The World Bank has often been pilloried for pretending to know more about poverty than the poor people who battle it every day and whom the Washington lender is meant to help. The criticism that has been levelled against it applies just as well to government agencies and politicians who speak for the poor.
Illustration: Jayachandran / Mint
A new book that has been released by the World Bank is thus an important break from the past. It is based on a huge Moving Out of Poverty study that the bank’s researchers have worked on in 15 countries, including India. The way this study has been done deserves praise: The researchers have actually listened to what the poor have to say about their condition and how to overcome it. The interviews complement the regressions that are a must for any contemporary economic study.
Deepa Narayan of the World Bank said in a recent interview that more than half the people who have accumulated assets and moved out of poverty attribute it to their own hard work and initiative. More than three out of every four poor people interviewed by the World Bank are optimistic that their children will lead better lives than them. “People want a free market economy,” Narayan told The Times of India.
This is a statement that does not quite fall in line with the current consensus about how government programmes such as the farm loan waiver and the rural jobs scheme helped the United Progressive Alliance (UPA) win the general election.
It is not our case that the government has no role to play in a country such as India. Several studies have shown how huge expenses on hospitalization, marriage, death, etc., push people back into poverty. The lack of information about prices or inadequate roads to take rural output to urban markets keeps people trapped in poverty. Local institutions such as panchayats need to be rebuilt and empowered.
The fashionable talk about inclusive growth assumes a paternalistic government will save the dumb millions. What is actually needed are low deficits, a stable economy, vibrant local markets, quality infrastructure, policies to help entrepreneurs create non-farm jobs and well-designed schemes to cover insurable risks.
But what we currently have on the table is a mishmash of statist solutions that will be captured by the local elite and wreck the national budget. Fresh thinking is needed to abolish absolute poverty.
State or market: which will help the poor more? Tell us at email@example.com