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| Kathmandu, Thursday September 26, 2002 Ashwin 10, 2059. |
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Poverty acceleration in the
Ninth Plan
By RAGHAB D PANT
The Ninth Plan, as we are all aware, had set
an ambitious target to reduce the number of people living below the absolute poverty level
from 42 percent of the population in 1996/97 to 32 percent of the population by 2001/02.
This was to be achieved, among other things, by increasing employment opportunities in the
country to provide, at least, one paid employment per family in the non-agricultural
sector; and by increasing the growth rate of the economy in total and by sectors. The
income from the agricultural sector was assumed to grow by 4.0 percent per annum and that
of nonagricultural sector by 7.0 percent.
If the plan target had been achieved, the
national income would have risen by, at least, 30 percent in the plan period and per
capita income by about 20 percent. In addition, about 4.0 million new employment
opportunities would have been made available in the country. Now, we all know that the
expectation was raised but the actual achievement was substantially below the target.
Still, the National Planning Commission
claims, and the National Development Council, the highest policy making authority under
the Chairmanship of the Prime Minister, has approved that the number of people below the
poverty level has declined to 38 percent in the plan period. There were a group of
economists- myself among them- who had expressed reservation about this estimate when the
information was first released on February 2001. The National Planning Commission also
could not support the estimate as it was not based on any scientifically conducted survey;
it was derived, as most of the estimates used by the NPC are, by ad-hoc procedure, the
detail of which is not yet available.
It appears that the lack of objective
procedure for estimation of poverty has misled the government itself in general and the
National Planning Commission, in particular. It is believed now in its own propaganda that
the poverty rate in the Ninth Plan period has declined, though the target was not fully
achieved.
The available information indicates that the
estimates used by the authority in some areas were faulty or manipulated, for example,
pattern of household consumption which always increased at an annual rate of 7.6 percent,
notwithstanding the overall performances of the economy. But, more importantly, the
planning authorities did not bother even to evaluate their own estimates in an integrated
framework. Otherwise, available information would have indicated even then the overall
poverty rate in the Ninth Plan period had, in fact, gone up; and the poverty situation in
the country, especially in the rural sector, has touched a level more than what it was in
the beginning of the Ninth Plan.
The estimates used by the NPC for the decline
in poverty rate assume that the overall number of people below the poverty level in the
Ninth Plan period increased by 120 thousand to 8.8 million due to growth of population, if
not by other reason. It, however, indicates that the number of people below the poverty
level would have reached 9.7 million, had not the poverty rate in the plan period declined
to 38 percent. This means, in effect, the national development programs had uplifted
almost 1.1 million people, or 220, 000, at an annual basis, from the poverty level in the
Ninth Plan period. It is not obvious how they do it, and why the same programs, with minor
improvements, were not replicated in the Tenth Plan.
The overall reduction in poverty rate
requires an increase in all or one of these three activities, namely, (i) expansion in
employment opportunities; (ii) increase in productive investment; and (iii) rise in
productivity. The employment opportunities within the country, as we are all aware, have
not shown much improvement, if not deterioration in recent years. True, the Ninth Plan had
set a target to provide at least one paid employment per family in the non agricultural
sector. This will require a total employment opportunities in the country in the non-
agricultural sector equal to the number of families in the country which, according to
National Census Report 2001, were 4.25 million. We are not yet aware how much employment
opportunities were created in the Ninth Plan.
As regards the investment, it has, in fact,
declined due partly to security problems and due partly to less than satisfactory
management of financial resources by the public sector, especially the government, and
rising corruption. No latest information is available on the productivity but as far as
the agricultural sector is concerned, the productivity of major agricultural products has
barely shown any improvement in the first three years of the plan period. It is only the
good monsoon in the year 2000 and 2001 that saved the growth rate of the agricultural
sector being negative in per capita terms in the plan period.
The poverty rates in the country will decline
only if there is an adequate change in the availability of resources in the country. These
resources are either available from the change in the national income of the country or
through import of goods and services, including the income from remittances. The average
growth in the gross domestic product in the Ninth Plan was, in per capita terms, 1.5
percent compared with a target of about 4.0 percent. This was also achieved due to good
monsoon in the two fiscal years cited above; the per capita income in the last fiscal year
of the Ninth Plan has shown a negative growth.
The availability of goods and services in the
economy in the first two years of the Ninth Plan as well as in the last year has shown a
negative growth in per capita terms. It is safe to assume that the poverty rate in these
three fiscal years has gone up in the country. There is no possibility whatsoever that
this decline was more than compensated by the good monsoon of the year 2000 and 2001.
In the Ninth Plan period, the availability of resources
increased by 1.70 percent, after adjusting for the growth in population. It is impossible
to assume 4 percentage point decline in poverty rate due to 1.7 percent increase in the
availability of resources. On the contrary, there is sufficient information to support the
claim that poverty rate in the Ninth Plan period has gone up, especially in the rural
sector. This is a separate issue to deal with.
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