New Delhi: This Ford Foundation professor of economics at the department of economics at the Massachusetts Institute of Technology, US, does his research on developmental economics through the Abdul Latif Jameel Poverty Action Lab that he co-founded in 2003.
Abhijit Banerjee is currently conducting a lot of projects in rural India to understand what works for the poor and what doesn’t. In an interview on the sidelines of Ideas India 2008, a conference organized by the Aspen Institute India, Banerjee emphasizes the need for a better design for developmental schemes, and reforms in bureaucracy to speed benefits of growth to the poor. Edited excerpts:
Result oriented: Banerjee says most welfare ideas fail as the design is often flawed and the bureaucracy is not under enough pressure to deliver. Ramesh Pathania / Mint
How would the current economic crisis affect the poor, especially in a country such as India?
The poor have not benefited a huge amount from the upswing (of the economy), and so they will not be hurt in a huge way by the downturn. And the fact that the commodity prices are stabilizing will probably do good for them. We do not quite understand the balance of inflation, but precisely due to the same reason why they (the poor) did not benefit from the growth, they are somewhat insulated from the losses.
As a percentage of total population, poverty rate has been declining but the absolute number of people under poverty has increased. Do you see a scenario where we could eradicate poverty?
Yes, if things go right, I have no doubt that this could be done. (But) we need a lot of things (to) go right to (make it) happen. Most countries that have started on the development path have not yet succeeded. Given that we have a substantial population growth rate, we have to do it (eradicate poverty) at a very fast rate. The poor are having a lot of children who are growing under the condition of poverty and they are more likely to end up (being) poor. Just to get the absolute numbers down, the incomes of the poor need to grow very fast, because we are adding a lot more to that category.
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Almost surely. Many things that could have reduced poverty—better education, better health, better access to public distribution system—all those things have failed miserably. There is no surprise why poverty is not falling faster. Most of the reason why poverty is falling, is not because of public expenditure, but because (of) these people joining temporarily some urban workforce... that is how poverty is falling.
But we have been spending huge amounts of money. Where exactly do you see the lacunae? Why are we not getting the results?
“Why” is a very hard question. There are many many reasons why our political system does not seem to furnish, what is clearly the obvious form of state failure. Politically, we don’t have the willingness to do it. Part of it is also poor execution of schemes. All of those are certainly there. The scheme is designed in some idealized reality in mind and in the world (it) works in a different way.
Sometimes you know the wrong thing will happen, but you let it happen because it benefits your cousin... there are all kinds of reasons. Any place I have looked at, I am constantly amazed how the government systems have poorly delivered.
Could you give us an example from your field experience on how a particular scheme has failed?
In Rajasthan’s Udaipur district, the district collector announced that on all Mondays the nurse practitioner in all health centres has to be there, on other days she can go to the field. On Mondays, the civil society organizations will monitor their attendance and report the results to the collector or the chief medical health officer. All of that was done, but basically the attendance rates remained at 30-35%. So 60-65% times, on Mondays, when they were told to come, they did not come. It is simply that nobody believes that the system is actually interested in punishing people who do not come to work. They don’t come to work, because nobody cares if they don’t come to work.
About the much talked about National Rural Employment Guarantee Scheme, what is your impression? Is it a success or a failure?
It is a hard question. In Rajasthan, it is working relatively well, (but) in other states it is not working that well. There is clear evidence of some amount of money vanishing one way or the other. On the other hand, every other government scheme is even worse. If I think about it relative to other government schemes that are around, it seems to be doing reasonably well. This scheme seems to be working less badly in states such as Rajasthan than in other places.
There is talk within the government for implementing a direct cash transfer scheme and education vouchers for the poor. Are you in favour of such innovations?
These are ideas certainly worth thinking about. But my big worry is, these will be implemented as usual without sufficient experimentation and without sufficient effort put in to come out with the right design. That is a big concern... make sure that they know how to do the cash transfer work without money being stolen. These are big issues. The country cannot afford another badly implemented expensive programme.
You must be interacting with bureaucrats in India. Is there a real concern among government officials towards making things happen? What is your impression?
Good question. I spend quite a lot of time with some government people. Among them, there is genuine concern that this government which came on the agenda of the poor has not done enough or should do more. I think that (concern) is genuine. Having said (that) I often feel that they have not realized how hard it is designing a programme. They sit in Delhi and come up with a nice scheme. But they would not know where the weaknesses come on the ground. The design is rarely worked out carefully. No experimentation or too little experimentation is done. So, you do not end up with a clear understanding of what will make a programme work. And once the programme is announced, there is not enough attention given to the so-called political economy to keep the pressure up to implement the programme well. So on both sides, the design is often flawed and the bureaucracy is not under enough pressure (to deliver).
And there is lack of accountability at the ground level.
Huge. But that is all the way up. I would not blame just the people at the bottom.
For that to happen, what kind of reforms would you suggest?
Well, people should start thinking whether the current system—of very small elite IAS (Indian Administrative Service) that is not specialized at all and is expected to know everything—is the best system.
So, some kind of other administrative structure is required.
Railways, for example, is separate. People are specialists. I think we need specialists. We have too many people who are generalists. It is hard to know everything. There are so many things to be mastered. They have so little time and they are so busy. I do not blame them. It’s a big challenge.