Restricting foreign capital in banking sector a mistake: Abhijit Banerjee

Nobel laureate Abhijit Banerjee has said that restricting capital infusion in the banking sector to Indian capitalists is a mistake. “It is a wrong view that Indian capitalists are somehow better than foreign capitalists,” he said.

“Foreign banks can bring in capital. Involving foreign banks in the Indian banking sector but restricting it to Indian ownership is bad,” he said.

Stating that the Indian banking sector is in a ‘zombie’ state, he said, banks are half-dead with so much bad debt. “If the books are carefully examined they are not in good health and they are in red,” Banerjee said.

“They are not lending as they don’t have capital. This capital can come from the foreign investors in the banking sector,” he said.

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He said the difference between lending rate and borrowing rate was very high.

Majority stakeholders

The Nobel laureate also opposed the move to restrict the ownership in companies to Indian businesses. “We are scared of competition. But faced with it we come out good,” he said.

Good jobs, bad jobs

He said there was no dearth of bad jobs in the country. “Low-end jobs are available in the construction, delivery, hotel and health sectors. These jobs are created by domestic consumption,” he said.

“Since they don’t have the social infrastructure, they quit after some time and go back to the villages,” he said, stressing on the need for skilling.

“There is a lot of scope for skill upgradation,” he said.

The country, he said, lost about 40 lakh to two crore ‘good’ (skilled) jobs.

He said that artificial intelligence has a negative impact on jobs. “Exposure to AI will create more pressure on good jobs. It will impact middle-level jobs,” he said.