‘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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14m slipped into poverty since 2005

ISLAMABAD: The National Assembly was on Monday informed that around 14 million people in the country might have landed in the rank of the poor due to rising food and oil prices during the last few years.

In response to a question, Minister for Finance and Revenue Shaukat Fayaz Ahmad Tarin in a written statement said that according to independent estimates between 2005 and 2009 over 12-14 million people had slipped down the poverty line owing to continuous rise in the prices of oil and food. However, firm statistics could only be established when data for the financial for 2008-2009 come in, he added.

Poverty declined in the country by more than 12 per cent between 2001-02 and 2005-06 and reached 22.3 per cent. However, if the estimations made by the independent sources are taken into account, it would mean an increase in poverty over the last few years from 22.3 per cent of the population in 2005-06 to at least 30 per cent in 2008-09, the minister said.

On the steps the government is taking to reduce poverty, the minister said a nine-point economic stabilisation-poverty reduction agenda laid down in the Poverty Reduction Strategy Paper (PRSP-II) had been finalised for the coming three years. The main focus of the paper is to strengthen the nexus between economic reform and poverty reduction particularly through social protection.

The Federal Poverty Reduction Strategy (PRS) secretariat tracks pro-poor expenditures in 17 sectors. Similarly, social protection programmes, both budgetary and non-budgetary, provide direct assistance to the most vulnerable segments of society through the Baitul Maal, the Employees Old-age Benefit Institute, Zakat and provision of micro credits.

Under the Benazir Income Support Programme, Rs70 billion would be distributed to approximately five million households. Each household having an income of less than Rs6,000 would be provided Rs1,000 per month.

‘Food Support Programme misused by legislators’

At another consultation on social protection and marginalised groups arranged by the Labour Education Foundation in Lahore on Monday, economist Kaiser Bengali informed that the Rs9 billion Punjab Food Support Programme was misused by legislators and revenue officials whereas Benazir Income Support Programme (BISP) funds were being monitored through a computerised system.

Mr Bengali, the BISP designer, said the Punjab Food Support Programme accounts problem had been caused due to the decision of the provincial government to accept even the photocopies of the forms printed for the scheme. The facility was, however, misused not only by the legislators through whom the forms were distributed to applicants but also by revenue officials who verified the forms.

He said the BISP was free from anomalies because its record was fully computerised. He said the programme could not alleviate poverty because it was rather an emergency aid to help the poorest of the poor families, one third of the population.

He said the 10 per cent of the richest class was paying only 12 per cent tax whereas the poor class was bearing 16 per cent of the burden because the taxation system in Pakistan was unjust and unfair. He said capitalists blackmailed the government. When the government decided to levy capital gains tax on stock exchanges, they went to Zardari House and threatened to transfer their money abroad which forced the government to exempt the sector from the tax for a couple of years.

He said capitalists transferred foreign exchange abroad because former prime minister Shaukat Aziz was the representative of an influential international institution who had sold 80 per cent of the local banks to the foreigners making the flight of capital an easy task.

Mr Bengali said federal and provincial governments were unable to honour their electoral problems due to certain compulsions. He said that a universal scheme for distributing a prescribed quantity of ration and kitchen items on cards instead of cash could prove better for social protection as it would save the poor from the humiliation suffered during the procurement of subsidised flour during Ramazan. Two to four per cent of the population not staying permanently at one place would, however, not be able to benefit from the ration card scheme.

He said that the recent world financial crisis had halted the aggression of capitalism continuing for the past two decades. The crisis forced the capitalism champion US to adopt the socialist theory partially and nationalise the banks. He said that poverty alleviation was possible only by creation of jobs and not by provision of financial assistance. Punjab Labour Minister Muhammad Ashraf Sohna said he had failed to get labour inspections restored in Punjab because the rulers belonged to the industrialist class.

He said he had decided to start registration of workers children for education from Oct 13 as the workers could get their rights by educating their children. He said the Punjab Employees Social Security Institution had also decided to establish medical colleges in Lahore and Faisalabad wherein 50 per cent of the seats would be reserved for the children of workers.

Political economy analyst Irfan Mufti said that poverty alleviation was not possible by doling out financial assistance as it provided only temporary relief. He said the government spent Rs400 billion on defence, most of which was used for maintenance of cantonments.

BISP Punjab Director Akbar Aleem Shamim said that the programme had been launched with a Rs.34 billion budget in 2008-09. The budget had been raised to Rs70 billion this year. He said the federal government was now carrying out a fresh countrywide survey for the identification of the deserving families on the directions of the World Bank.

Faisalabad Powerloom Industry workers leader Mian Qayyum said schemes like the BISP aimed at humiliating the people.

Ramesh Pal said eight million scheduled caste people could not benefit from the BISP because they did not possess computerized national identity cards.

Muhammad Ismail from the Fisher folk Forum, Yousuf Baloch from the National Trade Union Federation and Niaz Khan also spoke.

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