Asleep As Usual

State identification of beneficiaries means local politicians, in particular those close to the ruling party at the state (this is the age of federalism) doing the job. This is a recipe for the reintroduction of loan melas, a disastrous legacy of the Congress regime. Equally doubtful is the idea that the state governments will train entrepreneurs and assess their schemes. Not satisfied with that, the prime minister wants them to also help out with the marketing of the produce generated by the employment schemes at market related rates. How something as intrinsically bureaucratic as a state government can train risktakers is not clear. And one look at the balance sheets of the state marketing federations will be enough to demonstrate the absence of expertise in state level organisations.

It is not as if the poor do not need help or cannot be helped to earn something to bring them out of dire poverty. One sure way of doing so is to pursue higher growth at the aggregate level. This is bound to create jobs down the line. But this is not enough. Something more needs to be done directly. The most successful model for this is Bangladeshs gramin banks. They are local level organisations, with low overheads and in close touch with local communities. On the other hand the big bankers whom the prime minister addressed are city based people running urban and corporate oriented organisations that are trying very hard to go global. NGOs can indeed play a facilitating role but for that they have to be genuine and local. Unfortunately, the prime minister got both his audience and pitch all wrong. The only silver lining is that not much money is likely to be wasted on his day dreams, as bank officials have become wiser and do not take political exhortations for directed lending seriously any more.