Won't support fiscal tightening: Abhijit Banerjee on upcoming Budget

Nobel laureate Abhijit Banerjee on Saturday (January 11) said the fiscal deficit of the country has been breached by a huge margin already and therefore, it won’t be a big deal to breach it any further. He also said he wouldn’t be supporting fiscal tightening right now.

Banerjee, who was speaking about the upcoming Union Budget, also spoke about the Centre’s reported plans of cutting down school education budget by ₹3,000 crore. “The federal government provides very little of the funding in education. Education is a state subject and it is mostly funded by state. Cutting ₹3,000 crore is like a drop in the ocean,” the Nobel laureate said.

He further said education outcomes in state-run schools can be better than the private ones as he lauded Delhi government schools for “outperforming” their private peers. He said state agencies have been “generous” with resource allocation for education, which is visible in aspects like teacher salaries and the system, and the focus needs to shift to making them perform better.

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The comments from the MIT professor, whose work on poverty alleviation won him the coveted Nobel Prize recently, come weeks ahead of the Delhi polls. “Do I think that you can aspire to doing better in the government system relative to the average private school? Yes. The Delhi public schools have done it actually. Results in the Delhi public school system, the government school system like the municipal schools are better than the average private school in Delhi,” he told reporters here.

Speaking ahead of delivering a lecture at education-focused NGO Pratham’s 25th anniversary celebrations, Banerjee said the Delhi government schools have “outperformed” the private ones. He said private schools are “terrible” from an outcome perspective.

Education is largely a state subject under the federal structure of India, but stretched fiscal situations are generally “bad news” for the sector as lesser resources will be allocated, he said, answering a specific question on a ₹3,000 crore reduction in the central government’s education allocations.

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However, he said rather than financial resources, the Centre’s focus should be on reforms in human resource development, University Grants Commission and syllabus setting. He pitched strongly for leaving syllabus setting to the individual institutions, rather than making it centralised where boards set the syllabi.

There is a need for greater flexibility in the education sector across all aspects, he said, calling the system “very rigid”. “I think the real issue is not money… the education system is very rigid, too rigid. There’s almost no flexibility. Pensions, salaries eat up most of the budget. So it’s not that you can change very much. You are always committed to paying those things. It’s a rather inflexible system,” he said.

The economist, who has been a notary of stimulating demand to boost growth, also said that the budget deficit numbers are “a little bit imaginary” and one should not be very concerned about breaching the fiscal gap. “Budget deficit numbers are a little bit imaginary. So in that sense, I don’t think it is a big deal to breach it and certainly I wouldn’t be supporting fiscal tightening right now,” he said.

(With inputs from agencies)