Course: Research Methods in Social Sciences (SOC - 602)

Report Title: Poverty in Pakistan

Submitted by: Rizwana Waseem

Registration no.: 2019-ag-1162

Submitted to: Dr. Saira Akhtar

Degree: M.Sc. Sociology (Weekend Program)

Semester: Spring 2021 (4th)

Department of Rural Sociology

University of Agriculture, Faisalabad
Introduction:

Poverty in Pakistan has fallen dramatically, independent bodies supported

estimates of a considerable fall in the statistic by the 2007-08 fiscal year, when it

was estimated that 17.2% of the total population lived below the poverty line.The

declining trend in poverty as seen in the country during the 1970s and 1980s was

reversed in the 1990s by poor federal policies and rampant corruption. This

phenomenon has been referred to as the "poverty bomb". In 2001, the government

was assisted by the International Monetary Fund (IMF) in preparing the Interim

Poverty Reduction Strategy Paper that suggests guidelines to reduce poverty in the

country. According to a report submitted by the Ministry of Planning and

Development in the National Assembly of Pakistan, about 24.3% Pakistani lived

below the poverty line which translates into 55 million people.

As of 2017, Pakistan's Human Development Index (HDI) is 0.562,. Pakistan's HDI

is one of the lowest in Asia, after Yemen, Afghanistan and Syria.

Wealth distribution in Pakistan is slightly varied, with the top 10% of the

population earning 27.6% and the bottom 10% earning only 4.1% of the

income.Pakistan generally has a low gini coefficient and therefore a decent

distribution of income (relatively lower inequality).In 2011, 12.4% of Pakistanis

live below in Pakistan's definition of poverty. Statistics vary due to the definition of

poverty. According to the World Bank, poverty in Pakistan fell from 64.3% in 2001

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to 24.3% in 2015. Poverty headcount ratio at $1.90 a day (2011 PPP) (% of

population) fell from 6.2% in 2013 to 4% in 2015 Pakistan has made substantial

progress in reducing poverty giving it the second lowest headcount poverty rate in

South Asia.

AidData cites the World Bank and states that overall "Pakistan has done well in

converting economic growth into poverty reduction."

According to the World Bank, districts varied widely in poverty, with the richest

district Abbottabad at a headcount rate of 5.8pc and the poorest district — Washuk

District in Balochistan — at 72.5pc.

POVERTY PROFILE is generally accepted that the declining trend in poverty

in IPakistan during the 1970s and 1980s was reversed in the 1990s. The incidence

of poverty increased from 26.6 percent in FY1993 to 32.2 percent in FY1999 and

the number of poor increased by over 12 million people during this period. Since

FY1999, economic growth has slowed further, development spending has

continued to decline, and the country has experienced a severe drought. It is

therefore highly likely that the incidence of poverty in Pakistan today is

significantly higher than in FY1999. Poverty in Pakistan has historically been

higher in rural than urban areas. Poverty rose more sharply in the rural areas in the

1990s, and in FY1999 the incidence of rural poverty (36.3 percent) was

significantly higher than urban poverty (22.6 percent).

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Inequality also increased in Pakistan during the 1990s, in both urban and rural

areas, which enhanced the negative impact on poverty of the slowdown in growth

during this period. While agriculture is the predominant activity in rural society, a

substantial proportion of the rural labor force, estimated at more than 40 percent,

depends entirely on non-farm activities. The growth of non-farm activities appears

to have been severely affected by low economic growth, decline in public sector

development spending, and lower worker remittances during the 1990s. In line

with the national picture, poverty in the provinces (apart from Balochistan for

which the poverty estimates were considered to have been affected by sample

selection issues) also registered an increase between FY1993 and FY1999. In this

period, the incidence of poverty in Punjab increased from 25.2 percent to 33.0

percent; in Sindh from 24.1 percent to 26.6 percent; and in North West Frontier

Province (NWFP) from 35.5 percent to 42.6 percent. There is very limited

documentation on the gender dimensions of poverty; however, it is clear that the

gender discriminatory practices prevalent in Pakistani society shape men's and

women's choices and life opportunities differently.

Women suffer from poverty of opportunities throughout their life cycle. In

particular, women's access in the labor market in Pakistan is determined by rigid

gender role ideologies, social and cultural restriction on women's mobility and

integration in the workplace, segmented labor market and employers gender biases

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that attach a lower value to female labor due to their family responsibilities.

Female labor force participation rates in Pakistan are exceptionally low at just 13.7

percent, compared to 70.4 percent for men. In addition, the majority of women in

the formal sector of the economy are concentrated in the secondary sector of the

segmented labor market, where jobs are low paid and there are limited

opportunities for upward mobility. The identification of vulnerable elements within

the poor has also received little attention in earlier poverty assessments in Pakistan.

Vulnerability may be economic or social with the former being defined as the

ex-ante risk of falling below the poverty line and the latter being understood as the

constraints that the poor face in managing their assets, whether human, material,

social or political. While estimating income or consumption related vulnerability is

a complex task, in general vulnerability is likely to be high in households clustered

around the poverty line. Similarly, with regard to social vulnerability, the capacity

of the poor in Pakistan to access public entitlements like political processes or

goods and services which determine human development contrasts strikingly with

that of the rich. There are a number of attributes, besides location, which

characterize the poor in Pakistan. Education is the most important factor that

distinguishes the poor from the non-poor, for example the proportion of literate

household heads in poor households was almost half that in non poor households.

Second, poor households on average had 75 percent more children than the

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non-poor households. Most of these children are not receiving any education, and

thus the cycle of poverty is perpetuated. Third, more than one third of the poor

households were headed by aged persons who were dependent on transfer incomes,

such as pensions and other forms of social support. Fourth, the poor had few

physical assets, and according to one study, if a rural household possesses physical

assets (land/livestock) the probability of it being poor declines by 55 percent. Fifth,

the poor rely disproportionately on informal sector employment. The incidence of

poverty is the highest among household heads with occupations such as day labour

in agriculture, construction, trade and transport sectors. Incidence of poverty is also

high among self-employed, which includes street vendors in urban areas, and

sharecroppers in rural areas. Gender discrimination is another key attribute that

characterizes the poor. Incidence of poverty among women in Pakistan is higher

compared with men, and is characterized by low endowment of land and

productive assets, unemployment, discrimination in the labor market, and limited

access to economic options and political processes. The poor are also characterized

by their vulnerability to environmental degradation and deterioration of the natural

resource base, given that they tend to be strongly dependent on the exploitation of

such resources.

CAUSES OF POVERTY :

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A number of factors explain the existence of an increase in poverty in the last

decade. However, poor governance is the key underlying cause of poverty in

Pakistan. Poor governance has not only enhanced vulnerability, but is the prime

cause of low business confidence, which in turn translates into lower investment

levels and growth. Governance problems have also resulted in inefficiency in

provision of social services, which has had serious implications for human

development in the country. The lack of public confidence in state institutions,

including the police and judiciary, have eroded their legitimacy and directly

contributed to worsening conditions of public security and law and order during the

1990s. With regard to economic factors, decline in the Gross Domestic Product

(GDP) growth rate is the immediate cause of the increase in poverty over the last

decade. In the 1990s, growth declined in all sectors and was slower than average in

labor intensive sectors. However, the causes of the slowdown in growth may be

divided into two categories, i.e. structural and others, with the former being more

long-term pervasive issues, which have persisted because of deteriorating

governance. Among the structural causes, the burgeoning debt burden and

declining competitiveness of the Pakistan economy in the increasingly skill-based

global economy are the most important. While the former occurred due to

economic mismanagement, the latter was because of Pakistan's low level of human

development. With regard to the debt burden, increasing debt service requirements

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resulted in a growing fiscal squeeze, which in turn led to a declining proportion of

GDP being spent on development and social sectors in the 1990s. Falling public

investment, together with unsuccessful attempts at macroeconomic stabilization

also adversely affected private investment. At the same time, reduction in tariffs,

exhaustion of simple import substitution opportunities, and elimination of export

subsidies in the 1990s meant that international competitiveness became an

increasingly important determinant of investment opportunities in Pakistan.

Because of the low level of human development, excessive government

intervention and poor state of physical infrastructure, areas of the economy where

Pakistan was competitive were not many. As a result, total fixed investment

declined significantly, bringing about a fall in the economic growth rate. The

effects of poor governance, furthermore, served to reinforce the adverse impact of

structural factors. The existence of pervasive poverty, wherein a significant

proportion of the population remains poor over an extended period of time is

strongly linked with the structure of society. Cultivated land is highly unequally

distributed in Pakistan. About 47 percent of the farms are smaller than 2 hectares,

accounting for only 12 percent of the total cultivated area. Access To land, which is

the basic factor of production, is crucial to reduce poverty in rural areas. Pervasive

inequality in land ownership intensifies the degree of vulnerability of the poorest

sections of rural society, because the effects of an unequal land distribution are not

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limited to control over assets. The structure of rural society, in areas where land

ownership is highly unequal, tends to be strongly hierarchical, with large

landowners or tribal chiefs exercising considerable control over the decisions,

personal and otherwise, of people living in the area under their influence, as well as

over their access to social infrastructure facilities. Environmental degradation is

also a cause of poverty in Pakistan. The environment-poverty nexus manifests

itself most particularly in health effects. For example, waterborne diseases are

widespread because 17 percent of the urban and 47 percent of the rural population

does not have access to clean drinking water. The poor also tend to be more

vulnerable to the effects of air and water pollution, both in rural and urban areas,

given their limited access to quality health care. The prevalence of disease

exacerbates poverty firstly by compelling the poor to devote ever increasing

proportions of their limited income to health costs, and secondly by reducing

productivity.

VULNERABILITY:

The identification of vulnerable elements within the poor has also received little

attention in earlier poverty assessments in Pakistan. Similarly, the different aspects

of vulnerability have not been analyzed. This section focuses on two different

facets of vulnerability, economic and social vulnerability.

1. Economic Vulnerability :

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Vulnerability in its traditional sense is understood as the underlying susceptibility

of economically deprived people to fall into poverty as a result of exogenous

random shocks. Thus vulnerability is the ex-ante risk of falling below the poverty

line (see Box 2.3 for a discussion of ex-post measures of household poverty). In

this context, vulnerable households are generally found to have low mean

expenditure levels coupled with a high variance of expenditure. Essentially

households are vulnerable if they do not have the means to smooth out

consumption expenditure in response to fluctuations in income. Estimating income

or consumption related vulnerability is a complex task, requiring an analysis of

household consumption patterns over a period of time in relation to the occurrence

of exogenous shocks. In general, vulnerability is likely to be high in households

clustered around the poverty line. Coping strategies for vulnerable households

depend primarily on their sources of income. Thus, in areas where income sources

are relatively diversified, exogenous shocks can increase reliance on

non-agricultural wages. In areas where such diversification has not occurred, credit

may be an important means of sustaining consumption.

"Vulnerability" in this case stands for the underlying susceptibility of economically

deprived people to fall into poverty as a result of exogenous random shocks.

Vulnerable households are generally found to have low expenditure levels.

Households are considered vulnerable if they do not have the means to smooth out

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their expenses in response to changes in income. In general, vulnerability is likely

to be high in households clustered around the poverty line. Since coping strategies

for vulnerable households depend primarily on their sources of income, exogenous

shocks can increase reliance on non-agricultural wages. Such diversification has

not occurred in many parts of Pakistan, leading to an increased dependence on

credit.

While economic vulnerability is a key factor in the rise of poverty in Pakistan,

vulnerability also arises from social powerlessness, political disenfranchisement,

and ill-functioning and distortionary institutions, and these also are important

causes of the persistence of vulnerability among the poor

Other causes of vulnerability in Pakistan are the everyday harassment by corrupt

government officials, as well as their underperformance, exclusion and denial of

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basic rights to many in Pakistan. Also, lack of adequate health care by the state

leads the poor to seek private sources, which are expensive, but still preferable to

the possibility of medical malpractice and being given expired medicines in state

run medical facilities. Also, the failure by the state to provide adequate law and

order in many parts of the country is a factor in the rise of vulnerability of the poor.

2. Social Vulnerability:

While economic vulnerability is a key characteristic of the poor in Pakistan, there

is increased recognition of the fact that vulnerability, in a broader and more

encompassing sense, arises also from social powerlessness, political

disenfranchisement, and ill-functioning and distortionary institutions, and that it is

important to understand these factors as being among the primary causes of the

persistence of vulnerability faced by the poor. This is evident from the fact that the

poor rarely speak of just lack of income per se as being the key factor contributing

to their vulnerability, but tend to focus more in this regard on the constraints that

they face in managing their assets, whether human, material, social or political. In

addition, highlighted in the poor's perceptions of vulnerability is increasing

insecurity arising from sectarian violence, communal clashes and deteriorating law

and order. Vulnerability, in this broad sense, therefore, may be defined as the lack

of capacity in the poor to access public entitlements, particularly political processes

or goods and services which determine human development, where human

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development is defined as enlarging people's choices in a way that enables them to

lead longer, healthier and fuller lives. Vulnerability in Pakistan manifests itself in at

least four ways. First, it is exacerbated by the everyday harassment,

under-performance, exclusion and denial of basic rights by public officials of

people who are disadvantaged by virtue of gender, ethnicity, and economic and

political powerlessness. That citizens have started reacting to such treatment is

evidenced by the number of complaints filed against key government departments

in Pakistan, which 13 more than tripled between 1985 and 1998. These complaints

could be placed in five categories: delay, inattention, neglect, arbitrary decisions

and corruption. While alarming, these trends say nothing of those who cannot or do

not file formal complaints but silently suffer nevertheless on account of the

dysfunctionality and non-responsiveness of public institutions. Second,

vulnerability is much increased by local officials responsible to license and

regulate economic activities who typically extract rent from informal sector

workers, by imposing or manipulating regulatory controls over their livelihood

activities. This is particularly marked with law and order entitlements: budgetary

allocations to meet recurrent costs of police stations are so meager that it is

accepted practice to solicit contributions from the public to meet these

expenditures. Third, and well known, the vulnerability of the poor is continually

reaffirmed by the corruption of local cadre/officials that hampers access to public

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goods/services such as health, education and land management. For example, it is

common in Pakistan to find the poor turning to private sources of health care

because they fear that a visit to a public facility would be unproductive. In this

regard, the perception of the poor is that although private care is considered

expensive, public sources may be no less expensive when there is a possibility of

having to pay illegal fees, being serviced with expired drugs and dangerous

diagnoses, and undergoing long delays in obtaining medical consultation due to

frequent absenteeism of the concerned staff. Access to public services is also

hampered by the need to provide documents such as national identity cards or

domicile certificates, which are difficult to obtain. Finally, the failure of state

institutions to provide law and order and security is a function of the inefficiency in

existing police, legal, and judicial structures. Studies suggest that the poor more

frequently remark on the impact of a brutalizing police force and a corrupt

judiciary than is apparent from official accounts of indicators and causes of

poverty. The poor recognize that the state has a responsibility to provide

affordable, equitable and effective public goods and services, but feel that the state

has failed to deliver. Dysfunctional institutions do not just fail to deliver services -

they disempower, and even silence the poor through humiliation, exclusion and

corruption. The persistent inability of theGovernment to rectify these conditions is

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arguably the most important constraint on long term growth prospects and

inequality.

Education:

Despite the Social Action Program (SAP), primary enrolment in Pakistan has

tended to stagnate, if not decline, during the 1990s. In FY1999, the primary school

gross enrolment rate (GER) was 71 percent, as against 73 percent FY1991 (Table

2.6), while the net enrolment rate declined from 46 to 42 percent. However, some

progress was made in reducing gender disparities in education over the period. The

female GER increased from 59 percent to 61 percent, while the male GER declined

from 87 percent to 80 percent. Thus the decline in the gender gap (from 28

percentage points to 19 percentage points) was largely because of declining boys'

enrolment. Also, no progress was made in reducing rural-urban disparities. The gap

in the case of girls widened marginally over this period, and in FY1999 girls' GER

was 50 percent in rural areas compared to 92 percent in urban areas. At the same

time, the gap in the case of boys widened significantly, because the decline in boys'

GET in the rural areas (from 83 percent in 1991 to 75 percent in FY1999) was

much greater than the decline (from 97 percent to 95 percent) in the urban areas.

The inescapable conclusion is that, apart from a welcome increase in girls' GER,

little progress was made in expanding primary education coverage, particularly in

rural areas, during the 1990s. Mirroring trends observed at the overall national

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level, GERs in the two big provinces also witnessed a decline between FY 1991

and FY 1999. As is evident from Table 2.6, GER in Punjab fell from 80 percent to

75 percent; and in Sindh from 65 percent to 64 percent. GERs, in NWFP and

Balochistan, however, increased during the same period from 67 percent to 70

percent, and from 46 percent to 64 percent respectively. The main source of this

increase in both provinces was the significant increase in GERs of girls, which

increased from 44 percent to 54 percent in NWFP, and from 27 percent to 43

percent in Balochistan. GER of girls in Sindh marginally increased as well. The

disparity in GERs between urban and rural areas also increased in all four

provinces, but most notably so in Sindh, where urban enrollment rates increased

but rural enrollment decreased during the FY1991-FY1999 period. Enrolment

statistics have to be considered together with the dropout rate to get a true picture

of the magnitude of the problem of inadequate education coverage. The dropout

rate is determined primarily by the quality of education imparted, and by parent's

estimation of the stream of future benefits likely to accrue from time spent in

school. For low income households, the opportunity cost of having a child in

school is fairly high, and parents cannot be persuaded to bear this cost if they

perceive that the quality of education is low, or that no significant benefits are

likely to accrue from keeping children in school. A strong relationship exists,

therefore between household income and the dropout rate. According to the PIHS

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1998-99 data, 47 percent of children from the poorest quintile dropped out before

completing primary education as compared to 23 percent from the richest quintile.

The percentage of children aged 10 to 18 years who left school before completing

primary education declined slightly from FY1991 to FY1999, from 17 percent to

15 percent. Except for Balochistan where the percentage of children leaving school

before completing primary education perceptibly increased from 2 percent to 12

percent between FY1991 and FY1999, the dropout rate also decreased in the other

three provinces. Nationally, the male - female gap in the dropout rate narrowed

from 5 to 1 percentage points, while the urban/rural gap widened from 7 to 9

percentage points. The gender gap in dropout rates of all provinces declined as

well, with the exception of NWFP where it increased as a result of a significant

increase in the dropout rate for girls. The urban-rural gap in all the provinces

increased in accordance with the national trend. The education system is beset with

learning deficiencies and low achievements (Box 2.4). Detailed statistics from one

province, Punjab, reported in a World Bank 20 document, further illustrate

problems in educational standards. From 1989 to 1998, the proportion of children

passing from the first to the second grade in the province remained constant at 59

percent. Only 20 percent of children in the age cohort of 10-12 years were enrolled

in middle schools, and of those who entered grade 6, only 56 percent went on to

complete grade 8. Of every thousand children enrolled in primary school, only 264

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completed middle school. In 1999, only 41 percent of public school students in

Punjab who took the matriculation (or grade 10) examination got a passing grade.

Since only 16 percent of the age cohort 15 to 19 reached the 10 grade, such a low

pass percentage has disquieting implications. Notwithstanding the generally

disappointing situation noted above, significant changes are taking place in the

education sector in Pakistan. Increasingly, parents prefer to enroll their children in

private schools, even in rural areas. Consequently, the share of primary school

enrolment in government schools (excluding kindergarten) fell between FY1991

and FY1999 from 86 percent to 75 percent. Even in rural areas, government

primary school enrolment share fell from 95 percent to 86 percent; in this period.

During the same period, in urban areas, the share of government primary schools in

enrollment fell from 70 percent to 53 percent; that is, by FY1999, almost half of all

primary education in urban areas was being delivered by private schools. It is also

clear that both male and female students have been shifting from public to private

21 schools. These are major shifts of great importance but the reasons why these

are occurring are poorly documented. It is possible to speculate, however, that

parents' decisions of educating their children in private schools are influenced by a

combination of factors. These include the generally poor standard of government

primary education (including high level of teacher absenteeism), problems of

access and security (for girls), preference for English as a medium of instruction

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(generally offered by private schools), and lack of accountability in public schools

(or a perception that private schools will be more accountable because services are

paid for). A Multi-Donor Support Unit (MSU) survey on grade 5 student

attainment compared results from private and government schools in rural areas.

The survey showed better performance by private school pupils: boys in private

schools scored 13 percentage points more than boys in government schools while

for girls the improved performance was even greater at 18 percentage points. The

report notes the better performance of private schools is not due only to the

presence of more competent teachers but also because better learning conditions

and better management. The fact that the shift towards private schools is occurring

is especially noteworthy in light of the fact that the gap between average household

expenditure per child for private and Government schools is significant, as shown

in Table 2.7. For example, for primary education, the mean annual expenditure in

private schools was about four times higher than that in Government schools in

FY1999. For middle education, average annual expenditure in private schools is

three times higher than in Government schools. The demand for private education

indicates that there is a willingness to pay for education, provided that the quality

of education is considered to be adequate.

Spatial Distribution of Poverty:

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During the last decade, poverty elimination programs helped many of the poor to

participate and rise up. However the Global financial crisis and other factors like

the occupation of Afghanistan have impacted Pakistani growth. Poverty in Pakistan

has historically been higher in rural areas and lower in the cities. Out of the total 40

million living below the poverty line, thirty million live in rural areas. Poverty rose

sharply in the rural areas in the 1990s and the gap in income between urban and

rural areas of the country became more significant. This trend has been attributed

to a disproportionate impact of economic events in the rural and urban areas.

Punjab also has significant gradients in poverty among the different regions of the

province.

The Khyber Pakhtunkhwa of Pakistan was one of the most backward regions of

South Asia. Despite this, tremendous progress has been made in many areas. The

NWFP now boasts several universities including the Ghulam Ishaq Khan

University of Science and Technology. Peshawar, a sleepy cantonment among

British towns, is a modern cosmopolitan city. Much more can be done to invest in

the social and economic structures. NWFP remains steeped in tribal culture, though

the biggest Pahan city is Soviet invasion of neighboring Afghanistan is intact and

according to Western reports supported the Taliban regime. These and other

activities have led to a breakdown of law and order in many parts of the region.

Poverty and Gender:

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The gender discriminatory practices in Pakistani society also shape the distribution

of poverty in the country. Traditional gender roles in Pakistan define the woman's

place as in the home and not in the workplace, and define the man as the

breadwinner. Consequently, society invests far less in women than men.Women in

Pakistan suffer from poverty of opportunities throughout their lives. Female

literacy in Pakistan is 71.8% compared to Male literacy at 82.5%. In legislative

bodies, women constituted less than 3% of the legislature elected on general seats

before 2002. The 1973 Constitution allowed reserved seats for women in both

houses of parliament for a period of 20 years, thus ensuring that women would be

represented in parliament regardless of whether or not they are elected on general

seats. This provision lapsed in 1993, so parliaments elected subsequently did not

have reserved seats for women. Reserved seats for women have been restored after

the election of 2002 .Now women have 20% seats reserved for them in Parliament.

According to the United Nations Human Development Report, Pakistan's human

development indicators, especially those for women, fall significantly below those

of countries with comparable levels of per-capita income. Pakistan also has a

higher infant mortality rate (88 per 1000) than the South Asian average (83 per

1000).

Environment:

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Environmental problems in Pakistan, such as erosion, use of agro-chemicals,

deforestation etc. contribute to rising poverty in Pakistan. Increasing pollution

contributes to increasing risk of toxicity, and poor industrial standards in the

country contribute to rising pollution.

Lack of adequate governance:

By the end of the 1990s, the manner in which power was exercised in the

management of a country's social and economic status resources for development

emerged as Pakistan's foremost developmental problem. Corruption and political

instabilities such as the insurgency in Balochistan and decade long armed conflict

with the Taliban in Waziristan region resulted in reduction of business confidence,

deterioration of economic growth, reduced public expenditure, poor delivery of

public services, and undermining of the rule of law. The perceived security threat

on the border with India has dominated Pakistan's culture and has led to the

domination of military in politics, excessive spending on defense at the expense of

social sectors, and the erosion of law and order, in conjunction with several

implementations of martial law and approximately four coup d'états in the past

fifty years.

Pakistan has been run by military dictatorships for large periods of time, alternating

with limited democracy.These rapid changes in governments led to rapid policy

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changes and reversals and the reduction of transparency and accountability in

government. The onset of military regimes have contributed to non-transparency in

resource allocation. Those who do not constitute the political elite are unable to

make political leaders and the Government responsive to their needs or

accountable to promises. Development priorities are determined not by potential

beneficiaries but by the bureaucracy and a political elite which may or may not be

in touch with the needs of the citizens. Political instability and macroeconomic

imbalances have been reflected in poor creditworthiness ratings, even compared to

other countries of similar income levels, with resulting capital flight and lower

foreign direct investment inflows. The current government of Pakistan has

professed commitments to reforms in this area.

In addition, Pakistan's major cities and urban centres are home to an estimated 1.2

million street children. This includes beggars and scavengers who are often very

young. The law and order problem worsens their condition as boys and girls are

fair game to others who would force them into stealing, scavenging and smuggling

to survive. A large proportion consumes readily available solvents to stave off

hunger, loneliness and fear. Children are vulnerable to contracting STDs such as

HIV/AIDS, as well as other diseases.

Feudalism:

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Pakistan is home to a large feudal landholding system where landholding families

hold thousands of acres and do little work on the agriculture themselves. Since

feudalism is rampant in such areas, people cannot acquire and hold land, which is

one of the main sources of livelihood in rural agricultural areas of Pakistan.They

enlist the services of their serfs to perform the labour of the land. 51% of poor

tenants owe money to the landlords. The landlords' position of power allows them

to exploit the only resource the poor can possibly provide: their own labour.

Inequality and Natural Disasters:

The recent 2010 Pakistan floods have accentuated differences between the wealthy

and poor in Pakistan. Abdullah Hussain Haroon, Pakistan's diplomat to the United

Nations, has alleged that wealthy feudal warlords and landowners in Pakistan have

been diverting funds and resources away from the poor and into their own private

relief efforts.[32] Haroon also alluded to was evidence that landowners had allowed

embankments to burst, leading to water flowing away from their land.[33] There are

also allegations that local authorities colluded with the warlords to divert funds.[34]

The floods have accentuated the sharp divisions in Pakistan between the wealthy

and the poor. The wealthy, with better access to transportation and other facilities,

have suffered far less than the poor of Pakistan.

Poverty eradication in Pakistan: Past, present, and future

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1. While the current government in Pakistan has taken a multi-dimensional

approach and introduced some measures to eradicate poverty, along with

specific COVID-19 emergency interventions, many challenges still remain.

We lay out our thoughts below on whether Pakistan is on track to achieving

SDG1 by 2030, given that another 10 million are expected to move into

poverty due to the pandemic.

2. Over the past two decades, Pakistan has made significant progress in

fighting poverty, reducing it by more than half since 2000. As one of the first

countries in the world to declare Sustainable Development Goals (SDGs) as

part of its national development agenda and updating the national poverty

line in 2016[1], Pakistan has remained committed to improving

multidimensional poverty measures.

3. As per the latest official figures, the poverty headcount ratio declined from

29.5% in 2013-14 to 24.3% in 2015-16. Of all 114 countries for which the

World Bank measures poverty indices, Pakistan was amongst the top 15 that

showed the largest annual average percentage point decline between 2000

and 2015. Despite this, by 2015, around 50 million people still lived below

the national poverty line. Since then, the pace of poverty reduction has

slowed down. This is partly due to the macroeconomic crisis resulting from

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 structural economic issues and the lack and inadequate implementation of

pro-poor policies.

4. Lack of accurate and consistent poverty estimates has been a key hindrance

in formulating effective pro-poor policies in Pakistan. The use of monetary

poverty lines tied to currency conversion rates with differing purchasing

power parities, along with the use of different methodologies has led to

inconsistent measures. For instance, between 2010 and 2015, show a decline

in poverty headcount while an independent policy think tank estimated that

around 38% of the population was still living below the poverty line in 2015;

which in absolute terms meant an additional 13 million people falling into

poverty. Bureaucratic and political delays in regularly updating the National

Socio-Economic Registry (NSER) survey has also led to issues in targeting

(the last round of the NSER survey was carried out in 2010-11).

5. In 2016, the government tailored a widely used global poverty measure, the

Multi-Dimensional Poverty Index (MPI), for Pakistan. The aim was to

capture the three main deprivation indicators: education, health, and living

standards. Based on 2017-18 estimates, 38.3% of the population was

deprived in at least one of the three indicators – an improvement from

previous years, largely from progress in sanitation and child mortality.

However, deprivation resulting from a lack of access to electricity increased.

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6. Vulnerabilities play a central role in perpetuating poverty as poor households

lack necessary human, financial, and physical capital to withstand the

negative impacts of sudden shocks. It is no surprise that COVID-19 is

expected to be up to 10 times more deadly for the poor. A recent UNDP

study of 70 countries, including Pakistan, estimated that COVID-19 may set

poverty levels back by 9 years, with an additional 490 million people falling

into multidimensional poverty.

7. Prior to COVID-19, Pakistan’s economy was already struggling with a fiscal

crisis and undergoing an IMF-sponsored macroeconomic stabilisation

programme. With one of the lowest human development indicators around,

the government estimates that 56.6% of the population has now become

socio-economically vulnerable due to COVID-19. As one of the youngest

countries in the world, with nearly two-thirds of the population under the age

of 30, a consistent GDP growth rate of 7% is required to absorb the young

workforce. With a projected growth rate of only 2% post-pandemic,

unemployment rates may rise drastically, perpetuating the cycle of poverty.

8. Despite a declining poverty rate over the past few years, the IMF has also

projected a sharp reversal ahead, which may push almost 40% of Pakistanis

below the national poverty line. The cost of the expected economic

slowdown due to COVID-19 containment measures, invariably relying on

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 some form of lockdown, will mostly be borne by the estimated 24.89 million

daily wage earners, piece-rate workers, and self-employed in. These groups

are more vulnerable to pandemic-induced poverty due to a lack of access to

social protection programmes.

9. Pakistan has a long history of poverty reduction policies and interventions.

However, the persistently high poverty levels reflect the inadequacy of these

measures resulting mainly from a focus on static measures and limited

outreach. Poverty reduction programmes account for just about 2% of GDP;

due to lack of coordination, inefficient implementation, and inadequate

monitoring and evaluation, there is often duplication and fragmentation

across these programmes.

10. Despite deep-rooted economic inequalities and the sheer number of

people impacted, policymakers have largely steered clear of addressing the

issue of inequality. It is estimated that 40% of all children born in abject

poverty will remain in the lowest income quintile, another 40% will improve

slightly from very poor to poor, while only 10% will be able to transition out

during their lifetime[2]. Research also shows that while relatively high

economic growth in 2001-04 was not pro-poor, the low growth period of

2005-10 saw better poverty indices. This indicates that policy interventions

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 for the poor are not all the same; there is a need to have a more targeted

approach for transitional and inter-generational chronic poor.

Early indications point to the government’s commitment to poverty

reduction, as it has pledged to reduce poverty by 6 percentage points to 19%

by 2023. Measures include increasing poverty alleviation expenditures and

ensuring that vulnerable groups such as women, children, and people with

disabilities receive needed aid.

11.One such measure is the integration of more than 134 fragmented and

insufficiently managed social protection programmes, and prone to political

manipulation, under ‘Ehsaas’. This is a new overarching programme

launched in 2019, built on the framework developed under the Benazir

Income Support Programme (BISP). BISP is one of South Asia’s largest

cash transfer programmes and Pakistan’s flagship social protection initiative.

Launched in 2008, BISP currently caters to 5.7 million ultra-poor families

via unconditional cash transfers to women.

12. In response to COVID-19, the government quickly implemented the

Ehsaas Emergency Programme, under which low-income households gained

access to financial assistance through text messages. In the first phase of this

programme, 12 million families were provided with a monthly stipend of

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 12,000 PKR ($72). More recently, the programme has been extended to

include 17 million families, around half of the total population of Pakistan.

13. The government has also made efforts to de-politicise poverty measures.

There is great optimism that under the current government, the NSER

survey, which will cover at least 27 million households, will be completed

by 2021 and enable smart poverty targeting.

14.Even before the pandemic, Pakistan was categorised as being ‘off track’ to

halve multidimensional poverty by 2030, and less likely to achieve SDG1

with current interventions. This has largely been due to inadequate policy

responses from successive governments, despite some good progress on

poverty alleviation in the early 2000s. The current government, however, has

taken some steps in the right direction. While there is growing consensus on

the benefits of a rapid policy response, there has historically been a lack of

focus on more long-term sustainable efforts.

15. There is increasing evidence, across South Asia, that an

‘income-mediated’ approach to SDG1 will have limited success and more

‘expenditure led’ policies are required. Looking ahead, well-informed

income and poverty projections can provide a blueprint for more proactive,

targeted and sustainable policies, with a focus on alleviating extreme

poverty.

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16. Research by Lahore University of Management Sciences (LUMS) in

collaboration with Oxfam.

17. Instead of using the Food Energy Intake (FEI) approach, a Cost of Basic

Needs (CBN) approach is now employed

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