"India and the US are similar in one very important way. The minorities are actually minorities. They are not anywhere close to being dominant," Banerjee said at the epilogue session of the Tata Steel Kolkata Literary Meet on Monday evening.
"So the sense that we need to be mindful of the minorities - this talk about that you hear at least from the fringes of the ruling party about the demographics of the Muslim population - this is really just ways to demonise a population," he said during the session, that centred around the book 'Good Economics for Hard Times', which the eminent economist has co-authored with fellow Nobel laureate and his wife Esther Duflo.
Banerjee said like the African Americans and Mexicans in the US, the minorities - "you can say the entire group of minorities - they are relatively economically and educationally deprived, and small group, with a very powerful and economically much better-of majority".
The Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology said whenever these fears are stoked, one could imagine a context where these are two equal groups.
"An you worry about the other group becoming too powerful. But this is just not realistic here. And in that sense I feel that all the reference to that is a bit of a... it is constructing a narrative that has no basis in reality. I don't think there is any real fear that there is going to be a Muslim takeover of India," he said during the interaction on the Grand Steps of the iconic Victoria Memorial Hall.
Ruling out any future political role that he sees for himself, Banerjee said Abdul Latif Jameel Poverty Action Lab (J-PAL) - the organisation he has set up with Esther and Sendhil Mullainathan - was committed to work with anybody who wanted to do something useful.
Becoming political wouldn't be helpful in that context, he remarked.
"I think I believe that what is most useful is the work that our organisation Poverty Action Lab does. We are mostly committed to working with anyone who wants to do something useful.
"People react to things... We are better off mostly putting our head down, try to help the poorest people. That is still a very real option," he said.
According to Banerjee, despite bad politics in both countries, "that you may worry about", state governments, including those of the BJP, have worked with their organisation.
"We have often found them very responsive to sensible things," he said, referring to the project on reducing industrial pollutants in which J-PAL worked with the Gujarat government when current prime minister Narendra Modi was the chief minister of the state.
"We did it with Modi in Gujarat. It is now a policy in Gujarat," he said.
( With inputs from IANS )