FINANCIAL
MANAGEMENT
POVERTY REDUCTION
THROUGH GROWTH DRIVERS
(PROFESSOR DR KHAWAJA AMJAD
SAEED)
October 27, 2010
ANALYSIS OF POVERTY
With the passage of time, Economists have developed various indicators
to measure the economic growth in a country. However, with all the
research that has been undertaken, poverty continues to exist and
unfortunately rather than getting eliminated, it is continuing to increase.
People are living below the poverty line. Except for a few affluent countries,
the situation in the world is not satisfactory. Recently, research has revealed
that every 7th person, even in the United States of America is living below
the poverty line. Financial mismanagement has aggravated the situation.
Unemployment in USA has gone up on an average of three times. Despite,
the presence of the best talent in the USA, the Government of US
continues to ponder over this issue as to how to fight poverty, how to
generate employment, how to keep the hope of people alive. Even in the
fast-growing growth-related countries, including India, poverty is very high
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Therefore, the democratic Government of Pakistan must rise to the
occasion and the Parliament of Pakistan should address this issue with a
sense of urgency. This is the crying need of today, as we have not yet
succeeded even to provide the basic necessities of life to the people. All
governments (civil, or military) in the past have raised high hopes of the
masses. The promise propagated has been that poverty will see a
declining curve, employment openings see the dawn of day and high
standards of living will be the final outcome
POVERTY MEASUREMENT
Economists have developed a GINI Co - Efficient (popularly known as the
GINI Index). This measures the level of inequality of income in society. It
uses a scale of 0-1.0. The higher the scale, the greater is the inequality of
income and therefore, the greater is the level of poverty.
The available GINI Co-efficient in the year 2004 for Pakistan was 0.417.
The Government of Pakistan hopes that this may be reduced by 15% by
the year 2015 as part of the Millennium Development Goal (MDG).
GROWTH DRIVERS
Steady growth on all economic fronts, with benefits to the society across-
the-board, ought to be the main aim of every economic policy. Therefore, it
is essential that a steadily rising growth rate should be targeted for
achievement.
Agriculture has a weight of 22% in the GDP of Pakistan. Strategies are
required to be developed with a breakthrough approach in boosting
livestock development (52% weight in agriculture), Crops - both major and
minor (44% weight in agriculture),
The Planning Commission is urged to consult all the stakeholders and
develop a strategy with a flourishing growth in the foregoing segments of
the agriculture sector to ensure that Pakistan becomes a food centre for
her food needs in the short run and for SAARC countries as a food store-
house in the long run.
MANUFACTURING & SERVICES
SECTOR
Manufacturing constitutes 26% weight in the GDP of Pakistan. Full
capacity utilization of the existing industrial units at the micro-level ought
to be our goal. The development of small dams in the short-run and
hydel dams construction in the long run, with nuclear use for electricity
with the help of China,
The services sector has a 52% weight in the GDP of Pakistan. It
consists of four components namely, physical (roads, communication,
transport, bridges etc), social (education, health and family planning),
Financial (banking, insurance, leasing, mutual funds and modarabas)
and intellectuals (HRD, innovation and new inventions areas).
The democratic Government of Pakistan is urged to develop an
employment budget and channelize the initiative of the people of
Pakistan in targeting their efforts for construction of farm to main roads,
improving communication, strengthening transportation, investment in
education and health, qualitative improvements in the financial sector.
STRATEGIC DIRECTIONS
So far, the Government of Pakistan has tried several measures to alleviate
poverty. However, the positive results have yet to see the light of the day. A
three-pronged strategy is needed to tackle the problem on an urgent
footing with a war-footing strategy to ensure social stability in Pakistan.
The Ist element of the strategy is to focus on human development ,i.e.
education, health, water supply, sanitation, nutrition, population and gender
Efforts should be initiated to improve on the GINI co-efficient as discussed
above. The democratic Government of Pakistan is urged to demonstrate
their political will in respect of the above so that growth is ensured and
poverty is reduced to the most minimum level.
The third element of the strategy is to improve the living standards and
incomes of the rural population, to which most of the poor belong. The most
effective way to do is to enhance agriculture productivity, including livestock