Commentary: Indonesia searches for that elusive broad-based growth

JAKARTA: When Joko Widodo took over the Indonesian presidency in 2014, he faced a stagnating poverty reduction effort and stubbornly high inequality levels.

The government also furthered the Subsidised Rice for the Poor programme, where each household is entitled to buy 10 to 20 kilograms of rice per month at a heavily subsidised price of Rp 1,600 per kilogram . This programme reached 15.8 million households in 2017. Meanwhile, the Village Fund came into effect in the 2015 budget year. The use of Village Fund grants is determined by villagers at a forum, which is then formally proposed in an expenditure plan. Most villages have allocated over 70 per cent of their funds for infrastructure development, especially the improvement of village roads.

Under the Village Fund scheme, the government provided a block grant of Rp 280 million to each rural village in 2015, which grew to Rp 800 million as of 2018. Consequently, the Village Fund’s overall budget increased from Rp 20 trillion in 2015 to Rp 60 trillion in 2018.One might expect Jokowi’s social policy initiatives to contribute to pro-poor economic growth by addressing the problems of stagnating poverty reduction and high inequality.

Under Yudhoyono, consumption growth of the rich was higher than that of other segments of the population, leading to an increase in inequality during those periods. In contrast, in the first three years of Jokowi’s administration, it was the middle class who experienced the highest growth compared to both the poor and the rich, which explains the decrease in inequality in Indonesia in recent years.

For the middle class , their consumption growth was only half of economic growth under Yudhoyono during his second term and has increased to comparable rates of economic growth under JokowiThe Belt and Road Initiative can provide Indonesia financial and technical support. but they can only benefit if they understand how seaborn and ...Since 2004, the consumption of the richest 20 per cent of Indonesia’s population has consistently grown at a rate higher than economic growth.

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