Modi govt's banking for poor lacked execution at grassroots: Expert

The project of bringing banking to the poor had results that were less real and more symbolic

The government's macro project of bringing banking to the poor is showing results that are less real and more symbolic because of a lack of follow-through at the grassroots, says public policy expert Anirudh Krishna.

He says that had demonetisation come after people had become familiar with banking, then both the objectives could have been realised better, with less pain overall and greater benefit.

Krishna, a former IAS officer and an Edgar T Thompson Professor of Public Policy and professor of political science at the Duke University, USA, has come out with a book "The Broken Ladder: The Paradox and Potential of India's One Billion" which is an account of India's development strategies.

In the book, published by Penguin, Krishna presents a ground-up perspective, delving into the lives of ordinary individuals.

On demonetisation, he writes, "Some poorer people were largely unaffected, but many more had a hard time from the beginning. Week after week, as people lined up for hours in front of bank branches and banks ran out of cash, the market collapsed. People stopped buying things and started letting go of their employees."

He then cites the example of a 50-year-old villager Hiralal, who had a masonry business. He built and repaired drystone walls, generating enough work to employ four assistants. But after demonetisation, as banks were letting account holders withdraw only Rs 10,000 monthly, there was no one who wanted to build a wall in the near future.

Hiralal received no commissions and his team of workers, once united, had scattered. Though he had a bank account, Hiralal didn't know how to use it. No one had informed him about how to write or deposit checks or how to take out a loan for running his business operations.

"Because of the lack of follow-through at the grassroots, the macro project of bringing banking to the poor had results that were less real and more symbolic. If the two campaigns had been more closely integrated, with demonetisation coming after people had become familiar with banking, then both the objectives could have been realised better, with less pain overall and greater benefit," Krishna writes.

"But paying heed to the micro-realities of individuals' diverse experiences doesn't come easily in a world of siloed campaigns and top-down imaginations - where the intent, so often, is to 'give' the things of development to the people," he goes on to add.

Development, according to him, isn't about giving away a set of things; "what's required is to provide opportunities so that people can develop".

"Developing people, in turn, is not best served by big- bang remedies that ignore micro realities and are not followed through persistently. That's hardly the only way in which public resources can be employed in the service of the nation. An alternative mode of governance needs to be inculcated. There's much to be gained from exploring a bottom-up process of innovation," Krishna suggests.

He says two sets of development strategies are required in tandem: a macro strategy to grow the national economy, and a micro strategy to promote individual development.

"There is a symbiotic and cyclical relationship between aggregate growth and individuals' development. Opportunities for individual development increase when there is faster economic growth in the country; conversely, growth is given a boost when, across the board, individuals become more productive," he writes.