Question

Discuss the assertion that economic growth is a necessary but not sufficient condition to eradicate absolute poverty and reduce inequality

word count is 1000 words

Answer 1

Economic growth is said to happen in a country wherein, the total production in the country increases and the result is an increase in the income level of people at large. When we talk about economic growth, we look at figures such as Gross Domestic Product, which is the final value of goods and services in the country.

Over the years, countries try their maximum to increase their productivity and to have organizations, which largely help them in moving in the correct direction. Accordingly, countries have been classified into developed, developing and underdeveloped economies with differences in cost of living, overall production and lifestyle being evident.

The debate, however remains to the fact, that if or not, the economic development reaches all sections of the society equally and who benefits from this rapid increase in production facilities in the country.

Economists often debate, that only a small section of the society holds maximum capital, while the rest of the general population or the working class receives much lesser payments for their work and may suffer the consequences of poverty.

In developing and underdeveloped economies, this issue is even larger, with large scale population constantly living under povery for decades and income inequality which means that the rich gets richer, whereas the poor gets more poor, is seen to be the worst kind of economics that could possible exist. For example, we have countries like India, wherein the GDP growth rate has been 5-10% per year, however 70% of the capital of the country is controlled by the elite and rich sections, whereas most other people live in extremely deplorable conditions.

Thus, economic growth in itself, cannot be considered sufficient enough to eradicate poverty and reduce inequality in a country. If the rich acquire capital, use the same and increase the levels of production and export these to other countries or are consumed by the locals, without an increase in the income of local population which works for the capitalists, the end result would be that even though economic progress would happen, the rich would get richer and the poor would continue to suffer at large.

Here, it is critical that growth becomes inclusive which is what economists stress upon. There is a constant need of evaluating the practices followed by corporate houses towards payments of employees, and to ensure that equality in terms of opportunities available, education, health care etc are provided to everyone regardless of their economic background.

It is through this constant upgrade of the skills and development of people, which would help the economy in keeping poverty away and reducing inequality as much as possible.

It is essential that the government proactively manages things such as taxation, minimum wages for people and skill upgrades, which would allow for all sections of the society to benefit from the growth that is taking place. Equal opportunity, would then enable higher success rates for people across the globe.

In a situation, wherein vast population remains under the poverty line, the problem of corruption, theft etc also rise as people lose their confidence on the government and resort to other illegal activities which may not have any positive effects for the society at large. To keep this in check, the above listed activities are important.

It is important for a country to provide education, health care and all possible facilities to the marginal group via the taxes collected to ensure that their standard of living also rises, in comparison to the high growth rates which are taking place in the society at large.

Please feel free to ask your doubts in the comments section.