A Nobel for ideas relevant to India

Nobel Laureate in Economics Abhijit Banerjee. (AFP photo)

Mumbai-born Abhijit Banerjee and fellow researchers in the US, Esther Duflo and Michael Kremer have jointly won the Nobel prize in economic sciences. The Royal Swedish Academy of Sciences made the right call in recognising their innovative approach to studying poverty at the grassroots and offering new ways to deal with it. They developed methods of field experimentation, inspired by clinical trials in medical science, as a tool to evolve development interventions relevant for developing countries. It is important to recognise the value of this approach when alleviating poverty is a major international challenge. What stood out was their ability to break development problems into focused wholesome units and to find sustainable solutions. Their field experiments in education, healthcare, micro-credit programmes, agricultural distress and productivity issues gave important inputs and insights for the fight against poverty.

The research efforts of Banerjee, Duflo and Kremer, which have spanned continents and included countries like India and Kenya, have struck new paths in development economics. Making field experiments a reliable tool to test the efficacy of State-run development schemes was an important idea. In a sense, their work has been a continuum with that of Amartya Sen, the only other India-born economist to have won a Nobel prize. While Sen’s focus was on State-run welfare programmes as tools to fight poverty, Banerjee, Duflo and Kremer have provided models and approaches to run such schemes and to make them appropriate and efficient. For example, their field experiments proved that even small differences in prices of medicines created a huge impact on the healthcare of children, especially in the lowest economic strata. These findings propelled the World Health Organisation to distribute free deworming pills to 800 million children globally. Their experiments in Hyderabad and Vadodara led to the design of ‘remedial tutoring’ that has benefitted over five million children in education.

Banerjee’s research is deeply engaged with the Indian economy, and he is a strong advocate of a minimum income guarantee scheme as a way to fight poverty in India. He was involved in developing the NYAY scheme that the Congress offered in its 2019 Lok Sabha election manifesto. The BJP has also claimed that it has adopted a version of his idea in its PM-Kisan Yojana. The award should prompt budding Indian economists to research development issues with new and original perspectives.

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