States must strengthen their financial position to accelerate poverty reduction and ensure sustained development, Iqbal Singh Dhaliwal, Global Executive Director of the Abdul Latif Jameel Poverty Action Lab (J-PAL), part of the Massachusetts Institute of Technology (MIT), has said.“The central government’s fiscal deficit is fine, but the state governments are facing considerable challenges in terms of their finances and fiscal resources. There are two basic reasons for this,” Dhaliwal told PTI in an interview.“One is the addition of schemes after schemes. Whatever programme launched 20 years ago is also running along with what has been launched recently,” he said, stressing the need to streamline welfare programmes. “Schemes which have served their purpose should be phased out, like how we replace our old TV or laptops after they have served their purpose.”A former bureaucrat turned economist, Dhaliwal also suggested that governments should focus on productive use of funds. “The government should consider providing money for productive purposes, like setting up small businesses or working capital for small businesses, and monitoring end-use,” he said.He noted that the design and timing of welfare disbursals are critical to their effectiveness. “The method of giving, the amount of giving, and the date of giving in a month — all of those make a difference, and there is more experimentation that needs to be done,” Dhaliwal said.He further argued that the government should prioritise investment in human capital. “The government should focus on providing better public schools and primary health centres rather than giving cash in hand,” he said.On the growing impact of artificial intelligence (AI) on employment, Dhaliwal cautioned that India could face similar job losses as seen in the US and Europe, especially in low-skilled segments of the BPO and IT sectors.“There is an urgent need to upskill these vulnerable sections and provide necessary training so that they are ready for AI-induced working,” he said