Poverty alleviation is a term which has been equally espoused and misused by International Financial Institutions as well as developed and developing countries. In the name of removing or reducing poverty, funds are generated, allocated, lent and spent, without having much impact on the levels of poverty in the developing countries.
2011 data shows that around one billion people live in extreme poverty in the world. A breakup of this is: 551 Million in Asia,436 Million in Africa,15 Million in South America,5.9 Million in North America,0.3 Million in Europe and 50 Thousand in Oceania. India – with almost 300 million people – is the country with the most poor people in the world. Nigeria and China follow with 107 and 84 million people.
Based on the updated poverty line of $1.90 a day, in the World Bank’s Global Monitoring Report 2014-15 titled ‘Ending Poverty and Sharing Prosperity’, World Bank projections suggest that global poverty may have reached 700 million, or 9.6 percent of global population, in 2015. Globally, 1.2 billion people (22 percent) live on less than $1.25 a day. Increasing the income poverty line to $2.50 a day raises the global income poverty rate to about 50 percent, or 2.7 billion people. It says that 30 percent of the world’s extremely poor live in India.
On October 16, 2015, on the occasion of World Food Day, the International Union of Food (IUF) and Pakistan Institute of Labour Education and Research (PILER) released a statement that said the results of millennium development goal (MDG) are not encouraging and the nations have failed to reduce poverty and hunger by 50%. According to the statement, countries like Pakistan experienced an increase in people living under the poverty line, which shows that the state has failed to address the issues of poverty and food nutrition. IUF showed grave concerns on condition of workers, especially agriculture and rural workers, who have not enough resources to secure sufficient food for their families while nutrition is not only the need but also a basic human right.
Despite sounding hyperbole in their rhetoric to remove poverty in their countries, most of the developed and developing countries make meager budget allocations for poverty removal programmes. Even in the United States of America, less than 1 percent of the US budget goes to fighting extreme poverty.
It is a common knowledge that the IMF and the World Bank aggressively disbursed loans for decades in the name of economic rehabilitation and poverty alleviation. Now recipients of their soft loans and structural adjustment programmes are deeper in debt than ever before. Their non-usurious, low-interest loans compounded over time to create a situation where interest payments now exceed original principal amounts often by several orders of magnitude. The world’s poor now pay several times more in interest payments than they do in all social services combined, leaving us with damning evidence that the debt-based sincerity of the IMF and the World Bank only served to spread world poverty.
Even the aid provided by the World Bank to different countries fails in its objective to reduce the poverty. A paper written by Paul Collier and David Dollar of World Bank’s Development Research Group in April 1999 finds fault with the World Bank’s approach. It says- “Although aid is allocated coherently, it is allocated inefficiently with respect to poverty reduction. At present, aid is allocated partly as an inducement to policy reform and partly for a variety of historical reasons. This produces a pattern in which aid is targeted on weak policy environments and on countries which do not have severe poverty problems. The policies which appear to matter for aid to be effective in poverty reduction are not narrowly macroeconomic, but include both distributional policies and the provision of social safety nets. The diversion of aid from poverty reduction to policy improvement would be justifiable, were there evidence that the offer of finance is effective in inducing policy improvement. However, currently the evidence suggests that finance is ineffective as an incentive, perhaps because the income effect offsets the substitution effect, perhaps because it impairs government ownership of the process of policy reform.”
A new World Bank report too admits that the overall returns to spending in terms of poverty reduction has not reached its potential. The report, Social Protection for a Changing India, says while India devotes over 2% of gross domestic product (GDP) to her social protection programmes and the spending allocated to each rural household on major centrally sponsored schemes is significant at 40% of the annual rural poverty line in 2004-2005, the poor are not able to reap the full benefits of such large investments. The administrative capacity of poorer states is typically low coupled with a range of implementation problems, it says. While states with higher poverty are allocated more funds from the central budget, they have the lowest capacity to spend effectively, the report adds. The report, prepared at the request of the Government of India, is the first comprehensive review by the World Bank of the performance of India’s key anti- poverty and social protection programmes such as the Public Distribution System (PDS), Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREG), Indira Awaas Yojana (IAY), and Indira Gandhi National Old Age Pension Scheme (IGNOAPS) among others.
Says noted economist Jayati Ghosh- “It is interesting that even the focus on poverty alleviation takes a very limited view of what poverty is or how it is generated. Essentially, this is an approach that somehow abstracts from all the basic economic processes and systemic features that determine poverty. So ‘class’ tends to be absent from the discussion, or included only in the form of ‘social discrimination’, with the economic content being effectively wiped out. The poor are not defined by their lack of assets — which would then necessarily draw attention to the concentration of assets somewhere else in the same society — but by lack of monetary income or various other dimensions (such as poor nutrition, bad housing and inferior access to utilities and basic social services, etc.) that are actually symptomatic of their lack of assets. Similarly they are not defined by their economic position or occupation, such as being workers engaged in low paying occupations or unable to find paid jobs or having to find some livelihood in fragile ecologies where survival is fraught with difficulty. “
Prof. M.A. Oommen, a leading economist too feels the same. He says:”To be sure, poverty is not a clinical problem, an individual tragedy, or a behavioural distortion, as the World Bank argues. Poverty arises because of structural injustice in initial endowment of land and other assets, lack of exchange entitlements to participate in the market, the government’s failure to provide equality of opportunities to access healthcare, education, employment, and so on. In other words, poverty is integrally related to the development paradigm you choose and is the outcome of the process of development itself. “
That’s why even the Millennium Development Goals failed effectively in removing the poverty. Hence, the need is to rethink on the strategies chalked out to remove global poverty.
(Writer is a senior journalist).