PAKISTAN: NOW, THE POVERTY BOMB GOES OFF

Many more people are afflicted by the poverty of opportunity than by simple income poverty. Today, roughly 30% of Pakistan's population is classified as 'income poor', whereas nearly half suffers from the deprivation of basic opportunities of life.

By M Ziauddin

June 1999

The poverty bomb which was never defused in high-growth periods can easily explode in a period of slow growth, high inflation, rising unemployment, and deteriorating social services.

This prophetic observation is contained in a recently released study titled A Profile of Poverty in Pakistan, prepared by the Mahbubul Haq Centre for Human Development (MHCHD) in collaboration with the United Nations Development Programme (UNDP).

The increasing incidence of poverty-driven suicides in the country in recent months seems to indicate that the bomb has finally exploded. The 1990s have been the years of continued slow growth, high inflation, rising unemployment and deteriorating social services. And this seems to have led to the creation of the right conditions for the poverty bomb to go off.

The study was started by the late Dr Mahbubul Haq, but was completed after his death by Khadija Haq and a team of dedicated socio-economists including Dr Pervez Tahir of the Planning Commission, Dr Moazzam Mahmood of the PIDE, Dr Younus Jafri of the Federal Bureau of Statistics and Murtaza H Syed of the HDC.

According to the study, in 1960, about 19 million people lived below the poverty line in Pakistan. By 1980, the number of people defined by the government as absolutely poor had grown to 34 million. And in the 1990s - between 1990 and 1995 - the number of absolute poor rose to 42 million. The current statistics present the following profile of poverty: 42 million or roughly 30% of the population are poor; 47 million adults or 62% of the adult population cannot read or write, 76% of the female adult population is illiterate.

In addition, eight million children are out of school; 61 million people or 45% of the population have no access to safe drinking water; 54 million people or 40% of the population have no access to even basic health services; 72 million people or 53% of the population have no access to sanitation; nine million children under the age of five or 38% of the under-five population are malnourished.

The study is based on individual household data from the Household Integrated Economic Survey (HIES). This is a comprehensive data source on income and expenditure in the country. The survey is conducted regularly by the federal bureau of statistics and provides statistically representative data at rural/urban and provincial sub-levels.

The study uses the calorie-based as well as as basic needs approach. Three indicators are examined - the head count ratio, the income gap (measuring the severity of poverty) and the FGT index (measuring the severity of poverty). The study estimates absolute as well as relative poverty lines to assess poverty incidence.

Region- (urban/rural) and province-specific poverty lines are also used to measure poverty at different sub-levels of the population. The calorie-based approach defines the poverty line as the minimum expenditure required to achieve a daily intake of 2,250 calories per person.

This approach indicates that poverty has declined at all levels between 1986 and 1994 from 27% to 21%. The basic-needs approach defines the poverty line in terms of the minimum expenditure required to achieve a basket of needs consisting of food, clothing, housing, health, education, transportation, etc.

When this approach is based on expenditure pattern a mixed trend emerges, and for Pakistan as a whole poverty appears to have declined marginally from 29% to 28.7%. It is when the basic-needs approach is based on income distribution, however, that a more conclusive and interesting pattern emerges.

For Pakistan as a whole, poverty has increased from 29% to 36%. Rural poverty has increased most alarmingly by as much as 9 percentage points compared to 1 percentage point in urban areas. Again, basic-needs poverty is most prevalent in Punjab and Sindh. Both the depth and severity of poverty have increased over the reference period.

Under different regimes, Pakistan has experienced poverty and stagnation in the 1950s, increasing poverty and growth in the 1960s, stagnation of growth but declining poverty in the 1970s, increasing growth and declining poverty in the 1980s and finally, increasing poverty and falling growth in the 1990s.

The study rejects the trickle-down theory. Despite the high trend growth rates, a critical factor that undercut this growth record was the lagging growth in the social sector.

In fact, Pakistan's social indicators have lagged behind those countries which have far lower GDP growth and income levels. As a result, the majority of Pakistan's population has not been allowed to participate in either the process or the outcome of growth.

The study claims to be the first of its kind in Pakistan. It represents a new approach to determining the levels and trends of poverty. Past studies suffer from narrowness of focus as well as arbitrariness in methods and measurements. They have thus tended to offer conflicting measures of poverty. The study aims to rectify this deficiency by supplying a conceptually sound methodology for constructing poverty lines that yields consistent estimates of poverty.

Poverty, according to the study, is traditionally defined as insufficient income to meet specific needs. Therefore, if those needs can be defined, one can arrive at some measure of the number of people who fail to meet them. The set of needs may be defined as certain minimum caloric requirements for living, or a basket of basic needs that also includes shelter, energy and apparel or even a more extensive bundle representing certain minimum levels of education, health and social participation.

Clearly, the wider the defined set of needs, the fewer the number of people one would expect to meet those needs. The study attempts to introduce a new index called the Poverty of Opportunity Index (POPI), in an attempt to trace the history of human poverty in Pakistan over the last quarter of a century.

This study concludes that many more people are afflicted by the poverty of opportunity than by simple income poverty. This has remained true of Pakistan throughout the 25-year reference period.

Today, roughly 30% of Pakistan's population is classified as 'income poor', whereas nearly half suffers from the deprivation of basic opportunities of life. The majority of Pakistan's human poverty is to be found among women and in its rural areas.

If present trends continue, it is estimated that Pakistan will take another 170 years before it can stake a claim for a place in the list of developed nations based on socio-economic indicators.

Pakistan's economic fortunes and planning have largely been controlled by a narrow group of industrialists, agriculturists, politicians and civil and military bureaucrats. And regardless of political regimes, Pakistan's economy has traditionally been fuelled by five pumps: agriculture, manufacture, foreign remittances, foreign aid, and a large and vibrant black economy.

These five pumps have been responsible for much of our economic growth. This growth continued to be generated and enjoyed by the same narrow band of actors; the nature of the policies created a renter class in both industry as well as agriculture. This class prospered with years of state patronage and manged to usurp the benefits of growth. - Third World Network Features/Dawn

About the writer: M Ziauddin wrote the above article for Dawn, a prominent Pakistani daily.The paper can be found on the Internet at http://www.dawn.com

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