Poverty remains a serious challenge

Poverty remains a serious challenge for Pakistan as an in-depth analysis of poverty line distribution reveals that the total number of population below and around the poverty line is 42.8 percent. Though out of this 20.5 percent is in the vulnerable to poverty group, however, their living conditions need attention as they do not have access to necessities of life and face problems in terms of missed opportunities, lack of education, and health facilities.
The government needs to focus on the qualitative side of these issues as a marginal improvement in terms of percentages does not capture the severity of the problem.
In order to help poor break the vicious circle of poverty, government has focused on social protection strategies in PRSP II which are based upon five key elements: income support, nutrition support, human resource development, natural disaster management, and facilitation for the role of non-government and private sector organizations in the implementation of these pro-poor policies.
In this regard, the government has also built a comprehensive network of social protection which includes direct as well indirect measures. Direct social protection mechanisms include provisions like employment-based social safety guarantees (Employees Old-age Benefit Institution, Worker’s Welfare Fund etc), direct transfers like Benazir Income Support Program (BISP), Zakat, Pakistan Bait-ul-Maal etc; and market-based interventions like microfinance initiatives, and measures to encourage the community participation through enhancing the role of community organizations such as the Pakistan Poverty Alleviation Fund.
According to the MDG Report 2009 by UNDP, around 55-90 million more people have fallen below the poverty line due to recent financial crisis. Globally, the number of chronically hungry people is expected to have soared from 960 million in 2008 to one billion in 2009. In Pakistan, the share of “severely food insecure population” is also expected to have increased from 23 percent in FY06 to 28 percent in 2008.6 Low economic growth rate (2 percent for FY09), global economic recession, sharp rise in inflation during FY08, reduction in subsidies and insufficient employment opportunities are main reasons for growing poverty in the country.
Although the latest poverty figures are not available, the Economic Survey 2008-09 mentions that headcount ratio (HCR) in Pakistan is estimated to have soared from 33.8 percent in FY08 to 36.1 percent in FY09. Earlier data estimates indicated a decline in HCR over the period between FY99 and FY06; HCR declined by 10.3 percentage points and fell from 32.6 percent in FY99 to 22.3 percent in FY06. However the decline in urban poverty was more pronounced than rural poverty except for FY05. High incidence of poverty in rural region can be linked to inadequate infrastructure, lack of opportunities and resources.
Urban poverty remained lower than both overall and rural poverty because of relatively easier accessibility to resources and opportunities in these areas. The government plans to reduce expenditure under the head of rural development through years 2009-2013, with the intention of targeting poverty in rural and urban areas on equal footings. Allocating equal resources for urban and rural areas have an underlying danger of increasing the incidence of poverty in rural areas since they will have relatively less resources while already having higher poverty level than urban areas. It has been observed that despite a decline in various indicators of poverty i.e. headcount ratio, poverty gap, and severity of poverty, a significant proportion of the population remain clustered around the poverty line. Thus, while the headline numbers have shown improvement, this does not necessarily imply a substantial improvement in their living standards. Moreover, this observation also suggests that people who have been able to come out of the poverty trap have access to only minimum subsistence level of living; any shock to the economy can push them back into poverty.

The Poverty Debate in Pakistan
Poverty, as measured by headcount ratio (HCR), in Pakistan was earlier reported to have fallen by the Centre for Poverty Reduction and Social Policy Development (CPRSPD). However, later reports reveal that poverty in Pakistan has risen in line with the international trend. Conflicting reports about the level of poverty in the country have forced the government to revisit the poverty figures for FY08.
Subsequently, the World Bank re-visited the poverty estimates by CPRSPD in order to validate the latter’s results but found a 4-5 percentage points increase in poverty figures in the last quarter of FY08. The Bank has further projected that HCR in Pakistan may rise above 25 percent in FY10.
According to the World Health Organization’s inter-agency assessment mission 2008 on impact of food crisis in Pakistan, 24 percent of the population is still living under the poverty line. The report further states that there are chances of severe food crises and subsequent social unrest in the country. The food crises will result in malnutrition, particularly among the urban population, lower health and lower labor productivity. This is expected to result in higher poverty levels in the country. The causes of food crisis are thought to be widespread regional and socioeconomic inequalities prevailing in different parts of Pakistan.
The Panel of Economists constituted by the government has pointed out that as many as 10 million more people were expected to fall into the poverty trap during FY08. The interim report “Economic Stabilization with a Human Face” states that headcount ratio in the country may have risen by 3.5 percentage points in FY08 from 22.3 percent in FY06. Going ahead, a further rise is expected in FY09 by additional 2.7 percentage points. This brings the headcount ratio figures in the country at 28.5 percent in FY09. Moreover, the World Bank’s task force on food security estimated that HCR has increased in Pakistan to 33.8 percent in FY08 and 36.1 percent in FY09. This means that approximately 62 million may have fallen below poverty line in FY09.
Recent data suggests that between 2005 and 2009, more than 12-14 million people are expected to have slipped into poverty. Considering these figures, it is estimated that poverty may have risen between 30-35 percent in FY09. The global economic crisis, decline in manufacturing sector in the country, and closure of industries due to power crisis is likely to push more people in poverty.

Sources: Pakistan Economic Survey 2008-09; Interim Report on Economic Stabilization with a Human Face, Panel of Economists, Planning Commission; UN Inter Agency Assessment Mission on Impact of Food Crisis in Pakistan, World Health Organization