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Economists Call for New Steps for Poor to Share Wealth in South Asia  - 2004-09-19

Nearly two-thirds of South Asians live in poverty, according to a recent report by the Asian Development Bank. Economists are calling for a redistribution of the benefits of economic growth in the region.

The Asian Development Bank says two out of every three persons in South Asia live on less than $2 a day despite strong economic growth in recent years.

South Asia includes seven countries, India, Bangladesh, Pakistan, Nepal, Sri Lanka, Maldives and Bhutan.

The gross domestic product of South Asian countries grew at an overall rate of more than five percent in 2003, with India posting the strongest growth at about eight percent. That growth has lifted millions of people out of poverty. But South Asian countries are not transforming the lives of the poor as quickly as their neighbors China and East Asia.

Greet van der Linden, vice president of the Manila-based bank in New Delhi says that is because economic prosperity has mostly bypassed rural areas and farmers, who constitute the bulk of this region's population.

Mr. Linden says rural economies must be made more dynamic to pull larger numbers of people out of poverty.

"It is very clear that the most rapid reduction in poverty came about at a time when agricultural incomes were going up quite fast," he said. "In fact China started its reforms in the rural areas. So countries should focus on investing in rural infrastructure."

Economists say such investments raise productivity in the agriculture sector, and help better distribute incomes.

Mr. Linden says India has made a beginning in this direction by promising more investments in rural roads, irrigation, and power.

The report also suggests that South Asia should focus more on establishing labor-intensive industries. Much of India's economic expansion has come in the information technology sector, but most of those jobs have gone to city dwellers with higher educations and the boom has not helped the poor.

Economists say the need to reduce poverty in South Asia is critical because it is one of the world's most densely populated regions. But they warn that decades of sustainable growth will be needed to win the battle against poverty.