Finance Minister Nirmala Sitharaman on Thursday said that the Nudge Theory, given by economist Richard Thaler, has been used by Prime Minister Narendra Modi-led government in various initiatives to make a difference in the economy.
The theory is being used as a tool to promote economic activity tailored to India’s requirements, she said while addressing the annual day function of Shri Ram College of Commerce (SRCC).
Examples of its usage can be seen in the ‘Beti Bachao, Beti Padhao’ scheme which has improved the sex ratio, Sitharaman explained.
The Finance Minister also referred to the Stand Up India scheme under which subsidised loans to women are given, and also to the Prime Minister’s endeavour urging people to give up their LPG cylinder subsidy, to underline her point.
Nudge theory is a concept in behavioural economics, decision making, behavioural policy, social psychology, consumer behaviour, and related behavioral sciences that proposes adaptive designs of the decision environment (choice architecture) as ways to influence the behavior and decision-making of groups or individuals.
The Finance Minister further in her address, said that one needs governments that are futuristic, ready for reforms and provide consistency for businesses to grow.
“That’s exactly the difference when it comes to the kind of decisions the Modi government has taken and which didn’t happen earlier during previous governments,” she added.
