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Poverty and its Contrarians

There are three types of lies — lies, damn lies, and statistics.

To anyone trying to make sense of our government’s sundry assertions and postulations these famous words, attributed to the 19th century British Prime Minister Benjamin Disraeli, ring so true.

In a country like Pakistan, with a long history of chequered governance, the credibility of statistics and numbers is rarely taken on its face value. However, of late the precarious state of income and poverty figures has surpassed even our own dubious standards. They are a mess, to say the least.

Since 2008, the Government of Pakistan (GoP) has not thought it important to release statistics regarding the state of poverty and income distribution in the country. To the unobservant mind this may not seem important enough, at first. But when one ponders upon this, the implications for this failure are far reaching and are fundamental to evaluate the overall public policy direction and specific public sector responses to the crises the majority of our country’s population face every day.

In 2008 the World Bank, based on the data provided by the GoP, estimated that 21.04% of the population was living under the poverty line, having incomes less than $1.25 per person per day (PPP). A further 39.15 % were living in poverty, having incomes less than $ 2.00 per person per day (PPP). However, these figures were heavily disputed and appeared to be the latest rendition of the long running comedy of errors that is Pakistan’s economic statistics.

One reason for this was that earlier in 2006 Planning Commission had declared the poverty level computation methodology, adopted in 2001, to be faulty and revised it, claiming a 30.7% decrease in absolute poverty from 34.5 % in 2001 to 23.9% in 2006.

Meaning thereby that 10% of the total population, i.e. more than 16 million people, were lifted above the poverty line in just five years, with even more unbelievable reduction of extreme poverty in urban areas, which came down to a mere 14.9%.

Along with these hedonistic statistics came the lofty claims of an unprecedented swelling of the middle class. The Asian Development Bank also exacerbated this charade when in 2010 it declared the size of Pakistan’s middle class to be 70 million or 40% of the population.

To top it all of Pakistan Social Living Standards Measurement Survey 2010-11 cheered to have brought the extreme poverty level down to a hard-to-believe 12.4%, with only 7.1% of the urban dwellers living in extreme poverty and merely 15.1% of their rural counterparts experiencing the same fate.

These figures were utilized in the Pakistan Millennium Development Goals Report 2013, released by the current PML(N) government, claiming that “there has been a persistent downward trend in poverty incidence” in Pakistan. The report further claimed that “the percentage of population below the poverty line fell from 34.5 percent in 2001/02 to 12.4 percent in 2010/11”, meaning thereby that more than 30 million people were lifted out of extreme poverty during the period.

The irony of these lofty claims becomes even more apparent considering in the very year of 2010 Pakistan suffered the worst floods of its history, devastating the lives of 20 million people throughout the length of the country; a tragedy repeating itself every year since then.

This massive confusion needs to be dealt away with. It is imperative that the government should objectively reassess and release details and methodology about the income distribution figures, not only for the $1.25 and $2 income brackets but also details about $2-$4, $4-$10, $10-$20 and $20+ income ranges.

A host of significant occurrences since 2008 demonstrate that the incidence of absolute poverty and the contraction of middle class have been, in fact, considerably exacerbated in the last six years and highlight the urgent need for accurate income level statistics.

In 2007 Pakistan, along with the rest of the world, suffered the worst food price crisis in generations. Food prices skyrocketed.

Remember the recurring Flour price crises in 2007, followed by the sugar price crisis (where the Supreme Court had to intervene) and then followed by the sharp hikes in rice price. Another food price crisis hit us in 2011, as a result of a host of global events and recurring floods in the country.

As a result, according to the Planning Commission, the cost of minimum food basket rose by 130% from 2005-06 to 2011-12; consequently forcing the people to consume less food. Calories Intake per capita during the period declined from 1750 to 1700. As a direct result of this massive food inflation 62% of the population has been reportedly forced to compromise on basic expenditures like health and education, especially for women, in order to meet their food expenses.

For a country where the swelling mass of the poor spends 60% of their income on food, where 58% of its entire population is unable to fulfill its nutritional requirements, it is brutally callous to stick to the ridiculous claims about massive reduction in poverty. Again according to the Planning Commission, in 2011 there were 44% more calories available than actually consumed, meaning thereby that food is there but the decline in purchasing power prevents people from acquiring it. This factor alone suggests that since 2007 poverty in Pakistan has risen considerably and middle class has in fact shrunk.

A lot has been said about the rural economy boom during the period under discussion. But even though the rural economy has seen huge inflows as a result of higher food prices, the benefits of this windfall have been reaped by farmers having land in excess of 12.5 acres and those in relatively more developed and non-feudal areas of the country, like Punjab and KP. Rural areas, nonetheless, remain the hub of extreme poverty in the country, with Sindh and Balochistan faring the worst. This dichotomy becomes more evident when we consider that 67% of households in Pakistan don’t own any land.

Another major cause of the rise in incidence of poverty has been the fallout effects of the increasingly unmanageable imbalances in the economy. Since 2008 Pakistan has been suffering one of the worst stagflation-any period in its history. Inflation has remained stubbornly high, unemployment has been rising steadily and growth has remained low and stagnant. During this period Pakistan’s economy has been trapped in the clutch of two successive IMF stability programs. Just as austerity has been the name of the game since the 2008 global recession elsewhere in the world, likewise the economic belt tightening forced upon Pakistan by the IMF has not allowed meaningful growth and job creation to occur. The social development spending outlays have reduced considerably. But despite this budget deficits, to this year, have remained out of control.

Though IMF employed enormous pressure on the government for measures like wiping out subsidies, massive increases in energy prices, imposing regressive in-direct taxes, measures which effect the poor and the middle class the most; they have turned a blind eye to the government’s unquenchable binge for creating easy domestic debt at will. Along with crowding out the private sector from the debt markets, this has been undoubtedly the biggest cause for the towering inflation during the period. Add to this the cataclysmic rise in oil prices, dismal tax collection and the depreciation of rupee by more than 55% since 2008, the government’s claims about poverty reduction seem boisterously ridiculous.

A close examination of various Household Integrated Economic Surveys since 2002, published by the Pakistan Bureau of Statistics, demonstrate a persistent rise in the real (inflation-adjusted) income of the top quintile of Pakistani households, while the real income of the bottom quintile has been persistently declining. The fact that this gulf between the rich and the poor has been widening irrespective of the state of the economy at any given stage, starkly demonstrates the structural imbalances in our economy.

Terrorism and a worsening law and order situation have also dampened the economic growth and have all but decimated the sense of security, essential for any meaningful growth in an economy, in large parts of the country. This is most evident in Karachi, the financial and trade nerve centre of the economy. The premier business hub of the country is defined nowadays more by nefarious activities like extortion, mass targeted killings, kidnappings and gang wars, rather than leading the way by growth and innovation. According to recent government pronouncements terrorism and its allied effects have caused the economy in excess of $80 billion in the last decade, bulk of it in the last seven years.

So it’s not a cosmic mystery to deduct that poverty incidence in the last seven years has increased multi fold. Majority of the people in the country live at the borderline of their respective income brackets and are hence extremely vulnerable to the overall direction of the economy. Seeing in the light of the above cited reasons government initiatives like BISP seem woefully inadequate.

Lately development thinking has widened its scope from focusing merely upon income as the ultimate measure of human progress, towards a more holistic approach evaluating human well-being. Approaches like Amartya Sen’s Capability approach and Multi-Dimensional Index emphasis the need to look beyond income to assess the broad nature and connotations of what it means to be poor.

But to assess anything we need data, reliable data. We need carefully devised and well-tested methodologies to produce and process this data. This is extremely important because when people know, public opinion is formed and it’s the only way to force change in government policies and actions.

It’s no small matter. It’s the matter of the well-being of 180 million souls.

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