62 million people fall below poverty line

[Naveed Yaseen]

KARACHI (October 30 2009): Poverty ratio in the country is rapidly rising due to sharp increase in inflation and reduction in subsidies, and as per World Bank, poverty has reached at 36.1 percent with 2.3 percent increase, which reflects that around 62 million Pakistanis have fallen below poverty line, the State Bank of Pakistan has stated in its annual report.

The SBP said, with many other developing economies, Pakistan's economy had also faced a wide range of socio-economic challenges and despite government's commitment, a number of factors, including limited fiscal space, inadequate infrastructure, institutional governance issues, etc, slowed the progress of initiatives undertaken for the social uplift of people.

Thus, a review of socio-economic indicators of the country showed that there had been a marginal improvement in health, education, and employment indicators, while poverty in the country was expected to have risen, during FY09. According to the UNDP Annual Report 2007-08 Pakistan's Human Development Index (HDI) ranking had declined from 136 to 139 among 179 countries.

"Moreover, the World Bank's task force on food security estimated that headcount ratio has increased in Pakistan to 33.8 percent in FY08 and 36.1 percent in FY09. This means that approximately 62 million may have fallen below poverty line in FY09," the report said. According to the Millennium Development Goals' Report 2009 by UNDP, around 55-90 million more people have fallen below the poverty line due to recent financial crisis.

Globally, the number of chronically hungry people is expected to have soared from 960 million in 2008 to one billion in 2009. In Pakistan, the share of "severely food insecure population" was also expected to have increased from 23 percent in FY06 to 28 percent in 2008. Low economic growth rate, global economic recession, sharp rise in inflation during FY08, reduction in subsidies and insufficient employment opportunities are main reasons for growing poverty in the country.

The SBP said, although the latest poverty figures were not available, the Economic Survey 2008-09 mentioned that headcount ratio (HCR) in Pakistan was estimated to have soared from 33.8 percent in FY08 to 36.1 percent in FY09. It has been observed that despite a decline in various indicators of poverty ie headcount ratio, poverty gap, and severity of poverty, a significant proportion of the population remain clustered around the poverty line.

Thus, while the headline numbers have shown improvement, this does not necessarily imply a substantial improvement in their living standards. Moreover, this observation also suggests that people who have been able to come out of the poverty trap have access to only minimum subsistence level of living; any shock to the economy can push them back into poverty.

"In order to help poor break the vicious circle of poverty, the government has focused on social protection strategies in PRSP II which are based upon five key elements: income support, nutrition support, human resource development, natural disaster management, and facilitation for the role of non-government and private sector organisations in the implementation of these pro-poor policies," the report said.

In this regard, the government has also built a comprehensive network of social protection which includes direct as well indirect measures. Direct social protection mechanisms include provisions like employment-based social safety guarantees, direct transfers of zakat through Benazir Income Support Programme, Pakistan Bait-ul-Maal etc; and market-based interventions like microfinance initiatives, and measures to encourage the community participation through enhancing the role of community organisations such as the Pakistan Poverty Alleviation Fund.

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