‘Economic shock can send millions below poverty line’

ISLAMABAD: Almost 75 per cent of the poor in Pakistan are clustered around the poverty line. A slight increase in income can drive a large number of people above it, while one crop failure or economic shock can send millions below the red line, according to a finance ministry survey.

The survey was released to coincide with the ‘International Day for the Eradication of Poverty’, observed on Saturday.

According to official figures, a sustained period of economic growth saw a fall in the national poverty rate by more than 11 percentage points between 2001 and 2006.

However, recent estimates showed that nearly a quarter of the country’s population remained poor, with a significant number barely clinging to the poverty line.

Terming higher economic growth indispensable for poverty reduction, the survey said investment in human capital and higher spending on social sector was required.
It noted that typical coping strategies had a negative impact on welfare and tended to perpetuate inter-generational poverty.

According to the document, aggregate shocks like calamities and recent global food, fuel and financial crises, and shocks of personal nature like health and unemployment, burden households, particularly those in the rural areas, with considerable additional costs.

Such shocks are likely to reverse the declining trend of poverty unless measures are taken to protect vulnerable households.

According to a recent UN assessment, households unable to meet medical expenses increased from 6 per cent to 30 per cent in 2008. It also expressed fears of a massive increase in school dropouts.

The diminished purchasing power has severely impaired the capacity of poor households to seek healthcare, and children’s education, particularly for girls. This situation has been further aggravated by falling nutrition levels.

The World Bank estimated that the poverty head count ratio could increase to more than 25 per cent by 2009-10.

The ministry of finance has finalised the second generation Poverty Reduction Strategy Paper (PRSP-II), covering the period up to 2011, which is aimed at reducing poverty by regaining macroeconomic stability.

Preliminary findings of the poverty analysis in Pakistan carried out by the Asian Development Bank showed that extreme pockets of poverty existed in rural Sindh and southern Punjab while entire Balochistan was poor by all indicators of poverty and development.

The ADB report said that poor people also struggled with prevailing patterns of land ownership, malfunctioning labour markets, lack of access to education and health services, and discriminatory social structures in rural areas.

Urban areas, meanwhile, suffered from deteriorating living environments, inadequate access to basic services, security problems and poor infrastructure.

Existing publicly financed social protection programmes in Pakistan are limited in their coverage, administration, targeting efficiency and ability to respond to shocks.

Until the introduction of the Benazir Income Support Programme in 2008, the country’s safety net system comprised basically two cash transfer programmes – Zakat and the Food Support Programme administered by the Baitul Maal.

Both Baitul Maal and Zakat are weakly targeted to the poor: Only 46 per cent of Baitul Maal’s total expenditure (and 43 per cent of total Zakat funds) reach the poorest 40 per cent of the population.

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