Analysis: Why pro-poor strategies have failed
Trillions spent to improve the lot of the poor have not borne fruit.
The Benazir Income Support Programme (BISP) estimated in its survey that 45.7% people spend their lives below the poverty line. In other words, 82 million people are living in poverty. PHOTO: FILE
KARACHI:
It sounds unbelievable that sacrificial animals worth more than Rs120 billion were slaughtered this year on the holy occasion of Eidul Azha in a poverty-stricken country like Pakistan. It appears even more unbelievable when the fact that more than 60% are forced to live below the poverty line in Pakistan comes to mind. The country inherited this situation at the time of partition. This heritage of poverty was augmented over the years with the increasing ratio of population, mainly due to the uneven distribution of income and inadequate poverty reduction strategies initiated by successive governments. Although it is an arduous job to find the exact figures of poverty in Pakistan due to unrealistic assessment of the poor, there are some semi-independent sources who have attempted to measure poverty in recent decades.
According to a newspaper report, 60% of population is living below the poverty line. Similarly, the Benazir Income Support Programme (BISP) estimated in its survey that 45.7% people spend their lives below the poverty line. In other words, 82 million people are living below the poverty line.
On the other hand, pro-poor spending, like subsidies and direct transfers are increased by the government every year. For instance, the pro-poor expenditure by the federal and provincial governments during the first half (July to January) of the last fiscal year 2011-12 witnessed an increase of 90% and amounted to Rs919.564 billion compared to the allocation of Rs482.815 billion in the same period of the fiscal year 2010-11. During the 2010-11, Rs1.245 trillion were spent for pro-poor initiatives as against Rs1.110 trillion in 2009-10. The question here arises as to why these huge sums do not bring about any qualitative change in poverty reduction? There are certain hindrances in poverty alleviation from Pakistan. Let me explain.
A number of policies were formed by different governments in the past in order to reduce both urban and rural poverty, but failed mainly due to inconsistency and poor implementation. The rural development, as a poverty reduction tool, has been part of all the 5-year development plans, starting from the mid-1950s, failed mainly due to inadequate resources. The SAP of the 1990s did not achieve its outcomes because of poor implementation. Similarly the Poverty reduction strategy (PRSP) initiated in the 2000s based on poverty reduction through economic growth failed to achieve its objectives because governments mainly focused on a consumer based economy which does not ensure improvement in the living standards of the indigent.
The view that poverty could be reduced through poverty alleviation schemes such as BISP etc has not been substantiated by facts on the ground. Subsidies are ineffectual in fighting poverty because they are given on non-targeted basis which reduce per capita impacts. Although poverty in Pakistan is spread widely, there are pockets of poverty in southern Punjab, rural Sindh, K-P and Balochistan. No attempt has been made to target poor regions for development and poverty reduction.
Another antecedent behind the growing incidence of poverty in Pakistan is rapid growth of population, which obviously is a cutting edge of increasing the number of dependents on earners. Growing population is not a trigger behind the poverty always, but it can be vulnerable when growth rate of population outstrips economic growth. This phenomenon was observed at the end of last decade. The high growth rate in population has several implications for poverty reduction. The growing labor force cannot be absorbed productively in the weak economy, leading to high youth unemployment and underemployment. The unemployment rate is 5.95% in December 2011 not much changed as compared to last year. According to the labor force survey during the year 2010-11, there are 3.4 million people unemployed in Pakistan and the data from economic survey of the preceding year shows that till December 2011 the total number of unemployed workforce was 3.53 million which turned into more of its dire phase in 2012-13. The huge portion of unskilled labour force does not contribute productively to increasing industrial growth leading to poverty reduction.
The writer hosts business talk shows on FM 101 and Radio Pakistan and is pursuing an M Phil degree in Economics
Published in The Express Tribune, October 21st, 2013.
It sounds unbelievable that sacrificial animals worth more than Rs120 billion were slaughtered this year on the holy occasion of Eidul Azha in a poverty-stricken country like Pakistan. It appears even more unbelievable when the fact that more than 60% are forced to live below the poverty line in Pakistan comes to mind. The country inherited this situation at the time of partition. This heritage of poverty was augmented over the years with the increasing ratio of population, mainly due to the uneven distribution of income and inadequate poverty reduction strategies initiated by successive governments. Although it is an arduous job to find the exact figures of poverty in Pakistan due to unrealistic assessment of the poor, there are some semi-independent sources who have attempted to measure poverty in recent decades.
According to a newspaper report, 60% of population is living below the poverty line. Similarly, the Benazir Income Support Programme (BISP) estimated in its survey that 45.7% people spend their lives below the poverty line. In other words, 82 million people are living below the poverty line.
On the other hand, pro-poor spending, like subsidies and direct transfers are increased by the government every year. For instance, the pro-poor expenditure by the federal and provincial governments during the first half (July to January) of the last fiscal year 2011-12 witnessed an increase of 90% and amounted to Rs919.564 billion compared to the allocation of Rs482.815 billion in the same period of the fiscal year 2010-11. During the 2010-11, Rs1.245 trillion were spent for pro-poor initiatives as against Rs1.110 trillion in 2009-10. The question here arises as to why these huge sums do not bring about any qualitative change in poverty reduction? There are certain hindrances in poverty alleviation from Pakistan. Let me explain.
A number of policies were formed by different governments in the past in order to reduce both urban and rural poverty, but failed mainly due to inconsistency and poor implementation. The rural development, as a poverty reduction tool, has been part of all the 5-year development plans, starting from the mid-1950s, failed mainly due to inadequate resources. The SAP of the 1990s did not achieve its outcomes because of poor implementation. Similarly the Poverty reduction strategy (PRSP) initiated in the 2000s based on poverty reduction through economic growth failed to achieve its objectives because governments mainly focused on a consumer based economy which does not ensure improvement in the living standards of the indigent.
The view that poverty could be reduced through poverty alleviation schemes such as BISP etc has not been substantiated by facts on the ground. Subsidies are ineffectual in fighting poverty because they are given on non-targeted basis which reduce per capita impacts. Although poverty in Pakistan is spread widely, there are pockets of poverty in southern Punjab, rural Sindh, K-P and Balochistan. No attempt has been made to target poor regions for development and poverty reduction.
Another antecedent behind the growing incidence of poverty in Pakistan is rapid growth of population, which obviously is a cutting edge of increasing the number of dependents on earners. Growing population is not a trigger behind the poverty always, but it can be vulnerable when growth rate of population outstrips economic growth. This phenomenon was observed at the end of last decade. The high growth rate in population has several implications for poverty reduction. The growing labor force cannot be absorbed productively in the weak economy, leading to high youth unemployment and underemployment. The unemployment rate is 5.95% in December 2011 not much changed as compared to last year. According to the labor force survey during the year 2010-11, there are 3.4 million people unemployed in Pakistan and the data from economic survey of the preceding year shows that till December 2011 the total number of unemployed workforce was 3.53 million which turned into more of its dire phase in 2012-13. The huge portion of unskilled labour force does not contribute productively to increasing industrial growth leading to poverty reduction.
The writer hosts business talk shows on FM 101 and Radio Pakistan and is pursuing an M Phil degree in Economics
Published in The Express Tribune, October 21st, 2013.