Subsidy doesn't make people lazy: Abhijeet

Jaipur: It is quite an outdated view that if you give poor people money, they become lazy, said Indian American economist and Nobel prize winner Abhijeet Banerjee, while speaking at a session on Fighting Global Poverty at the Jaipur Literature Festival here on Sunday.

He along with his team conducted randomised controlled trials like in medical research in determining the effectiveness of development programmes like those implemented by the government.

Some of this research is also directed towards finding out if it is possible to bring change through smaller interventions and he says India has been one of the countries where they have done the most work.

He rubbished the idea that resists subsidies and says it is wrong to assume people do not use or mis utilise things if they get them free or with subsidy.

"There is no evidence to say this." He relates the example of what happened in Africa when there was a resistance to giving mosquito nets for free to prevent malaria.

The argument was that these nets would be used as fishing nets. However, after a few trials when they were finally given that saved millions of children's lives.

Similar trials on education revealed that one of the ways to ensure children especially from rural India to learn is to ensure they catch up with the syllabus as they get into higher classes.

Experiments done across India have given good results, he added. Abhijeet said, "In UP when we introduced this model for 50 days showed great improvement in the scores. It is just reorganising the use of time."

He further said that while small loans have mostly proved to be ineffective in helping the poor, giving livelihood solutions like giving cattle or goats to rear seemed to work. "We must not undermine the potential of the poor in our country.

Most of the times it has been seen that such opportunities are taken advantage of by the beneficiaries. However initial guidance and encouragement is needed for them to be able to become entrepreneurial.

Such support increases their earnings and helps them improve and it is prejudice to think they will become lazy, he said. Speaking about Indian economy and the banking sector, he said, "There are no quick fixes. It is a long process to rebuild the resources."