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Poverty Reduced Credit It to Democracy
It is now official. During the eight years from 1996 till 2004, there has been a massive reduction in the poverty level in the country from 42 percent to 31 percent.
Perhaps such a remarkable achievement in so short a period is rare in today's developing countries.
This means, democracy and free market economic system really help in uplifting the living standards of the masses. The latest news dispels all doubts, if there were any. It may be recalled that the poverty incidence was 36 percent in 1977. That increased to 49 percent when multiparty democracy was reintroduced in 1990. But it was reduced to 42 percent in 1996, i.e. at the completion of the first five-year plan period of democratic dispensation that adopted liberal economic policy as the guiding principle of economic management. Similar remarkable achievement was made during the second Plan Period under democratic system, as confirmed by this latest survey.
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If there had been no insurgency, the latest survey would have found still higher improvement. It could be even better had the pace of economic reforms not slowed down and had the democratic political process not derailed, towards the end of the second five-year plan under democracy, by unscrupulous elements who were unfortunately chosen by the people themselves. It can be now hoped that given the next chance, the people will be more careful in making such decisions. The people may not all be formally educated, but they are all quite wise in learning from past mistakes.
It is pleasant to note that the improvement in the situation was remarkable in the far-western and mid-western regions, but unfortunately it has deteriorated in the eastern hills.
Thus the problems are still present. Poverty incidence of 31 percent is not a figure to rejoice over, when the comparative figures in the neighbouring countries are still lower (e.g. 25 percent in India). More serious is perhaps the problem of the gap between the rich and the poor getting wider. The Ginni coefficient is found to have risen up to 0.41 from 0.34 between 1996 and 2004. The percentage increase in per capita expenditure of the poorest households was much lower than that of the richest households.
Still, it should not be forgotten that such anomalies are normal in the initial stages of the economic development of a country, which automatically corrects itself within some years. To hasten the speed of such corrections, no doubt, further reforms are required in the economy making more sectors open and attractive for private sector investment. More investment means more jobs and more income, thus less poverty. The larger the size of the national income pie, larger will be the size of the share from it for the poor. Therefore, the policymakers must be checked from bringing about unsustainable populist measures of distribution. Economic logic says, tackling distributional justice should follow, not precede, the wealth creation.
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