High growth rate does not alleviate poverty: Kerala CM

Thiruvananthapuram, July 21 (UNI) Kerala Chief Minister V S Achuthanandan today said high GDP growth rate did not necessarily lead to unemployment and poverty alleviation.

Taking a dig at the Draft Approach Paper of the Planning Board for the XI Five year Plan, the Chief Minister told the South Zone Regional Consultation meeting that several assumptions in the paper were questionable.

The Planning Commission's own estimates showed the rate of decline in poverty during the period since 1990 was almost half of what it was between 1977 and 1990, notwithstanding the higher growth rate that was supposed to have occurred in the former period.

The poverty ratio in 2004-05 was officially estimated to be 28 per cent. ''Since the official estiamtes are known to suffer from methodological limitations that make them underestimates, the trickle down assumption that largely underlies the Draft Approach Paper becomes more questionable,'' he added.

A background note prepared by the Planning Board which was circulated at the meeting said it had serious reservations on the approach of the Planning Commission document and on a number of specific points.

''The basic emphasis of the document is on an acceleration of the growth rate, which directly and indirectly, is supposed to reduce poverty and unemployment. This presumption is untenable.'' Rural poverty, in the strict sense defined by the Central Government itself, appeared to have increased or at the very least not declined despite the significant acceleration in growth rate.

''If growth acceleration has left rural poverty untouched at best, then more of the same would hardly make any difference to poverty.

On the contrary, it would only accentuate inequalities even further,'' it added.

The magnitude of poverty was linked essentially to unemployment.

''If growth remains 'jobless' then no amount of acceleration in it would even reduce poverty.'' It also disputed the Planning Commission's presumption that the growth of labour demand would increase with the growth of GDP. The reality was the elasticity of employment declined as growth rate increased.

''The decline is so sharp that a 12 per cent growth rate in manufacturing has been accompanied by an employment elasticity of 0.08, implying a mere one per cent growth in employment.

Referring to the Planning Commission's claim that 'average Indian' was improving faster through growth acceleration, it said the statement was analogous to saying that a person whose head was in the freezer and feet over fire was ''on average'' comfortable.

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