Dr Saheb Sahu
“Economists worry that a ‘universal basic income’ would make recipients lazier. Programs around the world find the opposite is true”.
Abhijit Banerjee and Esther Duflo, Professors of Economics (MIT) and Co-recipients of Nobel Prize in Economics, 2019
On September 13-14, 2025, The Wall Street Journal published a review of the book, “Poor Economics: A Radical Rethinking of the Way to Fight Poverty” by Abhijit Banerjee and Esther Duflo (Revised edition).
According to Banerjee and Duflo, in recent years, a number of countries have introduced conditional cash transfer (CCT) programs, making it possible for economists to study the effect of simply giving people money. In 2010, 27 low and middle income countries had a CCT program; by 2016, the number had reached 64. These programs had no work requirement, although they had other requirements, such as sending children to school or requiring pregnant mothers to have their babies in a hospital.
One critical question is whether an inflow of unearned cash would cause people to become lazy and stop working altogether. Study of data from seven programs in six continents found no evidence that it does. A study published in National Bureau of Economic Research (2024) looked at cash transfer in middle and low income countries. The conclusion: On average, cash transfers actually lead to increase in labor-force participation and days of work.
All these studies tell an important story. There is lot of involuntary unemployment or underemployment in rural areas in poor countries and this unused capacity ca be unlocked when resources (meaning CCT) transfer are poured in. According to Banerjee and Duflo, cash transfer programs have the potential to have large multiplier effects. Not only people don’t work less when they are guaranteed an income, they might actually put more effort at work. And the fact that they have more money to spend leads to the creation of more jobs in the community (multiplier effect).
Their conclusion: We don’t need to worry so much about the typical economist’s concern that a guaranteed income will make people lazy. Instead, we need to start thinking about how to satisfy the human need for meaningful work in a future where more and more jobs are done by AI.
Definition of Multidimensional Poverty Index (MPI)
MPI goes beyond income. It measures three main dimensions: 1- Health (nutrition, and child mortality) 2- Education (years of schooling and school attendance), 3- Living standard (access to cooking fuel, sanitation, drinking water, electricity, housing and assets).
A household is considered “MPI Poor” if it is deprived in at least one third of these weighted indicators.
Present Status of Poverty in Odisha
NITI Aayog National Multidimensional Poverty Index (MPI) – Progressive Review (2023) shows Odisha’s MPI head count at 16.68% for 2019-21 (rural 17.7%, urban-2.3%). This is a significant drop compared to 2015-16 (29.34%). Odisha’s own Economic Survey (2024-25) cites these improvements while also acknowledging on going gaps in housing, services and some human development indicators. Despite the state level improvement, poverty is uneven in Odisha; several southern and western districts are poorer. Poverty rate in the district of Malkangiri is 45%, compared to 3.29% of Puri. The district-wise data makes it clear that Odisha has made good progress, but southern and western districts like Malkangiri, Nabarangpur, Koraput, Rayagada, Mayurbhanj, are still quite poor. 10 of the 200 poorest districts of India are in Odisha.
What steps the present government can take to bring poverty rate to less than five percent?
There is no easy and quick solution to eradicate poverty. It is a shame that in spite of rich mineral resources, long coast line, low population density, reasonably stable governments since independence (Congress, BJD and now BJP), Odisha is still one among the poorer states in India.
Education and Migrations
Education and migration are two of the proven strategies to escape poverty in one generation. It has worked all over the world. Education is one area where government of Odisha, should spend more of it resources to improve infrastructures of schools and colleges (hostels, toilets, libraries, and computers), reduce school dropout rate and improve teacher’s absentee rate, especially in rural schools.
Oriyas who have migrated to Surat, Bangalore, Hyderabad, Delhi, and Pune are prospering. Even seasonal laborers who migrate to southern states earn more money in few months than they do in a year in Odisha. Government of Odisha, instead of denying that poor people are migrating in large number, it should facilitate migration and see that these people are not taken advantage of by the middle-men. In India the prime example of poverty reduction is the state of Kerala-education and migration. Kerala has no mineral wealth and almost no major industries, and much higher population density but its MPI is the lowest in India (0.55%).
Guaranteed Basic Income for the Poor
There are multiple poverty reduction schemes (Yojanas) at present in Odisha. Some of them are: Subhadra Yojana, Madhubabu Pension scheme, Swayam Scheme, KALIA, Mission Shakti, BSKY, Biju Pucca Ghar Yojana, MGNREGA (Central scheme, started during Congress rule at the center) and few more. The problems with all these schemes are leakage (new word for corruption), improper implementation and the amount of money given are not sufficient enough to get a poor Oriya out of poverty.
The present government has started the Subhadra Scheme. Under this scheme, each eligible Oriyawoman between the ages of 21-60, receives a payment of 5000 rupees, twice a year for five years. The money is deposited directly into their bank accounts.
The present Subhadra Scheme is a good start but the amount of money being transfer is not enough to get the recipients out of poverty. The government of Odisha should fold all the poverty related schemes to one and transfer enough cash to each eligible poor Oriya to get him or her out of poverty. Every poor Oriya regardless caste, sex, age, religion, or place of birth should receive the direct deposit in to her/his bank account, every month or even better, once every six months. This way the amount may be sufficient enough for her/him to start a small business.
The Government of Odisha should take the advice of prominent economists like Abhijit Banerjee, Esther Duflo, Amartya Sen, Angus Deaton, Philip Van Parijs, Thomas Piketty and many others and expand the Subhadra like scheme (direct cash grant) to cover all poor Oriyas. The amount of money should be sufficient enough to get one out of poverty. The cash transfer should last minimum of five years.
The question is where will the money be found? It is not a question of money but a question of will. If the present government wants to match the poverty rate of Kerala (which it should aspire to), it need to find the money and transfer to the poor for at least five years, without any pre-condition. As the saying goes – “Where there is a will, there is a way”.
If the present government can lift Odisha from the bottom rug of poorer states to match close to that of Kerala, it will make every Oriya proud and definitely win the next election (just my personal prediction).
PS. Dr Saheb Sahu is a son of farmer’s parents from Bargarh district of Odisha. He was educated at Mulbar Elementary School, Kamgaon Middle School, C. S. Zila School, G. M. College and AIIMS (New Delhi). He migrated to USA in 1970. He was an expert member of WODC for six years. He has written two books and many articles about Odisha’s poverty. His previous articles have been published in Odishawatch.in
Sources:
1- Abhijit Banerjee and Esther Duflo: Poor Economics: A Radical Rethinking of the Way to Fight Poverty. The Wall Street Journal, Sept 13-14, 2025.
2-Chat Gpt, Sept, 24, 2025.
