IS PER CAPITA INCOME REAL REFLECTION OF NET ECONOMIC WELFARE?

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Sep 29 - Oct 12, 2008

Over a period of time, Pakistan has witnessed consistent growth in its gross national products year on year. Therefore, its per capita income has also kept on rise. Although this is a good sign for both economy and society, uptrend graph of poverty puts practice of dividing GNP over whole population with apparent circumvention over wide income disparity in dubious zone. Too, it raises question about the strength of linkage between gross national product and net economic welfare.

Gross national product is considered to be an accurate yardstick to measure growth of an economy. Based on flow of goods and services or earning from economic activities plus net position of income, its result is calculated to assume per head wealth of a person.

All main contributors in growing GNP and national income recorded relative appreciation in FY08. Per capita income increased in value as compared to preceding fiscal. Attributable primarily to historical arrival of home remittances of $6.5 billion, net factor income from abroad reached to Rs. 2.3 trillion in FY08.

Greatly added with personal consumption, government expenditures, and investments, GNP at factor cost peaked up to Rs. 101 trillion in last fiscal following factoring in foreign income accrued to country's residents. GNP at market price also soared.

When total income in last fiscal is divided over national population, per capita income inferred in a result is Rs. 62,994 per annum. Population of the country was estimated near 161 million last year. Quite explicit is the fact that an average per month income of a Pakistani is about Rs. 5,250 per month according to previous estimation or Rs. 175 a day.

The population of Pakistan living below international standard is highest amongst west and central Asian countries according to ADB regional comparative study. The World Bank also estimated that 74% of Pakistanis were surviving with only $2 a day. Although these two studies are outdated, report of federal bureau of statistics comes up with not as such significant improving result in its recent report that lowers down percentage to slight 54%.

Both net national income and wealth of an individual determine performance of an economy. If national income increases without bringing betterment in standard of living of a common person of the country in an equitable manner then economic activities may likely get hampered or slowed down, translating into manifold problems of poor macro economic indictors such as inflation, unemployment, economic imbalance.

World over, economists believe that ensuring equitable distribution of windfalls branching out of rising national income may enable economic managers to offset risk of economic recession as sharing wards off any serious external and internal billows.

In past, economy of Pakistan turned out to be a safe heaven of investment and attracted exuberant participation of services sector in particular in building volume of gross domestic products. Alone service sector outweighed collective revenue of two core and economically important agriculture and industrial sectors in GDP account.

Workforce associated with the services sector experienced rise in their pay scales and income increase not only gave way to open employment opportunities but all in all reinvented economical fads. However, this wave of change though small could not go past major portion of the society. People who are living at subsistence remain unfortunate to survive even another shudder of economic disturbance emerging out from inflation spikes.

It is said that better GNP would become none less than statistical fudging if it fails in elevating quality of life. And it is far practical to trade off quantity of goods with quality of life. For example, if better GNP results in deteriorating human health due to industrial emissions then outcomes would be too likened to draw on robustness of economy. Hence modern economists recommend appraisal of impact of GNP over society at large and ecology.

To Pakistan continuous upgrading of national incomes is necessary to stand above the status of developing economy. For it, expanding of scale is as much important as anything else. Yet, circumventing over other costs like income disparity would hinder at smooth upgrading process.

While government is responsible to add on to process, public can too play its role in enlarging national outputs. What they will be required is to overcome their ignorance in relation to wastage in day to day routines. Such wastages are not necessary related to money but also energy, etc. Unnecessary turned-on light also causes a heavy energy loss in aggregation. Similarly, water flowing out from tap drained in vain may render increase in cost of production. Often, people shrug off this as peccadilloes. However, net economic welfare and preventing economic blight may be possible only with due support of public.

The question is how government can get on the track leading towards good net economic welfare? Simply by pumping up balloon of gross outputs government would get only entangled itself into jugglery of statistics and has final beneficiary of magnificence of numeric values around blessed and selected sections of the society. Although per head income increased, surely, had it not been calculated as an average of gross income this figure would have been scant. Despite ever rising national income for last many years, those languishing under perennial poverty are still struggling hard to have basic necessities of life. General scene belies any claim that poverty is at downward trend. Unless development of each is condition for development of all, national income can not equitably be distributed.