POVERTY

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Feb 28 - Mar 6, 2011

Poverty is characterized by lack of adequate food and shelter, education and health, deprivations that keep people from leading the kind of life that everyone values.

Poor people also face extreme vulnerability to ill health, economic dislocation, and natural disasters. And, they are often exposed to ill treatment by institutions of the state and society and are powerless to influence key decisions affecting their lives. Poverty has no geographical boundary. Poor people live without fundamental freedoms of action and choice that the better-off take for granted.

Over the last five years, in an era of unprecedented global wealth creation, the number of people living in chronic poverty has increased. Between 320 and 443 million people are now trapped in poverty that lasts for many years, often for their entire lifetime. Their children frequently inherit chronic poverty, if they survive infancy. Many chronically poor people die prematurely from easily preventable health problems. Widespread chronic poverty occurs in a world that has the knowledge and resources to eradicate it.

More recently, the structure of world economy is such that the rich grow richer and poor grow poorer. Surplus is created by the rich countries at the cost of poor countries due to unfavorable trade terms and most of the savings of the developing countries go back as refund of loan and interest. This could equally be true for the rich and poor states within the country. However, economic disparity within the country can be eliminated through better planning, better management of economic and manpower resources which can ensure balanced and sustainable development of all states.

Poverty alleviation is the most persistent challenge facing Pakistan since its inception. The factors that create perpetuate poverty include income inequality, unemployment or underemployment, inadequate access to basic services and resources by the poor, inequitable distribution of assets, technology and socioeconomic opportunities, and underdeveloped infrastructure, etc.

The incidence of poverty in Pakistan is much higher in the rural areas than in the urban areas.

As regards poverty status in Pakistan, no unidirectional movement of headcount ratio has been observed. The headcount ratio (HCR) of 30.6 per cent in 1998-99, increased to 34.5 per cent in 2000-01, before declining to 23.9 per cent and 22.3 per cent during 2004-05 and 2005-06.

In spite of world economic crisis, workers remittances in case of Pakistan are showing a robust upward trend, estimated at $5.3 billion in 2007-08, $6.4 billion in 2008-09 and $7.3 billion during 2009-10 (July-April). Unemployment rate decreased to 5.2 per cent in 2007-08 from 6.2 per cent in 2006-07. However, it rose to 5.5 per cent during 2008-09. Agriculture sector, the largest source of employment (45.1 per cent) improved in terms of growth in 2008-09. On the other hand, the services sector, the second largest job provider (34.5 per cent) and having the highest employment elasticity grew at 4.56 per cent in 2009-10 compared with 1.58 per cent in 2008-09. A major factor in operation over the past two years, which may have possibly mitigated pressure on poverty, has been the substantial increase in support prices of wheat, the largest staple food crop, which were raised to Rs950/40 Kg from Rs625/40 Kg in September 2008. Prima facie, the increase in support prices in conjunction with a much larger commodity procurement program run by the government (under which 9.2 million tons of wheat was procured in 2008-09) has led to a substantial cash injection into the rural economy.

The sharp rise in international oil and food prices not only adversely impacted the macroeconomic indicators in Pakistan but also increased the poverty level. The gender discriminatory practices also shape the distribution of poverty Pakistan. Traditional gender roles in Pakistan define the woman's place as in the home and not in the workplace, and define the man as the breadwinner. Consequently, the society invests far less in women than men. Women suffer from poverty of opportunities throughout their lives in the country.

POVERTY REDUCTION

Country

Period

Headcount Poverty Rates Final (%) No, of Poor (mn) % Share of Each Country in the Total PR
Final PR
Bangladesh 1992-2005 9.6 76 4.4 0.7
China (rural) 1990-2005 26.1 204.2 409.9 68.8
China (urban) 1990-2005 1.7 9.1 64.1 10.8
India (rural) 1988-2005 43.8 353.3 -8.9 -1.5
India (urban) 1988-2005 36.2 117.3 -19.2 -3.2
Iran 1990-2005 1.5 1.0 1.2 0.2
Pakistan 1991-2005 22.6 37.5 39.2 6.6
Sri Lanka 1985-2002 14.0 2.7 0.6 0.1
PR: Poverty reduction

CONCLUSION

Poverty in Pakistan has many dimensions and requires a multi-strategy solution. However, there is a need for government to formulate and carry out thorough implementation of economic development plans and programs that will provide employment, housing, education, improved health care facilities among other things specifically for the urban poor. Agricultural research can also contribute to poverty reduction. Global companies and international NGOs could strengthen their collaboration to reduce poverty. Companies, in particular, should adopt a more activist approach to reduce poverty while the World Bank and IMF are working for poverty reduction.