"India needs a better opposition. The opposition is the heart of democracy and the ruling party should want a better opposition to keep it under check," Banerjee said.
The Indian-American innovative MIT economist, his wife Esther Duflo and Harvard professor Michael Kremer jointly won the 2019 Nobel Economics Prize "for their experimental approach to alleviating global poverty".
Elucidating on the ways to ameliorate poverty, he said there was no silver bullet, but many silver pellets.
"Poverty, like cancer, is many problems. There are many diseases. Some people are education poor, some are heath poor and some asset poor. You have to figure out what is missing. Trying to solve everything with one action is unviable to work and never does work," he said.
Banerjee also challenged the dogma that if the poor people are given money they waste it, become lazy and fall back into poverty. He advocated that the people living in abysmal poverty should be encouraged by giving them assets and freebies.
"There is so much prejudice about the abilities of the poor. Give the very poor some asset. Not lend, but give them an asset. Maybe a cow, some goats or trinkets to sell, then you look what happens to these people after 10 years. They will be 25 per cent richer, they will be healthier and happier. It encourages them to keep trying and they work harder than the people who didn't get the assets," he said.
"It is sustainable. We have calculated the rate of return on the investment. In India, it is 400 per cent. Net income that it generates is four times the amount you put in. The same experiment was done in Bangladesh for 10 years. It has been exactly the same there," he said, giving references from his work.
He said it was important that the poor are encouraged in the beginning, asserting that these people "actually have never done anything in their lives".
Banerjee also spoke about the crisis in the banking sector.
"We are in a deep cycle. It will take some time to fix things, particularly the banking sector. We don't have the money to do what China did which was to put the money in the banking sector, write off the loans. We cannot really afford that right now," he said.
He stressed that devolution of power and decentralisation were very important for economic success.
"Take China, it has on the ground democracy even though it is such an authoritarianism set up. They introduced village elections 20 years ago. The elected leaders go to different places. The intra-province competition is intense. There is devolution of power. China is much more decentralised than India despite its ruling Communist Party being such a centralised force," he said.
Responding to a question on whether he would accept the post of Reserve Bank of India (RBI) Governor if it was offered to him, Banerjee said, "Absolutely not. Because to be an RBI governor, you better be a macro economist."
Asked if he could have won the Nobel Prize based in India, he said, "I don't think so."
"I benefited enormously from a place (MIT) where I had the world's best potential PhD students. And that is important. All this work that I am taking credit for is mostly done by others.
"My students, collaborators, and friends and that is what makes it valuable. It is not that there is dearth of talent here, but bringing together of people on a large scale changes it. It is hard to do it alone," he said.
Born in Mumbai, Banerjee was educated at the University of Calcutta and the Jawaharlal Nehru University (JNU). He received his PhD from the Harvard University and is a professor at the Massachussetts Institute of Technology (MIT).
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.