Poverty in Pakistan

Theory of Poverty: [1]

Poverty cannot be described it can only be felt. One knows more about poverty when he is hungry and cannot purchase food, he and his children want new clothes but they can’t purchase it because of low income, he’s sick and doesn’t have money to have medicine, he wants to send his children to school but can’t bear educational expenditures. The world Development Reports define poverty as “pronounced deprivation in well being’. Poverty can be measured by following three methods, i.e. Head Count Ratio, Basic Needs Approach, and Poverty of Opportunity.

According to Head Count Ratio, the persons who fall below the poverty line as determined in the country are regarded as poor. In Pakistan, for instance, the persons who earn income which cannot meet the daily intake of about 2350 calories per person are considered to fall below the poverty line. Basic Need’s Approach suggests the measurement of ‘poverty’ with reference to income distribution. According to this approach if the persons of a fixed income group cannot purchase basic needs, i.e. food, clothing, housing, education and basic health facilities, they are considered to fall below the poverty line. The third approach which is ‘poverty of opportunity’, if due to fall in income, health or education the human sufferings increase the people are considered to have fallen below the poverty line.


Poverty in Practice: [2]

Global environment:

Globally considerable progress has nevertheless been made in different parts of the world in reducing poverty. The proportion of people living in extreme poverty on global level fell from 28 percent in 1990 to 21 percent in 2001 (on the basis of $1 a day). In absolute numbers the reduction during the period was 130 million with most of it coming from China. In Sub-Saharan Africa, the absolute number of poor actually increased by 100 million during the period. The Central and Eastern Europe and the CIS also witnessed a dramatic increase in poverty. While incidence of poverty declined in South Asia; Latin America and the Middle East witnessed no change.

Proposal to tackle the problem:

The recent trends in global and regional poverty clearly suggest one thing and that is, that rapid economic growth over a prolonged period is essential for poverty reduction. At the macro level, economic growth implies greater availability of public resources to improve the quantity and quality of education, health and other services. At the micro level, economic growth creates employment opportunities, increases the income of the people and therefore reduces poverty. Many developing countries have succeeded in boosting growth for a short period. But only those that have achieved higher economic growth over a long period have seen a lasting reduction in poverty East Asia and China are classic examples of lasting reduction in poverty. One thing is also clear from the evidence of East Asia and China that growth does not come automatically. It requires policies that will promote growth. Macroeconomic stability is therefore, key to a sustained high economic growth.

Although extreme poverty on global level has declined, the gap between the rich and poor countries is increasing, even when developing countries are growing at a faster pace than developed ones – perhaps due to the large income gaps at the initial level. In a world of six billion people, one billion have 80 percent of the income and five billion have less than 20 percent. This issue of global imbalance is at the core of the challenge to scale up poverty reduction.

Case of Pakistan: [3]

Poverty has many dimensions in Pakistan. People have not only low incomes but they also are suffering from lack of access over basic needs. The major challenge of today is poverty reduction. In Pakistan, Poverty Reduction Strategy was launched by the government in 2001 in response to the rising trend in poverty during 1990s. It consisted of the following five elements:-
(a) Accelerating economic growth and maintaining macroeconomic stability.
(b) Investing in human capital.
(c) Augmenting targeted interventions.
(d) Expanding social safety nets.
(e) Improving governance.

The net outcome of interactions among these five elements would be the expected reduction in transitory and chronic poverty on a sustained basis. The reduction in poverty and improvement in social indicators and living conditions of the society are being monitored frequently through large- scale household surveys in order to gauge their progress in meeting the targets set by Pakistan for achieving the seven UN Millennium Development Goals by 2015.

Pakistan’s growth performance over the last four years is enviable in many respects. Sound macroeconomic policies and implementation of structural reforms in almost all sectors of the economy have transformed Pakistan into a stable and resurgent economy in recent years. The real GDP has grown at an average rate of over 7.5 percent per annum during the last three years (2003/04 to 2005/06). With population growing at an average rate of 1.9 percent per annum, the real per capita income has grown at an average rate of 5.6 percent per annum. The strong economic growth is bound to create employment opportunities and therefore reduce unemployment. The evidence provided by the Labour Force Survey 2005 (First two quarters) clearly supports the fact that economic growth has created employment opportunities. Since 2003-04 and until the first half of 2005-06, 5.82 million new jobs have been created as against an average job creation of 1.0 – 1.2 million per annum. Consequently, unemployment rate which stood at 8.3 percent in 2001-02 declined to 7.7 percent in 2003-04 and stood at 6.5 percent during July – December 2005. The rising pace of job creation is bound to increase the income levels of the people.

In recent years the role of remittances in reducing poverty has been widely acknowledged. Remittances allow families to maintain or increase expenditure on basic consumption, housing, education, and small-business formation. Total remittances inflows since 2001-02 and until 2005-06 have amounted over $ 19 billion or Rs.1129 billion. Such a massive inflow of remittances particularly towards the rural or semi-urban areas of Pakistan must have helped loosen the budget constraints of their recipients, allowing them to increase consumption of both durables and non-durables, on human capital accumulation (through both education and health care), and on real estate. To the extent that the poorer sections of society depend on remittances for their basic consumption needs, increased flow of remittances would be associated with reduction in poverty.

Although, growth is necessary but it is not sufficient to make any significant dent to poverty. Realizing this fact the government had launched a directed program under the title of Poverty Related and Social Sector Program some five years ago. Over the last five years the government has spent Rs.1332 billion on poverty-related and social sector program to cater to the needs of poor and vulnerable sections of the society. Such a huge spending on targeted program is bound to make a significant dent to poverty. The Household Integrated Economic Survey (HIES) – a component of Pakistan Social and Living Standards Measurement (PSLM) Survey provides important data on household income, consumption expenditure and consumption patterns at national and provincial level with rural-urban breakdown. The information pertaining to income and expenditure of the households are used to estimate poverty. The HIES is specifically designed to monitor poverty status of population by collecting information on consumption expenditure at the household level. With a representative sample size of 14706 households, it covered 5808 and 8898 households in the urban and rural areas of the country, respectively. The Survey was started in July 2004 and the entire field operations were completed in June 2005. The poverty line is based on 2350 calories per adult equivalent per day. It is also comparable with poverty line of 2000-01 as it was also based on 2350 calories and calculated from Pakistan Integrated Household Survey (PIHS). The poverty line of 2004-05 is adjusted by the inflation rate during the period 2001-2005.

The latest estimate of inflation – adjusted poverty Line is Rs.878.64 per adult equivalent per month ─ up from Rs.723.40 in 2001. Headcount ratio, i.e., percentage of population living below the poverty line has fallen from 34.46 percent in 2001 to 23.9 percent in 2004-05, a decline of 10.6 percentage points. In absolute numbers the count of poor persons has fallen from 49.23 million in 2001 to 36.45 million in 2004-05. The percentage of population living below the poverty line in rural areas has declined from 39.26 percent to 28.10 percent while those in urban areas, has declined from 22.69 percent 14.9 percent. In other words, rural poverty has declined by 11.16 percentage points and urban poverty is reduced by 7.79 percentage points.

Consumption inequality increased marginally during the period. These findings are consistent with the developments on economic scene that have taken place in Pakistan since 2000-01. A strong growth in economy, rise in per capita income, a large inflow of remittances and massive spending on poverty-related and social sector programs were expected to reduce poverty in Pakistan. It is important to note that the methodology and the estimates of poverty have been endorsed by the development partners such as the World Bank, the Asian Development Bank, the United Nations Development Program (UNDP) and the Department for International Development (DFID), UK. The service of world renowned poverty expert, Professor Nanak Kakwani was hired by the UNDP to independently look into the methodology as well as poverty estimates. He also authenticated both the methodology and estimates. In order to maintain consistency across years, it is essential that we apply the same agreed upon methodology over the years, irrespective of its weaknesses and strengths.

Conclusion: [4]

Pakistan has emerged as ‘Asian Tiger’ with reference to the Economic growth during last couple of years. And government of Pakistan spent about Rs.1332 billion to reduce the poverty. And as a result poverty reduced from 39.26 to 28.10 percent (rural) and from 22.69 to 14.9 percent (urban). By having a close look at the facts it is revealed that although a heavy amount has been spent on poverty reduction but the attained results are not up to the mark as poverty percentage stands quite high. Actually government has spent all this amount only on first strategy of poverty reduction, i.e. Accelerating economic growth and maintaining macroeconomic stability, while other four strategies have been left either untouched or neglected.
Government only targeted high macro economic growth; the level of investment in human capital has not been seen at even a low extent. Augmentation in targeted interventions has also been misdirected. Employment opportunities should have been created with in the industrial or agricultural sector in order to accelerate the production of basic needs so that consumer goods should have been in the reach of low income group. While services sector was expanded without any planning, which resulted in a situation that mobile is kept by every one but they don’t have access over basic needs.
After that social safety nets have also been neglected, there’s no proper pronouncement by government in this regard. And finally ‘improvement in Governance’, which has been left untouched. For a long time, whenever senior government personnel visits a major city like Karachi, all the traffic on the roads is diverted in the streets and all the work being done is stopped in order to ensure the security of the official. By this way those who earn on daily wages, have to suffer loss in daily wages. I quoted this example because when rulers are so ‘insecure’ in their own homeland how can they improve the governance or develop their country or how can they ensure the safety of the whole country?

Concisely, in spite of all efforts of government poverty still stands as an iron wall for Pakistan’s economy. And to break this iron wall we are in need to apply all five poverty reduction strategies at utmost level.

References:

1- Economics of Pakistan, M.Saeed Nasir
2- Reports of World Bank
3- Economic Survey 2005—06

50 Responses

  1. Salam Qurrat,

    you have done good job. Do we need to up-date the fact and figures or u have used up-dated. Its really helpful for all of us. Thank u for sharing with us. Keep it up. May Allah bless u.

    Regards and best wishes.

  2. asalam-o-alakum,
    i am khalid zaman and i am doing my thesis on : the poverty -growth nexus in pakistan (1990 to 2005)”through poverty equivalent growth rate. i need a STATA do programme for estimating Poverty equivalent growth rate . please do favour

  3. Salam,

    Excellent Qurat, Really i am impressed by your work.
    This is updated + accurate 1.

    Best Luck in every Field of your Life.
    Regards,

    Muskan

  4. salam
    i am waqas from sweden doing my masters in chemical engineering with speciolization in sustainable development.
    its nice to see your work infact i”ve got an updated information about poverty facts and figures in Pkaistan best of luck and keep it on..

  5. Hi there,
    I just read an article about poverty in Pakistan(53% of the population will fall in poverty especially in rural area and children age 0-15) in the Dawn. This report shocked me so found your article. So we know the figures about poverty, now we have to find the sustainable solutions. Poverty is the mother of all crimes. Pakistan has pretty big young population but unskilled as compare to other emerging markets like china, mexico, turkey even India. But again the problem how can we educate even have no funds to feed them. Gap between rich and poor getting bigger. We need to find the solution like macro finance that works very well in Bangladesh and now trying in India.
    any suggestions?

  6. i just red artical which was very informative regarding Poverty. i know poverty is a global issue and needs to collective work to control this issue. i may request you to please send me latest infromation of proverty.

    Regards
    Pervaz

  7. We know that poverty is global problem but we have to start, can’t wait someone’ll do for us.

  8. Qurat you’ve done a great job Keep it up

  9. assalam o alaikum!
    quratulain you have really done a great job.the article is really informative.it helped me in doing my assignment.thanks to you.looking forward for more informative articles like this.
    regards
    eesha..

  10. I really appriciate your resarch on this article,honestly ,should do some thing before its too late.
    KEEP WRITING

  11. That’s is very impressive efford at the part of u Qurrat i am thanfull to u it will help me in my Exam it’s update info about Economy
    plz let me know some topics i will send u i need ur assistance Dear
    i hope u will help me in this regard

  12. Qurratulain

    I ma thankfull to you for the sharing of this updated info about pakistan economy

  13. @zaib

    Thnx for the comliments….!

    @Khalid Zaman

    You can visit http://www.finance.gov.pk

    @Muskan

    Thnx dear.

    @Waqas

    Thnx a lot

    @Tariq Khilji

    I totally agree with your points.

    @Parvez Gulzar

    The article containes latest data.

    @Faiza

    Thnx a lot

    @Esha

    Thnx a lot

    @Sahar

    Thnx a lot

    @ Zahid

    You can place your queries at justqurat@gmail.com i’ll try my best to provide you with maximum possible help.

    Regards,

  14. Dear Qurratulain:
    Hello! I have read your comments about the poverty reduction in Pakistan. You have explained everything in detail but there is onething I would like to mention that the recent estimates of poverty reduction are still not reliable. I have studied that report of state bank of Pakista and it is not broad based at all. The model is too small to address the population of 160 million. It is being said by various independent economists for instance Dr. Shahid Hassan Sidiqqui that poverty in Pakistan has increased and there is a hypre trend for concentration of wealth. I am a an honours student of economics currently working on my research paper about the recent economic growth trends in Pakistan in the context of its sustainbility and implications. Could you please provide the detailed refrences of the reports and research papers you used for your review about poverty.

  15. Dear Qurratulain:
    Hello! I have read your comments about the poverty reduction in Pakistan. You have explained everything in detail but there is onething I would like to mention that the recent estimates of poverty reduction are still not reliable. I have studied that report of state bank of Pakistan and it is not broad based at all. The model is too small to address the population of 160 million. It is being said by various independent economists for instance Dr. Shahid Hassan Sidiqqui that poverty in Pakistan has increased and there is a hypre trend for concentration of wealth. Just recently the ADB has also showed concerns and doubts on this estimation. The government of Pakistan is not revealing the true picture. I am a an honours student of economics currently working on my research paper about the recent economic growth trends in Pakistan in the context of its sustainbility and implications. Could you please provide the detailed refrences of the reports and research papers you used for your review about poverty.
    Regards
    Adnan Hafeez

  16. @Adnan Hafeez

    I wrote this article on poverty at the end of August 2006 and the facts and figures i mentioned in this article are upto June 2006. For this i used latest edition of “Economics of Pakistan by M. Saeed NAsir and Syed Kamal Hyder”, “Reports of world bank at http://www.worldbank.org “, and “Economic Survey of Pakistan for the fiscal year 2005–2006, it is available at http://www.finance.gov.pk ” . I’ve mentioned all these references at the end of the article as well.

    For further assistance you can visit this link http://www.finance.gov.pk/poverty/home.html

    Regards,

  17. Thanx for your reply. Well I have browsed through the reports you have mentioned. I checked it with Stata Bank of Pakistan, ADB, IMF and Ministery of Finance, Pakistan. The model which was used in that study for which they have made a claim for the reduction in Poverty is not relaible at all. The model reviews only 88,000 housel holds for the population one hundred and sixty million. Moreover, you did not mention the HDI (Human Developement Index Ranking) in 1999 it was 127th went to 144th in 2003 and in 2005 it was 135th ( I can send you the rankings if you want). The 2006 report is due to be released on 11th Nov, 2006. Henceforth, these rankings show that the povery in General has increased in Pakistan since 1999. The population that is living on less than a dollar per day has decreased it has only improved to the population living under $2 a day. The magnitude of improvment is way too small to be even considered when the economic growth is said to be 8.5% and 6.5% in FY 05 and FY06 respectively. How do you comment on that?

    Regards

  18. ASALAM-0ALAKUM
    HOW R U QURAT , I AM KHALID ZAMAN , THANX FOR YOUR SUPPORT, I HAVE SEND U A QUERY ABOUT POVERTY BAND AND HCR, POVERTY GAP , FGT , GINI COEFFICIENT , IMPACT ON ECONOMIC GROWTH ON POVERTY AND IMPACT OF INEQUALITY ON GROWTH AND IMPACT OF POVERTY ON INEQUALITY REGRESSION ANALYSIS, FROM 2000 TO 2005 , I REALLY NEED A YEARLY BASE DATA FROM SUCH THINGS FROM 2000 , 2001, 2002, 2003, 2004 AND 2005, PLZ HELP ME OUT, AND TELL ME HOW I CAN MEASURES AFTER SUCH THINGS TO CALCULATE PRO-POOR INDEX OF POVERTY, PLZ HELP ME OUT AND GIVE ME AN ANSWER OF E-MAIL, URGENTLY , BEST REGARDS AND HAPPY EID MUBARAK

  19. very excelent

  20. Very interesting site… I wish I could build one like yours!nancy

  21. Dear Qurratulain,
    I am a student of MBA Finance, working on my final project etitled ” Micro-credit for poverty alleviation”.I found your web page very informative. Here i am enclosing my request:
    I need latest data about Poverty rate(2000-2006) and Micro credit disbursments. Can you help me in finding the above said data urgently.

  22. this articles really is good and thought provoking. in my view poverty is lack of resources for,even,survival.more articles should be written on this issues to highlight it further b/c poverty is moher of all evils.

    Rahim bux Soomro

  23. hi.

    i write a dessertation on the topic of. how regulating
    inequalties in society.i need the data or percentange of rich or poor people.as weell middle class. last 30 years or currently.

  24. please send me some articles on poverty in pakistan.

  25. @jovial

    Poverty in Pakistan is a wide topic, please be specific so that I may forward you the relevant sources of information.

    Regards,

  26. salam
    i m a student of MBA finance and after two days i present the presentation on the poverty of pakistan 2007 so respected QURATULAIN if you have any material on this topic so plz send me bcz this is a big problem for me.

  27. @saim mahdi

    I just recovered the whole post, and for latest information visit finance.gov.pk, grab the economic survey and have a read of poverty section there!

  28. I just recovered the whole post, and for latest information visit finance.gov.pk, grab the economic survey and have a read of poverty section there! thanks for ur help

  29. Assalamoalaikum, my name is Twaha and i’m doing my bachelors in computer engineering. Your article is really good Qurat. I must say, i was able to understand your article much better than many others ive tried to read.

    Um, ive been given an assignment at my university, to write a mini research paper on “Poverty: A problem of Pakistan”. I’m a litle confused as to what and how to write. What to include and what not. So can you help me out a little plz?

    Thank you and Allah Hafiz.

  30. @Twaha

    Actually whenever you write something, you must cover all the aspects whether it’s a detailed research paper or a mini one. Yes, the thing you can manage is the length by shortening or explaining the relevant facts. Anyways, let me outline the assignment in my capacity:

    Defining Poverty
    Causes Of Poverty
    Effects Of Poverty
    Analysis/ Impact
    Suggested Remedies
    Conclusion

    Hope it’ll be helpful to a little extent! 🙂

    Regards,

  31. hi Qurratulain i have read out ur work its great job u have done i would like to ask u one thing regarding poverty pls as u have explained it realy well would u pls also mention the impact of inflation on povety as well. as even if income level is raised of a poor person but the pirces rise simlutaneously there will b no effect on his standard of living as his real income remains the same or even decrease due to very high inflation. so raise in income level is not the only solution. the inflation should also b contrlled
    regards meena

  32. Dear Qurratulain,

    I think you’ve done a good job on your article though I dont agree with most of your conclusions, especially that Pakistan is an Asian Tiger. I’d like to remind you about the Paper Tigers of south east asia. Having done an MSc International Economics I could poke a few holes in your economic rationalizing, but maybe on another day.
    For now Im wondering if you have a year by year table of Pakistan’s HDI ranking for the past decade. I keep seeing one or two figures, but a table with all of our rankings over the years would really help me.

    Thanks,

    Atiq

  33. HI um’ Mazan frm lahore pakistan and um’ doing BBA .i would just like to say thanks to you for ur wonderful research…..

  34. salam hope ur fit as fiddle.thanx alot for sharing informative article on poverty.Im student of busines administration in uni of sindh.To study socio-politio-cultural topics of pakistan is my hobby.

  35. Qurat,
    i appriciate your efferts for a great reserch on poverty , i hope this would help policy maker to do some thing
    once again i hope u continue your wrintings , this alsw a help for the poor class people .

  36. good

  37. aslam o alaikum
    dear qurat!
    u really do a nice work on poverty
    i am a student and after one week i have to present a presentation on poverty in pakistan.

    i need some information. Plz help me in this regard.
    plz send me some information about what is the history of poverty in pakistan
    effects of poverty in pakistan.

    i hope u will help me in this regard.

  38. Asalam-wa-alikum

    The work you did did not require any comment after all of those
    but “Classic”
    i kind of wondering that i have a project to submit in coming 3 days which requires material on POVERTY so if you can help me with some thing in getting stuff on (current poverty in Pakistan) it will be very appreciatingly helpful .

    Regards
    Sara

  39. we need help! tomorrow is our oresentation and we really need some impressive data on poverty..:s

  40. presentation

  41. I m Omar…and I am a Student of business studies in Uk….However this is quite an old version of research but this research shows unbeleivable fact…and beleive me that i dont beleive in it as this is what which doesn’t show what it is actually….

  42. good! but didnt mentioned he current situationin our country , specially in poverty side

  43. ok send your comments on my mail

  44. hello ur comment r good bt i need data on urban poverty in pakistan

  45. slam, i am adnan malik doing my masters in public administration with specialzation in HRM.wish you a special EID MUBARAK,you have done a great job and help many personels to improve their knowledge and to know the causes of poverty in pakistan so i would like to say “thanks” for this effort and wishing you BEST OF LUCK.by.

  46. hi, Give something for help those hungry people from Africa and India,
    I made this blog about them:
    in http://tinyurl.com/6p6lb8

  47. Poverty Should be removed from over all the world

  48. Hello Qurratulain,

    I have studied ur proposal about the poverty in Pakistan. You have tried well to explain the basic reasons and causes of the poverty. MAY ALLAH bless u and give you more knowledge to serve the humans.
    thx.

  49. Job is good, but I am not clear , how to assess the poverty gram or poverty level, what are the concern about poverty, how it is measured, its parameters and pornes?

    I intend attempting a thesis work but lacks in data, any assiatnce, which I sould expect…….

    waiiting,

    rafix500@gmail.com

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