Poverty in Pakistan

PRESENTED BY: MUBEEN BUTT ROLL NO. 12345 MS. ISLAMIC BANKING & FINANCE

UNIVERSITY OF MANAGEMENT & TECHNOLOGY, LAHORE.

Preface
A report published by Social Policy Development Center

(SPDC), Karachi divulged that : There are

100 districts in Pakistan.

Out of which

36 are in Punjab 26 are in Balochistan 16 are in Sindh 24 are in KPK

Poorest Districts of Pakistan

Rajinpur in Punjab Badin in Sindh Kohistan in KPK &

Musa Khail in Balochistan

There is heave deprivation and poverty in 10 districts

of Punjab out of its 34 districts. There is lesser poverty in Lahore as compared to Karachi.

Poor Districts of Pakistan

Acute poverty prevails in Peshawar and Quetta too. Punjab is less poor as its 83% population is not acute

poor as per an estimation. 88% population of Balochistan is poor. 51% population of KPK is extreme poor. 31% population of Sindh is also poor. 25% population of Punjab is living below the poverty line.

Regional Disparities
Regional disparities are attributed to : Difference in Educational Facilities Difference in Living standards

Financial Dualism
Technological Dualism International & Domestic Dualism

Report: Asian Development Bank

According to a recent report by

Asian Development Bank titled Poverty in Pakistan: Problems, causes and institutional responses Poverty ratio in Pakistan was 42% in 2005.

Poverty Line & measurements of Poverty

A predefined limit for measurement of poverty is

called poverty line (Anonymous) In different time periods, various criteria for measuring poverty are presented: Some of them are listed below:
Per capita monthly expenditures measure. 2. Per capita monthly consumption expenditures measure. 3. Per capita 2550 calories measure. 4. Per capita basic needs approach.
1.

Measurement of Poverty
1. Per Capita Monthly Expenditure Measure: Prof. M. Nasim (Ex-Professor, Quaid-e-Azam University, Islamabad) presented this criteria. He settled the price line on Prices of 1959:Rs. 250 & Rs.300/month for RURAL AREA Rs. 300 & Rs. 375/month for URBAN AREA

Measurement of Poverty
2. Per Capita Monthly Expenditure Method: Criteria was presented by Dr. Hussain Malik, (late Professor of Quaid-e-Azam University, Islamabad.) He set a limit for minimum per capita monthly expenditures : Rs. 159 and Rs. 176 per month for Rural Areas.

Measurement of Poverty
3. Per Capita 2550 Calories measure: This criteria was presented by Dr. Hussain Malik A person must get 2550 calories per day. If a person get less than 2550 calories a day, then he is living below the poverty line.

Measurement of Poverty
4. Per Capita Basic Need Approach: This criteria was presented by Mr. Mushtaq Ahmad, He was an Ex-Senior Economic Advisor, Govt. of Pakistan. He stipulated a poverty line as a whole at Rs. 388 per month on 1991-92 price level. The line was set for a family comprising 4 children and 2 adult.

International View Point regarding Poverty

At present, poverty is the core issue of the world. The poverty line has also been stipulated at

international level at $2/day. Some countries are agreed upon the poverty line of $1/day. So, as per modern economists the poverty line is settled at $2 per day. So, if a person earns less than $2 per day. He is living below the poverty line.

International view regarding Poverty

According to UNDP Report (2004)

65.5% population of Pakistan earns less than $2 per day. However, there doesnt exist coincidence regarding poverty line.

Official View regarding Poverty Line

There is no consensus among the Economists

regarding the measures of poverty. Some of them use the criteria of basic needs to measure poverty where not only income but the peoples access to different services will be included. Some economists consider per capita calories better than the other criterion. Some experts use the criteria of 2350 calories per capita while other use 2550 calories per capita.

Causes of Growth of Poverty in Pak.

Population Pressure
Pakistan will become the 4th largest country regarding population by 2050. Due to rising population number of dependants are increasing. Per capita income is decreasing. Shortage of basic needs. Greater demand than supply Increasing expenditures.

Causes of Growth of Poverty in Pak.

Internal Situation
Law and Order situation is worsened. Bad law and order causes capital flight and low investment in the country. Consequently, per capita income is decreasing day by day. Unemployment is increasing. Low living standard of people.

Causes of Growth of Poverty in Pakistan

Agricultural Backwardness:
Pakistan is an agrarian economy. This sector is facing backwardness at all levels. 70% people are directly or indirectly related to this sector. There is a great disparity in the distribution of land as 93% of the farmers have small holdings of land. They have per capita land less than 10 acres.

Causes of Growth of Poverty in Pakistan

Unequal Income Distribution
There is discrimination in income distribution. Few families have larger share in the income Huge number of people has smaller share in the income. Big businesses are captured by few families and they are charging high prices of their product and earning abnormal profits. People prefer imported goods over domestic one. Consequently, foreign payments are increasing and foreign industry is promoting day by day.

Causes of Growth of Poverty in Pakistan

Defense Expenditures:
Lions share of our budget comprises of defense expenditures. Due to rising defense expenses we are facing debt burden. Lesser amounts are contributed towards Health and Education. Higher salaries are taken by top ranking officers. Ministerial staff is getting low salaries against their services.

Causes of Growth of Poverty in Pakistan

Increase in Unproductive Expenses:
Due to persistent enmity with India we allocate huge amount of our budget towards defense expenditures. Almost 90% of our budget is designed for defense expenses. Remaining budget is spent on repayment of loans.

Elite Social Setup:

Such a social setup is being promoted in the country where the concept of so-called quality is superseding the quality. As a result the ear of elites is springing up in the country. The process of re-structuring is being implemented in banks, financial institutions, railways and autonomous bodies etc.

Islamic Measures to Remove Poverty

Zakat and Usher. The system of Zakat and Usher is in the practice since 1992. The income earned through this source is utilized to meet the basic needs of the poor like orphans, disabled and widows. From 1983 to 1992, Rs. 19.6 Billion were raised through Zakat out which RS. 13.6 Billion were distributed. In the same period, Rs. 1.83 Billion were raised through Usher.

Islamic Measures to Remove Poverty

Bait-ul-Maal:
In 1992 Govt. established a fund regarding charity which is called Bait-ul-Maal. This fund provides additional amounts to the poor in addition to Zakat and Usher. This extends the program of social protection to those poor who are deserving. Till 31st July, 1994 it provided food stamps to the poor people. However, since October 1994 the Food Stamp Scheme has been replaced with food subsidy scheme. Under the scheme those families whose income is below Rs.1500/are given a stipend of Rs.150/- per month. In 1994-95 for the purpose Rs. 500 Million were kept.

Govt. Measures to Remove Poverty

Provision of Social Services Health, Education, Water supply and water Sanitation system are called provision of Social Services. In Pakistan, there is shortage of such services. Following major steps were taken:
Social Action Program (SAP): It was initiated in 1990 for the purpose to provide primary health facilities to the lower income groups particularly the people living in rural areas. Under this program proportion of primary enrolment raised from 66% to 77% Financial Assistance for Education: Govt. provides Qarz-e-Hasna to the brilliant students in order to cater their educational expenses.