Development economist Abhijit Banerjee, professor at the Massachusetts Institute of Technology, is a close tracker of the Indian economy. He is the co-author of the award-winning work, Poor Economics, along with Esther Duflo. Excerpts from an interview with Lola Nayar:
How does the Indian economy look today from an international vantage point? Is it, as many feel, at an inflection point after two years of lacklustre growth?
There is a small financial community which is carefully watching. But it will take time and some specific implemented policy changes before the consensus emerges that things have really changed.
Is the BJP’s victory in the 2014 elections a mandate for a shift in focus in the Indian economy, as some people feel?
Food inflation continues as it did before the elections. Are we going to be in a permanent state of higher inflation?
Partly, there is a global trend towards food inflation. We are also trying to have it both ways: it is always hard to make credit more easily available while trying to totally eliminate inflation—this is not going to happen. It is true that there are a lot of inefficiencies in the food chain management which could be reduced, but it would not be easy. And even after that there is going to be pressure from the fact that the economy is growing and the credit is growing.
The BJP government says it will recraft social development schemes...
It has been argued that states have a bigger role in the implementation of welfare schemes. How can the outcomes be improved? Will privatisation yield better results?
As a point of fact, most social programmes are implemented by the states. The issue is more that these schemes are centrally designed and handed down to the states to implement; maybe the states would take greater ownership of them if these were their own schemes and they might also fit the local needs better.
After long years of debate on poverty numbers and the yardstick for measuring dire poverty, Dr C. Rangarajan in his report recently suggested Rs 32 for rural and Rs 47 for urban poverty. Do you agree with this measure?
I am okay with these, though it is worth emphasising that raising the poverty line (which is what the Rangarajan committee recommends) helps the rich states get more money from anti-poverty programmes at the expense of the poorer states. Mostly we need to stop acting as if there is some intrinsic truth behind these lines, when they are just tools for measurement.
“(For intrinsic sustainable growth), we need to take it seriously, especially the
sustainable part.” Based on your research and projects under the Poverty Action Lab, where and when do welfare policies yield desired results and where do they fail?
Good intentions and grand theories do not make a good programme. Programmes work best when they’re based on a detailed understanding of the problem being solved and how they are implemented on the ground.
Both the UPA and NDA governments talk about inclusive sustainable growth. What is intrinsic to achieving the objective?
Taking it seriously, especially the sustainable part. We are great at coming up with fancy words that can mean all things to all people.
How important is the state role in improving human development indices, given that we are hearing that government role should be restricted to governance, not schools, hospitals and industries?
Industries is clearly a bad idea. But the world over, education and health are delivered by governments. It does not have to be that way, but one reason why our government schools and clinics work so badly has to do with our unwillingness to punish the criminally delinquent behaviour of teachers and health workers. If there was a political will to take them on, even the current system would work a lot better.
Apropos of ‘Social Agenda Has To Be Central To The Country; It Can’t Be A Side-Show’ (Interview of Abhijeet Banerjee, Outlook: July 21, 2014), the actual economic growth of the country will surface when the effects of the development trickle down to the poorest of the poor. A nation cannot thrive economically just by media hype and empty slogans, when millions of the countrymen are devoid of proper health facilities, education, sanitation and even food. Bullet trains and SEZ may be great ideas, but the need of the hour is to prepare our human resources by providing them subsidized food and education. The middle classes consider it to be sheer waste of public exchequer, but how can the country progress when most of the poor people lead an abject and miserable life of extreme poverty. The people who are lagging behind in development need to be promoted first through Government’s affirmative action so that these classes may become an asset in our national progress in place of just remaining a liability.
"Will privatisation yield better results?
As a point of fact, most social programmes are implemented by the states. The issue is more that these schemes are centrally designed and handed down to the states to implement; "
It can't be any other way. Only the centre creates money. The states DO NOT.
Privatization will wreak the economy if TRADE DEFICITS exceed FISCAL DEFICITS because the difference ( FISCAL DEFICIT - TRADE DEFICIT) = NET PRIVATE SAVINGS is the economic balance of a monetary sovereign nation. The left hand side is the SOURCE of money to the economy, now at 4.6% of GDP, pretty damn small!
K Suresh/DL Narayan,
You could be very true..... but let us hear it from our own gentleman right here..
And Misogynist , Please spare your gyaan to us : What is your opinion on pornography and those Kingfisher Calendars ?
@Ramki - "but misogynist is anti women so he wont relish those calendars and the beautiful models."
:) Don't be so sure. Relishing is quite independent of his 'avowed' opinion regarding women. It all could be a facade. I suspect he cries wolf to blunt the effect of real wolf. Don't forget his abhorrence for a male-led BJP and soft corner for a woman-led congress.
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