Economic Survey 2009-10: Govt to initiate survey to gather poverty data

[Lahore_Real_Estate]

ISLAMABAD: Government will initiate a survey soon to gather data related to poverty in Pakistan because currently no authentic figures on the subject of poverty are available to the economic mangers of the country. Deputy Chairman Planning Commission, Nadeemul Haq, and Advisor to Prime Minister, Abdul Hafeez Sheikh, expressed these views while unveiling Economic Survey of Pakistan for the year 2009-10.

The Survey revealed that poverty was about denial of opportunities and fulfillment of human potential. Poverty and inequality were closely related, and inequality appeared to have been on the rise worldwide in recent times. More than 80 percent of the world's population lives in countries where income differentials are widening. Poverty is the principal cause of hunger and under nourishment. According to most recent estimates of the Food & Agriculture Organization of the United Nations (FAO, 2009), the number of hungry people worldwide has reached 963 million, or roughly 15 percent of the estimated world population. This represents an increase of 142 million over the figure for 1990-92. Poverty essentially consists of two elements, narrowly defined "income" poverty and a broader concept of "human" poverty (referred to as the poverty of opportunities by late Dr Mahbub ul Haq).

Income poverty is defined as the lack of necessities for minimum material well being determined by the national poverty line. Human poverty means the denial of choices and opportunities for a tolerable life in all economic and social aspects.

In case of Pakistan, poverty line is calorie-based. Expenditure on calorie intake of 2350 calories per adult equivalent per day, along with consumption expenditure on non-food items, is aggregated to construct a poverty line. This poverty line is adjusted at the time of the poverty estimation after accounting for the inflationary impact in intervening years.

With respect to relevant developments in the incidence of poverty, after a high growth rate of 6.8 percent in 2006-07, Pakistan has experienced a declining rate of economic growth, during 2007-08 and 2008-09 (3.7 percent and 1.2 percent respectively). However, there has been an increase in growth rate of 4.1 percent in 2009-10. As may be seen, the growth rate declined, given the international economic crisis during 2008-09 although it was not negative, as in case of some other countries.

Inflation, which was declining over 2004-05 to 2006-07, started increasing since 2007-08 and touched the peak of 20.77 percent in 2008-09, in line with the world inflation trend. Inflation has subsided in 2009-10 but is showing an upward trend recently. Food inflation, which has immediate impact on poverty, increased to 23.7 percent in 2008-09, but declined to 12 percent in 2009-10. However, that too is showing an upward trend recently.

Unemployment rate decreased to 5.2 percent in 2007-08 from 6.2 percent in 2006-07. However it has increased to 5.5 percent during 2008-09. Agriculture sector, the largest source of employment (45.1 percent), although improved in terms of growth in 2008-09, is projected to witness a lower growth rate in 2009-10 i.e. 2.0 percent. On the other hand, the Services sector, the second largest job provider (34.5 percent) and having the highest employment elasticity, is expected to grow at 4.56 percent in 2009-10 compared with 1.58 percent in 2008-09. In spite of world economic crisis, workers remittances in case of Pakistan are showing a robust upward trend; estimated at $5.3 billion in 2007-08, $6.4 billion in 2008-09 and $7.3 billion during 2009-10 (July-April). A major relief over the past two years has been the substantial increase in support prices of wheat, the largest staple food crop, which were raised to Rs950/40 Kg from Rs625/40 Kg in September 2008. Prima facie, the increase in support prices in conjunction with a much larger commodity procurement program run by the government (under which 9.2 million tons of wheat was procured in 2008-09) has led to a substantial cash injection into the rural economy.

On the flip side, however, there are more "consumers" than "producers", and the income transfers to the rural economy come at the expense of the urban population. While the Benazir Income Support Programme (BISP) caters to the needs of the 'poorest of the poor' of the society, in terms of cash assistance for day-to-day subsistence. This is also targeted primarily towards rural areas. There is anecdotal evidence that the ranks of the vulnerable in urban areas are increasing, especially in the low-income category. To this extent, a better targeting - or wider coverage - may be needed.

The rise in food prices is worrisome precisely because food price inflation is the most problematic and hurts the poor the most. The effects of rising food prices will differ across households. There will be some households that may benefit from higher prices; there may be households that are adversely affected. Rising food prices may lead to income gains for net producers who are in rural areas. As a stylized fact, strong positive correlation existed between employment generation and poverty reduction. Increasing opportunities for decent work is central to shaping an enabling environment for the achievement of the goals of the Millennium Declaration. This will entail crucial choices about the pattern of development. Dialogue, involving trade unions, employers' organizations and others, is vital to finding the right balance of policies for employment creation, productivity growth, and poverty reduction.