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Updated: June 15, 2013 02:13 IST

A case of misplaced euphoria

    Vani S. Kulkarni
    Raghav Gaiha
Comment (15)   ·   print   ·   T  T  
The Hindu

In spite of the rosy picture painted by the World Bank, the prospect of eliminating extreme poverty remains distant

In a protracted period of gloom and persistent recession with feeble signs of recovery in a large part of the developed world, the World Bank, Brookings Institution and others can be forgiven for their euphoria over the accomplishment of a key Millennium Development Goal (MDG) — of halving extreme poverty in the developing world — five years ahead of the 2015 deadline.

Average of 15 poorest countries

Extreme poverty is measured with reference to a threshold of $1.25 per capita per day (in terms of 2005 dollars adjusted for purchasing power differences). This poverty line is the average of the 15 poorest countries. Those below it are condemned to a wretched, brutish and short existence.

Yet, 970 million people will remain poor in 2015, with 84 per cent of them concentrated in South Asia and Sub-Saharan Africa. The latter is also the only region that will not achieve this MDG by 2015.

Global poverty remains a rural problem with more than three-fourths of the extremely poor located in rural areas. However, as global poverty fell, so did the gap between rural-urban poverty. It reduced by half in East Asia and the Pacific by 2008, while in Sub-Saharan Africa, Latin America and the Caribbean, and South Asia, there was less progress.

Projections differ but various scenarios suggest that poverty estimates in 2030 will range between three and nine per cent. Most projections, however, pay lip service, if any, to market and natural catastrophic risks. Rates of GDP growth observed in recent years are extrapolated with ad hoc assumptions about changes in income inequality to arrive at poverty estimates in 2030. As policy buffers against the food price surge and financial crisis that followed in quick succession are far from adequate, vulnerability to such shocks remains a major concern. Besides, the havoc wreaked by natural disasters and conflicts often wipes out years of development.

The Kashmir earthquake in 2005, for example, more than offset the gains from three years of development assistance. So while such shocks will continue to occur with the frequencies observed in the past, those associated with natural catastrophes may rise as global warming rises.

It is indeed odd that while last year’s Global Monitoring Report (GMR 2012), prepared by World Bank researchers, drew pointed attention to vulnerability to food price and related shocks — specifically the dire consequences for undernourished women and children — the MDG projections in GMR 2013 gloss over this issue and paint a rosy picture of banishing extreme poverty and other deprivations in the next two decades (i.e. 2010 to 2030).

Ad hoc assumptions about income inequality widen the range of projected poverty in 2030. With high growth and low income inequality, extreme poverty is likely to be about three per cent while the combination of low growth and high inequality yields a much higher incidence of extreme poverty (nine per cent). Neither the GMR 2013 nor studies by Brookings offer a definitive account of how growth and inequality interact. In fact, recent estimates point to a worsening of income inequality in many countries (China and India) and improvement in a few (like Brazil). The important point is that if growth widens income inequality, ad hoc assumptions about inequality undermine the plausibility of projected poverty in 2030. The actual may well be outside the range projected.

For poverty reduction, some forms of inequality matter more than others. Important ones include inequality in the distribution of assets, especially land, human capital, financial capital and access to public assets such as rural infrastructure. The fast growing economies of East and South-East Asia had the advantage of low asset inequality compared to other Asian and Pacific economies. In some countries, this followed land reforms and a better distribution of educational services. So, moderation of current income inequality while facilitating access to income-generating assets and the promotion of employment opportunities for the poor are imperative.

‘Missing women’

Gender inequity is given short shrift in the MDGs and the focus is confined to differences in primary and secondary education enrolments. But gender disparities continue from birth to adulthood. The cycle of maternal and child malnutrition, morbidity and mortality, tends to perpetuate poverty over generations: a vicious cycle of low investment in women and in girls. Gender discrimination in access to health facilities, nutrition, education and security exacerbates this process further. Arguably, a more appropriate indicator of gender inequity is Amartya Sen’s measure of “missing women.” It is intuitive and appealing as it captures women’s multiple deprivations over a life span. Comparison of census results for India in 2001 and 2011 points to a slight increase in the sex ratio — a rise from 933 to 940 females per 1,000 males. But there is considerable variation in this ratio across different States. Haryana has the lowest sex ratio (877 females per 1,000 males) while Kerala has the highest (1,084). It is one of the two States (Puducherry being the second) where the number of women exceeds that of men while a few others (Karnataka and Andhra Pradesh) show higher sex ratios in 2011 relative to 2001. Female foeticide and infanticide are stark illustrations of discrimination that begins in the womb and continues thereafter lowering female/male sex ratio.

Recent studies have drawn attention to the important role of institutions in growth acceleration and poverty reduction. Unfortunately, none of the recent studies (including GMR 2013) examines these links critically despite easy access to World Bank’s rich and up-to-date database on key governance/institutional quality indicators (voice and accountability, political stability and absence of violence, control of corruption, rule of law, and an aggregate index of institutional quality). Since institutional improvements evolve over time, in complex ways, extensive experiments were carried out in a study that one of us did. Even modest improvements in institutional quality are associated with significant effects on income and, consequently, on poverty. For example, with the voice and accountability index assumed to take on the average value of this index among the top 30 performers, and the historic growth rate of agricultural income, the poverty head-count index (or the proportion of poor) shows marked reductions in China, Bangladesh, India, Sri Lanka and Indonesia, relative to the base line. A key issue is institutional “triggers” that induce institutional quality improvements. A case in point is the right to information that has had remarkable effects in terms of transparency and accountability in India.

Small cities

The GMR 2013 (as well as a series of recent papers by World Bank researchers) make(s) a powerful case for rapid and well-managed urbanisation as key to overall poverty reduction. It rests on efficient rural-urban migration and better utilisation of agglomeration economies. Indeed, it is argued that these could also result in speedier rural poverty reduction. An important link in the chain are small cities (somewhat misleadingly referred to as “the missing middle” given their rapid growth). Their weak infrastructure, and poor hygiene and sanitation are likely to turn them into slums with growing rural-urban migration. So the refrain is that investment must be directed to such cities to better exploit their growth potential.

A premise is that more rural-urban migration will have a substantial pay-off in terms of higher wages in rural areas and greater diversification of rural economies. Fine, except that if this premise is turned on its head, more efficient land, labour and credit markets and better infrastructure in rural areas would not only help raise agricultural productivity but also enable diversification of rural economies and, consequently, discourage rural-urban migration. This dynamic overturns the World Bank thesis.

In conclusion, neither the process of poverty reduction nor the projections for 2030 are plausible. So the prospects of eliminating extreme poverty remain fragile, grim and distant.

(Vani S. Kulkarni is research associate, Department of Sociology, Yale University, and Raghav Gaiha is visiting scientist, Department of Global Health and Population, Harvard School of Public Health.)

More In: Lead | Opinion

Why is it so difficult to insist on population control as a national
goal? Poverty decreases when you do not have children. This can be
emphasized in all non govt media e.g. movies/ religious
leaders/schools/music,as this trickles to everyone.

Anybody who is middle class today has risen from poverty only after
she or her parents decided on two or fewer kids, whether they survive
or not. This is not necessarily based on their educational levels e.g.
maids in Mumbai or Delhi are content with ONE child, boy or girl.

If someone does not want a child, because of a potential handicap,
gender, finance, etc., let them not have one or else be there to care
for mother and child yourself for 18 years. It is ridiculous to insist
someone has a child, girl or boy, in a country already highly
overpopulated.

from:  bharati
Posted on: Jun 17, 2013 at 09:37 IST

Despite being the fourth largest economy in the world, a large percentage of India´s population lives in absolute poverty. People around the country are involved in multiple occupations, ranging from textiles and agriculture to handicrafts and information technology. While there is certainly no lack of skilled labour in India, there is a lack of literacy amongst the nation´s poor resulting from the financial inability to acquire a proper education. This creates a vicious cycle, where generation upon generation of underprivileged individuals are unable to obtain the education they require to become successful in the rapidly expanding India of today.
Eradicating poverty in India would mean a complete revitalisation of multiple facets, including a better system not only to accommodate underprivileged student but to do so purely on the basis of need and intellect and not caste. This in itself could prove to be a daunting task since admission requirements to institutions higher education still vary for differ ent castes. Also, in order for the public to experience adequate medical attention, there would need to be an influx of medical facilities to accommodate the millions that will require medical care in the next years.
India´s economy has worked extremely well and the economic boom is fuelled by a generation of bright, English-speaking worker and professionals. This combination of skill and English language proficiency allows them to work remotely for foreign companies in call centres and custom service departments, and pursue careers ranging from IT domain to business environments in India as well as abroad.
However, there is still the matter of giving people the opportunity to reach this level of success, and this requires a drastic initiative to provide high quality education to the masses.There is a chance for dissolving poverty in India, but it will prove difficult to accomplish this task.
But education is the best way to eradicate poverty.

from:  kurt waschnig
Posted on: Jun 16, 2013 at 18:26 IST

1. Why the authors of this ed-page article are not providing their
email ids, while every writer of letters to editor column are
compelled to provide their full address and ofcourse email id.
2. These two indians affiliated to top class US ACADEMIA deserve
appreciation for their time and energy towards the extreme poor.
3.perhaps they may find some time to read the article below
Reduction of urban density of population by planned decentralization,
reverse migration, dispersal of economically robust population
segments, not the poorest and marginalized, to thinly populated
regions should be the starting point of sustainable urban
infrastructure development initiative in developing countries.
It is high time to place a strict moratorium on urban new investments
on newer capacity additions, with in the congested regions.
Due importance to UNIVERSAL SANITATION (perennial source of bio-fuel,
bio-fertilizer, and golden threshold to the dignity of our masses)

from:  RAM DHANASEKAR
Posted on: Jun 16, 2013 at 15:43 IST

Authors have in a very comprehensive and thought provoking manner highlighted the reasons for slow eradication of poverty around the world and especially in South-Eastern and African countries. They have also provided constructive suggestions such as improving the gender ratio, distribution of assets mother child nutrition and corruption and few others which will help improve this curse.
I personally feel corruption is one of the leading factors that has made mockery of all efforts by governments to let the poor have access to food, health services and education. It is high time we stop deluding ourselves that the lot of the poor is improving and making excuses for dismally low eradication of poverty.

from:  Prabha Sharma
Posted on: Jun 16, 2013 at 10:31 IST

This article reminds that growth throughout the world is far from inclusive, balance and only helping in increasing inequalities across the population. While the rate of some of the social indicators have been fallen but number of persons in the world has certainly has gone up. Fund is certainly not an issue but it is non-seriousness of policy makers and rampant corruption in the system that prevents and make the prospects of eliminating extreme poverty merely a daydream.

from:  Manoj
Posted on: Jun 16, 2013 at 04:40 IST

60-70 percent of Indian population live in rural India. Major part of
this population is of marginal farmers and landless labors. Due to
steep hike in cost of production for farmers their income is not
growing but decreasing. A farmer is paid Rs.13/- for a kg of wheat but
when a common fry goes to a shop for buying wheat flour, he has to pay
Rs.25/- per kg. Until the institutional developments would not be
focused towards the removal of middle man or agent and contracting
margins for farmers, there would not be poverty and hunger free India.
Second, the Indian Govt should prepare a separate budget for
agriculture sector, so that a focused approach can be applied for
development of rural infrastructure and hence the rural poor.

from:  Rohtash Bhartiya
Posted on: Jun 15, 2013 at 23:20 IST

By going through the IMF & WB reports I can guess only handful of work has been done so far. MDG goals are a myth anyone can guess. We appoint so called politicians to our respective assemblies but has no stake in judging there performances. We are helpless. This sordid saga of removing poverty can only be possible after we overcome of replete shortcoins in electing our representatives to parliament. No vision is visible unless we are able to see.

from:  Feroj
Posted on: Jun 15, 2013 at 19:02 IST

Majority women in Kerala have empowered themselves and attained
financial freedom. Of course they are hard working and want to be
financially not dependent on the head of the family with aspirations
for educating children, improving life styles etc.

It is a different issue that, unfortunately there are many other
issues while the state government sponsored a fresh Mission- Janashree
Sustainable Development Mission in 2008 to counter balance
Kudumbashree which went to the control of the Oppositions. There is no
ban on even dual memberships.

from:  Madan Menon Thottasseri
Posted on: Jun 15, 2013 at 18:09 IST

Indian government is poised to step up efforts to empower women
through self-help groups with a target 70 million women in six million
of SHGs within net seven years. Currently we have 2.5 million SHGs
with 30 million women members. The success will naturally depend on
the patronage offered to SHGs.

Out of Rs.15000 crores already financed by banks, 80 per cent was
towards four states of South India. In Kerala , the Kudumbasree, a
movement of the state government is active during the past 13 years.
It is notable that Kerala alone, there is convergence between the SHG
and the elected representatives of the village councils. This system
could not be implemented in other states and Jayaram Ramesh the
minister had reiterated in November,2012 that his ministry is all set
to make it possible in other states.

from:  Madan Menon Thottasseri
Posted on: Jun 15, 2013 at 18:08 IST

Despite being the fourth largest economy in the world, a large percentage of India´s population lives in absolute poverty. People around the country are involved in multiple occupations, ranging from textiles and agriculture to handicrafts and information technology. While there is certainly no lack of skilled labour in India, there is a lack of literacy amongst the nation´s poor resulting from the financial inability to acquire a proper education. This creates a vicious cycle, where generation upon generation of underprivileged individuals are unable to obtain the education they require to become successful in the rapidly expanding India of today.
Eradicating poverty in India would mean a complete revitalisation of multiple facets, including a better system not only to accommodate underprivileged student but to do so purely on the basis of need and intellect and not caste. This in itself could prove to be a daunting task since admission requirements to institutions higher education still vary for differ ent castes. Also, in order for the public to experience adequate medical attention, there would need to be an influx of medical facilities to accommodate the millions that will require medical care in the next years.
India´s economy has worked extremely well and the economic boom is fuelled by a generation of bright, English-speaking worker and professionals. This combination of skill and English language proficiency allows them to work remotely for foreign companies in call centres and custom service departments, and pursue careers ranging from IT domain to business environments in India as well as abroad.
However, there is still the matter of giving people the opportunity to reach this level of success, and this requires a drastic initiative to provide high quality education to the masses.There is a chance for dissolving poverty in India, but it will prove difficult to accomplish this task.
But education is the best way to eradicate poverty.

from:  kurt waschnig
Posted on: Jun 15, 2013 at 17:49 IST

World bank report is not required. Every Indian knows 60 years Congress
rule has given them poverty and misery. Although NDA rule gave respite
from this for 6 years unfortunately the secular Indian preferred
congress led UPA rule and is destined to suffer

from:  True Indian
Posted on: Jun 15, 2013 at 14:07 IST

The well-balanced article made an interesting read. While I agree with
the authors that reducing poverty as per MDG norms is a case of
misplaced euphoria, what remains even more worrisome is
multidimensional poverty (MP). Generally, populations with
deprivations under MP remain higher than under simple poverty
estimates. For instance, while in Niger and Ethiopia, where about 40%
of the population is poor, in terms of MP over 85 % remain poor. The
concern of the authors with the “missing women” syndrome is also well
appreciated. However, it is here that one needs to understand that
mere climbing up the poverty ladder will be no solution. Well
documented data reveals that contrary to conventional wisdom,
preference for boys remains more pronounced in the highly developed
Haryana and Punjab regions of India than in poorer areas. Also, high
prevalence of this prejudice exists among the more educated and
affluent women. Thus, steps other than poverty alleviation shall also
remain crucial.

from:  Simrit Kaur
Posted on: Jun 15, 2013 at 14:06 IST

I would rather take an optimistic view and not a gloomy one even if
the goals are daunting and we are no where near their fruition. It
will help if each of our states at the end of the year examine how far
they have reached in the goals of removing property, maternal
health, maternal mortality,infant mortality, child nutritioin etc. and
take steps to accelerate our progress. It will also help if our
legislators make it a point to debate this in their respective
legislative assemblies. I say this particualrly, because I have never
seen annual reports being covered by the media nor of the legislators
raising this issue. Unless those whom we have elected to the
respective legisltures and parliament and those responsible for
governance make it a point to have these issues debated and the media
constantly covering this issue, we cannot expect accelerated progress.

from:  s subramanyan
Posted on: Jun 15, 2013 at 12:22 IST

The IMF&WB recipes are a disaster for poor countries and only aggravate
the existing inequalities between the rich&poor!

from:  umesh bhagwat
Posted on: Jun 15, 2013 at 11:13 IST

What, no emphasis on overpopulation? The main cause of poverty is having
kids you cannot /will not look after. Why struggle trying to survive as
you get kids fed, educated, employed? Who said you have to have kids?
Absolutely no need for more kids if you are poor: why not work and enjoy
yourself at whatever level instead?

from:  bharati
Posted on: Jun 15, 2013 at 08:10 IST
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