powerlessness, state of helplessness and lack of access and opportunities. in pakistan, literacy rate is about 50 per cent and there is a high correlation between poverty and literacy. those who are poor are preponderantly illiterate. therefore, intensified efforts for education and literacy will certainly help in alleviating poverty. the educational system which is usually leveler of incomes has created inequities in pakistan. the children of the well - to - do families study in english medium schools go abroad for higher education and return to occupy high positions in the country. the children of the poor families remain illiterate or go to madarsah or attend urdu medium schools and generally become clerks. this is not fair at all. we should have a system whereby those who are bright and talented but do not have means to attend the best educational institutions should be given scholarships by the government. it is gratifying to see that the talented students from backward areas of fata have been able to get into the state bank of pakistan by dint of their merit and not sifarish. drop out rates in our educational system are extremely high, the quality is poor and the skills imparted at government schools and colleges are highly irrelevant to the demands of the economy. the output from such educational institutions is, therefore, relegated to the ranks of the unemployed. while the economy has serious shortages of technical and professional manpower, we have surplus of ordinary bas and mas who do not have employable skills. this imbalance is one of the major factors for high unemployment among the urban educated youth. gulf states and malaysia are also looking for engineers, architects, technicians, mechanics, para - medical staff, nurses, etc. but we do not have adequate numbers available in the country. access to health facilities is also highly differentiated and parallels the story of educational facilities. the government - run hospitals, clinics and dispensaries are in terrible shape, devoid of basic drugs and equipment. the doctors manning these facilities concentrate on private practice and are indifferent towards the patients from the poor households. the drugs supplied by the government for free distribution are sold in the market to earn private profits while private patients have to fend for themselves. access to thana, kutchery and tehsil is also heavily tilted against the poor. they have to either seek the assistance of an influential person or offer bribes to get redressal of their grievances. as most of the time they do not have adequate financial resources, they

4 per cent, 6. 6 per cent and more than 8 per cent. if growth remains on this trajectory and poverty targeted interventions including investment in human development are implemented, there is no doubt in my mind that we would once again see a reduction in poverty and decline in unemployment rates. what is the basis of this assertion? higher growth rate in real terms means that all households in the economy with the exception of those not in labour force or not fully employed receive higher incomes after adjusting for inflation. of course, these higher incomes accrue in proportion to the assets held by different income groups. top 20 per cent of the population receives almost 50 per cent of the national income. so they receive higher incomes than the bottom 20 per cent who get only 7 per cent of the national income. but still this segment of the population is recipient of additional income generated as a result of faster growth compared to a situation where growth is low or stagnant. higher incomes translate into increased demand for goods and services. this puts pressures on prices in the short run as there are too many people chasing a limited supply of goods and services. but higher prices also signal to the producers that there are shortages and they should enhance their production so that they can meet these shortages. to increase their production, they have to invest in new plants & machinery and employ more people. as more people find jobs, they are moved out of the ranks of unemployed and unemployment rates decline. as incomes accrue to these previously jobless or underemployed households they are lifted out of poverty and hence the incidence of poverty falls. this is exactly what happened in pakistan until 1988 / 89 and that is what is happening at present. sixty per cent of our population relies on agriculture directly or indirectly. those engaged in agriculture are not employed in the strict sense of terms as we think about employment in factories, firms, government departments, etc. in agriculture, higher incomes accrue to the landholders through higher output prices and higher productivity. farm labour also benefits as the demand for their services also rises and poverty declines in rural areas too. part of this income finds its way into demand for consumer goods. manufacturers seeing this upsurge respond by first increasing utilization of existing capacity and then expanding capacity through new investment. that is why we have seen double digit growth in investment, manufacturing production and sales and high overall growth rate of gdp. but it must also be admitted that poverty is not only a phenomenon of low incomes but that of