ADB's Strategy 2030: The social angle

The Asian Development Bank's focus on inequality and poverty alleviation has special significance for India

On July 26, 2018, the Asian Development Bank (ADB) unveiled its Strategy 2030 document, laying down the way forward to address the changing needs of the Asia-Pacific region. ADB’s vision is also tied to major global commitments such as the Sustainable Development Goals, the Financing for Development agenda, the Paris Agreement on climate change, and the Sendai Framework for Disaster Risk Reduction. Given its size and the economic boost this region is expected to experience in the coming years, Asia Pacific will be a crucial partner for the achievement of these long-term goals. 

The Asia Pacific is the fastest growing region in recent decades, with its share in the global GDP having increased to 33 per cent in 2016, from 25 per cent in 2000. However, it is also a region of sharp contradictions. While it is home to India and People’s Republic of China, two of the world’s largest economies, it has also seen a stark rise in income inequality, 80 per cent of the region’s population live in countries with rising income inequalities. Extreme poverty remains a pressing concern with 326 million people living below the poverty line of $1.90 a day, and more than 900 million people living below $3.20 a day. Seen it this light and given the sheer diversity of this region, ADB has, for the first time, adopted a differentiated approach to various groups of member nations. Topmost on ADB’s priority list is its support to the poorest and most vulnerable countries, including fragile and conflict-affected states and small island developing states. While it will continue to provide substantial financing to lower middle-income countries, its support to upper middle-income countries will be need-based and in areas where value can be maximised. 

In comparison to its predecessor (Strategy 2020), the Strategy 2030 document has set an important precedent by emphasising human and social factors, in addition to the usual infrastructure and the private sector. The vision of the document is spelt out as the promotion of “prosperous, inclusive, resilient, sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty”. The document lists the following as chief priority areas:

• Addressing remaining poverty and reducing inequalities
• Accelerating progress in gender equality
• Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• Making cities more livable
• Promoting rural development and food security and
• Strengthening governance and institutional capacity

The above list is demonstrative of some of the most critical and pervasive socio-economic problems being faced by India, where the support of institutions such as ADB would prove critical. According to Oxfam data on India, in the period between 2006 and 2015, ordinary workers saw their incomes rise by an average of just 2 per cent a year while billionaire wealth rose almost six times faster. Performance on indicators such as gender equity, and access to institutions leaves a lot to be desired. India’s spending on health care as a percentage of GDP remains at 1.4 per cent in comparison to the global average of 6 per cent. 

Rapid demographic changes in India are constant sources of challenge. The elderly population is expected to grow at high rates in the coming years, reaching 19 per cent by 2050. As revealed by the RBI Household Finance Committee Report in 2017, a small part of this cohort is adequately prepared for retirement, leaving them vulnerable to exigencies while simultaneously creating the likelihood of a huge fiscal burden for the government. Extreme weather conditions are occurring with alarming frequency in India, which have a significant toll on the agrarian economy. While the number of metropolitan, “smart”, and mega cities are on the rise, India is home to 14 among the 20 most polluted cities in the world. Therefore, the document’s emphasis on building “livable cities that are green, competitive, resilient, and inclusive” is critical. 

Illustration by Binay Sinha

In the post 2008 world, financial systems need to be adequately prepared to withstand economic shocks and uncertainties. Strong governance and institutional mechanisms go a long way in creating stronger and more resilient financial systems. At the same time, strong anti-corruption measures, and environmental and social safeguards are indispensable for sustainable development.

As the foremost institution of its kind in Asia, the document’s focus on gender equity is of special relevance for India. Gender equity is an area where India lags severely behind its global counterparts, even the developing countries. India ranks a measly 120 among 131 nations in terms of female participation in the workforce, according to a World Bank report. While female participation in the workforce has gone up, increasing violence against women, stubborn socio-cultural norms, lack of access to financial systems etc remain huge causes of concern. Aside from the social consequences, this stark gender divide has substantial fiscal consequences as well. The Strategy 2030 document spells out ADB’s commitment to maximising women’s access to markets and opportunities for skilled jobs, expansion of integrated support for women entrepreneurs and women-led SMEs through higher financial and technological inclusion, coupled with political and institutional reform. In a welcome move, the document has emphasised the importance of education, with a specific focus on supporting girls in studying mathematics, science, and technology. The document also pledges support for reproductive and other health needs, reducing time poverty of women, and enhancing gender equality in decision-making and leadership. 

As far as the education of young girls is concerned, these factors are intricately tied together. High-school drop-out rates for adolescent girls remains a worrying fact in India, one which the Beti Bachao, Beti Padhao campaign has failed to address adequately. An onset of menstruation, coupled with a lack of toilets in school and social taboos, early marriages, and “family constraints” are major reasons.  

Aside from a huge social and human cost, the widening gender gap also has huge fiscal ramifications. According to a McKinsey Report published in June 2018, 70 per cent of the potential GDP opportunity comes from increasing women’s participation in the labour force. According to World Bank estimates, about 20 million people (the size of the combined populations of New York, London and Paris) vanished from India’s workforce from 2004 to 2012. Increasing incidents of sexual violence, inhospitable workplaces, lack of child care are key contributing factors. Institutional reforms, better policies, and targeted interventions are vital to tackle these challenges. To that end, the ADB Strategy 2030 document should be viewed as a crucial and timely guiding force.

The author is a lawyer & public policy professional