annual report of the Mahbub-ul-Haq Human Development Centre has highlighted the issue of agriculture and rural development in South Asia this year. Since the passing away of Dr Haq, the Centre kept alive the tradition of bringing about the issue of human development in South Asia in the form of a development report. The issues of human development, poverty reduction and equitable and sustainable economic growth are major focus of the report.
It is a great tribute to Dr Mahbub-ul-Haq that today human development indicators are as much important as the growth of the economy itself. The UNDP has established an Annual Mahbub-ul-Haq Humanitarian Award in New York which was awarded first time to President Cardoso of Brazil for contributing most for achieving human development goals in his country. The annual human development report attracts extensive readership across the globe. The current issue of 2002 touches important correlation of agriculture and rural development and their impact on poverty alleviation.
The theme of this year’s report is agriculture and rural development. South Asia is the house of almost 46 per cent of the world’s poor and most of them live in rural areas. The limited development outlay is unable to finance the development needs of the urban areas, and rural backwardness is not taken care of in policymaking process. The lack of opportunities in rural areas and high degree of dependence give rise to migration of vast number of people from rural to urban areas. This puts extra pressure on urban areas to cater to the basic needs like food, shelter and education for larger number of people. This implies that the urban poverty originates from rural backwardness. The report rightly targets agriculture and rural uplift to tackle the problem of poverty. For fighting poverty in South Asia, agriculture has to play a critical role. Development of agriculture sector is bound to lead rural development and will go a long way in reducing incidence of poverty in South Asia.
The same theory is valid for Pakistan. Poverty in Pakistan is primarily rural phenomenon and urban poverty also originates from deprivation of the rural poor. Agriculture is the major source of earning livelihood for rural population. Hence, agriculture will have to play a pivotal role in our fight against poverty in Pakistan. There is hardly any question that higher economic growth is crucially important for poverty reduction because higher economic growth will lead to a greater absorption of labour, thereby increasing their income levels. Growth is necessary but not sufficient for poverty reduction, especially if the objective is rapid and sustained poverty reduction. What is more important is the pattern and quality of growth. Growth should be pro-poor and not growth per se.
Pakistan practiced trickle-down-based growth theory during 1960s and 1980s, but higher growth in these decades became the root cause of most of the miseries inflicted on poor of the country. Growth and only growth at whatever cost was the only objective of economic policy in these decades. The buzz word of Green Revolution was heard in the official circles during 1960s but the fruits were not reached to rural areas. The economy grew at a rapid pace but quality of growth and its distribution to various segments of the society was flawed. Hence the objective of well-being of the society was not taken care of.
Although growth is critical for poverty reduction, focus on growth alone is not enough. Where poverty is endemic, the high economic growth policy must be accompanied by direct poverty alleviation measures. In contrast to the approaches adopted in the past where poverty reduction was considered as a by-product of growth process, poverty alleviation, in fact, has taken the centre stage of the country’s macroeconomic policy. Our macroeconomic policy for the last three years contains some reference for poverty alleviation and improving the living conditions of the vulnerable segments of the society but the approach should be more focused and result-oriented. The problem in public service delivery is that in the competition for the allocation of public spending, social spending has been squeezed.
For the past two decades a rising debt-service burden along with continued substantial defence expenditure in the face of stagnant revenues has left little fiscal space to meet the rising needs of basic social services. During the 1990s, overall government revenue fell from 19 per cent of the GDP in 1991 to around 16 per cent in 2002. Even though defence spending fell from 6 per cent in 1991 to below 5 per cent in 2002, interest expense rose from 5 per cent to 7 per cent over the same period. As a consequence, compared to other countries at its income level, Pakistan allocates 42 per cent lower health spending per capita. The socially critical development outlay shrank from 8.8 per cent of the GDP in 1990-91 to 5.1 per cent in 2002. Furthermore, the failure of public services can also be traced to a record of poor implementation of public programmes, which has eroded their quality. The general deterioration in the quality of expenditure has eroded access of people to public services. The resource crunch impedes government’s ability to improve the quality of public services. The resources are hard to mobilize in vicious circle of slow growth.
The only option for the government is to develop agriculture sector to provide direct benefit to the poor. The development outlay could not be enhanced at once but efficiency in utilization of paltry amount on development of infrastructure in rural areas is essential. Being the dominant sector of the economy, agriculture accounts for one-fourth of the GDP directly, employs 44 per cent workforce, and contributes substantially to export earnings. Almost 67 per cent of the country’s rural population is directly or indirectly dependent on agriculture for earning their livelihood. On the one hand,agriculture caters to the basic needs of the majority of population, and on the other hand it provides raw material for industrial development. It also creates demand for goods and services. What happens to agriculture is, therefore, bound to affect the lives of the vast majority of the population. Empirical evidence suggests that agriculture has strong bearing on poverty. It shows that agriculture could play a pivotal role in poverty reduction and economic development in Pakistan.
The subject matter of the report crucially timely in this backdrop and South Asia, including Pakistan, should work upon its strong area, i.e, agriculture and agro-based small and medium enterprises. While devising growth-oriented strategy, they should focus on quality rather than quantity of growth. The human development report is a success in a sense that it brings to lime light the quality of growth. But quality data is missing in the report.
It is unfortunate that the report has used data from controversial sources like PIHS (Pakistan Integrated Household Survey), which has recently come under serious attack even from official circles of Pakistan. It was the problem with the World Bank when they released their Poverty Assessment last month and it persisted in HDR too that no one had bothered to check the reliability of the estimates from the government side. The information coming out from PIHS is primarily being used for research purposes by the academic community in the past. Using PIHS, many economists and social scientists have published papers in national and international journals. These numbers were rarely used for guiding macroeconomic policies and direction of the country. Hence, nobody took it seriously. PIHS was primarily conducted for monitoring of Social Action Programme (SAP) and thus naturally its focus was on most deprived areas of Pakistan. An independent study of Applied Economic Research Centre (AERC) ranked all districts of the country according to development indicators and if we allocate coverage given to each district in PIHS, interesting story about efficacy of PIHS emerges. The district-wise coverage of PIHS and number of households in the category is given in the Table.
It is obvious from the table that the most deprived districts with development ranking 81-101 attracted greatest coverage in PIHS, while according to development ranking most affluent 20 districts are accorded least treatment in the survey. It is interesting that the highest number of household is living in the most affluent areas. Therefore, PIHS has depicted distorted picture of social indicators. It is unfortunate that credible data on Pakistan’s social indicators is yet not available and experts are doubtful about the capacity of the Federal Bureau of Statistics in providing a credible data on social sectors. The Human Development Centre and other similar NGOs in this regard have a greater role to play. The government on its part facilitates development agencies as well as ensures collection of credible data about every economic indicator, including social sector. In this regard the statistics division should be manned with capable professionals and necessary equipment.