India / Farmers agitating as they suspect govt's motive: Abhijit Banerjee

New Delhi: Nobel laureate and economist Abhijit Banerjee on Thursday said the ongoing protests by farmer organisations against the three farm laws passed by the Central government have little to do with their content and more to do with lack of trust.

Speaking at the 18th edition of Hindustan Times Leadership Summit, Banerjee said the farmers are essentially acting out of pure suspicion of government’s motive. “It is not so much that you could not make a case for getting rid of many of these very old-fashioned institutions we have in the agriculture sector, we absolutely could, but the lack of trust is massive. The sudden cancelling of Centre’s liabilities under the GST Act does not help. You create these things and then you say we are going to have power delivered from top down and we are just going to take decisions. You can see that the states are lining up in partisan lines," he added.

Banerjee said all the negotiations with farmers eventually will have to go through some state governments. “This (the farm legislations) is a move at a time when states are feeling economically threatened because the economy is not delivering as much as it was earlier," he said.

Speaking on the state of federalism in India at present, Banerjee advocated for smaller states and constituencies. “Indian states are way too big, too clunky and too unable to focus on specific areas. We need much more federalism within the state. We have 540 MPs for a population of 1.3 billion. UK has 60 million people and something like 635 MPs. The Indian constituencies are so big that if I were an MP I can’t really be useful to most people in my constituency. At all levels, we have not adjusted to the scale. The states are too big, the assembly constituencies are too big. Everything is off scale in my view. That’s a dip problem," he added.

Banerjee said the bounce back of Indian economy is rather slow. “After a 24% reduction (in June quarter), you might have imagined that you would get a 15% bounce up. We are going to end the year with 10% short of where we were. There are reasons why it would be sticky and one of them is there is a massive demand shock. Investment is very slow. People are scared and they are sitting on whatever cash they have," he added.

Asked about his wishlist for the upcoming budget to be presented on 1 February, Banerjee said the government needs to focus on infrastructure projects and send a strong, pro-growth message through the budget. “We are in a state of a bit of paralysis. People understand that you have to bail out banks but it does not excite everybody. They would really like an assurance that growth will be restored and the government will do whatever it takes. I would start sending signals that the government has a commitment to growth and that is the only way in which you get people out of this state of not spending, not moving, not investing," he added.