Govt, business, civil society must implement direct cash transfers to avoid 'society-wide poverty trap', says Noble Laureate Esther Duflo

Esther Duflo, 2019 Nobel laureate,  on Monday said that it is essential for government, business, and NGO stakeholders to focus on cash transfers to economically vulnerable populations to avoid entering into a ‘society-wide poverty trap” in India. Duflo said “this is something business should be keenly interested in and very much behind it, not just because it’s the right thing to do morally, but also because I think it is the most responsible thing to do economically…self-interested business should be very much lobbying for this cash transfer.”

Duflo, a professor at the Massachusetts Institute of Technology (MIT) , and Director, J Abdul Latif Poverty Action Lab (J-PAL), made her remarks in the first session of a three-part webinar series titled ‘Leaders with Purpose’ co-hosted by Samhita Social Ventures and IDFC Institute, to discuss how to balance human, health, and economic factors when formulating responses to the COVID-19 pandemic.

Monday’s panel comprised of Duflo along with along with a number of corporate and civil society leaders. Panelists included Hindustan Unilever (HUL) Chairman and Managing Director Sanjiv Mehta, Godrej Consumer Products Chairperson Nisaba Godrej, Self-Employed Women’s Association (SEWA) National Coordinator Renana Jhabvala, and Pratham CEO . Rukmini Banerji. The panel was moderated by Nachiket Mor, who is currently serving as a Visiting Scientist at the Banyan Academy for Leadership in Mental Health, and is the former India Country Director of the Bill & Melinda Gates Foundation.

“We have-both Abhijit Banerjee and I-really insisted on the need for the government to act quickly and swiftly to prevent a lot of people who are not ultra-poor but merely poor, or maybe not even poor…to avoid those people to completely collapse back in a situation where it would be much harder to get out,” Duflo said of her own and fellow Nobel laureate’s views. “That in a sense is something that would affect them personally - an individual poverty trap - but can also create society-wide poverty traps.”

Samhita Social Ventures has facilitated and launched two alliances—the India Workers Alliance (IWA) and India Protectors Alliance (IPA)—to support migrant and informal sector workers who have been economically affected by the COVID-19 crisis, as well as frontline workers such as health workers and law enforcement. The alliances are collective CSR funds working with corporates, social enterprises, non-profits and government agencies to deliver the support to the ‘right person quickly’.

Monday’s webinar session saw all panelists collectively stressing the importance of effective multi-stakeholder collaboration and cooperation to ensure last-mile service delivery to those most at risk. Nisaba Godrej and Sanjiv Mehta remarked on the importance of business leaders considering the safety and security of workers in manufacturing and distribution networks, and working with NGOs to identify and deliver support to the most vulnerable communities. Renana Jhabvala reiterated Duflo’s recommendation of direct cash transfers as an effective way to promote well-being and resilience in low-income communities, and remarked on the importance of strengthening the systems through which the funds can be accessed.