Renu Pokharna

Archive for February, 2011|Monthly archive page

Showdown in Madison

In Civil Services Reforms, Urban Management on February 25, 2011 at 8:40 am

ELECTIONS, Barack Obama once said, have consequences. The Republicans’ triumph in last year’s mid-terms was seen by many as an instruction from the electorate to hack away at America’s sprawling government. In Washington, DC, that debate has gone nowhere. Both Mr Obama and his foes have produced fantastical budgets, full of illusory savings and ignoring the huge entitlement programmes. A government shutdown is looming. But look beyond the Beltway and something rather more promising is under way.

Unlike the federal government, which can borrow money to plug its budgetary gap, almost all the states are required to balance their budgets. Their revenues have been slashed by the recession; the stimulus funds that saw them through 2009 and 2010 have expired; medical costs are soaring. Tax rises remain unpopular, and so are deep cuts to important state-provided services like schools and the police. So governors are finally confronting the privileges that public-sector employees have managed to negotiate for themselves in recent decades.

For years politicians from both parties have given in to public-sector unions. The Democrats have been worse: witness their fealty to the teachers’ unions. But Republicans have spoon-fed their allies in the firefighters and the police. In general, the goodies have come less in the form of pay rises (too visible), than in over-generous pensions and health care, early retirement and the sort of restrictive practices that were chased out of the private sector years ago. All these are bankrupting the states (estimates of the unfunded pension bill alone range from $700 billion to $3 trillion); they also make public-sector reform much harder. Try sacking a bad teacher.

A few Democratic governors have joined the fray—notably Andrew Cuomo in New York and Jerry Brown in California. But the fight is being led by Republicans. The main battleground is Wisconsin (see article), where a newly elected conservative governor, Scott Walker, is locked in combat with the unions. Up to 60,000 union supporters have been braving freezing temperatures to protest in Madison, the state capital.

Wisconsin pioneered welfare reform in the 1990s—arguably the last serious attempt to do something about America’s straggling government. This time, to his credit, Mr Walker seems to have won one battle: the public-sector unions are now willing to pay more towards their health care and pensions (though his plan would still leave state workers with a better deal than most private-sector employees get). He deserves to win a second: to end the automatic deduction of union dues from salaries, which in effect casts state government as a fund-raiser for the union (with labour bosses recycling some of the cash back to tame politicians). However, in his third battle—trying to end the right to collective bargaining in the public sector—Mr Walker is going too far. If the public sector is to work more like the private sector, workers should have the same rights. Abolishing the automatic deduction would help curb the abuses that Mr Walker wants to do away with.

A boss who can’t say no

So Mr Walker is not completely right. But Mr Obama, who threw his weight behind the unions, not the taxpayers, at the first sign of political cannonfire, is completely wrong. No doubt the unions will now dutifully stuff more dollars into Mr Obama’s campaign chest; but elections are won in the centre and, with the federal deficit bulging, reforming the state could be one of the main issues next year. Does America really want to retain a chief executive who appears to have so little interest in making the public sector work more efficiently? That is a question many independents should ponder.


The Economist, 24 Feb 2011

Study claiming liberalization helped Dalits stokes debate

In Dalits, Education, Poverty Eradication on February 21, 2011 at 10:21 am

The Dalits of Uttar Pradesh and, by extension, India, are better off because of India’s visible adoption of economic reforms in the early 1990s, according to a recent study that has set off a debate on whether economic progress can structurally alter the country’s caste system.

The study, conducted by the Centre for the Advanced Study of India (Casi) of the University of Pennsylvania, covered 19,071 Dalit households in Bilariaganj and Khurja blocks in Uttar Pradesh, and seeks to prove that many of these households have improved since 1990.

In terms of product ownership, between 1990 and 2007, the proportion of Dalit households in the sample with a television set jumped from 0.8% to 34%. And the number of Dalits in the sample making a livelihood by removing the carcasses of animals—considered impure in most parts of India and, hence, a task once reserved for Dalits—has fallen from 39.9% to 2.4% in the same period.

The study has its share of supporters including Narendra Jadhav, a Dalit, and a member of the Planning Commission, and Dalit activist Ram Kumar.

“The market changed it all. The process of liberalization after 1990 brought with it a regime which was blind to caste and religion. Talent and hard work mattered above all. We saw the change happening. Things started improving back in the village with the remittances sent by us,” says Ram Kumar, who was once thrown out of his school for daring to share water with his so-called upper-caste classmates.

“We have seen the study and the results of this survey vindicates the stand of many including me. Liberalization and the market economy gave an opportunity to the untouchable of country to break the established norms of villages and work with dignity. The process still continues,” says Jadhav.

Not everyone agrees.

“Behavioural and lifestyle changes are natural with time and circumstances,” says Vivek Kumar, associate professor at the Centre for the Study of Social Systems, Jawaharlal Nehru University who adds that the question of the impact of liberalization on the caste system remains open. “The market ushers in the change for the sake of its profit and for expanding its consumer base. The process of social change cannot be left to the mercy of the market,” he says.

Vivek Kumar also adds that Bilariaganj, one of the two locations where the survey was carried out, has a high density of semi-skilled workers and that the migration of such people to towns is a natural phenomenon, irrespective of the process of liberalization.

The study was commissioned by Casi to a team of four, Devesh Kapur, head of Casi, Chandra Bhan Prasad, a Dalit researcher and writer based in Delhi, Lant Pritchett of Harvard University and D. Shyam Babu of the Rajiv Gandhi Foundation.

“After my tenure as a visiting fellow in the University of Pennsylvania, I started with this study which had a very unconventional approach, which classical economist may not accept. We asked every Dalit family of two blocks in Uttar Pradesh to respond on the occupational and lifestyle changes between 1990 and 2007. The methodology could be questioned but the change is evident on the ground,” says Prasad.

The Casi study was conducted in early 2008 and its findings are yet to be released. Casi has also tried to strengthen its study by juxtaposing with it the findings of an earlier study (conducted in 2008) that looked at the employees of three malls in east Delhi and its environs.

That study had found that of 427 people surveyed, 76 were Dalits. And just around one-third of people responsible for the cleanliness of the mall—Dalits, most people in India still believe, are largely in “cleaning jobs”—were Dalits.

“The notion of Dalits being the ones responsible for the cleaning jobs is also shattered by this survey. Of the 151 cleaning staff among the respondents, surprisingly, only 58 of them wereDalits while another 58 were from the general caste and 30 and five, respectively, of the OBC (other backward classes) and ST (schedued tribes) class,” says Prasad.

The findings of the Casi study were presented to the Planning Commission in early November, but Jadhav says it is “too early” to see if these have any impact on government policies.

Even as the debate over the study continues to rage, however, Dalit activist Ram Kumar sees another side to the findings.

“Without skill development and proper stress on education, now there is risk of Dalits in cities being treated worse than in villages,” he says. “The market is cruel and insensitive.”


MINT, 2 Dec 2009

A bicycle built for many

In Education, School Vouchers on February 21, 2011 at 10:18 am

In Nitish Kumar’s Bihar, there is a “Mukhyamantri Balika Cycle Yojana”, now covering madrassas too. It was a scheme started in 2006. Through this, girls who pass Standard VIII are given bicycles, once they enrol in Standard IX. More accurately, girls who pass Standard VIII are disbursed (through schools) Rs 2,000 to purchase bicycles and Rs 700 for uniforms. In three years, from 2007-08 to 2009-10, 871,000 girls have got bicycles. It is a universal scheme, no debates about BPL (below the poverty line), the only criterion being enrolment in Standard IX, with the submission of receipts for cycles and uniforms. So far, there haven’t been any allegations about leakage through this conditional cash transfer. A survey found that in 92 per cent of instances money disbursed has been used to purchase cycles. Since other girls in school possess cycles and uniforms, peer pressure ensured that the funds were not diverted. At worst, inferior uniforms and cycles may have been bought. This is spliced with cash awards and scholarships for girls who pass board examinations or score 60 per cent. Take the Annual Status of Education Report. The last one is still for 2009. Consequently, it doesn’t capture the entire impact of the cycle revolution. Nevertheless, drop-out rates for girls in the 11-14 age-group in Bihar dropped from 17.6 per cent in 2006 to 6 per cent in 2009.

This is nothing short of phenomenal. When bicycles became safe and popular, transcending penny farthings in the 1890s, women took to them and feminists dubbed them “freedom machines”. It was said bicycles accomplished more for women’s sensible attire than all reform movements put together. The mid-term appraisal of the Eleventh Five-Year Plan has the following congratulatory words: “The Sarva Shiksha Abhiyan, in combination with the Mid Day Meal Scheme, has succeeded in achieving near universal enrolment in primary schools.” It then laments high drop-out rates and low retention. The number of out-of-school children has indeed sharply dropped (2.8 million in 2008-09). The MDMS is different. But it is doubtful the SSA proper has done much to boost primary school enrolment. Without getting into definitions of what is truly “private” school, 58 per cent of enrolment in urban India is in private schools and the figure is 32 per cent in rural India. Therefore, demand has been spliced with choice. The Right to Education Act imposes high compliance costs on budget private schools and drives them out. It thus hinders, rather than furthers, the cause of school education. But that is a separate point. Budget analysis (such as by the Haq Centre for Child Rights) shows most SSA expenditure has been on civil construction and teachers’ salaries.

Enrolment (and even drop-outs) is fundamentally a girl-child problem, especially in formerly backward states like Bihar. It is no one’s case that cycles alone led to success. If nothing else, a cycle scheme has to be administratively delivered. West Bengal announced a similar cycle scheme for 11 blocks affected by Maoist violence in Midnapore district. But not a single cycle has been delivered. For girls, transport infrastructure (not just cycles, but roads), presence of women teachers and separate toilets are important. There were between 300,000 and 400,000 vacancies for school teachers and, with 50 per cent reservation for women, around 100,000 have been filled. Government schools have begun to function and the MDMS is actually delivered. In addition to cycles, the Bihar government itself ascribes success to other schemes that improve schools, apart from better roads. There are other schemes that directly provide subsidies to women who need them. There is an implicit assumption that market failures exist and state provisioning is the only answer. There is a difference between state financing and state provisioning and subsidies (through conditional cash transfers) to those who need them are not antithetical to introducing choice, competition and efficiency.

Take education as a test case. Several states have education vouchers, with differing conditions. Uttarakhand has Pahal, with a stipulation that there cannot be a government school (or Education Guarantee Scheme centre) within 1 km of the habitation. Rajasthan has two separate schemes — Gyanodaya Yojana (where new secondary schools are set up by the private sector and state-funded vouchers are used) and Shikshak Ka Apna Vidyalaya (where trained and unemployed teachers set up schools in backward areas and vouchers are used). It is early days, but Uttar Pradesh proposes vouchers for poor students who wish to study in English-medium schools. Madhya Pradesh has a scheme known as Paraspar, where Rs 3,000 is transferred to private schools for students from economically weaker sections. There are pilot schemes in Delhi too. One way to interpret the RTE Act is that the government has recognised the public education system cannot deliver. Girls in Bihar wear uniforms and ride bicycles, but still mostly to government schools. The reason is that private schools still don’t exist. That’s because there are serious entry barriers to setting up private schools. Once roads are built and such licensing restrictions eased, the moral of the bicycle story is that one should transit towards education vouchers. But, as mentioned earlier, the RTE Act doesn’t ease licensing restrictions. It makes them tougher.

Fifty years ago, Friedrich Hayek wrote a book titled The Constitution of Liberty. This is what it said: “It would now be entirely practicable to defray the costs of general education out of the public purse without maintaining government schools, by giving the parents vouchers covering the cost of education of each child which they could hand over to schools of their choice. It may still be desirable that government directly provide schools in a few isolated communities where the number of children is too small (and the average cost of education therefore too high) for privately run schools.”

Obviously, this doesn’t imply the absence of regulation. Cross-country literature on conditional cash transfers isn’t unambiguous. Success is a function of the segment. However, when there is significant private sector presence, they work better. Education is a case in point, not just in India, but globally. It isn’t likely to work that well for health, not yet. Whenever one thinks of conditional cash transfers, one invariably thinks of food. A couple of months ago, Kaushik Basu authored a paper published by the finance ministry. This was titled “The Economics of Foodgrain Management in India” and advocated food stamps. This may work for fruits, vegetables and other food items. But it is unlikely to work for foodgrains, where public procurement and high prices drive out private grain trade and unreasonable prices granted to fair price shops build leakage into the system. Once those are scrapped, it might work. Efficiency requires not just direct subsidisation, but also the easing of governmental controls.


Indian Express, 10 Dec 2010

Why the rich are getting richer

In Microeconomic Policy on February 21, 2011 at 9:30 am

The U.S. economy appears to be coming apart at the seams. Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression. Many of those laid off fear that the jobs they have lost — the secure, often unionized, industrial jobs that provided wealth, security, and opportunity — will never return. They are probably right.

And yet a curious thing has happened in the midst of all this misery. The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer. And not just a little bit richer; a lot richer. In 2009, the average income of the top five percent of earners went up, while on average everyone else’s income went down. This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom. The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.

This is what the political scientists Jacob Hacker and Paul Pierson call the “winner-take-all economy.” It is not a picture of a healthy society. Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class. Income inequality in the United States is higher than in any other advanced industrial democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan. It breeds political polarization, mistrust, and resentment between the haves and the have-nots and tends to distort the workings of a democratic political system in which money increasingly confers political voice and power.

It is generally presumed that economic forces alone are responsible for this astonishing concentration of wealth. Technological changes, particularly the information revolution, have transformed the economy, making workers more productive and placing a premium on intellectual, rather than manual, labor. Simultaneously, the rise of global markets — itself accelerated by information technology — has hollowed out the once dominant U.S. manufacturing sector and reoriented the U.S. economy toward the service sector. The service economy also rewards the educated, with high-paying professional jobs in finance, health care, and information technology. At the low end, however, jobs in the service economy are concentrated in retail sales and entertainment, where salaries are low, unions are weak, and workers are expendable.

Champions of globalization portray these developments as the natural consequences of market forces, which they believe are not only benevolent (because they increase aggregate wealth through trade and make all kinds of goods cheaper to consume) but also unstoppable. Skeptics of globalization, on the other hand, emphasize the distributional consequences of these trends, which tend to confer tremendous benefits on a highly educated and highly skilled elite while leaving other workers behind. But neither side in this debate has bothered to question Washington’s primary role in creating the growing inequality in the United States.


Hacker and Pierson refreshingly break free from the conceit that skyrocketing inequality is a natural consequence of market forces and argue instead that it is the result of public policies that have concentrated and amplified the effects of the economic transformation and directed its gains exclusively toward the wealthy. Since the late 1970s, a number of important policy changes have tilted the economic playing field toward the rich. Congress has cut tax rates on high incomes repeatedly and has relaxed the tax treatment of capital gains and other investment income, resulting in windfall profits for the wealthiest Americans.

Labor policies have made it harder for unions to organize workers and provide a countervailing force to the growing power of business; corporate governance policies have enabled corporations to lavish extravagant pay on their top executives regardless of their companies’ performance; and the deregulation of financial markets has allowed banks and other financial institutions to create ever more Byzantine financial instruments that further enrich wealthy managers and investors while exposing homeowners and pensioners to ruinous risks.

In some cases, these policy changes originated on Capitol Hill: the Ronald Reagan and George W. Bush tax cuts, for example, and the 1999 repeal of the Glass-Steagall Act, a repeal that dismantled the firewall between banks and investment companies and allowed the creation of powerful and reckless financial behemoths such as Citigroup, were approved by Congress, generally with bipartisan support. However, other policy shifts occurred gradually and imperceptibly.

Hacker and Pierson’s second important point is that major policy shifts do not always happen in such obvious ways. Many of the policies that have facilitated the winner-take-all economy have just as often come about as a result of what Hacker and Pierson call “drift,” which occurs when an enacted policy fails to keep up with changing circumstances and then falls short of, or even subverts, its intended goal. The American system of separated powers — with its convoluted procedures and bizarre rules, such as vetoes and the filibuster — is especially conducive to drift, particularly compared to more streamlined parliamentary systems in other countries that afford majorities relatively unimpeded dominance over the policymaking process. Policies in the United States, once made, tend to be hard to overturn or even to modify.

Sometimes drift occurs through simple neglect or inertia. An example is the phenomenon known as “bracket creep,” the process by which prior to the indexing introduced in 1981, inflation pushed incomes into higher tax brackets. But Hacker and Pierson particularly zero in on instances of intentional policy drift, when policymakers deliberately sidestepped or resisted available policy alternatives that might have reduced inequality. Allowing corporate executives to be compensated with stock options is one such case; stock-option compensation tends to bend incentives toward the short-term maximization of share prices rather than planning for long-term growth. Consequently, such compensation has allowed top managers to capture jaw-dropping gains despite their companies’ often dismal performances. The long-term cost of corporate failure is borne not by CEOs and their executive minions, of course, but by rank-and-file employees, who get laid off when companies need to cut costs and whose pension investments are wiped out when companies’ stocks sink.

In the 1990s, the Financial Accounting Standards Board, which regulates accounting practices, noticed this practice, correctly predicted the damage it would do to the economy, and then sought to curtail it. But Congress, spurred on by the lobbying efforts of major corporations, stopped the FASB in its tracks. As a result, Americans spent the 1990s and the first decade of this century living under 1970s accounting rules, which allowed top executives to more or less help themselves and, through the mutual back-scratching habits of corporate boards, help one another.

Similarly, labor law has failed to keep up with the times. Policymakers have repeatedly failed to enact reforms that would have accommodated new union-organizing techniques and empowered unions to counter the growing power of business to resist labor’s demands. In this realm, the United States is running a twenty-first-century economy under 1940s rules. A clearheaded understanding of the power of drift in policymaking puts the Republican congressional minority during President Barack Obama’s first two years in a fresh light. Obsessive obstructionism is not just a symptom of general crabbiness; it is a shrewd and sensible part of a larger strategy to enrich corporations while gutting long-standing protections for the middle class.

The dramatic growth of inequality, then, is the result not of the “natural” workings of the market but of four decades’ worth of deliberate political choices. Hacker and Pierson amass a great deal of evidence for this proposition, which leads them to the crux of their argument: that not just the U.S. economy but also the entire U.S. political system has devolved into a winner-take-all sport. They portray American politics not as a democratic game of majority rule but rather as a field of “organized combat” — a struggle to the death among competing organized groups seeking to influence the policymaking process. Moreover, they suggest, business and the wealthy have all but vanquished the middle class and have thus been able to dominate policymaking for the better part of 40 years with little opposition.


In pursuing this argument, Hacker and Pierson revive the old academic tradition of pluralism to shine a bright light on some of the pathologies of American politics. The contemporary study of American politics emerged from pluralism, the post-World War II view that in the shadow of the two totalitarianisms of midcentury Europe — communism and fascism — democracy could be rendered stable and progressive through a politics of mutual accommodation among relatively evenly matched groups. Rather than titanic conflict between workers and capitalists, so the argument went, pluralist democracy would produce solid incremental policy changes that would inch American society forward toward security and affluence. The dramatic and decidedly nonincremental events of the 1960s and 1970s — the civil rights movement, the Vietnam War, and broader cultural upheaval — punctured this view.

Critics of pluralism began to note its limitations, emphasizing the primacy of individual motivations rather than group affiliations. Since then, the study of American politics has largely turned away from questions of organized interests and their role in policymaking and has focused instead on the ways in which individual attitudes and behavior combine to produce policy. Yet if one assumes that people vote based on their economic interests and that election outcomes influence policy through something like majority rule, how can one account for a generation of policies that promoted the interests of the wealthy few at the direct expense of everybody else?

Another critique of pluralism is that it underestimated the lopsidedness of political organization. As the great political scientist E. E. Schattschneider wrote in 1960, “The flaw in the pluralist heaven is that the heavenly chorus sings with a strong upper-class accent.” Schattschneider, it turned out, did not know the half of it. To most observers, the 1960s seemed the height of American liberalism, and the decade’s policy developments — upgrading the basic New Deal package of social protection and labor rights to include extensive protection of civil rights and civil liberties and additional benefits such as limited health insurance — seemed to bear out this view. But to business elites, the 1960s marked the nadir of their influence in American society, and they did not react passively. The era saw the stirrings of a conservative counterrevolution marked by ideological, political, and organizational developments, and particularly by the political awakening of business.

American conservatives, increasingly empowered by effective organization and lavish funding from their patrons in the business community, began to actively resist the politics of pluralist accommodation. Rather than accepting the basic contours of the New Deal and the Great Society and seeking to adjust them step by incremental step, conservatives assumed a newly confrontational posture and turned their efforts toward dismantling the legacies of Franklin Roosevelt and Lyndon Johnson.

The economic crisis of the 1970s, which heralded the end of a generation of U.S. economic dominance, helped their cause by laying bare the limitations of the New Deal order. The country’s economic and social policy regime — which relied heavily on the private provision of important social protections, such as pensions and health insurance — may have been adequate for a globally dominant industrial economy that generated 30 years of widely shared growth and stable employment for millions of industrial workers. But in the 1970s, it began to prove thoroughly inadequate for an era of globalization, deindustrialization, and economic dislocation, as displaced workers found themselves unable to rely on the government for economic protection. This, in Hacker and Pierson’s parlance, was policy drift on a massive scale.

Ascendant conservatives seized on this state of affairs to argue that the whole New Deal edifice of social protection, financial regulation, progressive taxation, and civil rights should be dismantled rather than reinforced. Beginning with the Carter administration, the expanding business lobby successfully defeated proposal after reform proposal and aggressively promoted an opening round of tax cuts and deregulation — mere down payments on the frenzy to come.


If there is a flaw in their telling of this grim tale, it is that Hacker and Pierson perhaps underestimate the actual discontent of the American middle class over the period they discuss. In the 1960s and 1970s, Americans came increasingly to distrust their government, and not without reason. Their leaders had led them into a distant war that proved unwinnable and tore the country apart; a criminally corrupt president was exposed and forced to resign; cities were going up in flames, exposing the deep racial rift that remained in American society despite the triumphs of the civil rights movement. Democrats and Republicans began to diverge on racial issues. The Republicans became the party not only of the wealthy but also of the whites (no Democrat since Johnson has received a majority of the white vote in a presidential election).

Even in the age of Obama, racial inequality remains an acute and intractable problem, and the forces of racial resentment, mingled with legitimate discontent over the government’s abandonment of the middle class, infect American politics down to the present day (as the Tea Party movement’s more lurid fulminations suggest). So by the late 1970s, dissatisfaction with the state of the government, politics, and policy was rampant across the board, among the wealthy and the middle class alike, and the conditions were ripe for a turn against the political status quo. Conservatives, on behalf of the wealthy, were ready with ideas and organization to seize the moment. Progressives and the middle class were not, and so began the spiral toward the winner-take-all game that Hacker and Pierson describe.

Like many social critics, Hacker and Pierson are long on diagnosis and rather short on treatment. Not surprisingly, they emphasize rebuilding the organizational capacity of the middle and working classes as the place to start repairing the infrastructure of American politics, neither a terribly precise prescription nor a route to a quick cure. But if they are right — and theirs is a compelling case — the task of restoring some sense of proportion and balance to the winner-take-all political economy is essential if the American body politic is to recover from its current diseased condition.

Foreign Affairs, Feb 2o11

Abhijit Banerjee: Rigour In Social Policy

In Microfinance on February 21, 2011 at 5:55 am

Here is an entirely banal idea that I think has the potential to change the world: Take evidence seriously. Taking evidence seriously does not mean privileging numbers over all other forms of knowledge–theories, narratives, images. Nor does it mean the kind of radical skepticism that questions everything to the point where no action is possible.

What it does mean is being very conscious of the quality of evidence, about the danger of naively interpreting the patterns that we see in the world. It means being willing to piece together and think through the whole story–how is it supposed to work, what are the possible pitfalls, what do we know that could help us avoid potential problems. It means having the humility to know that our instincts can be (and often are) wrong and the modesty to admit that we don’t know the answer to something. And it means having the patience to try to learn before jumping in. Common sense stuff.

Common sense, but not easy. Consider the recent flap about the efficacy of microcredit. Until recently, the entire public conversation about microcredit was between those who believed that microcredit was about to more or less single-handedly save the world from poverty by unleashing the entrepreneurial talents dormant among the poor, and those who saw it as the next usury.

When, recently, proper evaluations of microcredit came out, it became clear that while there was a clear positive impact–the number of new businesses that got started went up from 5% to 7% in one instance, and people bought more durables for their businesses and homes–it did not have quite the transformative impact that its most vocal supporters had claimed for it. The reaction, in the public domain, for the most part, was either to deny the evidence or, entirely unfairly, to write off the whole idea of microcredit.

This cycle of hype and then disappointment is immensely costly. When things were going well, it took attention away from other important interventions. Now, as a defensive mood takes over the microcredit community, it threatens the process of innovation within microcredit–towards better financial products, but also towards more generally helping the poor to be more effective in their own lives.

Yet the results were mostly what one might have expected, given what we already knew about the poor. They need credit for their businesses, but also to fix their homes and pay hospital bills–and microcredit, far from being usury reinvented, is the cheapest source of credit that they can reliably get.

On the other hand, while they do start a lot of businesses, it is mostly because they are still looking for a job that is rewarding enough or because they want their wives to have some way to add to the family pot without having to leave home for too long.

As a result, the business that the average poor person sets up is unlikely to be transformative for their lives. In the circumstances we should have expected more or less what came out–definite gains, but modest, at least for the time being. Indeed this is exactly what many of the more clear-sighted people in the microcredit business, who know how things are on the ground, had predicted.

Why was this evidence never used to set our expectations for microcredit? Why couldn’t we wait till the evaluations were done before it started to dominate so much of the conversation about anti-poverty policy?

The same unwillingness to pay attention to the evidence and to try things out before they get etched in stone is everywhere in the world of social policy. The [India’s] National Rural Employment Guarantee Scheme was expanded to the whole country without any proper evaluation and before any serious experimentation with its design, despite the fact that there was no lack of evidence pointing to the various dangers it faced. Many of those warnings are now reality, but now changing the scheme or experimenting with it is immensely harder. The National Rural Health Mission massively expanded spending and employment in the government health sector, despite consistent evidence that health workers do not come to work and most patients, including the very poor, have switched their allegiance to private health care.

Such slippage is not hard to explain. Politicians prefer not to be told that they need to wait three years before they can launch their flagship program; journalists prefer stories about grand successes to qualified endorsements; donors want to eliminate poverty today, and being told that we don’t know how puts a pall on the proceedings. But in the end these are our resources that are being wasted, our hopes that are being betrayed. And all these people are meant to be our agents. We have to convince them that we want evidence rather than emotions, measured success rather than failed miracles, trial rather than error.

Forbes, 15 June 2006

Skipping Rote Memorization in Indian Schools

In Education on February 21, 2011 at 5:47 am

PANTNAGAR, India — The Nagla elementary school in this north Indian town looks like many other rundown government schools. Sweater-clad children sit on burlap sheets laid in rows on cold concrete floors. Lunch is prepared out back on a fire of burning twigs and branches.

But the classrooms of Nagla are a laboratory for an educational approach unusual for an Indian public school. Rather than being drilled and tested on reproducing passages from textbooks, students write their own stories. And they pursue independent projects — as when fifth-grade students recently interviewed organizers of religious festivals and then made written and oral presentations.

That might seem commonplace in American or European schools. But such activities are revolutionary in India, where public school students have long been drilled on memorizing facts and regurgitating them in stressful year-end exams that many children fail.

Nagla and 1,500 other schools in this Indian state, Uttarakhand, are part of a five-year-old project to improve Indian primary education that is being paid for by one of the country’s richest men, Azim H. Premji, chairman of the information technology giant Wipro. Education experts at his Azim Premji Foundation are helping to train new teachers and guide current teachers in overhauling the way students are taught and tested at government schools.

For Mr. Premji, 65, there can be no higher priority if India is to fulfill its potential as an emerging economic giant. Because the Indian population is so youthful — nearly 500 million people, or 45 percent of the country’s total, are 19 or younger — improving the education system is one of the country’s most pressing challenges.

“The bright students rise to the top, which they do anywhere in any system,” Mr. Premji said over lunch at Wipro’s headquarters in Bangalore, 1,300 miles south of Uttarakhand. “The people who are underprivileged are not articulate, less self-confident, they slip further. They slip much further. You compound a problem of people who are handicapped socially.”

Outside of India, many may consider the country a wellspring of highly educated professionals, thanks to the many doctors and engineers who have moved to the West. And the legions of bright, English-speaking call-center employees may seem to represent, to many Western consumers, the cheerful voice of modern India.

But within India, there is widespread recognition that the country has not invested enough in education, especially at the primary and secondary levels.

In the last five years, government spending on education has risen sharply — to $83 billion last year, up from less than half that level before. Schools now offer free lunches, which has helped raise enrollments to more than 90 percent of children.

But most Indian schools still perform poorly. Barely half of fifth-grade students can read simple texts in their language of study, according to a survey of 13,000 rural schools by Pratham, a nonprofit education group. And only about one-third of fifth graders can perform simple division problems in arithmetic. Most students drop out before they reach the 10th grade.

Those statistics stand in stark contrast to China, where a government focus on education has achieved a literacy rate of 94 percent of the population, compared with 64 percent in India.

Mr. Premji said he hoped his foundation would eventually make a difference for tens of millions of children by focusing on critical educational areas like exams, curriculum and teacher training. He said he wanted to reach many more children than he could by opening private schools — the approach taken by many other wealthy Indians.

Mr. Premji, whose total wealth Forbes magazine has put at $18 billion, recently gave the foundation $2 billion worth of shares in his company. And he said that he expected to give more in the future.

Those newly donated shares are being used to start an education-focused university in Bangalore and to expand and spread programs like the one here in Uttarakhand and a handful of other places to reach 50 of India’s 626 school districts.

The effort’s size and scope is unprecedented for a private initiative in India, philanthropy experts say. Even though India’s recent rapid growth has helped dozens of tycoons acquire billions of dollars in wealth, few have pledged such a large sum to a social cause.

“This has never been attempted before, either by a foundation or a for-profit group,” said Jayant Sinha, who heads the Indian office of Omidyar Network, the philanthropic investment firm set up by the eBay founder Pierre Omidyar.

Although the results in Uttarakhand are promising, they also suggest that progress will be slow. Average test scores in one of the two districts where the foundation operates climbed to 54 percent in 2008, up from 37.4 percent two years earlier. (A passing mark is 33 percent or higher.) Still, only 20 of the 1,500 schools that the foundation works with in Uttarakhand have managed to reach a basic standard of learning as determined by competence tests, enrollment and attendance. Nagla is not one of the 20.

“We are working with the kids who were neglected before,” said D. N. Bhatt, a district education coordinator for the Uttarakhand state government. “You won’t see the impact right away.”

The Premji Foundation helps schools in states where the government has invited its participation — a choice that some educational experts criticize because it seems to ignore fast-growing private schools that teach about a quarter of the country’s students, including many of India’s poor.

Narayana Murthy, a friend of Mr. Premji and chairman of Infosys, a company that competes with Wipro, said he admired the Premji Foundation’s work but worried it would be undermined by the way India administers its schools.

“While I salute Azim for what he is doing,” Mr. Murthy said, “in order to reap the dividends of that munificence and good work, we have to improve our governance.”

Mr. Premji says his foundation would be willing to work with private schools. But he argues that government schools need help more because they are often the last or only resort for India’s poorest and least educated families.

Mr. Premji, whose bright white hair distinguishes him in a crowd, comes from a relatively privileged background. He studied at a Jesuit school, St. Mary’s, in Mumbai and earned an electrical engineering degree at Stanford.

At 21, when his father died, Mr. Premji took over his family’s cooking oil business, then known as Western Indian Vegetable Product. He steered the company into information technology and Wipro — whose services include writing software and managing computer systems — now employs more than 100,000 people. He remains Wipro’s largest shareholder.

While the foundation has been welcomed by government officials in many places, the schools in Uttarakhand provide a glimpse of the challenges it faces.

After visitors left a classroom at Nagla school, an instructor began leading more than 50 fifth-grade students in a purely rote English lesson, instructing the students to repeat simple phrases: Good morning. Good afternoon. Good evening. Good night. The children loudly chanted them back in unison.

Another teacher later explained that the instructor was one of two “community teachers” — local women hired by a shopkeeper to help the understaffed school. Although under government rules Nagla should have nine trained teachers for its 340 students, it has only four.

Underfunding is pervasive in the district. But so are glimmers of the educational benefits that might come through efforts like the Premji Foundation’s.

Surjeet Chakrovarty, now a 15-year-old secondary school student, is a graduate of Nagla and still visits his old school regularly. The son of a widower who is a sweeper at a local university, Surjeet aspires to become a poet and songwriter — something he attributes to the encouragement of his former teachers at Nagla.

“My teachers here gave me so much motivation to write,” he said.

One of those Nagla teachers, Pradeep Pandey, shared credit with the Premji Foundation, and its assistance in developing new written and oral tests.

“Before, we had a clear idea of the answers and the child had to repeat exactly what we had in mind,” Mr. Pandey said. “We can’t keep doing what we did in the past, and pass them without letting them learn anything.”


The New York Times, 17 Feb 2011

Fair share of Vibrant Gujarat

In Gujarat on February 15, 2011 at 5:56 am

In a locality scarred by the Gujarat riots of 2002, one store stands apart – Hearty Mart. The “community store” in Ahmedabad’s Juhapura neighborhood is the brainchild of Nadeem Jafri. He started the mini-supermarket in 2004 in what was a ghetto. With discounted prices and a no-frills shopping environment, it is targeted at people who find big-brand organised retail intimidating. He also supplies food to the hotels and restaurants run by the Momin community across Gujarat. “We leveraged the strength of our community which lies in running restaurants, around 2,000 of which are in on the Ahmedabad-Vapi belt,” says Jafri, an MBA from FMS Indore. Hearty Mart has grown from one store in Ahmedabad to nine more in Gujarat.

The condition of Muslims in Gujarat under chief minister Narendra Modi has been the subject of much debate. The riots that followed the Godhra massacre tarnished the state’s secular image. Yet, Gujarat remains the most popular destination for investments, with businessmen falling over each other to put money into the state. Have Muslims got their rightful share of the prosperity? Modi has said Muslim businessmen never had it better in Gujarat. But what is the situation on the ground?

Almost every businessman in Gujarat has basked in the glory of the state’s growth story. “Muslims too have made the most of this opportunity, and have prospered,” says Talha Sareshwala, CEO and managing director of Parsoli Motors, the leading BMW dealer in the city. When the dealership started in 2008, it hardly had Muslim customers. “I have seen the spending power of Muslims rise tremendously in these 8 to 10 years. Now, around 10 to 12 per cent of my customers comprise Muslims,” he says.

“If one is living in a society, one cannot lead a secluded existence; one has to come forward and join the mainstream. Any setback is actually an investment and becomes the cause for going forward,” says Uves Sareshwala, Talha’s elder brother and one of the co-promoters of Parsoli Corporation. The Parsolis have tried their hand at several lines of businesses including poultry, industrial valves, stock broking, paints and luxury cars.

It is not just the educated or the established Muslim business families that have managed to grow in the last few years. Ayub Pathan, who used to earn Rs 600 a month from his job at the city airport, owns a fleet of seven taxis. “In 2001, I had sold my wife’s jewellery, borrowed money at high interest rate from the unorganised market, and bought my first taxi. Bank loans were not easy for a Muslim entrepreneur then. But, things have improved. I have moved from my humble hutment at Camp Hanuman to an apartment at Shahibaug,” Pathan says with pride. He earns close to Rs 50,000 a month from his taxis.

Muslims, according to the 2001 census, make up nearly nine per cent of Gujarat’s population of 50 million. The Sachar Committee says Muslims aren’t badly off in Gujarat. Their literacy rate of 73.5 per cent is better than the national average of 59.1. The per capita income of Muslims in urban Gujarat is Rs 875 per month, higher than the national average of Rs 804. The number of Muslims living below the poverty line in Gujarat has also come down, from 54 per cent in 1987-88 to 34 per cent in 2004-2005. Muslims form 5.4 per cent in the state government’s roll call, compared with 2.1 per cent in West Bengal, 3.2 per cent in Delhi and 4.4 per cent in Maharashtra.

So, did government policies have a role to play? Yes, says Kaizar Mahuwala of Gurjar Images: “Our plant needs to run 24X7; if we shut down for a day, it would take 36 hours to restart production. Such a plant could possibly run only in a state like Gujarat where the power infrastructure can support industrial growth.” The sentiment is echoed by others. “The future is here. I cannot even think of living in any other city but Ahmedabad, everywhere else seems alien to me,” says Talha Sareshwala who is now planning to open BMW showrooms across Gujarat.


Business Standard, 15 Feb 2011

Half of India’s kids will grow up stunted, says top economist

In Bureaucratic Delays, Civil Services Reforms, Corruption, Livelihood, Malnutrition, Mid Day Meal, PDS, Poverty Eradication, Public Health, Red Tape, UID on February 9, 2011 at 9:54 am

In an apparent rebuke of the Indian government’s ambitious welfare schemes, a noted economist has said nearly half of the country’s children aged below five will suffer from stunted growth, and many of them will probably be brain-damaged due to lack of iodine and iron. He also contested some official figures and claims on the efficacy of such state-run programmes.

Abhijit Vinayak Banerjee, Ford Foundation International professor in economics at the Massachusetts Institute of Technology (MIT), and a poverty and public goods specialist, said the state of maternal and child health in the country is worse than that in sub-Saharan Africa.

He said the government’s way of responding to the failure of such programmes was to typically raise spending, as is evident from its plan to spend 1% of its gross domestic product on the National Rural Health Mission (NRHM) compared with 0.9% now.

Banerjee, who is also a director of the Abdul Latif Jameel Poverty Action Lab (J-PAL) at MIT, a pioneering institute that carries out field studies in various countries on what works in eliminating poverty and what doesn’t, said surveys by J-PAL have found much lower success rates than claimed by the government in its health and education programmes in many states.

For instance, compared with the National Family Health Survey-3 (NFHS-3) claims of a 27% full immunization rate in Rajasthan, only 20% of those surveyed were able to show full vaccination cards. In rural Udaipur, only 4.5% produced such documents.

Similarly, while NFHS-3 said 43% of children are given diarrhoeal remedies, J-PAL found that while 73% of mothers knew about the efficacy of such oral remedies in diarrhoea, only 23% actually used them.

“Hopefully, our work will be able to generate a culture of good evaluation and good evidence,” Banerjee told Mint. “It is important to question and throw out bad evidence.”

J-PAL, which has a field office in Chennai, is conducting more than 20 poor-related projects in 12 states across the country.

The much-publicized Integrated Child Development Scheme (ICDS), Banerjee said, works well by government parameters simply because they are placed in villages that are already performing well. “When you place them against other villages, the success vanishes,” he pointed out.

According to R. Gopala-krishnan, joint secretary in the Prime Minister’s Office, who has been involved with many government welfare programmes, “There is still a licence-permit regime in the health sector that keeps the country from generating more doctors and nurses.”

Also, he said, the anganwadi (village nutrition nurse) or health centre programmes suffer from conceptual defects. An anganwadi nurse is intended to take care of a population of 3000, covering over five-six villages, needing her to be located in a central area. That rule, he said, made her not only far off from most villagers, but also accountable to none.

Similarly, although the health centres are to be staffed by a doctor and a nurse each, they are not allowed to conduct surgical procedures or administer antibiotics, the remedies that the poor people desperately need. This has led to people avoiding such health centres and absenteeism of staff and scarcity of well-trained doctors to run them.

Banerjee felt that while the record of the Indian government is exemplary in many areas such as conducting elections or building roads, it has neglected more universalized public goods such as education, health and environment, especially in regions dominated by scheduled castes and scheduled tribes, wasting funds and energy.

The government needs to do five things to reach the poor effectively, he said. “Use technology aggressively, don’t demand too much time of the poor, experiment before you reach scale, and then universalize rather than targeting, which led to more corruption. Lastly, don’t be afraid to give money,” he said.

The public distribution system is one area where the government needed to universalize or withdraw.

“It is simpler to give money to the poor instead. Even spending the money on a few programmes that deliver would increase welfare a lot. For instance, supply free iodized salt or subsidized fortified wheat flour rather than grains,” he added.

Incentives also work wonderfully, especially to clear the general distrust the poor have for government schemes. In rural Udaipur, the immunization rate went up to 45% after families were given 3kg of pulses.


MINT, 21 May 2008

We need more specialists to make schemes for poor work

In Bureaucratic Delays, Civil Services Reforms, Corruption, Malnutrition, NREGA, Poverty Eradication, Red Tape on February 9, 2011 at 9:43 am

New Delhi: This Ford Foundation professor of economics at the department of economics at the Massachusetts Institute of Technology, US, does his research on developmental economics through the Abdul Latif Jameel Poverty Action Lab that he co-founded in 2003.

Abhijit Banerjee is currently conducting a lot of projects in rural India to understand what works for the poor and what doesn’t. In an interview on the sidelines of Ideas India 2008, a conference organized by the Aspen Institute India, Banerjee emphasizes the need for a better design for developmental schemes, and reforms in bureaucracy to speed benefits of growth to the poor. Edited excerpts:

How would the current economic crisis affect the poor, especially in a country such as India?

The poor have not benefited a huge amount from the upswing (of the economy), and so they will not be hurt in a huge way by the downturn. And the fact that the commodity prices are stabilizing will probably do good for them. We do not quite understand the balance of inflation, but precisely due to the same reason why they (the poor) did not benefit from the growth, they are somewhat insulated from the losses.

As a percentage of total population, poverty rate has been declining but the absolute number of people under poverty has increased. Do you see a scenario where we could eradicate poverty?

Yes, if things go right, I have no doubt that this could be done. (But) we need a lot of things (to) go right to (make it) happen. Most countries that have started on the development path have not yet succeeded. Given that we have a substantial population growth rate, we have to do it (eradicate poverty) at a very fast rate. The poor are having a lot of children who are growing under the condition of poverty and they are more likely to end up (being) poor. Just to get the absolute numbers down, the incomes of the poor need to grow very fast, because we are adding a lot more to that category.

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But the fact is we have not been able to reduce poverty at a faster rate. Does it show the poor quality of execution of various developmental schemes in India?

Almost surely. Many things that could have reduced poverty—better education, better health, better access to public distribution system—all those things have failed miserably. There is no surprise why poverty is not falling faster. Most of the reason why poverty is falling, is not because of public expenditure, but because (of) these people joining temporarily some urban workforce… that is how poverty is falling.

But we have been spending huge amounts of money. Where exactly do you see the lacunae? Why are we not getting the results?

“Why” is a very hard question. There are many many reasons why our political system does not seem to furnish, what is clearly the obvious form of state failure. Politically, we don’t have the willingness to do it. Part of it is also poor execution of schemes. All of those are certainly there. The scheme is designed in some idealized reality in mind and in the world (it) works in a different way.

Sometimes you know the wrong thing will happen, but you let it happen because it benefits your cousin… there are all kinds of reasons. Any place I have looked at, I am constantly amazed how the government systems have poorly delivered.

Could you give us an example from your field experience on how a particular scheme has failed?

In Rajasthan’s Udaipur district, the district collector announced that on all Mondays the nurse practitioner in all health centres has to be there, on other days she can go to the field. On Mondays, the civil society organizations will monitor their attendance and report the results to the collector or the chief medical health officer. All of that was done, but basically the attendance rates remained at 30-35%. So 60-65% times, on Mondays, when they were told to come, they did not come. It is simply that nobody believes that the system is actually interested in punishing people who do not come to work. They don’t come to work, because nobody cares if they don’t come to work.

About the much talked about National Rural Employment Guarantee Scheme, what is your impression? Is it a success or a failure?

It is a hard question. In Rajasthan, it is working relatively well, (but) in other states it is not working that well. There is clear evidence of some amount of money vanishing one way or the other. On the other hand, every other government scheme is even worse. If I think about it relative to other government schemes that are around, it seems to be doing reasonably well. This scheme seems to be working less badly in states such as Rajasthan than in other places.

There is talk within the government for implementing a direct cash transfer scheme and education vouchers for the poor. Are you in favour of such innovations?

These are ideas certainly worth thinking about. But my big worry is, these will be implemented as usual without sufficient experimentation and without sufficient effort put in to come out with the right design. That is a big concern… make sure that they know how to do the cash transfer work without money being stolen. These are big issues. The country cannot afford another badly implemented expensive programme.

You must be interacting with bureaucrats in India. Is there a real concern among government officials towards making things happen? What is your impression?

Good question. I spend quite a lot of time with some government people. Among them, there is genuine concern that this government which came on the agenda of the poor has not done enough or should do more. I think that (concern) is genuine. Having said (that) I often feel that they have not realized how hard it is designing a programme. They sit in Delhi and come up with a nice scheme. But they would not know where the weaknesses come on the ground. The design is rarely worked out carefully. No experimentation or too little experimentation is done. So, you do not end up with a clear understanding of what will make a programme work. And once the programme is announced, there is not enough attention given to the so-called political economy to keep the pressure up to implement the programme well. So on both sides, the design is often flawed and the bureaucracy is not under enough pressure (to deliver).

And there is lack of accountability at the ground level.

Huge. But that is all the way up. I would not blame just the people at the bottom.

For that to happen, what kind of reforms would you suggest?

Well, people should start thinking whether the current system—of very small elite IAS (Indian Administrative Service) that is not specialized at all and is expected to know everything—is the best system.

So, some kind of other administrative structure is required.

Railways, for example, is separate. People are specialists. I think we need specialists. We have too many people who are generalists. It is hard to know everything. There are so many things to be mastered. They have so little time and they are so busy. I do not blame them. It’s a big challenge.


MINT, 22 Dec 2008

‘Simple’ projects help the poor

In Foreign Aid, Malnutrition, Poverty Eradication, Progressive Panchayat, Public Health on February 9, 2011 at 9:32 am

The rural poor in countries like India often benefit more from cheap, simple projects than they do from big, internationally-aided ones, a study by a group of economists at Massachusetts Institute of Technology (MIT) has found. The economists, members of the school’s Poverty Action Lab, have been evaluating anti-poverty programmes in India, Kenya, South Africa, Peru and the Philippines. In India, the Lab has nine completed and continuing projects on subjects ranging from computer-assisted learning to women as policy makers, and school health to affirmative action in colleges. One of the projects is an evaluation of village councils run by women in the states of West Bengal and Rajasthan.

There are cheap, simple and effective approaches that can have important benefits for the poor which are not being done Abhijit Banerjee Poverty Action Lab A 1993 law reserved one-third of India’s village council leader posts for women. These councils control the allocation of funds for local infrastructure projects – such as the construction of roads and drinking water and irrigation systems, and the repair of schools and other public buildings. ‘Spending differently’ The MIT study found that women leaders invested more in infrastructure that related to their concerns – water and roads in Bengal, and water in Rajasthan. It also found that women were more politically active in village councils with a woman leader. Girls in Indian school Helping children learn need not cost much The findings, says Professor Abhijit Banerjee, an MIT economics professor and co-founder of the Poverty Action Lab, cast doubt on the general perception in India that men – often the husbands of the elected leaders – rule these women-led village councils by proxy. “Women leaders spend differently from their male counterparts voicing their priorities,” says Professor Banerjee.

The Lab evaluated another project run by an Indian non-governmental organisation in poor urban neighbourhoods. In this innovative programme, the NGO hired young local women – called balshaki (or child’s friend) – to provide remedial education to high school pupils who lacked primary school level competencies. These students are taken out of regular classes for two hours of the school day and taught basic literacy and numeracy skills. The programme costs $5 a child every year, and is being implemented in 20 cities around India. The MIT study showed that helping the students improves their grades and “effectively decreases inequality in classroom test scores”. Health and learning The other interesting finding pertains to an evaluation of a NGO-run pre-school nutrition and health project in the slums of the capital, Delhi. The programme provides for giving children medical treatment for intestinal worms and iron supplements to improve health. It costs on average less than $2 per child every year. The MIT study found that the children gained weight and that average pre-school participation jumped sharply. Absenteeism reduced by a fifth.

The study raises questions about whether high-profile, foreign-funded poverty alleviation projects really deliver the desired results. Developed nations and international donors, including the World Bank, spend more than $55bn every year in programmes designed to improve the condition of the world’s 2.7bn poor people. “There are cheap, simple and effective approaches that can have important benefits for the poor which are not being done,” says Abhijit Banerjee. Rigorous evaluation One good example, he says, is that a fourth of the world’s population have intestinal worms. Providing cheap deworming medication has no side effects, costs just pennies per child and increases health and school attendance substantially. “Interventions that people assume are effective do not always work as well as expected or have the expected consequences,” says Professor Banerjee.

One example he quotes is a Lab study finding that providing text books to children in poor Kenyan schools only raised the test scores of those already doing well at school. “It is possible that the majority of children could not use the standard textbooks effectively as they were in English, the third language of most children in rural Kenyan schools,” says Professor Banerjee. The Lab’s economists suggest that donors and those receiving aid should evaluate their programmes rigorously and “reorganise” them accordingly. “We believe one important benefit of careful evidence on development programmes is that it can help address the cynicism about aid. People are more likely to give funding to programmes that have been demonstrated to have important benefits,” says Professor Banerjee.


BBC, 11 Aug 2004