RICH-POOR GAP WIDENING

KANWAL SALEEM
(feedback@pgeconomist.com)
Aug 1 - 7, 2011

Poverty is a complex multidimensional problem with origins in both the national and international domains. There is no simple or uniform answer to tackle the problem of poverty.

Poverty has traditionally been measured in terms of the income or expenditure level that can sustain a minimum standard of living.

Most countries have adopted national "poverty lines" in terms of household income, and monitor the number of people who fall below that threshold. The eradication of poverty and hunger, greater equity in income distribution and human resource development remain major challenges in countries like Pakistan where poverty is on rise in the aftermath of high inflation and less resources.

If a person's daily income is less than one dollar a day, then he is considered as living below the poverty line.

The biggest reason for poverty in Pakistan is the backwardness of the agriculture sector, as nearly 66 per cent of the population, living in the rural areas, is lowly paid. Nevertheless, poverty is the state of a person who lacks a certain amount of material possessions or money.

Absolute poverty or destitution refers to being unable to afford basic human needs, which commonly include clean and fresh water, nutrition, healthcare, education, clothing, and shelter. Over 1.7 billion people are estimated to live in absolute poverty today. Relative poverty refers to lacking a usual or socially acceptable level of resources or income as compared with others within a society or country.

In Pakistan, the gap between rich and poor is widening, as is evident from both urban and rural settings where vast segments of populations remain deprived of the most basic necessities of life such as health and education, clean drinking water or even adequate sanitation facilities.

There is consensus that poverty has been seriously aggravated in Pakistan over the past few years. Food inflation, low economic growth, the energy crisis or even increased security threats are some of the factors leaving impact on the lives of the average citizen.

In Pakistan, around 40 per cent people are living below the poverty line. People in the rural areas are poorer than in the urban areas.

Experts are of the view that productive employment is the only real safety net for the majority of the working population in a developing country like Pakistan.

Pakistan is an agriculture country but sadly, poor farmers have no availability of adequate and cheap fertilizer, pesticide, quality seed, water, latest technology. They have no capital to improve their lands. That is why their income level is low and poverty especially prevails in the rural areas.

Another reason for poverty is the unfair distribution of income among people.

Such unequal distribution of income is creating restlessness among the less income class. They have less money to fulfill their basic needs like food, health, education and housing etc.

The poverty level is growing day by day. In fact, the non-adoption of Islamic economic system and the capitalistic system are responsible for such an unfair division of wealth.

Yet another reason for poverty is the rapidly growing population of the country. Population-wise Pakistan is the 6th largest country in the world and its population growth rate is around two per cent, which is the highest in the region.

Pakistan's GDP growth rate is less than three per cent which is posing manifold challenges. There is a shortage of goods and services like food, clothing, housing facilities, education, and health etc. All these things are inadequate to meet the necessities of a growing population. One earning hand has to feed a large number of family members.

Due to inflation, the salaried and fixed income group is more affected than the business class. The salaries are not increased in proportion to inflation, but expenditures are increasing day by day.

Less income and the low level of saving are responsible for poverty. Our industrial sector is very backward. the share of this sector in national income is less than 20%, which is very low as compared to the developed economies.

Due to industrial backwardness, our exports are less; rather we have to import electrical and industrial items at high rates. A vast portion of foreign exchange reserves is consumed for industrial imports. The low level of living and poverty is related to the backwardness of this sector directly of indirectly.

Low level of education and the defective education system is also contributing to poverty. In Pakistan, the literacy rate is very low in the world. Due to the few technical, engineering and research institutions, the productivity of labor is very low and our human resources are outdated, both qualitatively and quantitatively.

Poor governance is responsible for poverty. There is corruption, political instability, a disturbed law and order situation, red-tapism, terrorism, etc.

Weak taxation system is also causing poverty, as due to less recovery of taxes, those who are liable to pay taxes are not paying their due share. If the taxation system is improved and due taxes are recovered and used for public welfare, vicious circle of poverty could be tackled.

There is heavy burden of indirect taxes like general sales tax, customs duty, excise duty etc, affecting the investment climate and poor consumers greatly. Black marketing, hoarding, smuggling, profiteering, nepotism, corruption are exploiting the poor people of Pakistan, making them poorer. Only through innovation in agriculture sector and promoting industrialization, poverty can be tackled.

If we look at the rehabilitation, poverty alleviation, or social welfare programs throughout the world, there are certain phases that are being implemented and carried out throughout the life cycle. The first phase is rescue, relief, and recovery followed by complete rehabilitation by introducing certain livelihood enhancement measures or "graduation" strategies enabling the poor to stand on their feet. Benazir Income Support Program (BISP) has been introduced to combat poverty.

Experts called for developing consensus on minimum economic program that may serve as a foundation for an indigenous, innovative, national economic revival strategy.

The greater involvement of professional bodies in economic planning is crucial in Pakistan also because the government, which is supposed to reconcile divergent interests, seems to be preoccupied with the one-point agenda of meeting donors condition of raising resources for its budgetary needs. High inflation, wage freeze, and rising unemployment have actually led to comparative decline in their living standards, rendering their economic aspirations unachievable, they added.