The economic crisis India is facing due to the coronavirus pandemic and subsequent lockdowns is “probably bigger” than the 1991 balance of payments crisis, which resulted in the country liberalizing its economy, said Nobel Prize-winning economist Abhijit Banerjee. In an interview to HuffPost India, Banerjee, who is the Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology, also warned that India’s gross domestic product (GDP) could go down by 10-15%.

Banerjee, who shared the prize last year with Esther Duflo and Michael Kremer, also called for increased spending on anti-poverty programmes, and suggested that the government shed all concerns regarding macroeconomic instability and go for printing money to tide over a limited fiscal space.

Speaking on Friday, as India extended its ongoing lockdown by two more weeks, Banerjee said that increased testing is a way out of a cycle of total lockdowns, which, he warned, would be damaging and difficult to enforce if prolonged. “Given that there is uncertainty, the right thing to do is to predict where the new upsurges might be, and test, test, test, test, test,” Banerjee told HuffPost India.

Banerjee, who has been critical of credit rating agencies in the past, also asked the government to ignore any threats of a sovereign rating downgrade by them and go ahead with increased spending by way of fiscal easing. 
“I would ignore them and do what it takes [for the economy],” he said.
https://www.huffingtonpost.in/