Pakistan needs to focus on achieving more inclusive growth: Pasha

The Asia-Pacific region is well on track as a region to achieving the Millennium Development Goal of halving poverty by 2015, however, South Asia remains somewhat off-track and will have to perform better to achieve the target.
This was stated by Dr Hafiz A. Pasha, Assistant Secretary General United Nations while delivering a lecture on the theme of 'Inclusive Growth: The Asian Experience and Implications for Pakistan' organised by the Planning and Development Board as a part of P&D lecture series, here on Wednesday.
Dr Hafiz Pasha, who is also assistant administrator of UNDP, maintained that Pakistan also has the opportunity for bringing down poverty sharply, however, for achieving the Millennium Development Goal (MDG) of halving poverty by 2015, Pakistan will have to focus on achieving more inclusive growth. 'Countries like Bangladesh and Pakistan also have large pockets of poverty and prospects have improved in both the countries of achieving a faster breakthrough in reducing the incidence of poverty', he added.
He said the Asia-Pacific has been the fastest growing region in the world over the last few decades, and has at the forefront of the process of globalisation. In the recent years, the euphoria about Asian economic performance has been enhanced even further by the high growth rates achieved simultaneously by the two largest economies of the region, China and India.
India growth rate has crossed 9 percent while China continues at almost 10 percent. Both the countries also had the largest numbers of the poor and the critical question is how the high rates of economic growth have impacted on the incidence of poverty in these two countries, he said, adding, all countries of south Asia including Pakistan have also seen a significant upsurge in their growth rates by anywhere between half and one and ha1f percentage points. The manufacturing sector, in particular, in these countries is beginning to take off on the back of rapid growth in exports.
Talking about trends in inequality in Asia Pacific, Dr Pasha said there have been concerns about inequality in Pakistan. However, he said the recent ADB study has shown Pakistan not only has had a relatively low level of inequality but has also experienced a very small increase in inequality from 1990 to 2004. 'Rising inequality is demonstrated by the fact that in most countries the top 20 percent have experienced bigger increases than their counterparts in the bottom 20 percent', he pointed out.
He added that the countries where inequality has increased, regional disparities have also widened at the sub-national level. Another important source of rising inequality is the growing gap between rural and urban incomes. Quoting ADB, Dr Pasha said the growing urban-rural gap has contributed more to the overall level of inequality in China than disparities among household within urban or rural areas. In India also, estimates are that the gap is increasing and rural incomes are now only about half the level of urban incomes on a per capita basis, he added.
Citing neglect of agriculture and rural development, failure in employment generation, under investment in human development and consequences of globalisation and liberalisation as drivers of inequality and poverty, Dr Hafiz A. Pasha apprised the select audience about its impact on the growth.
About the Pakistan experience, he said growth in Pakistan has picked up appreciably in the last four years while levels of expenditure of the poorest segments have fallen slightly primarily because of low growth. He added that Pakistan has also a higher rate of economic growth probably being accompanied by rising inequality. The visible consumption boom, especially with the explosion in asset values in the stock market and the urban real estate market have fuelled these concerns about the growing concentration of wealth in the country, he added.
Dr Pasha said that taking lessons from the Asian experience, there is need that growth should take place in sectors in which the poor work. Therefore, an inclusive growth strategy has to focus on sectors, areas, factors of production and items of consumption, which can play a special role in alleviating poverty.
About the policy for resource mobilisation, he said one of the singular failures of many Asian governments has been the inability to use fiscal policy as a strong redistributive mechanism, especially in terms of developing a progressive taxation system. 'Provincial governments in Pakistan have, in fact, been endowed with taxes, which are inherently progressive in character. These include taxes on assets like land, buildings and motor vehicles, which are owned largely by the richer segments of the population.