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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But the fact is we have not been able to reduce poverty at a faster rate. Does it show the poor quality of execution of various developmental schemes in India?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?