The Hindu : International : South Asia set to tackle income poverty

Online edition of India's National Newspaper
Monday, Apr 26, 2004

International

International

South Asia set to tackle income poverty

By Sridhar Krishnaswami

WASHINGTON, APRIL 25. Against the backdrop of the broad-based economic recovery that seems to be under way in many regions of the world, it is ``disheartening'' to note that a number of Millennium Development Goals (MDGs) may not be achieved and that goals that are met at the global level may hide ``significant under-achievements'' at the regional or sub-national levels, says the Finance Secretary, D.C. Gupta.

In his statement to the Development Committee this morning, Mr. Gupta said that the South Asian region is on track to meet the goal of tackling income poverty ``but in various social indicators such as universal primary education, infant and maternal mortality and gender gap would require a step-up'' in efforts.

``It is, therefore, necessary at this juncture for the international development community to take stock of the situation in terms of achievements and shortfalls and of the performance of the three parties to the Monterrey Compact,'' Mr. Gupta said.

He argued that the ``wholly inadequate'' levels of the global flows in Official Development Assistance (ODA) was impeding the performance in achieving the Millennium Development Goals and that the most conservative estimates are that as much as an incremental $30 billions in ODA can be effectively utilised by developing countries on an annual basis today and say even $50 billions as capacity developed.

``... At a closer look global statistics of ODA flows reveals that, lately, even the meagre increases... have been accounted for almost wholly by special purpose allocations. A large part of ODA has been directed for debt relief or aiding war on terror, and not to directly finance the incremental cost of MDGs,'' Mr. Gupta pointed out.

Mr. Gupta touched on the issue of performance-based allocation. ``Yet in reality, much of aid allocation continues to be driven by strategic considerations rather than objective criteria. Even when performance is claimed to be the basis of allocation of concessional finance, caps and exceptions distort the process quite substantially,'' Mr. Gupta said.

Turning to South Asia, he said that the quality of governance of the region was ``not only relatively better but also is in the process of improvement'' and that in terms of both the unmet needs and performance-based allocation criterion more concessional assistance should be flowing to the region.

India has stressed in its Statement to the Development Committee that what is hurting development are barriers to trade in developed countries particularly on goods and services and this dwarfed the insufficiency of global ODA flows.

``While developed countries are expected to remove tariffs on developing countries' exports of manufactured goods as well as agricultural products and dismantle the massive export subsidies, there is little evidence of appreciable progress in this direction. If anything the movement is in the reverse direction,'' Mr. Gupta said.

Among the issues that Mr. Gupta raised was that of long term debt sustainability in low income countries and in the need of the World Bank and the IMF to prepare an ``appropriate framework'' that will be of help to borrowers, donors and the international financial institutions.

``There cannot be a perfect mathematical solution to the debt sustainability issue. What constitutes `excessive debt' itself is a critical issue and no single quantitative measure can be used to arrive at a conclusive judgment regarding sustainability of debt in specific situations,'' he has maintained.

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