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Growth out of poverty

Growth out of poverty
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First Published: Sun, Jul 12 2009. 09 19 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Sun, Jul 12 2009. 09 19 PM IST
In his recent Budget speech, finance minister Pranab Mukherjee heralded the United Progressive Alliance’s (UPA) hand in inclusive development. Between funnelling money into rural jobs schemes and food subsidy programmes, Mukherjee and his political allies, as most analysts note, are following up on election-year promises to provide for India’s aam aadmi (common man).
This newspaper has argued on numerous occasions that many of these projects—from the National Rural Employment Guarantee Scheme to the UPA’s food security programmes—are misguided, mismanaged, and do not effectively provide the services for which they are created. There are simply better ways to create jobs and feed India’s neediest—without throwing away a preposterous amount of money and skewing market incentives.
Illustration: Jayachandran / Mint
While development projects cannot be discounted wholesale, the recent United Nations (UN) Millennium Development Goals Report 2009 reminds us that few development programmes are as efficacious at poverty alleviation as economic growth.
In the foreword to the report, UN secretary general Ban Ki-Moon writes about the repercussions of the present economic crisis on the UN Millennium Development Goals (MDGs): “At the very least, it will throw us off course in a number of key areas, particularly in the developing countries. At worst, it could prevent us from keeping our promises, plunging millions more into poverty and posing a risk of social and political unrest.”
The report notes that over the last decade, the lives of those in extreme poverty are considerably better: Primary education has improved, particularly in South Asia, and childhood and infant mortality has decreased significantly worldwide.
But this raises a greater question about causality: The report has no evidence that UN interventions are responsible for these tempered improvements. We are inclined, instead, to believe that simply economic growth—which has been substantial in India over the past decade—is responsible for these improvements.
The current downturn—in addition to the recent increase in food and oil prices—has hurt the poor substantially. And these issues have hindered poverty alleviation, though the extent of this remains to be seen. Critics of the MDG project, such as economist William Easterly, note that factors outside the control of the UN—such as economic growth—are the key drivers of development. Like the MDGs, the UPA should understand that the most meaningful poverty alleviation programmes encourage economic growth.
Do lessons from the UN MDG project apply to India? Tell us at views@livemint.com
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First Published: Sun, Jul 12 2009. 09 19 PM IST