Overcoming Poverty

Lok Nath Bhusal

Indeed, time has come to put the poverty alleviation agenda at the heart of the development debate and action for since a long time, poverty has been a major hurdle to prosperity. Broadly, poverty is a human situation in which people lack what they need to possess - economic well-being, political awareness and social inclusion - for their meaningful and dignified existence in the society. Therefore, it embraces the whole gamut of economic, political and social dimensions; not necessarily only their incomes but capabilities as a whole.

Policy failures

For advanced economies, poverty is generally a relative concept whereas it is an absolute one for developing countries like Nepal. People hate poverty and wish to come out, but some unfortunate ones are destined to live under the shadow of poverty and suffer it. This situation is basically attributed to the failure of state policies and their proper implementation. Since poverty is one of the major reasons for socio-economic instability, the state must make systematic interventions to fight against this socio-economic ill. First, the current subsistence agriculture must be transformed into a competitive and wealth-yielding business to tackle the poverty systematically. Our agricultural productivity is the lowest in South Asia. Over two thirds of the economically active population works for agriculture, but its contribution to the GDP is a mere 40 percent. Hence, majority of the poor people come from agriculture. Again, the Economic Survey 2005/06 reveals that in the last fiscal year, the entire production of food crops was adversely affected due to the vagaries of the weather - drought. Indeed, farmers should be able to receive extra income, and conventional agricultural practices must be by more profitable techniques and marketisation of agro-products through the development of physical infrastructures.

A Green Revolution through the use of high-yielding varieties, expansion of irrigation facilities and availability of reasonably-priced chemical fertiliser, comprehensive land reforms and expansion of extension services must materialise. Furthermore, economic development throughout the world suggests that rapid industrialisation must be supported by a strong agriculture sector as the latter has backward and forward linkages to the development of the former. In the context of Nepal, since the agriculture sector is the topmost contributor to the GDP, positive state intervention is most crucial and urgently required to successfully compete with other countries, especially India. This is why farmers of the developed countries are enriched by the state, and much of the trade impasse is concentrated around reducing agriculture subsidies provided by the state.Second, disparity in the distribution of income and resources must be reduced to uplift the penniless population. Our average per capita income has risen to US$ 311, but it is an understatement of the degree of income inequality; averages have great significance in statistics, but they can be dangerous. For example, there have been frequent reports that 20 per cent of the population captures 80 per cent of Nepal's resources whereas the remaining 80 per cent population is stuck with 20 percent of the national income. This has been largely supported by the Nepal Living Standard Survey (NLSS) conducted by the Central Bureau of Statistics.

Alarmingly, the Gini ratio, which measures the inequality in the income distribution, was 0.34 for the first NLSS carried out in 1995/96. But this jumped to 0.41 in the second NLSS of 2003/04, suggesting an economically more asymmetric society. Moreover, there are colossal income gaps between the rural and urban population and the people working in the formal/organised and informal/unorganised sector. Clearly, this is a threat to a civilised society. Hence, the state must ensure a more equal and inclusive society through a progressive tax system so that those who can afford pay more, and thus help freeing the poor people from poverty.Third, enhancing social and political consciousness among the people is an equally important determinant in effectively tackling poverty. So far, age-old laws and conventions based on the feudal system and with ill-intention have been able to suppress the people in the name of religion, race, caste, ethnicity and gender. Social change has been terribly slow due to strongly grounded vested conventions designed to promote the elite. As a result, the so-called lower caste people, minorities, various ethnic communities and women have been deprived of their social rights. Consequently, poverty has been hovering around them. However, overcoming such a situation through ethnic autonomy as proposed by some political forces is more likely to aggravate the situation rather than truly addressing the issue.

Precisely, the politics of ethnic autonomy cannot be justified in the 21st century. In fact, it must be realised that the unprecedented economic success made recently by Japan and South Korea has been largely attributed to their homogonous society. Precisely, in developed societies we do not observe informal institutions such as caste, race and ethnicity. This reflects that the ultimate cure to the problem is social transformation, not the autonomy based on ethnicity. Clearly, ethnicity unknowingly invites disintegration which has been proved as a major barrier to rapid socio-economic development. As a solution to these maladies, we need to decentralise, delegate the central power and resources to the people and make them responsible to understand their local problems and to identify alternative local solutions. For this, the notion of home-rule and local government as a fundamental right must be ensured in the upcoming interim constitution. Also, promotion of human rights, building strong communities and strengthening civil society organisations and local bodies are very crucial engagements required to improve the demand side of the equation. Such an unequivocal and inclusive social and democratic political system helps to reduce the poverty in a sustainable manner.

Challenges

Finally, poverty mitigation has been the single goal of the Tenth plan and all our development efforts for quite a long time. However, the progress made so far has not been very satisfactory. Agricultural, economic and socio-political challenges must be overcome to eradicate the extreme poverty. More aggressive state intervention in the form of crafting and implementing pro-poor programmes is extremely desirable to maintain socio-economic stability and national prosperity. Given the recent political developments, the poor population is likely to decrease significantly in the next couple of years. For this, it is quite understandable that an economic agenda, one that particularly focusses on the above issues, must go simultaneously with the ongoing political transition.

Source: The Rising Nepal, August 23, 2007