State needs to renegotiate role to end poverty: Jairam Ramesh

Eminent economist Abhijit Banerjee adds that cash transfer not the only answer to end poverty

Seeking a new, renegotiated role for the state in development of India and ending poverty, eminent economist Abhijit Banerjee and Minister for Rural Development Jairam Ramesh said a fresh look was needed at what the state could do and what it should do immediately.

They were speaking at the Hindustan Times Leadership Summit here.

Ramesh flagged the challenges of poverty: while overall poverty levels may have been going down, there were new dimensions of impoverishment. He referred to ecological poverty, which was causing large scale of land degradation, leaving huge populations without access to water and forests. He also said 70% of India was indebted because of expenditure on health and conceded that public health simply does not exist in large parts of rural areas. Paradoxically, private expenditure on health was growing.

 

What should the state do about this? Was cash transfers the right way? Should the state step back and leave it to individuals to reorder their priorities? Banerjee argued that this would be a mistake, and could possibly add to impoverishment.

“If people have to worry about safe drinking water, break laws to fetch firewood, worry about whether their children were safe while being unsupervised in the absence of crèches, and still run to get their microcredit and make use of government schemes, this is just impossible. There are some things the state has to continue to do. We have to figure out, exactly what”, Banerjee said.

Ramesh said the state needed to build capacities to enable the poor to participate in economic and market expansion.

“The public domain delivery of public services by the state is extremely inefficient. We have to recognise this. But this need not be so. Private delivery of public services could be made more efficient”.

While agreeing that some schemes run by the government/state should be wound up altogether, Ramesh said schemes ‘inevitably have schemers’ and it is not so easy to wind them up.

Both Banerjee and Ramesh agreed that the state needed to re-explore its role in removing poverty in India, and said it could not go into retreat.