Economic growth best antidote for poverty

India, Bangladesh, Pakistan have shown strong growth and sharp reduction in poverty levels ILA PATNAIK The Financial Express: Tuesday, July 18, 2006

Much as the UPA would like to believe that its social security programmes would eradicate poverty, there seems to be no better poverty alleviation programme than growth. The decline in poverty in India reported by NSS data for 2004-05 has not happened because of any well-targeted anti-poverty programmes, or because the NDA stepped up expenditure on anti-poverty programmes. It happened because of higher growth. And, interestingly, it has happened not only in India, but also in most of South Asia.

A recent study shows interesting evidence. Quietly, without most of us noticing, some of the poorest countries in the world—South Asian countries—have obtained strong growth and a sharp reduction in poverty in the past five to 10 years. Bangladesh, Bhutan, India, the Maldives and Pakistan have all grown at more than 5% per year on average over the past five years. A recent paper titled Economic Growth in South Asia: Promising, Un-equalising,...Sustainable? by Shantayanan Devarajan and Ijaz Nabi of the World Bank examines the impact of the growth on poverty ( http://tinyurl.com/kl6dd ).

Devarajan and Nabi additionally estimate that if Indian growth were to accelerate to 10%, poverty in India is likely to get down to 13% by 2013. In other words, such an acceleration in growth would get an additional 30 million people out of poverty by 2013. Those who focus on poverty need to focus on this number. No redistribution scheme can have the impact economic growth can have. High economic growth is the best poverty alleviation programme.