Nobel laureate economist Abhijit Banerjee wanted India to follow the experiment of Indonesia to give out money to the people, entirely through a community decision making process in which the community decides who the needy people are.
He was part of that experiment and he realised it doesn’t do any worse than centralised targeting. “You don’t get captured by special interest or anything. What you get is that people make judgments about what is appropriate in a much more locally nuanced way,” he said in a video-conferenced interaction with former Congress President Rahul Gandhi from the US.
“They have very much gone in the direction of telling the community, that here is some money, give it to the ones who are the most needy. In an emergency that is a good policy because the community has some information that you couldn’t possibly have if you centralise,” Banerjee said.
On Rahul wondering if the dominant castes in the Indian context may usurp the money, he said maybe but he would put in place extra money to allow for that than to try to figure out who are the deserving people in a village.
“I don’t disagree with you that there might be elite capture some money. We are worried about that a lot in Indonesia, but we didn’t find much evidence of that. I think we have to take a chance that some of this would go wrong. But if we don’t take a chance, we will surely get into trouble.”