Alleviation of poverty will require states to improve their financial health by rationalisation of schemes, said Iqbal Singh Dhaliwal, Global Executive Director, J-PAL, a part of Massachusetts Institute of Technology (MIT), in a special interview.
A former bureaucrat and eminent economist, Dhaliwal said the first step for states to improve their fiscal health is phasing out schemes that were launched decades ago and have served their purpose.
“The central government’s fiscal deficit is fine, but the state governments are facing considerable challenges in terms of their finances and fiscal resources. There are two basic reasons for this: the addition of schemes after schemes. Whatever programme [was] launched 20 years ago is running along with what has been launched recently,” he said.
Using the analogy of old TVs or laptops that need to be discarded and replaced after years of use, Dhaliwal said, “there is a need for rationalisation of schemes.”
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Suggesting ways for productive use of money, the economist said governments should prefer to help people set up small businesses, lend them working capital and set up schools and primary healthcare centres instead of giving handouts.
“The method of giving, the amount of giving, and the date of giving in a month… all of those make a difference, and there is more experimentation that needs to be done,” he noted.
On the growing dominance of artificial intelligence (AI), Dhaliwal said there is no doubt that AI will replace slow-skilled jobs in the BPO and IT sectors, as it did in the US and Europe.
To counter this, he suggests upskilling people, especially those from vulnerable sections, and providing them with necessary training so that they may be ready for AI-induced working.
ITIs and schools should help spread awareness about secure and threatened job sectors.
Abdul Latif Jameel Poverty Action Lab (J-PAL) is a global research centre working to reduce poverty by ensuring that policy is informed by scientific evidence. Anchored by a network of more than 1,100 researchers at universities around the world, J-PAL conducts randomised impact evaluations to answer critical questions in the fight against poverty.
J-PAL co-founders, Abhijit Banerjee and Esther Duflo, with longtime affiliate Michael Kremer, were awarded the 2019 Nobel Prize in Economics for their pioneering approach to alleviating global poverty.
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