The Hindu Business Line : Alleviating poverty

Without doubt, the fight against poverty has remained strong in the last 25 years, helping at least 500 million people worldwide out of the poverty trap. However, a new World Bank paper that talks about poverty in developing countries provides enough material for introspection to policymakers in countries such as India, who constantly crow about high rates of GDP growth and robust economic performance. Arguing that the developing world is poorer than previously believed, t he paper estimates that 1.4 billion (140 crore) people, or one in four, in the developing world were still living below $1.25 a day. Africa and South Asia are home to the largest number of the world’s poor. In South Asia, the poverty rate has fallen from 60 to 40 per cent between 1981 and 2005 but, again, not enough to bring down the total number of poor people in the region.

Very simply, despite all the Government’s anti-poverty programmes and rhetoric, no significant impact has been made on poverty. Now, with raging food inflation, the already meagre purchasing power of the poor stands eroded, making them worse-off than before. Also, the country’s welfare programmes have proved unequal to the humungous task of poverty eradication. The inference is clear. Although overall economic growth is impressive, the composition of growth in recent years has left much to be desired. Growth, unequivocally, is a necessary condition for lifting people out of poverty. But what we see is lop-sided growth. While the manufacturing and services sectors (together, they employ a third of the country’s workforce) record impressive rates of growth, agriculture — on which depends the livelihood of more than half the population — has been a laggard. It would be naïve to believe that policies of economic reforms and focussed investment in manufacturing and services sectors — to the broad exclusion of agriculture — would help successfully fight pervasive poverty in rural areas.

Indeed, it is time to rethink our poverty reduction strategies; they should be designed to ensure sustained growth in agriculture and put more money in the hands of those engaged in farming and related activities. It is also time to redouble efforts in terms of infusing large doses of fresh investment into the moribund farm sector to raise production through higher productivity. Growth in agriculture and related activities is sure to set off a virtuous cycle of more incomes, more consumption and more investment leading to rising rural prosperity. Clearly, poverty reduction follows growth with equity.

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