Per capita income of Pakistan will be $600 by the end of this financial year in June, says Finance Minister Shaukat Aziz. That would mean a jump of $108 per capita from last year's $492 as given out by the Economic Survey of Pakistan.
He would give the exact figure as a part of the budget papers, he told the Senate last week.
If that happens Pakistan will not be the first in South Asia to achieve that distinction but the third. Sri Lanka is leading the queue with a per capita income of $879 and little Maldives in the Indian Ocean with $645 per capital. But Pakistan will be ahead of India as India's per capita income is $433 now followed by Bangladesh with $380 and Nepal $240.
Mr Shaukat Aziz gives credit for the growth in per capita income to the 6 per cent economic growth expected by the end of the financial year instead of the targeted 5.5 per cent. In that case India's economic growth this year is estimated as 8 per cent, and that should improve its per capita income spectacularly particularly in view of its moderate growth in population.
The London Economist's prestigious annual economic survey of the world - "The World in 2004" - says Pakistan per capita income is $540, while India's per capita income is $593 , giving edge to India.
While the World Bank still classifies Pakistan and India as low income countries, while Sri Lanka and Maldives are classified as low middle income countries, if Mr Shaukat Aziz's projection is right both Pakistan and India may this year be able to become low middle income countries - a distinction which Pakistan should enjoy for the first time.
And that has become possible for Pakistan as not only the old six per cent economic growth has been resumed but also the dreaded population growth of 3.1 per cent has come down to 2.2 per cent, though that is a questionable claim.
If Pakistan becomes a low middle income country with a per capita income of over 600 dollars, should the masses of Pakistan rejoice over that, and will they get a large part of the benefit, if not its full part? Will the life of the 40 per cent of the people living below the poverty line of a dollar a day change radically for the better? No such large hope.
Per capita income is the average of the income between the very rich and the very poor and those in the middle. It is the average income of the Dawood family and its employees, of the Saigol family and its workers in numerous factories and of the Dewan Farooq family and its workers.
And in the rural areas it is the average between the income of the richest landlord and his farm workers including the bonded labour in perpetual misery. But a higher per capita income speaks of the higher economic development of prosperity of the country, although that is a sectoral prosperity in this heartland of feudalism, and supremacy of tribal chiefs.
The fact as the economic survey shows is the 20 per cent lowest income groups in the country get just 6.2 per cent of the total income of the country while the richest 20 per cent get 50 per cent of the income and the middle 60 per cent get 44 per cent of the income of the country.
And the poor are getting poorer as they get an increasingly low share of the income while the rich are getting richer as they get an increasingly larger share of the national income. If the perpetuation of the old feudal order ensures this iniquitous process, modern capitalism as promoted by the World Trade Organization and the international financial agencies perpetuates that vigorously.
This is the second attempt Pakistan is making to become a low middle income country. In the 1980s when Ghulam Ishaq Khan was the finance minister we nearly made it but then heavy inflation and hefty devaluation of the rupee followed and we went down the per capita tube.
But this time it is the other way around in respect of the dollar. The dollar has gone down by 25 per cent in relation to the Euro. And the rupee has gained about ten per cent against the dollar. And we have built up a foreign exchange reserve of 12.6 billion dollars. So the cheap dollar has made it easy for us to become a low middle income country and have a per capita income of 600 dollars.
The governor of the State Bank of Pakistan, Dr. Ishrat Husain, says that Rs100 billion was transferred to the rural areas to make those areas less poor. The finance minister places that figure from raising the support price for wheat and cotton at Rs60 billion.
But the fact is that money is transferred from the urban areas to the rural areas. The urban buyers of food were forced to pay far more for their food, and that included the urban poor. They also included the wage earners from the rural areas in the urban centres who were forced to spend more on their food and to spend less money to their homes in the rural areas.
In fact, the rich farmers benefited by the process as they sold their wheat at higher prices, not the subsistence farmers who if they sold their wheat now would soon be buying it at far higher prices soon. This is simple transfer of resources from the urban areas to the rural, which could mean reducing misery in one area and increasing it at another.
Mr Shaukat Aziz says there would be additional cash flow of Rs65 to Rs70 billion in the rural areas to reduce poverty. He has not given out the details. I hope this is not the second instalment of transfer of resources from the urban poor to the rural rich, along with marginal benefit to the rural poor. Poverty should not be fought in that manner, though that is getting to be a common mans in Pakistan as that is an easy process.
Per capita income in Pakistan has also increased due to the large inflow of home remittances from the four million overseas Pakistanis. They jumped from under one billion a year to 3 to 4 billion dollars from many countries in the world following 9/11.
Keeping money abroad for Pakistanis and Muslims in general has become unsafe. Hence Pakistanis sent home that money to buy land, build houses and indulge in the high spirited stock exchange speculation. That inflow is slowly tapering off.
What is of concern to many is that while so much of money is afloat, moving from place to place or market to market it is not going for serious investment, productive investment. Steps have to be taken firmly in that direction to sustain economic growth and social development. The ministers concerned have to make special efforts in that direction instead of through loud public exhortation, through private persuasion.
The improving per capita income, economic growth and rising foreign exchange reserve has given rise to the protest not enough is being spent on education and public health. A minimum of five per cent of the GDP on both the sectors is regarded essential for healthy social growth and economic resilience. But what is spent on education is not more than two per cent of the GDP and what is spent on public health is far less than one per cent.
A World Health Organization expert told a health conference in Karachi last week that one per cent of the GDP if spent on public health is just enough; but when it is far below on one per cent, diseases and epidemics will bread. The conference was also told the country had just one nurse for 4,000 people which is woefully inadequate.
The World Bank's development report - 2004 says "Growth though essential is not enough. More public spending alone is not enough. Technical adjustments without changes in incentives are not enough. Understanding what works and why is important.
Hence while the government rejoices over the macro-economic growth and the possibility of per capita income of the country touching 600 dollars by June the other neglected sectors of great importance to the people should be given urgent and sustained importance along with well directed funds and efforts.
The World Bank's World Development Report says that while in the year 2002 per capita income of Pakistan was 410 dollars on the basis of the higher purchasing power parity of the rupee per capita income was 1,940 dollars and growth rate per capita was only 1.9 per cent against the economic growth of 4.4 per cent because of the heavy population pressure on the additional resources.
