Ending Poverty and Boosting Prosperity

The consideration of the development community has concentrated finally on the poorest individuals at all developed nations confronting the best difficulties, as exemplified by the 2018 High Level Panel report. The achievements of World Bank are extraordinary in reducing extreme poverty and boosting shared prosperity all over the world.

Reducing the worldwide poverty rate to close to 3 percent in 2030 isn’t an expectation. It is an objective that we think about is not yet achievable, given ongoing background. It will require a fall in poverty by around one rate point for every year amid this period, which is about the same as the normal yearly reducing seems since 1990.

In the meantime, keeping up such a growth rate is a long time goal, which can be achieved by equal distribution of income, boasting socio and economic sector and increasing human and physical capital. That direction is an exceptionally idealistic situation, as it expects proceeding with the example of solid development in those regions, effectively dealing with any worldwide shocks to restrain its effect on poor people, and keeping disparity from expanding.

However, a one rate point reduction in extreme poverty every year turns out to be continuously harder to accomplish as the rate decline, in light of the fact that increasing one rate point speaks to an undeniably bigger offer of the general poverty rate.

One may along these lines expect the pace of worldwide extreme poverty decrease to back off in the coming years with respect to the previous decades.

To my point of view a more inclusive growth strategy should be pursued, centred on tackling income distribution directly. The idea that a strategy that combines growth with better income distribution can have a better result in terms of poverty reduction.

As the world becomes wealthier and poverty becomes uncommon, real issues emerge about whether US$1.90 (2011 PPP) is as well low to characterize whether somebody is poor in the world. One-fourth of the world lives under US$3.20 every day (table 1).

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The higher poverty line depicts a divergent regional narrative of poverty reduction from the US$1.90 line. The Middle East and North Africa is a valid example. In 1990, utmost poverty in the area was 6 per cent and it is known 5 per cent in 2015.

This disheartening picture of almost no progression in reducing utmost poverty appears to be unique when analyzed through the viewpoint of the US$3.20 line.

At the same time, the nations of the Middle East and North Africa diminished the extent of individuals living on under US$3.20 from 27 percent to 16 percent. The progression in decreasing poverty in those regions is covered up when one investigates only extreme poverty.

So far the focus has been on income poverty. However, it is important to tackle poverty; the real target should be poverty broadly defined that counts human well-being as its central dimension.

This means going beyond the concerns of increasing the incomes of the poor and requires implementation and/or enhancement of public policies and mechanisms to improve critical social indicators such as mortality rates and education provision.

Recurrent expenditure should play a key role in that process, but this also needs finance. In order to finance additional recurrent expenditure, the generally recommended measure is to raise private savings (which can then be taxed or borrowed) or increase consumption-based tax revenues.

This may be feasible for middle-income countries like India, and could even contribute to the objective of income redistribution. But for extremely poor counties, there is no room to reduce private consumption.

Therefore, recurrent expenditure should be financed with supplementary external resources. However, this may also need additional financing, as it is uncertain whether the resources freed by less intensive growth would be sufficient. Therefore, alternative solutions should be sought in order to increase the availability of external finance for reducing poverty and boosting prosperity.

Umer Jeelanie Banday is a doctoral student and research fellow in Union Ministry of Commerce and Industry, New Delhi