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Who is poor in Pakistan today? Raising the basic standard of well-being in a changing society

Ghazala Mansuri's picture
Photo credit: Visual News Associates / World Bank


Over 80 percent of Pakistanis consistently report that their economic wellbeing has either deteriorated or remained the same. Only 20 percent, disproportionately concentrated in the very top of the distribution, feel that they are better off and similarly small numbers believe that economic conditions have improved for their locality. If we took a poll today, it is possible that many of you would say that extreme poverty has risen rather than fallen.

But in fact, the national data tells a completely different story! According to the national poverty line set in 2001, Pakistan has seen an exceptional decline in poverty—falling from nearly 35 percent in 2001 to less than 10 percent by 2013-14. Moreover, these gains were not concentrated among those close to the poverty line. Even the poorest 5 percent of the population saw an improvement in living standards.

The increase in incomes is also evident when looking at other indicators of wellbeing. Access to toilet facilities for instance, has significantly improved; Among the poorest 20 percent of households, those without any type of toilet has been cut in half—from close to 60% to about 30%, while the ownership of assets like motorcycles has risen from only 2% to 18%; and many more of the poorest households now have refrigerators, televisions and stoves.
 
Most importantly, households have changed their dietary patterns in ways that are consistent with poverty reduction. Even the least advantaged families in Pakistan have moved towards a more diverse diet, with a greater consumption of dairy, meat, fruits and vegetables. Not only has their diet become more diverse, households also spend a smaller fraction of their total income on food items, preferring instead to spend more on nonfood items such as housing, utilities, education, health care and consumer goods, including leisure goods.
 
So what accounts for the gap between people’s perceptions of rising poverty and the evidence presented above? Perhaps it is the relative lack of improvement in basic public services, or a perception that there is too much corruption, or that only the wealthy and connected can get good jobs or set up businesses. Perhaps there is a sense that the gap between the rich and poor is growing.

All of these issues are undoubtedly important, and rightfully influence people’s perceptions about their wellbeing. At the same time, they do not preclude a decline in extreme poverty.

Further, our collective sense that too many are poor may actually be linked to the pace to development itself. As societies develop, ideas about the absolute minimum acceptable standard of well-being also change. More precisely, with development, the minimum requirements for a productive life and personal dignity grow, and this changes a society’s views about who is poor.

Few would argue that Pakistan is the same country today that it was 15 years ago. As development has occurred our standards for what is a bare minimum level of existence have also risen – and this is a good thing.

To anchor this idea, ask yourself: what percentage of Pakistanis ought to be considered too poor (in today’s Pakistan), to afford the minimum standard of living necessary for a productive life and for personal safety and dignity? If your answer is anywhere between 25% and 35%, you are with the majority! Call the poverty rate obtained through such a question the socially subjective poverty rate for Pakistan.

A national poverty line, and poverty rate, is clearly most useful for guiding policy when it is well-aligned with overall development and therefore also with the socially subjective notion of who is poor. In this sense, the poverty line is always a policy choice.

All societies that aim to build democratic and inclusive policies must respond to development by periodically raising the standard of living for their most vulnerable members. In the (now) developed world, governments have intervened time and again to help ensure that the standard of living for the most deprived improves with development.

The government’s decision to set a new poverty line for Pakistan is extremely encouraging in this context. It was also necessary given the robust decline in poverty based on the old line.

The new line, which uses an improved methodology, sets a minimum consumption threshold of Rs. 3030 per person per month. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.  

Why Rs. 3030 per person per month? Well, while the analysis that produces a national poverty line is based on nationally representative household consumption data, and uses a rigorous and well established method, it does not uniquely determine a value for the line. Rather, it provides a range of options, all of which are compatible with the data, but only a few of which are also consistent with society’s understanding of who is most deprived at a point in time.

Pakistan’s new national poverty line is highly policy-relevant precisely because it resonates with the socially subjective view of who is poor today. Pakistan now needs to build on this bold decision by taking equally bold steps to scale up its efforts on other fronts. Things have not improved on key issues like child stunting or schooling or jobs, which will determine what the country’s future looks like. The true fruits of poverty reduction will only be fully evident when the quality of public service delivery and the quality of governance rise to meet the growing needs of the population, and key services are accessible to all Pakistanis.

Comments

Submitted by Ahmed Yar khan on

The argument in para 5 of the article carries a lot weight as the general perception is devoid of any tangible evidence.As the development pace increases the perception of who is poor also changes.Surely countries like Pakistan need simultaneous action on multifarious fronts to alleviate poverty.

Submitted by Ghulam Murtaza Khan on

The poor household needs to be redefined. There has been sharp increase of daily wage rates of unskilled/skilled labour. An unskilled labourer even in remote villages can earn minimum Rs. 600.00 per day. However, the population of SAFAIDPOSH families increased during last 10-20 years.

Submitted by Abdullah bohar on

Inshallah pakistan well grow economically strong this time and inshallah we win against terrorists and all violations. This time Pakistan will change to some years ago so I am hope full.

Submitted by NaQsheen Women Entrepreneurs Network on

This article presents a refreshing perspective indeed. It gives us hope that challenges of poverty are withering away and socio-political commitment is gaining ground. Your use of picture in this article, where we can see women busy in creative entrepreneurial activity, is meaningful. As a network of women entrepreneurs, we are also witnessing a massive wave of enthusiasm and initiative among women in Pakistan to benefit from new business opportunities. If only we could provide an enabling environment to this growing hope among women.

Submitted by Rizwan Majid on

As far as the standard go there might be an improvement in spending as there is rise in cost and devaluation of currency. Over all business is going down as more and more people are only able to spend money on necessities. How these kind of stats can be collected and relied upon in a society where there is hardly any proper records are kept. There is mis information every where. Kindly re asses your view.

Submitted by S. Subramanian on

An excellent contribution! It importantly underlines the issue that the poverty standard need *not* (and typically should not) be invariant in the space of real incomes (incomes adjusted only for price changes) or commodity bundles in order for inter-temporal (or spatial) comparisons of poverty to be meaningful. It would be nice to have a more fleshed-out version of this paper, one which also subjects the World Bank's 'dollar-a-day' type of 'extreme' poverty line to criticism.

Submitted by S Imam on

An unrealistic manipulation and projection of data to claim that poverty declined sharply in Pakistan during the last 14 years. Poverty in countries like Pakistan is directly proportionate to public sector development in social and infrastructure sectors in all parts of the country. Who can deny that public sector investment has been declining drastically. Even the funds which are allocated at the time of an annual budget announcement for PSDP are rither reduced or reallocated for other non-developmental sectors. Moreover, income disparity not only has been growing hugely, but also some regions are developed at the cost of others, hence regional disparity. Lahore and Islamabad have motorways, but what about the state of the affairs of infrastructure development in South Punjab or in Karachi or, for that matter, in Balochistan. This analysis is yet another attempt to hoodwink the public.

Submitted by Zaheer Qureshi on

Good to know that Government is alive to tge issue of poverty. Changing the poverty line from calorie consumption to rupee consumption is also good as it is more easily comprehendable. Probably the new line (3030 rupees) is based on workd Banks 1 dollar extreme poverty line.
As far aa reduction in percentage of poor is concernd, the source of data has not been given. In countries like pakistan getting reliable data has akways been an issue.

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