New Delhi:
Here is the full transcript of discussion between Dr C Rangarajan, Prof Abhijit Banerjee, TN Ninan and Harsh Mander with NDTV's Sonia Singh
NDTV: Good evening and welcome to a new season of The NDTV Dialogues, a conversation of ideas on issues that often don't feature enough in either the political or media discourse. Tonight we look at a crucial aspect, defining poverty, or more specifically settling on a number which draws a line in the sand, as it were, between who is considered poor in India today or who the government considers poor and who isn't. The C Rangarajan Committee set up to review how poverty is actually measured, how the number is fixed, gave its report recently to this government and joining me tonight is Dr C Rangarajan, the head of that Committee, also of course former Chief Economic Advisor to the Prime Minister. I'm also joined by Prof Abhijit Banerjee author of Poor Economics, which really looked again how aid is actually received and what impact it has. He is also the Founder-Director of the Abdul Latif Zamil Poverty Action Lab and Economic Professor at the Massachusetts Institute of Technology; TN Ninan, Chairman of the Business Standard and Harsh Mander, former IAS officer, head of the Centre for Equity Studies. They have also just released the India Exclusion Report.
Dr Rangarajan, thank you for joining me from Chennai. Your recent report, Sir, has raised the poverty line. It's now Rs 32 rupees daily, the cut off for those who live in rural areas; it's 47 in cities. You have also added important criterion, which many consider crucial. Yet there's controversy over this as well because critics have said this number as well is out of touch with reality. They have argued on why we need these poverty numbers, this line at all. What do you think is the benefit, Sir, of this number?
Dr Rangarajan: Well, we need a measure of poverty to understand very clearly how the society is meeting the minimum requirements of the population. The link between the poverty ratio or the poverty line and some of the programmes has been snapped in the more recent period. It is not always the criterion of poverty, which determines what benefits should accrue to the people. But even then there is a need to have an understanding of the level at which most people live and an understanding of whether people live below a certain minimum standard of living. Now it is this minimum standard of living, which I would call the poverty line. But the poverty line is not the exclusive concept in relation to which we should measure the progress of the society. But nevertheless it does give a measure of understanding how the government and the policy have resulted in ensuring a certain minimum standard of living to all the people.
NDTV: Prof Banerjee, coming with your perspective on this, do you think and the point that Dr Rangarajan made, that actually social security schemes in the sense have been de-linked from this poverty line? You know that the right to food envisages a scenario where 2/3rd of India would get subsidised food. Many argue how can we have so many figures flying around, How many people in India are actually poor today or not. Does it really add any clarity to that?
Prof Banerjee: Well, I don't think the point is to add clarity in that particular sense. I don't think that, I think that many of these schemes are products of various political processes, which Dr Rangarajan, or I mean nobody, controls those processes and its hard to make them take the blame for that. I think a lot of these things, in a sense I feel that's one of the things we lost when there was a single poverty line and there was a relative agreement on that and that was used for allocation across the states, I think there was a, it would have a fairer allocation of resources right now. If we are heading towards the poverty line of, you know, Rs 100 a day that's basically, then it becomes more or less useless as an allocating criterion, a way to allocate across the poorer states or richer states, because every state will have a lot of poor people. And I think part of what we would have liked to have is a policy poverty line which says, that look, this is what we think is a fair basis for allocating resources across the states, and that particular value of it has been more or less, for a variety of political processes have removed that value. So now I think there is a real question of what are we doing with this poverty line? And I think it's sort of become a kind of a political object of, you know, where everybody wants to show that they are more pro poor than everybody else. And so it's become, something that's adrift. I don't see a real social anchoring point for it, which is why I think we have all these debates. I think we have lost the intention behind it which was a, I think there was a clear allocative. You know this is where the real emergency is, that's where we should direct resources. There was a good, useful basis for poverty line.
NDTV: And of course, Harsh Mander, what we saw in the recent elections, what's interesting was the development and in fact when we look at development for what an average voter is much more about how to lift themselves out of poverty or how to get a better life. That was such a central theme of elections. The recent Budget, the NDA government says that they will continue their focus on inclusive growth, saying that none of the social sector schemes, the budget for this has not actually been cut. So there is a continuity in the sense that we do need to make India a less poor country, yet the issue, and I know that Jean Dreze and others like you have raised this point and it has almost become an academic debate. Is that where you think the problem lies?
Harsh Mander: I think that, you know, we reach a point where we say you can't just go to a doctor and the doctor will tell you whether you are sick or not. You can't go to an economist and say, you know, we need to understand and I think the demystification around this discussion is important, because it's not just about, it is about budgetary allocation to states which is important. But it is, it has been used for a very long time in doing two things, One is that to evaluate whether the kind of economic model that we have is actually making a difference fast enough, to as many poor people as it should; and the second, which is even more critical, is that it continues to be and despite you know Jairam Ramesh, and Montek having said it would be de-linked. On the ground I work with poor people in many parts of the country, there are many things that are linked still to the idea of poverty line. So it's not an academic question. I mean the most critical one is of course, for me, is the pension, old age pensions. If you have to be BPL and above 60 to get a pension, if you are not in that line and the most vulnerable tend to not be in those lines. I made a list, you know, food is fortunately being de-linked, you know, in Indira Awas. house, free medicines in many states, pensions, school uniforms, textbooks, a free bed in a private hospital in Delhi, which is reserved for EWS, all of that requires BPL cards. So that's why it's not an academic discussion. I think even a larger question of how well are we performing for the poor? Chidambaram and Montek were separately asked how long will it take for poverty, with the current growth model, for poverty to go and they said, the year 2040. I just find that this poverty line, which to me is much closer to a starvation line, if we are saying, we are not even promising, that its going to go, things are not going to change till 2040, it's something that is important for the country to discuss.
Tendulkar (line) for instance, I really struggled, I studied economics, I struggled to try to understand how they made their calculations. When you look carefully, they take this median expenditure in urban areas, something like that, then what poor people actually spend becomes the poverty line. That sounded very circular to me. And then somewhere they say that you have to make an assumption that this expenditure is normatively sufficient for the poor, which is where, to me, the heart of the problem is. What do we as a society believe? And Dr Rangarajan also spoke about minimum levels. Who decides what is minimum, appropriate for a poor household? I think that it is a normative question; it's an ethical question, which needs to be opened up. We need, as a society, to say while middle class aspirations are surging, what about the aspirations of the poor? What is adequate for them?
NDTV: Mr Ninan, why don't you come in on that aspect? Who decides what is the, we talk about the poverty line, there have been many issues, but what should it be called? Mckinsey Global Institute has come up with what they should call moral empowerment line, and that's really they should... What is acceptably poor to India? What figure would be acceptable, in the sense, what do we think is worth bargaining enough for, saying alright this is the line, and this is how much the Indian government can afford to spend, so lets fix up a number which is roughly within that budget. How do you think this... Do you think we are going about it the right way? Already thousands and thousands of crores have been spent in social security schemes and we are still at a state where just say, going by a right to food, 67 percent of India needs subsidised food.
Mr Ninan: You know Sonia you are never going to get agreement on any line. You may think its enough, he will say its not enough, Dr Rangarajan may say it's more than enough. On what basis are you going to agree or disagree? You can quarrel about any line you want. So I don't think that that's the basis on which to argue the point. If you need a line you can simply accept the international lines and adopt them for the Indian context. A $25 a day is extreme poverty and $2 a day is relative poverty. And you can see what the Indian reality is there and say at least we are just following international norms, and you may quarrel with it, but those are the international norms. That's one way of doing it. The whole issue with individual and families is, I would say, that most, I think other countries look at the cost per family depending upon whether you are a two member family or a four member family or you are a six member family, because the per unit cost is lower in a larger family; and the way other countries define poverty, look at the size of the family, we don't do that. So I think there is an issue there. And I would say that to take up Prof Banerjee's point, that if you are going to start allocating things then what you really need to do, I think, is a relative line, meaning that notions of poverty keep changing.
What was considered poor in the early 1970's when this whole thing began with the first real measurement of poverty, that line would have changed today, because the country's level of income is higher, the people are better-off, so you will expect people to have more facilities. In the same way people in the US still have a poverty line, in Europe they have a poverty line at much higher levels of income, so notions of poverty change. So, one way to do it is to look at a base in the nation to an average. Meaning if the average Indian family spends X number of Rupees, ten thousand or twenty thousand rupees then anyone who is less than half of that, lets say you can take any number, you can say 40 percent, 60 percent, anyone who is less than half of that deserves government support. And the point I would make is that the larger you make the catchment area, the less money you would give to the really poor. If you want to focus on the really poor, the extreme poor, then you need to keep that number lower down. Meaning, if you say 25 percent, you can give more resources to the really poor and if you say 75 percent of the country is poor, then you are spreading your money on a much larger ... and then the really poor lose out. So instead of trying to compete on who is more pro poor by getting a higher number, we should actually have a relative number and then just stick to it or just focus on the international bench mark
Dr Rangarajan: When looking at the number I agree with Ninan and others that there can be no agreement because the concept of poverty or the perception of poverty will vary from person to person. But what we try to do is to look at private consumption expenditures as revealed for the NSSO data. These private consumption expenditures have been calculated assuming certain minimum food requirements and certain minimum non-food requirements. I think people should look at what the norms that we have introduced are. We have taken the ICMR calculations of the latest period for finding out the calorie requirements, the fat and the protein requirements, to arrive at the minimum food consumption expenditures. And for the non-food expenditure, in the absence of a norm, we have taken the median fractal loss expenditure on clothing, rent and two other items as a norm. Now also while interpreting the number we should also take note of the fact that this is purely private consumption expenditure, to which we must add the public expenditure on health, education and other things, to understand what the level of living a person at that point is enjoying. Therefore it is contingent upon the public expenditure on health, education and so on. And there is evidence to show that in the recent period, the public expenditure on health and education has doubled between 2004-05 and 2011-12 on a per capita basis. Therefore in interpreting the number and the credibility of the number, please also take into account the public expenditures.
NDTV: In fact Dr Rangarajan I am just going to ask you on that, because also of course in your other role as a RBI Governor and Chief Economic Advisor, some of the facts that have merged must have struck you as very interesting. Because when you talk about public expenditure perhaps you have to look more at the public deliverables, because even though the expenditure may have gone up, the fact is that we have seen more and more poor people today opt for private schools, would opt for private hospitals because they can't access, as Harsh Mander put it, the public hospital or health services, Prof Abhijit Banerjee has also talked about that in his book where they will not go to a free primary health centre but go to a private doctor, because they feel that the doctor will actually show up. Again an interesting fact that the poverty level in urban India, that in fact the urban poor, the number of urban poor has risen, in fact it has almost doubled, in your report, which is striking, given that poverty then within our big cities is rising at a faster rate than in rural areas.
Dr Rangarajan: Well, one explanation, I will let others come in. One of the reasons why the urban poverty line has gone up is for the first time normative expenditures on the four items that I mentioned have been included. In the previous Committees and all that, as far as the non-food consumption expenditure was concerned there were no normative levels imposed on them. They were part of the behavioural pattern ie they determined the minimum food consumption expenditure, and the non-food consumption expenditure that came in that particular class, which met the minimum food expenditure, was taken as a non-food consumption expenditure. But for the first time we imposed on four items a certain minimum and that is why you find the urban poverty line shooting up this time by almost 40 percent over the Tendulkar Line.
NDTV: First Abhijit Banerjee, if you would like to come in on that point, not just about the poverty, but also the level for inequality. So it's not that there's just, you know, a slight difference between say a poor person and a person in the middle class. There is a stark difference in earning levels. Is that a bigger worry, in the sense, that the levels of inequality we are seeing around us, the fact that despite public expenditure, the public deliverables seem to not be improving?
Prof Banerjee: So I think you are saying two things and both I think are important and one thing you are saying is that, I think, I think Dr Rangarajan made the point that in some sense that the government is spending, is redistributing through these other public deliverables, and what's the effectiveness of this redistribution and that's absolutely the central question. And I think the evidence is that, I think, that part of redistribution is failing miserably. And people are running away from it. So I think that there is a, there is in some sense, we need to factor that in when we construct these poverty lines. I think we should take into account the reality of what's being delivered and not the idealized value that the government puts on. So that's absolutely right. The other point that you are making, which I think is absolutely the case is, in the end this goes, I mean goes back, to Mr Ninan's point about the relative poverty line. Lots of what I think is politically salient is exactly this issue of, you know, a growing divide in terms of consumption and part of the reason why I think we see a number of very volatile processes coming.
I have written about, for example, I think this is linked to the recent rash of rapes. I think there is a lot of political stuff that is going on is connected to it. It's a perception of exclusion and we can talk as much as we want about inclusive growth, but what people see are all, they see NDTV and they see other television shows, and they see the way people live and other people live. It's very visible and I think that's what I mean if you look at inequality. Inequality starts going up in India in 1984 and we have now crossed the early '50s levels. We went down from our 1950 to 1984. '84 it starts going up, has gone up continuously since then, and I think in the policy space what's interesting is that there is no discussion of it. We have no discussion of wealth taxation; we have no discussion of estate taxation. We really are completely blind to this whole thing. So in some sense it's the accumulation of resources in the hands of a small group of people, which is entirely unchallenged in the discourse; I mean we are talking about poverty, and that in some sense is the distraction that this whole debate about the poverty line, as I see is, this is being a distraction.
NDTV: Because this is too absolute. This is just about....
Prof Banerjee: Yes, this is absolute and once we fix this and we say it's Rs 60 and we are done.
NDTV: We throw money at it and we go away. I want to bring you on this Mr Ninan because I know that Harsh and Prof Abhijit may share that view on exclusion, but I want to bring you in on that because of course recently Jean Dreze, Professor Amartya Sen and he faced a lot of flak as being behind the food security act and being part of a UPA welfare state thinking, in a sense, but he made a point that this is a mythology which is created and when we look at India's spending, whether it's the social sector, whether it's on health, it's actually way below in percentage of GDP of other developed countries. So India actually is spending too little and developing countries as well, and I think they have compared under-5 deaths etc.
Mr Ninan: That is well known and it's been there for a long time.
NDTV: But many, the so-called reformists, now out there or opinions have a very different view on how India needs to actually fix this. What would you say is the best way ahead? Are we actually ignoring this whole aspect of exclusion of inequality and the social aspect that comes out of it as well? Again, as I said, in the election campaign it had a resonance but in governance will it find the same?
Mr Ninan: Well I have two things to say on this. One is that it is true that inequality has grown. I think our taxation on the people on the very top, if you want the top 1 percent or the top 1% of 1 percent it's just too low. Our peak income tax rate of 33 percent, including the surcharge at that level of income, lets say a crore plus, in the UK, which is a richer country, you will pay 45 percent income tax. There is no estate duty here or debt tax. It's there in so many other countries. Capital gains taxes on the stock market, long term, there is no tax on it. These are the ways in which people accumulate wealth.
NDTV: But no government is going to raise tax at this moment.
Mr Ninan: I think no government has the force anymore to address these issues because there'll be just a huge outcry. So I think our taxation policy contributes to it, lots of other things contribute to it. You do need more. On the question of government spending more on health and education really the authority is Prof Banerjee, and his book addresses the question of if you throw more money into this then are you getting any bang for the buck or not? And can a state fix that problem? If you throw money at it without, it is true that we spend too little by any norm internationally, but if you throw more money at it without fixing the problem, its just more money down the tube. If you fix the problem then you can do it and that's hard too. That's one of the things said in that book. And the fact is that if you look at the education trend, which is different from health, I think the two should not be treated exactly the same, if you look at the trends in education, people are choosing to pay and go private and there is a clear trend away from government education towards private education. You can see the percentage shift over time.
Harsh Mander: I think the solution is actually much greater public investment for health and education for the poor, But at a more basic level and I think that when you are talking about a life with more dignity, I think we need to say that a life of dignity constitutes 4 or 5.at least some we can debate, you know, this quality of education without discrimination, this kind of housing with basic services, this kind of health care, this kind of social security after a person becomes old and so on. I think we need to have that package and we need to constitute a new notion of a new poverty line built around that imagination. That's really what I am trying to say, Otherwise, and the last thing is that there is also a question of capabilities. You know I work with street kids and there the unreality of these figures really hits me. Because a small street child today in Delhi learns picking rags can earn about Rs 150 a day. That makes him sort of like, like gloriously wealthy. But he is able to do nothing with the Rs 150. It doesn't give him protection, it doesn't give him decent food, it doesn't give him schooling, it doesn't give him healthcare, So I think we also need to nuance the idea of what you can do with this money, because of your social barriers and exclusion comes in those ways as well.
NDTV: Dr Rangarajan, go ahead
Dr Rangarajan: Well, you know two things. One is on the inequality in the economy or the society and the relationship to the poverty ratio. These are essentially two different things. For example the inequality may remain the same but the poverty ratio might come down, because the poverty ratio, let us look at it in terms of a certain level, a certain minimum, therefore, the society may be progressing in a such a way that the minimum is being achieved by a larger number of people or almost by everyone, But the inequality in terms of the distribution of income may be different. Therefore I think the two are slightly different aspects and we need to attack each one of them differently. I certainly agree with Ninan about the taxing of the super rich. In fact two years ago I made the suggestion about taxing the super rich, but then it finally came out in a very attenuated form later. But certainly inequality is something that one should address separately, from ensuring that everybody achieves a certain minimum and that is where the poverty ratio comes in. Second very quickly on public expenditures. Yes we all know that the efficiency of the public expenditures on health and education is not great, but nevertheless we try to look at, in fact how the public expenditures on health and education are distributed. It is nevertheless true that bulk of the benefits of health expenditures will go to the lower deciles of the population. Therefore an inference can be drawn that the benefits of the public health expenditure, as they increase, will accrue more to the bottom deciles of the population. And finally one point, and Ninan was mentioning that we can take the internationally accepted poverty line, in the report that we have indicated that the poverty line that we have estimated comes to $2.14 in purchasing power parity terms and therefore it is roughly in some ways along the globally accepted poverty line.
NDTV: Final round of Dialogue. Professor Banerjee, if I could start with you when we look, you mentioned in the beginning also, this whole debate about poverty also has political connotations in defining what the poverty line is, and we know there has been back and forth about how the Rangarajan Committee has shown the number of the amount of people are poor, or is less than what the UPA originally estimated, but still is that there was a drop in poverty. Do you feel in perspective, given what's been spent on it, do you think India now, 67 years after Independence, has done well in fighting poverty? Do you think our schemes have achieved some of what they were meant to do? Do you think we need a complete re-look, because we are all talking about new government, new ideas now? Do you think we need a complete re-look at the right to food, which was touted as a lifesaver in the sense, a game changer by the UPA? We know that the NDA is planning to continue it in many senses. Is this the way forward? Do we continue with PDS or do we actually look at a completely different model and you say that if there is development, there are jobs, there is growth, the benefits will accrue?
Prof Banerjee: So I guess I, I think...
NDTV: And then you can become the Prime Minister if you have the answers
Prof Banerjee: I guess there are, I think overall I would say that we need, I think we need an explicit re-distributive policy. I don't believe that it's enough to say there is growth; there are jobs. I actually think we have enormous amount of historical, both discrimination and just historical waste. I mean many people who have grown up under circumstances where their lifetime opportunities are not that great, and to say that now you can just deal with the market seems brutal. I mean it seems to me that you have never got a decent education, your government school never worked, and you never got a decent health because you grew up with absolutely dismal sanitation, maybe not enough food, its unfair to say that now you can go and get a living and the market will give you what you need. I think that's unethical. Now having said that, are we doing redistribution right? I think we are doing redistribution very badly in my view and in that I would say, right to food, I have written extensively about, I think it's a very poorly thought out Right, and it doesn't address the problem that it is meant to address. I think that I have tried to argue in many places, many times that the problem is one of nutrition and the right to food doesn't address that. There is lots of evidence on that point and I will take a small bet that it will not fix the problem.
Now education another major, I think, potential. I think, perhaps the major lever for long-term re-distribution, we do it very badly. I think if you look at the Ashtha Reports, you can't, but which I think right now the right to education was a disaster in my view. It again did not think through what the real problems were, didn't deal with it. Talking about right to health, again, everything we are going to screw up because we would start by thinking that the real constraint is resources, and we don't think of the incentives in the system. How people behave, how you know what is the gap between what they are supposed to do and what they do.
We have a recent survey where we find that in Northern Karnataka, the number of doctors who are at their, the PHC, which is not even their sub-centre, which is one layer higher, is 20 percent. 20 percent of the time they are on the job, 80 percent are missing, and again there is just tremendous amount of evidence on this. Again unless I think this what Mr Ninan said and it's totally right, I think, that unless we somehow have the political will and it's a matter of political will, I think we can do this. It's not that it's impossible to get people to do their jobs. You know people do their jobs in the railways. They do their jobs in a much better way than the health care system. All government systems don't fail equally. And there is a reason, part of this is true, there is still much more of a middle class constituency for the railways, for rural healthcare. There is, anybody, except those who can't afford it, have checked out, you have it entirely. So, I think unless we have a political will to deal with it, we should not then spend money. We are not going to do it then we should think of other ways, you know giving cash to people but either we deal with the political problem of you know making the doctors come to work, making the nurses come to work, making sure that teachers teach or we don't do it. If we are not going to do it then lets do something else. I don't think abolishing redistribution is the solution at all. But we need to think. Take the reality into account, not the fantasy of, you know, we will send this money here and it will turn into great things. We need to think about what the reality is on ground and we need to either fight the battles, we need to make the reality better or to give up on it and try to do something else.
Mr Ninan: I want to say on the food thing, which is that for many years the food distributed through the public distribution system, the grain was a little over 20 million tonnes. Now, in the last, I forget the exact number of years, about 10 or 15 years, it's gone from 20 to 50. It's made no difference to the health care statistics on malnutrition or stunting or any of those issues. So if going from 20 to 50 million tonnes has made no difference, I don't see why people have such great faith that taking it from 50 to 65 will make a big difference. I mean there is something else which is wrong.
Dr Rangarajan: There is some evidence to show that growth has had an impact on the per poverty ratio. If you look at it from the numbers from 1993 to 2004-05 and the subsequent period, the growth rate has been faster than the second period and there is evidence to show, using the earlier methodology, that the decline in the poverty ratio has been faster in the latter period than in the former period. Therefore, growth does have an impact and growth, particularly with an emphasis on agriculture, will have an impact on reducing the poverty ratio. But that does not necessarily mean that we don't address the problem of poverty directly. We need to have many other programmes, which need to be put in place. And as far as public expenditures are concerned, the efficiency in the delivery system has been emphasized by many and that should be done. But basically I believe that growth combined with programmes aimed at reducing poverty will bring about a reduction in the poverty ratio. And finally one word, the poverty line is a bare minimum. Nobody is saying that it is the most acceptable standard of living and therefore, while interpreting the poverty ratio and the poverty line, this must be kept in mind.
NDTV: Is also the argument true that perhaps activists like yourself and others need to also rethink how we have to look at this?
Harsh Mander: I absolutely agree with what Abhijit said. I think that firstly, you know somebody called Akhil Gupta made a calculation of how many people die of entirely preventable causes every year in this country, and he reached a figure of about 2 million. I think we need to recognize we might be having some impact of growth on poverty. Is it enough? Are we doing enough for as many people? If we are telling them that nothing is going to change in your lives till 2040, is that acceptable? I think that's one question. I totally agree that there are more fundamental ways of dealing, I don't envisage a solution to hunger for the state to distribute food forever, but I also recognize a situation in which, when, you know in the long run, you need people, need decent work. We need to strengthen agriculture, we need to have jobs, people need to have protected work, we need clean water; we need sanitation. We need a lot of things that need to be done
NDTV: But there is a rethink, even on MNREGA. We have had the chief minister of Rajasthan say why should it be guaranteed. It should be a scheme, which should function. We should audit how it functions, not just give Acts, which don't work.
Harsh Mander: Even as a scheme when it is so weak this gives you, a Right gives you a chance, no? But just the point that I was trying to make, we need bigger solutions, but while we are making these bigger solutions, is it a fundamentalism or not? We believe that while those larger solutions are being worked out, the child is growing up today, his or her brain is being formed today; her body is being formed today. The desperation of hunger, because as a Commissioner of the Supreme Court, I have investigated far too many starvation deaths, desperation of a large segment of the population is something that we; you know we talk about inequality, I am working on a book of which the subtitle is Inequality and Indifference in New India. And I think it is about the indifference, politically, of the middle class. So I see something like a food programme or MNREGA as the necessary moral sort of support systems that we have, while we make the larger corrections that Abhijit talks about. But I am not prepared to tell another generation, wait, we mucked it up so far, let this malnourishment continue, let this hunger continue, let this squalor continue. And one day, when everything gets sorted out in our own minds, I think we need to provide in the interim, but recognize it's just in the interim, but we need larger solutions of the kind that he has spoken about.
NDTV: Also just a quote from the Economic Survey recently which made the point, "... that the continued emphasis on procurement and distribution of rice and wheat is contrary to the ground reality that shows changing preference functions of consumers and a shift to direct cash transfer for system of food stamps would anchor our food policy to the requirements of the people and reduce the fiscal deficit...." Do we need to completely re-look? Are these solutions that could be looked at because they are considered taboo as is said by some activists? Have these activists actually solutions one should have an open mind to? Politically they are controversial.
Prof Banerjee: I think there is, I think on a general point on whether we should open our mind, definitely. I mean clearly these things aren't doing anything like what they were envisaged to do. Now, having said that, is there a reason to talk about 'Right' schemes? I think there is a case for arguing that maybe MNREGA was well thought out, right, in the sense that in principle you can give the idea that you could work, if a poor person, I think in some sense. I think the idea of a scheme was that the government knows that you are poor. The idea of a Right is that I know I am poor. I need it. And it gives you a different perspective on it. Because you know the government has some statistical system, somewhere, it's sitting in Delhi and it's trying to figure out who is poor, shall I target it? This is the self targeting has a big advantage that the poor can themselves speak up. They can say, look I need it and that particular, so in that sense I feel that it's not right to just say that you know we should have just another scheme. I think there is a real basis for saying some things should be guaranteed and people should be able to walk up and say I need it, no questions asked, then you get it. I think that that particular idea in MNREGA was a good one.
NDTV: And cash transfers?
Prof Banerjee: I like cash transfers, I think many of our schemes are much too complicated to run and we actually should consolidate them. I would go for it. But I think the most important thing is that we haven't done enough experiments. I think we need to do more experiments, test them; see what they do. I think people have. I think even if I believe in it, this is the kind of thing where the evidence is important, so that everybody who goes into it is comfortable with it. And I think doing a bunch of experiments and showing that it works, showing that in fact all the kind of fears that we have are not founded. I think that is key, because otherwise I think there will be a political reaction, a negative reaction. We need to start by establishing that these things actually do work. I am for cash transfers, but not cash transfers without a bunch of experiments.
NDTV: Prof Banerjee, thank you very much. I think the most important thing of course is that poverty is not to be seen as a statistic, but something we don't look away from. Dr Rangarajan, Prof Banerjee, Mr Ninan, Harsh Mander thank you all very much for joining me for this Dialogue, thank you