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Growth and poverty reduction

| Updated: December 11, 2017 20:26:23


Growth and poverty reduction

It is concluded from 62-village panel data that, non-income poverty declined to a large extent in 2014. In this case, special attention should be given to access to food as food is the most basic element of survival. We assumed that households not reporting three satisfactory meals a day (assessment of household members) would be considered to be in hunger. Under this assumption, the proportion of such 'unsatisfied' households faced a dramatic reduction in recent years -  only about two in 100 members of such households cannot get  three satisfactory meals a day. Although roughly 10 million people are estimated to be deprived of the food needed to keep them fit for productive pursuits, we can conclude that the syndrome of  'silent famine' is decreasing day by day. The increase of life expectancy gives evidence of the reduced number of the hungry.

However, apart from success in food access, it is sad to say that although access to education above primary level improved quite satisfactorily, there is much debate about the quality of education. Still, seven in every 100 rural households do not send their boys and girls (aged 6-15 years) to schools. All this is happening when we continue to say that education is the magic lamp for poverty alleviation; falling far behind in education, no nation could achieve success in their fight against poverty.

What are then the causes of an improvement in hunger-like situation that we have just narrated above? A number of factors - either in isolation or in combination - could have caused somewhat improvement, but we present some of them very briefly. The causes are partly market-driven and partly driven by commitments from the state. Among the market-driven forces, adoption of new technology in paddy production is at the top of the list. This has helped increase food production, provide incentives to farmers and exert a downward pressure in food prices. In consequence, even the extreme poor could access food.

Basically, the poor have benefited from this new technology on several counts. First, labour-intensive as they are, modern varieties (MVs) absorbed more labour per unit to pave the way for employment opportunities for the poor. Their exchange entitlements thus increased to ensure food security. Second, infrastructural development and the growth of non-farm activities tightened the labour market and raised wage levels to the benefit of the poor. Third, increased access to the tenancy market associated with changes in tenurial terms favoured the poor to increase income and food security. Finally, some state-sponsored programmes such as safety nets, Vulnerable Group Feeding (VGF) and food for education etc. also helped households avert hunger. By and large, following reduction in income-poverty, scopes on the part of the households for spending on non-food items further widened.

But the basic question is: who are these hungry households and what are their features? We need to know about them if we want to draw up policies to address poverty and hunger. First, we observe that the largest proportion of these households has no homestead land. An inverse relationship exists between land ownership and hunger condition, where more owned land means less hunger. As per farm size, the largest share of the hunger-driven households comprises non-farm households although we observe remarkable improvement on this score over time.  Finally, households where the heads have no formal education seem to fall easy prey to hunger compared to their counterparts. That is, education has an association with hunger: more education means less hunger. But as land is hard to transfer, expansion of education remains to be the heart of the anti-hunger programmes.

We thus observe that there is not much difference between determinants of income and non-income poverty. In fact, both are influenced mainly by per capita income. This suggests that it is very difficult to conceive poverty reduction without raising income. But who fails to raise income? From the available data, we have already mentioned that small land size and lack of education block an increase in income. But since socio-political imperatives have been cited as serious constraints to drastic land reforms in the near future, we are left with three alternatives for policy consideration. First comes the need for increasing the access of the poor to education; second, enabling the poor households through necessary reforms in the tenancy market, expansion of infrastructural and credit facilities etc., and third, distribution of 'khas' lands among the landless households.

The first and the third options predominantly lie in the hands of the state, as it is its constitutional obligation to enhance access to basic education for the people. Again, freeing khas lands from the occupation of the influential persons is also the responsibility of the state. The second option could be materialised by both state and market. The partnership of public and the private sectors will play a pivotal role in building physical infrastructure, providing credit and expanding non-farm activities - all of these will then pull labour out of agriculture.

At this stage, we say a few words on the role of the economic growth in poverty reduction. It is true that we have observed a decline in rural poverty in tandem with  'satisfactory' rates of economic growth over time. And possibly for this reason, there is a scope to crown growth as the pinnacle of poverty reduction strategy. Eminent economist S.R. Osmani moves a step further to argue that proper distribution of wealth should always matter along with growth. This is because distribution not only helps poverty reduction, but also facilitates economic growth. One specific example used by him is the inability of a person to engage in productive activities in the wake of shortage of capital and the lack of access to credit. It is not that the person himself is only deprived; the nation is being deprived of the additional output. So, proper distribution, poverty reduction and growth can run hand in hand.

The writer is a former Professor of Economics at Jahangirnagar University.

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