Alarming Poverty and Pakistan

Mehmood-Ul-Hassan Khan
Poverty is curse. It is on the rise around the globe. According to the latest report of the World Bank (2009), global poverty ratio is on the rise and Pakistan is not any exemption. The ongoing global financial and banking crisis especially in the USA and the EU has already pushed the millions of people into deeper poverty. According to the latest estimates of the World Bank, almost 40 percent of 107 developing countries are highly exposed to the poverty effects of the crisis. Pakistan is ranked among the 43 countries most exposed to poverty risks. United Nation study (January 2009) says that due to alarming global poverty levels the death ratios of thousands of children and women would be increased throughout the world.

A World Bank report titled ‘Sparing lives, better reproductive health for poor women in South Asia’ has revealed that Pakistan’s 37.4 per cent children under the age of five are malnourished and poor women and children’s nutritional status may worsen if food prices continue to climb out of reach of the poor in the South Asian region. According to the latest report of the World Bank (2009), South Asia region still has nearly 400 million poor people out of a population of 1.42 billion. Poverty is not just endemic; it is increasingly becoming concentrated with the passage of time. In absolute terms, people living below the poverty line (based on $2-a-day criterion) account for more than 80 percent of the population in India, Bangladesh and Nepal, 73.6 percent in Pakistan, and 41.6 percent in Sri Lanka. A high poverty ratio has decreased Pakistan’s spending on social sector further. According to the State of the World Children Report, 2009, the per capita healthcare spending in Pakistan stands at 18 dollars out of which only four dollars are spent in the public sector per annum, while by minimum international standard we need to increase per capita healthcare spending to at least $45 per annum. The UN study says that poverty ratios in sub-Saharan Africa and developing countries would be increased. Moreover, the current worldwide economic meltdown would badly affect the Millennium Development Goals (MDGs). The report highlighted that infant mortality and child malnutrition would be increased.

According to Pakistan, Planning Commission (2009), poverty rate has jumped from 23.9 to 37.5 percent in the last three years. The commission has estimated that in 2005 there were 35.5 million people living below the poverty line but in 2008 their number increased to over 64 million. It is stated that over 64 million people, out of 160 million population has plunged into the poverty pool. Consequently, unemployment has also increased. Moreover, 40 percent of the urban population lives in slum areas. Reduction in social sector spending is increasing poverty and has reduced the standard of living in the country.

Main reasons

(a) High inflation (Since 2007 our economy is suffering from the high ratios of inflation. Price hike has changed the daily life of the masses. CPI and SPI are continuously on the rise. It is now in 23.5-26.2% which is at higher side).
(b) Shortages (Food, energy, water, oil, gas). It is the hallmark of our macro-economy. We have food shortage (wheat, rice, edible cooking oil, sugar and other basic necessities of life), energy shortage ( acute deficiency of electricity and gas supply which has ultimately decreased our LSM and agricultural production)
(c) Unemployment and business closures among the many factors (There has been load-shedding of more than 12 hours due to which large number of SMEs, factories and mills closed which increased the unemployment ratios in the country and ultimately poverty ratios jumped from 23.9 to 37.5 percent in the last three years.
(d) There has been a sharp reduction of 100 billion rupees in the social sector budget which has badly affected development activities. Its slow execution and utilization also instrumental to increase the ratios of poverty. During first six months of current fiscal year the government spent only 19 percent from total allocation of Rs 371 billion of federal public social development program, lowest until 2005. This federal level PSDP has already been slashed by Rs 100 billion. In the first half of last fiscal year the government had released Rs 132.6 billion, which is 39.6 percent of total allocation of Rs 371 billion. About 125 projects have been removed from the Public Sector Development Programme (PSDP) and 432 others are facing implementation delays because the government is trying to reduce spending and bring down budget deficit to 4.2 per cent of the Gross Domestic Product

Sectors Amount Percentage
Infrastructure development Rs 166 billion 45
Social sector Rs 188 billion 51

Again, social sector suffered a major cut as out of Rs 100 billion cut in development spending Rs 79.5 billion was slashed from social sector projects, while education sector Rs 20 billion and health Rs 39.7 billion would be decreased for next year. Recently, Pakistan occupies the 136th position among 177 countries listed in the human development index and lags behind even Bhutan and the Maldives in South Asia.

Remedial approach

(a) The government should launch a massive effort for job creation and employment generation in order to reduce the high levels of poverty
(b) Infrastructure development would be a effective tool to curb the rising ratios of poverty. It should be country-wide strategy and small and mega projects of infrastructure development should be initiated at the earliest
(c) Housing is another sector which needs to be promoted and encouraged through a well planned incentives package. Huge housing will not only give a boost to all related industries but will go a long way to meet the acute housing shortage in the country.
(d) Transportation sector should also be reactivated. Different public welfare schemes should be started at gross-rout levels
(e) Small and extensive vendor units in the textile, engineering and other export-oriented industries should be settled
(f) Facility of easy and smooth loaning
(g) Effective use of micro-credit institutions to reduce the high levels of poverty
(h) Delivery of essential services and basic necessities of life would lessen the burden of poverty on the general masses
(i) Restoration of investor confidence is must because investment would automatically create more jobs, reduce poverty level and promote economic growth.
(j) Better law and order situation would be helpful in the restoration of business activities and to reduce rising poverty.

Concluding Remarks

Poverty discourages human talent and dignity. It decreases the levels of patience and tolerance and promotes corruption and terrorism. It gives ways to disintegration and social alienation in the society. Sincere and coordinated efforts should be started to reduce the high ratios of poverty.

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