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Low revenues and corruption are the main factor

By Dr. S.M. Alam
Nuclear Institute of Agriculture, Tandojam
Jan 22 - 28, 2001

The World Bank in its third report has reported about poverty worldwide and particularly in South Asia and Sub Sahara region in Africa is due to drawbacks, fundamental weaknesses and paucity of resources in these regions. Corruption and bad governance are also the possible reasons. There is no denying the fact that corruption has increased manifold in the foreign-fundamental development projects specially in Pakistan. It is reported by World Bank that low revenues and corruption has enhanced poverty in Pakistan and day by day it is increasing tremendously.

The closing decade of the twentieth century witnessed liberalization and globalization of economies becoming the norm worldwide, along with the intensification of poverty was caused as a consequence of a sharp decline in job opportunities in developing countries and a drastic reduction in social security benefits in the development societies. According to the 'Development Report 2000: Attacking Poverty', released by the World Bank the problem has grown so immense that out of the world's six billion population, 2.8 billion or 44 per cent are living in abject poverty, on less than two dollars a day income and 1.2 billion or 20 per cent on less than one dollar a day. Although, about 43 per cent of impoverished people are concentrated in South Asia, large pockets of utter destitution exist in Africa and Latin America.

The poverty statistics for Pakistan depict a grim picture. According to the report, more than a third (34 per cent) of Pakistan's population lives below the poverty line, while our neighbours in the subcontinent are in a worse state. Compared to the international poverty level, 31 per cent of our population lives on less than one dollar per day and 85 per cent on two dollars a day. About 55 per cent Pakistani of over 15 years of age are illiterate, infant mortality is 91 per 1,000 live births or 10 times the level of advanced countries, while about 44 per cent have no access to sanitation and one-fifths are still without clean drinking water.

The World Bank report highlights the spread and intensity of poverty and suggests measures to tackle it on a priority basis. Although, the broad direction of these measures is correct, they fall short of addressing the root cause of poverty. Among the measures, the report rightly suggests a multi-dimensional approach covering such issues as debt relief, increased and effective assistance, providing access to the markets of the developed countries, ensuring stability of the financial markets, avoiding 1997 - like South East Asian crisis which unsettled economies and pauperized million of people. Elimination of poverty would take generations and that too if the public policies are right and rulers just. They weren't in the past, so the number of poor has grown and their lot worsened. One-third among them with an income of less than a dollar a day are very poor.

The government proposes to spend this year Rs. 20 billion of labour - intensive projects. Even if half of this sums were to go to the payment of wage of Rs. 100 a day per person, it would help only 278,000 out of 55 million people living in distressing poverty. This route to poverty eradication is thus long and also hazardous. The hazard lies in inflation as such investments usually yield little return; and secondly, the money may go into undeserving hands or misappropriated outright by the supervisors of small projects scattered over large areas involving mostly undetectable earth work.

Notwithstanding these hazards, the programme should proceed, for given close and honest supervision, it can improve the basic infrastructure like dirt roads, school and dispensary buildings as the rural works programme (RWP) did in the early sixties. It is particularly mandatory for a government claiming to be Islamic, for the Holy Prophet (PBUH) said: kadal faqro ainyakuno kuffa, meaning, in essence, poverty drives people to the brink of infidelity (or paganism or blasphemy). The powers of the government and teachings of Islam both, therefore, should be harnessed to the service of the poor. Poverty in Pakistan is enormous and growing. The "green revolution" and "workers remittances" which kept it in check (the remittances alone at their peak were estimated to have benefited 25 million people) are bygone phenomena. Poverty now can be checked only by large and sustained investment in industry and infrastructure. That would generate capital, skills and jobs with economic gain and not by printing currency notes without any planning. To attract investment, Pakistan cannot but return to the mainstream of world economy and politics. It cannot defy the world opinion, ignore counsels of friends, arouse their suspicions and yet expect its debt (now equalling a year's GDP) to be rescheduled or written off and new capital to flow into the country. At present the dilemma is how to prevent the flight of capital to foreign countries.

The real dent in poverty and empowerment of the poor can be made only through a redistribution of assets within nations and the spread of education. The latter, as far as Pakistan is concerned, is not only totally neglected but distorted to thwart the real objective of education, which is to facilitate vertical social mobility. Poverty being a complex phenomenon requires actions across a broad national and international level, providing debt relief and increased assistance and reforming the trading system in order to provide greater access for the poorer countries to the markets of the developed world are measures that must be taken urgently. On national front, the task of redistribution of incomes and assets aimed at raising the share of the poor people need to be undertaken in terms of major drastic reforms and a substantial increase in the share of direct taxes in revenue earnings and spending the additional revenues on vital social services.

Corruption, which is so much in focus these days will not go away until the exploitative system is simultaneously attacked. What the World Bank should do urgently if its concern about poverty alleviation is genuine is to mobilize support for debt write-off and channeling this saving into improving and expanding social services and social security. There is need to involve the WTO in the poverty reduction programme. It should see to it that the obligations that the developed world has assumed in the area of trade and investment are not only fulfilled but are also widened. International opinion should assert itself to bring about good governance and fair distribution of incomes and assets in developing countries.

Many opportunities to reduce rural poverty are missed because rural people are seldom listened to learned from and engaged in the development processes. For most developing countries, improved agricultural productivity will be the engine of growth in other sectors. Agriculture and associated services account for about 60 per cent or more of the employment and more than a third of national income, they are the driving forces of the economy in most developing countries. Growth in food and agricultural output have been the main basis of economic growth, higher per capita incomes and better diets for the people of most countries. Rural growth also contributes to reducing urban poverty. Increased farm productivity also results in reduced food prices and more balanced household expenditures for the urban poor. Nevertheless, the sector has not contributed in poverty alleviation as was expected. The poverty phenomenon increased significantly from 17.3 per cent in 1997 - 98 to 32.6 per cent in 1998 - 99. The number of poor people that can not meet their daily requirements and fell because the poverty line has increased from 17.8 million in 1987 - 88 to 43.9 million in 1998 - 99. This differential trend is more in rural areas than in urban. The country agriculture sector suffers from low and diminishing input returns on account of depletion in soil nutrients inadequate and ultimately low water availability, deteriorating and poorly managed irrigation infrastructure .