ISBF Distinguished Public Lecture Series | Growth and Distribution: The Theory and the Recent India Experience by Dr. Pronab Sen
From IMH, a celebration of the arts.
At ISBF, we had the pleasure of sitting down with Dr Pronab Sen, a distinguished economist and statistician, who discussed with us, a problem that has been ticking on the minds of all our economics students, ‘What is the cause of the slowdown in the Indian Economy?’ Is it structural? Is it cyclical?
He pointed out the fallacies of the Indian media, print and digital, as they scratch only the surface of the narrative, disguising the real problem, the demand-side problem, with individual financial events like Bank NPAs, the NBFC crisis and such.
Putting up the simple national accounting identity, Y = C + I + G + (X-M), he commented that the government was trying to please the nation, with short-run boosts, like fiscal stimulus, and failing to see the depth of the money cycle, and transactional movement from the poorest to the richest income classes.
Demonetisation, for a fact, completely wiped out the informal sector, its impact not having reversed even in 2019, as it shut the doors for an entire generation of small entrepreneurs and businesses.
A Panglossian Indian government believes that tax cuts would lead to investment increase, but it forgets that output isn’t selling at a great growth rate. Companies are placing heavier importance on keeping company stake close, buying back shares than reinvesting or paying out dividends.
At the end of the session, he entertained questions and answered them with utmost clarity and depth, leaving us all satisfied, but also, tempted enough to dig deeper.