Cards for the Poor and Funds for Villages: Jokowi’s Initiatives to Reduce Poverty and Inequality


ABSTRACT

When President Jokowi took the office at the end of 2014, Indonesia was facing the problem of stagnating poverty and inequality reduction. He quickly introduced several initiatives to address these problems, mainly in the form of cards which gave the poor access to education and health services as well as food and cash transfer, and grants for villages as mandated by the Village Law. This paper assesses the implications of these initiatives on poverty and inequality by correlating economic growth with real per capita household consumption growth by quintile at the district level. The results indicate that economic growth has become less pro-poor during the first three years of Jokowi government, indicated by lower growth elasticity of consumption of the poorest 20 per cent population, while those of the middle quintiles have increased significantly and that of the richest 20 per cent remains the highest. This indicates that the poor is less connected to economic growth compared to the middle class and the rich. This implies that Jokowi’s poverty and inequality reduction strategy through the expansion of social assistance programmes and grants for villages is not sufficient to help the poor. Hence, a complementary strategy to connect the poor to economic growth through job creation and income generation is needed. Furthermore, the results also indicate it is important to put more attention to assist the livelihood of the poor who live in Java and the urban poor.

Keywords: Economic growth, consumption, poverty, inequality, Indonesia