By By Mansoor Ahmad
The economic experts in Pakistan put forward two theories for poverty reduction. The thrust of banker financial manager Shaukat Aziz was on accelerated growth favouring the rich that in his opinion would have trickle down effect on the incomes of lower strata of society. He and other economic managers associated with him were certain that a sustained growth of over six per cent would reduce poverty.
This strategy failed as the trickle down impact of incomes to poor was nominal while the inequalities widened during the 10-year implementation of this doctrine. The vulnerability of the lower income groups was exposed badly when the food inflation shot up in 2008 that not only impacted the poorest but also threw the lower middle class in to the poverty ditch.
Majority of the economists plead for a pro-poor growth to reduce poverty. They caution the planners that unless there is sufficient change in resource distribution, people who have a larger initial share of the pie tend to gain a larger share in the pie’s expansion.
They also cite the credible global studies which show that in countries where high growth was achieved with rising inequalities the median rate of decline in the dollar-a-day headcount index is only about one per cent a year. However in countries where high was associated with decline in inequality the poverty reduced by up to 10 per cent depending upon the ratio of decline in inequalities. They argue that equitable growth is the fastest way to reduce poverty.
Senior economist Naveed Anwar Khan FCA said for whatever reasons the present regime has failed to maintain high growth rate. He said the GDP grew at 2 per cent last fiscal and is projected to grow at 3 per cent this year.
This he added would hardly cover the growth in the population. He said the present government has not introduced any policy initiative to reduce inequalities.
He said even from the nominal growth the major share went to the rich and there was no trickle down impact on the poorest. This he added implies that we should expect increase in poverty in coming years.
Asif Ali Shahid CPA said instead of reducing inequalities the government is trying to contain poverty through Benazir Income Support Program (BISP). He said a huge amount of Rs74 billion has been earmarked for this purpose that at best could keep the beneficiaries from going further down but remain poor.
It would not be able to reduce poverty he added. In the meantime he added more families from lower middle class that are not served by BISP would continue to fall in to poverty trap.
Faisal Qamar ACA said that the noble laureate Joseph Stilitz while on visit to India few years back had advised the governments in developing countries to promote labour intensive industries like clothing and construction to reduce inequalities and poverty.
He said these two sectors of our economy have come under more stress during past two to three years. He said poverty could not be reduced through high tech automated projects. He said poverty could only be reduced by creation of new jobs.
He said the government would have to adopt a strategy in construction sector under which it has to reign in high profiteering by the cement cartels and the steel tycoons.
In addition he added it should provide incentives like low markup loans and removal of hurdles in land acquisition and construction activities. This he added would employee most of the unskilled unemployed labour force in the country.
He said the clothing sector should be provided more incentives, as outside construction it is the highest provider of employment around the world. He said the added advantage in clothing sector is that it has higher employment opportunities for the fair gender.
He said the amount reserved for BISP would be sufficient to boost clothing sector and generate millions of jobs besides increasing exports.