Fruits of Nobel
Instead of merely lionising the Nobel laureate, India would be better off implementing Banerjee's work in tackling poverty – making an impact at the grassroots
Now that the euphoria triggered by Abhijit Vinayak Banerjee, Esther Duflo and Michael Kremer sharing this year's Nobel memorial prize has dimmed, it is perhaps time to take stock what this prize in economics that generated so much national pride and sub-national chauvinism really means for us. We seem to forget that it is their work that should be studied and perhaps celebrated more than its recognition by a coveted prize. The dazzle it has created in a Nobel-starved country like ours makes it somewhat difficult for anyone to make a calm assessment of what Banerjee personifies and what his work portends in the context of India. Fortunately, Banerjee's casual bearing and the candid manner in which he exposed himself through interviews in national dailies, in English and Bengali, provide important insights into these issues.
Firstly, his success reaffirms the importance of high-quality education, especially in a stimulating urban environment. Banerjee's brilliant academic record in the best of institutions in India and the US (Presidency College, Jawaharlal Nehru and Harvard Universities) have been well known. He has, in a sense, extended the tradition in Presidency College, Calcutta, which his predecessors like Amartya Sen and Sukhamoy Chakravarty had set up in terms of deep scholarship and originality in thinking. Banerjee's parents, Dipak and Nirmala, have been noted scholars in economics and his grandfather JM Banerjee was a revered headmaster of one of Calcutta's best schools. He was thus groomed in an academic environment and was free to choose his vocation. Calcutta (now Kolkata) as a city had a vibrant intellectual culture (no more so) where bright and creative minds were allowed adequate space to flourish. In the 1920s, it produced a galaxy of great scientists associated with the Saha Ionisation equation, Bose-Einstein statistics and Raman effect. From the Calcutta of the '50s and '60s emerged the best in cinema, theatre, music and other forms of art. As Banerjee pointed out, the Indian Statistical Institute (ISI), in the '50s, was globally dominant in its field. Banerjee is a late product of that intellectual climate. Apparently, he was under no pressure to join an IIT or appear for the IAS examination.
Secondly, Banerjee shows how insightful economists, working with an open mind and a degree of modesty, can make a decisive difference in public life. Much has been written on the experimental methods they have employed in understanding the multi-dimensionality of poverty, their strengths and weaknesses. How the concept of RCT (Randomised Controlled Trials), borrowed from the world of medicine for testing the efficacy of drugs, has been imaginatively used at the grass-root level in different countries and settings and how unusually revealing lessons have been learnt from such filed-trials have been discussed in academic circles earlier; the Prize has brought them out into the public domain. But Banerjee's steadfast refusal to be an Oracle and his comment about their latest book (Good Economics for Hard Times) '…we don't try to say here is the answer. We say this is the reason why the answer may be different from what you think. The book is not about answers but about arguments to get to the answers' (ToI), are indicative of his modest claim and appreciation of reality.
Thirdly, it is evident that their professional work has not been swayed by political or similar considerations. Banerjee's team has been working for years in various states of India under different political dispensations. Like many intellectuals of his stature, he has been critical of certain policies of the government and has not been afraid to express so, but he cannot be accused of calling a spade a shovel. His association with the drafting of a part of the Congress manifesto – relating to Universal Basic Income – has been criticised, including by lesser mortals occupying higher executive positions. But as an economist, Banerjee has not been defensive about this idea. His cordial meeting with the Prime Minister and his assertion that he does not believe at all in 'restricting good policy out of political prejudice' underline his approach and neutrality. One need not be a die-hard Marxist so as to espouse the cause of social justice and argue for the tax system to be reordered in an attempt to reduce the expanding level of inequality.
Fourthly, the critical importance of data/evidence in the formulation of policies, more so in the nation's fight against poverty, has been established beyond doubt. Jawaharlal Nehru depended on the great statistician PC Mahalanobis, founder of the ISI, to draft the second five-year plan. Being a man of science and vision, Nehru understood the importance of statistics in national planning. Unfortunately, there have been allegations, from time to time, that crucial data have sometimes been suppressed and perhaps even misrepresented in order to protect the image of the government in power. The work of Banerjee and his co-workers attests to the importance of the careful collection of data/evidence that can penetrate through the surface of reality and reveal many hidden, counter-intuitive truths. Finally, what follows is an evidence-based understanding of the serious limitations of a uniform national programme in a country of India's diversity. However, in a governmental system, with all kinds of political pressure and accountability, control and audit, how their approach can enrich the process of policy formulation at the national level and its implementation at the field level requires to be keenly watched. The RCT methodology may perhaps be more suitable for designing programmes at the village or block or maybe, at the district level. If their work succeeds in convincing policymakers, political and administrative, to meaningfully move towards a more decentralised planning system, that would signify a real gain for the country. If the Prize opens new doors and facilitates Banerjee and his colleagues to work symbiotically with the 'system', influence decision making and make a sustained impress on the lives of the underprivileged, maybe then we would have more mighty reasons to rejoice.
Amitabha Bhattacharya is a retired IAS officer who has also worked in the private sector and with the UNDP. Views expressed are strictly personal