4- PSDP 2004-05



The people remain as deprived as ever


June 14 - 20, 2004





Prime Minister's task force on poverty alleviation and employment generation headed by Dr. Addul Hafeez Shaikh, Minister for Investment and Privatisation has submitted its report while making a number of recommendations has strongly suggested to set up a permanent commission on poverty reduction and employment to constantly review and monitor the on-going projects for job and poverty reduction.

The government's poverty reduction plans moved a good step forward when the Prime Minister approved last week the idea of setting up a commission as per recommendation of the task force. The commission will not only review, coordinate and monitor the on-going efforts/project but would also devise a strategy for combating poverty through both long-term and short-term measures. These measures would form as part of a comprehensive policy aimed at addressing the inextricable issues of employment generation and poverty alleviations.

The task force headed by Dr. Abdul Hafeez Shaikh, included as member Dr. Nasim Ashraf, Chairman NCHD, Dr. Ishrat Hussain, Governor State Bank of Pakistan, Javed Sadiq Malik, Secretary Planning and Development, Waqar Masood Khan, Secretary, Economic Affairs Division, Dr. Ashfaq Hasan Khan, Economic Advisor, Finance Division, Dr. A.R. Kemal, Director PIDE, Dr. Nuzhar Ahmad, Director Applied Economic Research Center, Chairman Planning and Development, Government of Punjab/Additional Chief Secretaries, Government of Sindh, NWFP and Balochistan and Shaukat Hayat Durrani, Additional Secretary(EA) Prime Minister's Secretariat and seven members from the private sector, Farid Rehman, Peshawar, Dr. Akmal Hussain, Lahore, Dr. Salman Shah, Lahore Shahid Hafeez Kardar Lahore, Dr. Mushtaq Mirani, Hyderabad, Ms, Saadiqa Salahuddin Karachi and Malik Naeem Khan from Quetta.

It is a source of great embarrassment for the Economic Managers of the country that despite strong improvement in macro economic indicators, the people remain as deprived as ever. Their miseries have multiplied during this period of economic turnaround of which the government is so boastful. The unemployment which remained below 5 percent mark in 1980s is highest ever now at above 8 percent pushing more and more people into the net of grinding poverty. Poverty level has risen from 15 percent to 38 percent in the last 15 years. It is commonly believed that the government either lacks the commitment or the planners have no capacity to do something meaningful to mitigate poverty in the near future.

The Governor State Bank in his analysis of the causes of increase in poverty level in Pakistan, referred to period of 1990s when the economic growth rate had fallen and consequently the poverty level had risen from 18 percent in 1980 to 33 percent in 1990. The lesson from this situation underscores the need for maintaining a higher growth rate at not less than 6 percent annually and sustained for some years, which could increase employment opportunities and combat poverty. We need to continue prudent economic policies and with special emphasis on higher growth with enhanced allocation for public sector development program giving top priority to labour intensive projects.

The situation regarding unemployment and resultant poverty is more alarming in rural areas. The present government has done well to undertake construction of a number of small dams and water reservoirs mostly in rural areas, which will provide temporary employment to a large number of labour-class. Similarly roads should be constructed in rural areas specially from farm-to-market, which will doubly benefit the rural population providing employment to unskilled workers and improving returns to the farmers of their product.



Creditably for them, our economic managers have achieved notable success in improving the country's macro economic picture. During the last fiscal year, they were able to claim the GDP growth rate 5.1 percent, which exceeded the target of 4.5 percent; and 20 percent increase in exports. Also, the country's foreign exchange reserves have stayed at a satisfactory level, the foreign debt situation has improved to the point where the government has told the IMF no more loans are needed from it. In short, things are looking up, but not for the people at the lower rungs of society. In fact, the situation worse during the recent years. Even though the government claimed only a few days ago that poverty has decreased by two percent, there is little concrete evidence of that having happened. Like before, the daily press has continued to carry reports of people committing suicides due to financial difficulties.

If the economy is getting better and yet poverty refuses to make a retreat, that means the rich are getting richer, and the poor poorer. That is surely not something for the government to be proud of. It must devise its policies in such a way that all sections of society enjoy the fruits of economic progress. The ultimate measure of its success has to be its ability to bring more and more people above the poverty line through meaningful employment generation schemes.

In this comments at the inauguration of the Commission on Poverty Reduction and Employment, the Prime Minister said that increased allocations in the next year's PSDP and launching of mega infrastructure projects would generate economic activity and create a lot of new employment opportunities. The problem with mega projects, though, is that they have long gestation periods, which normally stretch from three to four years or more. It takes them a few more years to come to fruition. That is not to say that they are not needed, but that side by side with big projects the government must also advance labour intensive employment generation scheme such as the Small and Medium Enterprises (SMEs). Towards that end, it must remove the bottle necks that have kept the sector from making worthwhile headway despite repeated pledges of support from various government leaders.