Nobel Laureate Warns Political Polarization Threatens Indian Investment
Nobel laureate economist Abhijit Banerjee stated on january 30, 2026, that increasing political polarization in India is diminishing clarity and creating uncertainty for global investors, despite continued economic growth. Banerjee,a professor at the Massachusetts Institute of Technology (MIT),shared his concerns in an interview with the Press Trust of India (PTI).
Banerjee identified media freedom and data credibility as the most critical economic issues facing India. He argued investors prioritize reliable data over political statements.
“The most vital issues are media freedom and transparency. Do we really know what the numbers are? ThatS what investors care about,” Banerjee said.
While India continues to attract foreign investment, Banerjee characterized thes inflows as unstable. He noted the Indian rupee’s depreciation, linking it to insufficient capital inflows.As of January 30, 2026, the Indian rupee had depreciated 4.2% against the U.S. dollar since the beginning of the fiscal year, according to data from the Reserve Bank of India.
Banerjee cautioned that unpredictable policies and internal divisions are damaging India’s reputation as a stable, long-term investment location.
“Peopel need to know what the policy rules are. Will there be shifts in attitude towards specific companies?” he asked.
He emphasized the need for consistent transparency, not just isolated instances.
“Unless we have a very predictable and obvious policy regime and a transparent media, India will remain a mystery to the world,” Banerjee stated.
To attract sustained global capital and deepen its capital markets, banerjee believes India must establish institutionalized transparency across all levels.
Banerjee, age 64, was awarded the 2019 Nobel Memorial Prize in Economic Sciences jointly with Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty.
