Initiating Inclusive Growth
By Dr Akmal Hussain
my academic papers, I have been arguing that we need
inclusive growth if we are to break out of the historical
pattern of stop-go growth with inequality.
The specific sense in
which the term inclusive growth has been used in my work is
a growth process within an institutional structure that
provides equitable access to the middle classes and poor
over productive assets, credit, high wage employment and
Such an opening up of the
economy to all of the citizens rather than just the elite
would create a broad base of competition, efficiency,
innovation and productivity increase.
Since a wider range of
citizens would be driving the growth process, it would be
growth through equity.
Now that the Eleventh
Five-Year Plan is on the anvil, it may be helpful to
consider, what in my humble opinion, are five concrete
elements of an inclusive growth strategy for Pakistan. We
will discuss the first two in this article and the remaining
three in the next article.
First, a small- and medium-farmer based agriculture growth
strategy (that is farms below 25 acres).
These farms have a considerable yield potential and also
constitute a substantial part of the agrarian economy. Farms
below 25 acres constitute 94 per cent of the total number of
farms and over 60 per cent of the total farm area.
The key constraint to increasing their yields per acre is
that 29.4 per cent of the farm area in this category is
operated by tenants or owner-cum-tenants, who neither have
the incentive nor the ability to raise their yield per acre.
It can be argued that a
policy initiative that enables the tenants to acquire land
is essential to providing the small farmers with both the
incentive and the ability to raise their yields per acre.
How can this be done? The first step in this regard would be
to allot the existing state-owned agriculture land of about
2.6 million acres in five-acre packages to landless tenants.
This would make 58 per cent of tenants into owner farmers.
For the remaining tenants, an opportunity could be provided
by setting up a Rs500 billion credit fund to enable these
tenants to buy land.
The second concrete element
of an inclusive agriculture growth strategy is to enable
small farmers to substantially raise their yields and
thereby contribution to national income.
In the pursuit of this objective, it is proposed that a
Small Farmer Development Corporation (SFDC) be established.
The SFDC could be owned by small farmers and run by
professionals as a social enterprise.
The small farmers could be provided with loans to buy equity
in the SFDC, which could be paid back from the dividends.
The SFDC could be run as a commercial enterprise to provide
to small farmers the following services: land development;
laser leveling; brick-lined water channels on the farm or
drip irrigation to improve on-farm water management;
provision of new technologies for growing high value
off-season vegetables through tunnel farming; access over
credit as well as input and output markets to enable the
small farmers to get better quality seeds, fertiliser and
pesticides, and also get a better price for their output.
The SFDC, by enabling small farmers to increase the on-farm
water application efficiency on the one hand and growing
high value crops on the other, could make a significant
improvement in water use efficiency, that is, the GDP
generated per unit of water used.
This would be crucial not only for the welfare of the small
farmers but a key element in sustainable development in an
increasingly water scarce country.
In Pakistanís history and the history of economics,
inequality has been seen as the inevitable concomitant of
It is time to make history and turn the received wisdom on
its head. In this and the ensuing articles, I will specify a
new growth process that is fuelled by the enterprise and
innovation of farmers, as well as industrial entrepreneurs
in the small- and medium-sized category: this would achieve
faster growth through equity.
The Express Tribune