Past trend is indicative of macroeconomic stability and growth, benefits of such expansion unable to seep through down to the low lands of society


Feb 03 - 09, 2003



The President General Pervez Musharraf has repeatedly asserted upon the substance of poverty alleviation in his presidential policy. In fact, the President has prioritized poverty eradication as amongst the top along side good governance and debt serving. The urgency of such emphasis is clear, poverty being a thorny issue for economic revival. Income of individuals and households require uplift, as many citizens are dwelling on or below the poverty line, finding themselves incapable at the foot of the economy with negligible purchasing power in a world of rationing by the pocket.

Analysis of the past gives direction towards the future. In the context of poverty, past trend depicts aggravation. No reliable source of data can be found regarding the incidence of poverty in Pakistan. However, a general consensus is conforming that poverty has taken a downturn after the 1990's. In 1980's poverty had been observed to decline substantially in both rural and urban areas of Pakistan. Mainly, worker remittances from Middle East, rise in employment due to boom in construction and housing industry, and increase in public sector expenditure were factors contributing to poverty reduction in 1980's.

Though short lived, 1997 till 1999 has been the hardest hit period ever with heightened poverty due to low income of households, stagnant growth, and macroeconomic instability. Studies by the Federal Bureau of Statistics (FBS) indicate rising trend in poverty, 26.1 percent in 1991, 28.1 percent in 1993, 29.3 percent in 1994, 29.6 percent in 1997 and extreme 35.2 percent in 1999. Since 1999, the country has experienced a severe drought inflaming the agricultural economy of Pakistan, a restrictive fiscal policy, and decrease in public sector expenditure.

In the year 2000, Pakistan stood at a population of 141,256,186 persons with two-thirds living in rural areas, ranking 8th globally, and 1st regionally as the most populous country. Inequality in distribution of income has surged since 1997 between rural and urban areas in all four provinces. Rural areas have always exhibited higher poverty, 35 million of 47 million people below poverty line living in rural areas. Agriculture is the livelihood of these households, but rural income remains in a state of neglect. Growth in the agricultural sector has averaged 4 percent, whereas poverty in rural areas has increased by 7 percent. Thus, it is evident that positive agricultural growth did not raise relative rural income.



Provincial comparisons of poverty ratios for 1999 indicate rural NWFP as hardly hit with 45 percent poor, and least hit urban Sindh with 16.1 percent poor. In the same year, incidence of poverty was 22.4 percent in urban areas, 36.3 percent in rural areas, and 32.2 percent overall.

Society in Pakistan is observed to have exhibited great disparity. Gender and education discrepancies indicate female literacy as only 29 percent compared to 55 percent male literacy. The sex ratio in Pakistan is biased in favour of males, with 108 men for every 100 women. Compared to 70.4 percent of men, female labour force participation rate is only 13.7 percent. Consequences of such discrepancy are devastating. Studies indicate a 60 percent higher likelihood of finding malnutrition in children in households where the mother is illiterate. Although contradictory, studies indicate that the poorer the household, the greater its likelihood of dependence on female labour. Still, women bear a disproportionately high share of poverty than men. Discrimination in food distribution among male and female household members is significant due to cultural and economic constraints faced by women. Inability of the citizens to curb consumption and expenditure in response to random economic fluctuations is vulnerability to poverty, and this is what makes the poor poorer.

Children, made to support their families and themselves, constitute 20 percent of Pakistan's labour force. A survey sponsored by the International Labour Organization (ILO) estimated 1.5 million children are currently working in a hazardous and exploitative environment in the country. For long-term declivity in poverty levels, Pakistan needs its children to obtain sufficient schooling. Life expectancy and mortality rates indicate declining trend. According to World Health Organization (WHO) statistics, life expectancy at birth was estimated to 64 years in 1999. The Infant Mortality Rates (IMR) were estimated to have declined from 122 per 1000 live births in 1991 to 89 per 1000 live births by 1999. For males, IMR averaged to 93 per 1000 live births, whereas it averaged 85 per 1000 live births for females. In urban areas, IMR averaged 73 per 1000 live births compared to 95 per 1000 live births in rural areas. Child Mortality Rate (1 to 5 years) was estimated to 136 per 1000 live births in 1999, with 38 percent of these children being underweight. Mainly, girls and children exhibit a lower position in society.

On a positive note, immunization rates have substantially improved from 37 percent to 49 percent. However, immunization targets for the government had been 90 percent by 1998.

Education and poverty are closely linked, mostly illiterate being mostly poor. Also, indices indicate poverty of education opportunity as being the highest. With this in mind, the Ministry of Education is bringing Educational Sector Reforms (ESR). A comprehensive strategy for Educational Sector Reforms has been devised, outcomes of which are due in the year 2004. Major points of the strategy include National Adult Literacy Campaign, improvements in the quality of education through teacher education and training programs, reforms in higher education, Public-Private Partnership, and a comprehensive literacy and poverty reduction program.

In an attempt to root out poverty, emphasis remains on reforms in education. As per the Economic Revival Program, ESR aims to achieve literacy of 60 percent from 49 percent and higher education enrollment of 5 percent from 2.6 percent, making 13.5 million people literate. Education For All (EFA) Program redefines government's role from being a provider to becoming a facilitator, accepting education as one of the fundamental rights of every citizen. In this regard, Pakistan Literacy Commission has established 7,000 literacy centers, with 13,000 underway.

Despite constructive measures, overall results in the educational sector remain disappointing; great disparity in distribution of education between regions, genders and income groups, failure to meet the minimum essential requirements for quality of education, shortage of trained and qualified teachers, non-relevant curricula, and lacking proper physical facilities. Past 10 years indicate relative decline in literacy ratio, 1.4 percent change in literacy, whereas 2.4 percent change in population growth. In addition, the National Education Budget presents an alarming declining trend in resource allocation to education.

Where the public sector has been stagnant, the private sector has contributed substantially towards education. Current requirement is education for the masses. Pakistan may see substantial improvements in income growth if this objective is achieved. However, the tools of scarcity and the nature of shortage work well on behalf of profits earned by private institutions. In effect, the supply of college graduates is limited against greater demand. Thus, shortage of qualified labour force increases college tuition fees. On a positive note, income earned from wages increases, benefiting those who are employed, but many a few shall lose their jobs and add to the unemployment lines.

High quality production, a characteristic of many private bodies, cannot be overlooked here. Economists argue that large private institutions, although able to charge high for their production, provide quality of service parameters much greater than those available in the public sector, therefore offsetting the costs. Can there be a price control mechanism for tuition fees such that quality of education is not compromised? Perhaps yes, but it is yet to be seen. As fee structure remains controlled, production expands immensely and economic resources are allocated much efficiently producing the greatest good for the greatest number of people, but the downside is the degradation in quality of education. This situation is also unfavorable.

Quality encompasses all aspects of education. Be it faculty, facility, finance, equipment or international recognition. Concerned parents safeguard their investment in private institutions in expectation of future returns in the form of better jobs and a higher standard of living for their children. Despite likely abhorrence towards privatization, the impact on quality is yet another reason in favour of private institutions. Nevertheless, targets for higher education under ESR indicate 40 percent share of private institutions by the year 2004.

Problems in private sector education arise due to the absence of regulatory body for registration of private educational institutions. As per the National Education Policy 1998-2010, there shall be regulatory bodies at the national and provincial levels to regulate affairs of privately held institutions of higher education. Facing challenge of rapidly increasing population, Non-Formal Education (NFE) is considered a critical part of the overall education system, reaching varying needs of those who are out of the formal education system.

On the human development front, Pakistan's achievement is exceptionally low as compared to other countries in South Asia including Nepal, India, and Sri Lanka. Asian Development Bank (ADB) statistics indicate human development in Pakistan as being a negative function of the GDP per capita income in Pakistan. The United Nations Development Program (UNDP) rated Pakistan 138th of 174 countries. Weak public sector expenditure is a deterrent to human development. The trenches of poverty cannot be eliminated without productive expenditure on building the human capital base.



Inflation acts as a second deterrent to poverty alleviation. High inflation rates invade purchasing power of the poor. Between 1991 and 1997, Pakistan suffered from inflation in double digits, with growth rate in money supply averaging 17.5 percent. Since 1997, statistics indicate declining trend in inflation, down to 7.8 percent in 1998. Growth rate in money supply has fallen to an average of 9 percent between 1998 and 2001. In 2002, inflation was estimated at 2.6 percent. Declining trend in inflation is associated with better management in the reduction of budget deficit, benefiting the poor considerably.

Between 1947 and 1988, military governments were in power for 24 of the 41 years. The period between 1988 and 2000 has been termed as the decade of crisis and structural adjustment programs due to political instability, dip in GDP, macroeconomic imbalances, and poor performance of the large-scale manufacturing sector. Pakistan and Malaysia emerged as independent states after World War II with somewhat similar economic structures. However, as neglected as Pakistan stands, Malaysia shows impressive performance in poverty reduction, from 50 percent of the population in 1970 to only 8 percent in 2000. Basic reasons for Malaysia's success in poverty reduction being macroeconomic stability, but most importantly, a proactive policy to provide increasing opportunities for education, human development and employment.

Government's response in curbing poverty is a set of reforms. Of these include Governance Reforms, Public Works Programs, Microfinance, Social Protection Programs, Poverty Reduction Strategy, Rural Support & Development Programs, Private Sector Participation in Health and Education, and Public-Private Partnership Programs, central idea being rural development and employment generation to curb poverty.

As per the Asian Development Bank (ADB), poverty alleviation target for 2004 is 25 percent of the population, and 15 percent for 2011. Universal Primary Education is estimated at an impressive 100 percent in 2004. Infant Mortality Rate is forecasted at 65 per 1000 births for 2004, and 55 per 1000 births for 2011, whereas Child Mortality Rate is estimated at 17 per 1000 births in 2004 from 20 per 1000 births in 1999.

No longer opting to place reliance upon funding from the IMF, 1999 and onwards is a trend indicative of macroeconomic stability and growth with foreign exchange reserves reaching heights of US$ 7 billion, and increasing. With an underestimated 40 percent population underneath the poverty line of Rs.650 per person a month, the benefits of such expansion are unable to seep through down to the low lands of society. Exacerbated poverty in Pakistan, as per the Interim Poverty Reduction Strategy Paper (I-PRSP), has resulted due to government defalcation in mobilizing economic resources effectively in favour of poverty alleviation.

The new government must be able to effectively prioritize issues in the interest of the public. Is it more important to build a motorway, than to feed the poor? The past governments have taken fewer actions towards pro poor activities, or such that just do not work, adding to the poverty levels with lost resources and utmost deprivation. Indeed, too much money chasing too few goods is the scenario. Having low or even no income, the poor are mere skin and bone.

The formulation of the Interim Poverty Reduction Strategy Paper (I-PRSP) is a first step in the battle against poverty, but current need remains promising and prolific actions, poverty alleviation persisting in a state of aloofness. Unquestionably, inefficiencies cannot possibly disappear by tomorrow, but some projection of change needs be seen today.