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Causes of Poverty in Pakistan

Pakistan is a poor country. Its economy is facing fluctuations now a day. At the

time of independence Pakistan has very low resources and capital, so the

processes of progress were very slow. Unfortunately the politicians of Pakistan

were all not well aware of modern global system and the progress processes and

the needs of country. Due to bad policies today Pakistan is facing a lot of

problems. The continuous failure of policies leads the people of country to

miserable conditions. The major problem in the country is poverty which is

becoming the cause of crime and social disorder.

It is difficult to point out all causes of poverty in Pakistan but the major causes of

are given below:

Government Policies:

Government is not well aware of present conditions of country. The policies of

government are base on the suggestions of officials which do not have

awareness about the problems of a common man. After implementation the

policies do not get effective result. After the failure of one policy, government

does not consider its failure and announces another policy without studying the

aftermaths of last one. Heavy taxes and unemployment crushes the people and

they are forced to live below poverty line. The suitable medical facilities are not

provided to people and they are forced to get treatment for private clinics which

are too costly.


Another cause of poverty is corruption. There are two types of corruption. There

is not morality and every one is trying to earn more and more by using fair and

unfair means. Officials waste their time has low efficiency. Only one relationship

that is exists in society is money. One has to pay a heavy cost to get his right.

Law and order conditions are out of control and institutions are failed to provide

justice to a common man. Justice can be bought by money only. But government

is unable to control such type of things. In this whole scenario some corrupt

people has been occupying the resources and common man is living in

miserable conditions.

Division of Agricultural Land:

Pakistan is an agricultural country. Most of people are farmers by profession.

One has land which is fulfilling the needs of his family but he has to divide the

land into his children when they got young. After division the land is not sufficient

to support a family. Now the families of his children are suffering and spending

their lives below poverty line.


In our society social bonding are gradually becomes thinner and thinner. A race

of material object has been started even no one tried to understand the problems
of others. Every one is gradually changing from human to a bioman which only

know about his needs and have no concept about the limitations of others.

People are not ready to help each other. At last every one has lose his trust on

others which effect our social and economic system and it is another cause of


Lack of Education:

The literacy rate of Pakistan is very low. Most of people do not have any concept

about the modern earning sources. Most people are unable to adopt technology

for their business needs, that’s why business do not meet international standards

and results as decrease in revenue which lead the society to poor financial


Large Scale Import:

The import of Pakistan is greater than export. Big revenue is consumed in

importing good every year, even raw material has to import for industry. If we

decrease import and establish own supply chains from our country natural

resources the people will have better opportunities to earn.

Law and Order:

There are lot of problems regarding law and order. Terrorist attacks create

uncertainty in stock markets and people earning from stock are getting loss due

to which the whole country faces uncertain increase in commodity prices.

Fluctuated Foreign investment::

Foreign investor comes to local markets. They invest millions of dollars in stock

markets and stock market gets rise in index. Then the investor withdraws his

money with profit and market suddenly collapses. The after math always be

faced by poor people.


Government is unable to manage the departments and country has low reserve

assets. So the meet the requirements some companies run by government are

sold to foreign investors. The commodities or services provided by the

companies are becoming costly. For example if government sold a gas plant then

prices for gas in country rises.

Moral Culture:

The main reason for poverty is the social dishonesty and irresponsible behavior

of people. Every one is trying to get rich by using unfair means. A shop keeper is

ready to get whole money from the pocket of customer. People doing jobs are

not performing their duties well. In society the man considered brave or

respectful who do not pay taxes or continuously violate the laws. This

irresponsible behavior continuously increases and produces loss for county.



The objective of this undertaking is to determine the incidence of poverty and to identify

socioeconomic profiles of the poor in Pakistan. In addition to exploring the possibility of

alleviation of poverty through the 'Infaq' an attempt has been made in this study to

ascertain the prospects of bridging the poverty gap through the official 'zakat' and 'ushr'

collections. The role of different characteristics, that determine poverty status of a

household, has also been investigated in the present study. The nutrition based poverty

lines both in terms of expenditures and income were estimated using Household Income

and Expenditure Survey J 987-88 micro data. For the purpose of determining poverty

lines in terms of' expenditures the relationship between daily calorie intake per adult

equivalent and monthly total consumption expenditure per adult equivalent were

estimated. The expenditure based poverty lines were converted into income based

poverty lines by regressing the total expenditure per adult equivalent per month on

income per adult equivalent per month. Headcount (P0), poverty gap (P1) and Foster,

Greer and Thorbecke (FGT) poverty measure (P2), which are widely used in the recent

research done on poverty, were utilized for estimating the incidence of poverty in the

present study. The FGT measures are additively decomposable by households

(population) sub-groups; as a result the aggregate poverty can be represented as an

appropriately weighted sum of poverty levels in the component-sub-groups of households

(population). To ascertain the role of 'infaq', in alleviation of poverty the amount of 'infaq'

income received by the households was deducted from their total income and the P0, P1

and P2 indices were re-estimated. Thus the difference between both the results (with and
without 'infaq') showed the impact of 'infaq' on poverty alleviation. The Logit model was

used in this study for evaluation of the role of different characteristics that determine

poverty status of household. The incidence of poverty was estimated both at the

population and the household levels. Our findings are that the incidence of poverty is

sensitive to the poverty line selected. The incidence of poverty in terms of persons is

higher than that of households. This could be due to the fact that incidence of poverty is

relatively higher among the larger households, which are likely to represent, a larger

proportion or the population. Another finding of the study is that the incidence of poverty

in terms of income poverty lines is higher than that estimated in terms of expenditure

based poverty lines. Our estimates suggest that poor households are disproportionately

located in the rural areas of Pakistan. More than 85 percent of the total poor households

are residing in the rural areas of Pakistan. Punjab contributes 72.71 percent of poor

households, followed by Sindh (12.75 percent) to all the poor households of the country.

The share of NWFP in the poor households is 12.08 percent, while Baluchistan has the

lowest share (2.45 percent). Malik's index to ascertain the locational concentration of the

poor households was also estimated. These estimates suggest that the rural areas of

Pakistan have the relatively higher proportion of the poor households than their share in

the total population. The decomposition of the poor households according to the

socioeconomic characteristics of the heads of the households was also carried out in the

study. Our findings in this regard are: The majority of the male headed poor households

fall in the age group of 40 -49, while the majority of female headed poor households fall

in the age group of 30-39. Classification of the poor according to the marital status shows

that about 95 percent of the male heads of the poor households are married and 70
percent of the female heads of the poor households are married. It implies that household

headed by the married persons are more exposed to poverty risk. The proportion of poor

households having highly educated heads is extremely low. Majority of the educated

heads of the poor households falls in the primary or below matric category of education.

Our results indicate that more than 90 percent of the male heads of the poor households

fall in the working class category, while about 80 percent of the female heads of the poor

households fall in the non-working class category. The occupational classification of the

heads of the poor households shows that the majority of the male heads of the poor

households are in the agricultural, animal husbandry and forestry', followed by

production and related workers, transport equipment operators and labourers' categories.

The proportion of female heads of the poor households belonging to the category of

'professional, clerical and related workers' is the highest (81.0 percent in over all

Pakistan). The decomposition of the households according to the industrial activities

suggests that most of the male heads of the poor households are engaged in the

agriculture, forestry, hunting and fishing, followed by construction. While most of the

female heads of the poor households fall in the category of activities not adequately

defined. The breakdown of employment status of the heads shows that most of the male

or female heads of the poor households are classified as self-employed, and they are

followed by the category of employees. The earning status of the households reveals that

the proportion of the households with single earner is the highest in case of male headed

households, while in case of female headed poor households; the majority falls in the

category of no earner. The proportion of poor households is relatively high in case of

large sized households. The highest proportion of the male headed poor households is
found in case of households having 7 to 8 members and in case of female headed

households, those having 5 to 6 members. The Results of the Logit model show that the

households living in Punjab have the highest probability of being poor as compared to the

other provinces; that as the educational level of the head of the household increases the

probability of that household being pour decreases. that as 'lnfaq' increases the probability

of a household being poor declines. that the probability of a household being poor

declines, when the number of earners in that household increases, that the probability of a

household being poor increases with the increases in the size of the household. The

effects of 'Infaq, on poverty alleviation, in Pakistan, suggest that 'Infaq, could help in

reducing poverty level in Pakistan in terms of head count (P0) by 2.16 percent overall,

3.78 percent in urban areas and 2.06 percent in rural areas. The most important impact of

'infaq' is on the reduction in poverty gap (P1) and severity of poverty index (P2). The

poverty gap was reduced by 4.l6 percent in overall Pakistan under the impact of 'infaq'.

The 'infaq' helped in decreasing the severity of poverty by 8.6epercent in overall

Pakistan. We also estimated the funds required to bring the poverty gap to zero and

explored the possibilities of filling this gap by the official zakat collections. Our findings

are that the present zakat collections can fill the poverty gap completely of the extremely

poor and partially that of the very poor. But in the present form it is not capable of

eradicating total poverty. If zakat is collected to its full potential, it could not only result

in complete eradication of poverty from the country but also can generate surplus funds.