Academic journal article Journal of Financial Management & Analysis

Is the Term Poverty a Misnomer? A Financial Management Approach to Poverty Alleviation (Welfare Uplifement) through Village Democratization

Academic journal article Journal of Financial Management & Analysis

Is the Term Poverty a Misnomer? A Financial Management Approach to Poverty Alleviation (Welfare Uplifement) through Village Democratization

Article excerpt

Introduction

One of India's leading industrialists A. N. Mafatlal, with deep commitment combined with realistic programmes and plans towards eradicating extreme poverty from villages, has expressed the view:

There has been an increase in the disparity between the affluent and the poor as also between the urban and rural population and this has aggravated the already miserable condition of the majority of our people... in order to have a correct appraisal of the present malaise and develop an effective remedy for it, we should first of all, locate the cause of the distortion of the development strategy as it has evolved in practice... one of the most glaring defects in our economic planning has been the undue importance and support given to the growth of the large-- scale organised sector in the hope that this in turn will generate sufficient economic activity in the decentralised small scale sector ... the major problem before us is, therefore, to rectify the unbalance and to bring about a more rational and even growth through judicious division of investments between the large-scale sector and the small-scale sector. For this, there would have to be, first of all a fundamental change in the outlook and approach of both the large organised sector and the state. In particular, it is evident that the benefits of whatever development that has taken place have accrued almost exclusively to the upper strata of our society, i.e. about top 10 per cent of the population. Looking at the same phenomenon from a rational angle, the gains have concentrated in some of the larger urban centres and a few dynamic rural areas. Even in these areas there are pockets of poverty. It can safely be said that a large part of the country has remained bereft of the fruits of the economic development.1

Further the economic relationship between the operator in the techno-economic system (human beings) and the society (environment) has to be rightly understood by the following questions:

Why should the individual serve others ? What claims the society has on individual.

Misconstrued Poverty Diagnosis

An agriculture is the mainstay of 'development' process, and as more than a three quarter of the population derives its income from land to satisfy `merits wants' of a big majority of the population (for example, according to the World Bank study,2 rural areas contain 74 per cent of people in poverty in Pakistan who support 70 per cent of the total population) and this `core and tradition bound' sector does not receive any encouragement during natal and post-natal stage from financial institutions (national and international, commercial, cooperative and agriculture), the developing countries have provided special berths in the train in the form of concessionary credit to priority sector to undertake comfortable and easy journey to bring about increases in agricultural production and productivity. However, scholarly research studies have revealed that the special berth accommodation provided to the agricultural sector has not been put to the right use, which have resulted in bank losses caused by credit flow to agricultural sector. Mere credit flow does not bring about qualitative changes Judicious use of credit and monitoring to avoid diversion is what matters.

The present day world has an uneven spread of population classified by economic strata, viz., by those people who are relatively prosperous and others resourceless or in want of necessaries. Probably more than half of mankind is permanently hungry. Perhaps between 65 per cent and 70 per cent of people are illiterate, miserably poor. The gap between rich and poor countries is steadily widening to such an extent that the rich are getting richer and the poor are getting abysmally poorer, in that poor countries' share of the world GNP and exports is 4 per cent each while that of the rich countries is 84 per cent each. In recognition of the existence of this colossal problem, the World Bank has opined:

Though the knowledge of the problems and ways to address (poverty alleviation issues) have increased, nonetheless there is much about poverty and how to address it effectively is still not known, and solutions to the many causes and manifestations of poverty have yet to be found. …

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