Cir­cu­lar Poverty

Trapped in their vi­cious ‘debt prison,’ South Asian coun­tries will not achieve sus­tain­able growth in the so­cial sec­tor un­less they first strive to be­come eco­nom­i­cally self-re­liant and egal­i­tar­ian so­ci­eties.

Southasia - - Cover story - By Huza­ima Bukhari and Dr. Ikra­mul Haq

Eco­nomic chal­lenges faced by South Asian coun­tries are enor­mous and mul­ti­fac­eted. Neg­li­gence of so­cial sec­tor de­vel­op­ment re­mains the most wor­ri­some area hav­ing far-reach­ing ram­i­fi­ca­tions for sus­tained eco­nomic growth. In health and ed­u­ca­tion, for ex­am­ple, not only al­lo­ca­tion of funds is in­ad­e­quate in all South Asian coun­tries but the spend­ing, due to poor gov­er­nance, is prob­lem­atic — sleazed with wastage, un­der­uti­liza­tion and leak­ages. It is now uni­ver­sally ac­cepted that eco­nomic de­vel­op­ment with­out so­cial sec­tor up­lift can lead to all kinds of prob­lems — fi­nan­cial crises, so­cial un­rest, com­mo­tions, clashes and, in the end per­haps, to­tal col­lapse and an­ar­chy. Re­al­iz­ing the key im­por­tance of the so­cial sec­tor for eco­nomic de­vel­op­ment, Asian De­vel­op­ment Bank (ADB) and other donors, dur­ing the last many decades, have given mu­nif­i­cent grants to South Asian coun­tries for re­forms in vi­tal ar­eas of the so­cial sec­tor — ed­u­ca­tion, health, poverty re­duc­tion, gen­der em­pow­er­ment and en­vi­ron­men­tal pro­tec­tion, just to name a few.

Know­ing that South Asia is home to more than one fourth of the world’s pop­u­la­tion, with tremen­dous po­ten­tial to be an en­gine of growth for the rest of the world, ADB in its Strat­egy 2020, ap­proved in April 2008, has pledged to make the Asia-Pa­cific re­gion “free of poverty” and has reaf­firmed its “mis­sion to help its de­vel­op­ing mem­ber coun­tries in im­prov­ing their liv­ing con­di­tions and qual­ity of life.” In 2008, the World Bank also ap­proved a num­ber of projects for South Asia and al­most all of these fo­cused on so­cial sec­tors such as ed­u­ca­tion, health­care, poverty al­le­vi­a­tion and agri­cul­ture. In these ar­eas, Pak­istan ben­e­fited sub­stan­tially from the ADB as­sis­tance specif­i­cally since 1966. In 2009, the ADB dis­bursed $1.10 bil­lion and in­vested $942.7 mil­lion in newly ap­proved as­sis­tance, with the bulk of these sup­port­ing de­vel­op­ment ini­tia­tives in in­fra­struc­ture, en­ergy, so­cial sec­tors, gov­er­nance and trans­port in the four prov­inces and at the na­tional level (


ADB’s Strat­egy 2020, while iden­ti­fy­ing ma­jor driv­ers of change - de­vel­op­ment of pri­vate sec­tor, good gov­er­nance, gen­der equity, gain­ing knowl­edge and ex­pand­ing part­ner­ships with other de­vel­op­ment in­sti­tu­tions and with com­mu­nity-based or­ga­ni­za­tions - promised that by 2012, 80% of its lend­ing would be in the fol­low­ing five core op­er­a­tional ar­eas: In­fra­struc­ture, in­clud­ing trans­port and com­mu­ni­ca­tions, en­ergy, wa­ter sup­ply and san­i­ta­tion and ur­ban de­vel­op­ment • En­vi­ron­ment • Re­gional co­op­er­a­tion and

in­te­gra­tion • Fi­nance sec­tor de­vel­op­ment • Ed­u­ca­tion

ADB in its Strat­egy 2020 has re­it­er­ated its com­mit­ment to con­tinue op­er­at­ing in health, agri­cul­ture, disas­ter and emer­gency as­sis­tance, “but on a more se­lec­tive ba­sis”. It means that for so­cial sec­tor de­vel­op­ment, fund­ing from ADB would de­crease sub­stan­tially in the com­ing years. It poses a chal­lenge for South Asian states where poverty is on the rise and due to higher pop­u­la­tion growth, fa­cil­i­ties in health and ed­u­ca­tion are suf­fer­ing. Ed­u­ca­tion gaps by in­come and gen­der in these coun­tries also in­di­cate that even in coun­tries where eco­nomic growth rate is over five per cent, chances of so­cial mo­bil­ity for the poor are bleak. The dis­crim­i­na­tory sys­tems are cre­at­ing more dis­par­i­ties in in­come dis­tri­bu­tion. It is tragic that in South Asia one child in 13 dies be­fore the fifth birth­day. Half of the births are not at­tended by skilled staff. And wealthy women are more than twice as likely as the poor­est women to have ac­cess to skilled health staff at child­birth. De­fense spend­ing in In­dia and Pak­istan is reck­less and there is no com­mit­ment to al­lo­cate more funds for the so­cial sec­tor.

The South Asian coun­tries, like other de­vel­op­ing coun­tries hav­ing colo­nial lega­cies, are fac­ing a dilemma: rul­ing elite thriv­ing on debts/grants are more in­ter­ested in plun­der­ing na­tional wealth and taxes paid by the masses rather than work­ing for their wel­fare. Democ­racy is con­fined to elec­tion­eer­ing only, en­abling the rich and the mighty to rule whereas the over­whelm­ing ma­jor­ity de­prived of the real fruits of democ­racy, lives be­low the poverty line. The weaker seg­ments of so­ci­ety, es­pe­cially women and chil­dren, are de­prived of their fun­da­men­tal rights and, as a re­sult, so-called eco­nomic growth brings more pros­per­ity for the rich and fur­ther mis­ery for the poor and the down­trod­den.

The pre­vail­ing po­lit­i­cal cul­ture of corruption and in­com­pe­tence cou­pled with an op­pres­sive eco­nomic sys­tem is the root cause of all prob­lems, es­pe­cially debt en­slave­ment and back­ward­ness. The ma­jor weak­ness of gov­er­nance in these coun­tries is unchecked, waste­ful spend­ing and re­luc­tance to col­lect taxes from the wealthy.

Trapped in their vi­cious ‘debt prison,’ South Asian coun­tries will not achieve sus­tain­able growth in the so­cial sec­tor un­less they first strive to be­come eco­nom­i­cally self-re­liant na­tions and egal­i­tar­ian so­ci­eties. Noth­ing will change un­less rulers in these coun­tries come out of their colo­nial mind­set and start liv­ing like com­mon peo­ple; within their means. They must sur­ren­der their ex­tra­or­di­nary perks and priv­i­leges, en­joyed by them at the cost of tax­pay­ers’ money.

In a demo­cratic setup, re­spon­si­bil­ity to­wards peo­ple who vote for par­lia­ment and accountability are in­ter­con­nected. The con­cept of a mod­ern egal­i­tar­ian state emerges from the sov­er­eign right of the par­lia­ment to levy taxes. At the same time it has to spend the same for pub­lic wel­fare rather than for per­sonal com­fort and self-ag­gran­dize­ment. The sec­ond part of democ­racy is com­pletely miss­ing in South Asia re­sult­ing in the pre­vail­ing state of af­fairs. The writers are part­ners in the law firm HUZA­IMA & IKRAM (mem­ber TAXAND) and Ad­junct Pro­fes­sors at the La­hore Univer­sity of Man­age­ment Sci­ences (LUMS).

Our debt-rid­den fu­ture gen­er­a­tions have lit­tle to hope for.

Po­lit­i­cal corruption has pre­vented South Asian so­ci­eties from reap­ing

the ben­e­fits of in­ter­na­tional fund­ing.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.