September 18, 2006	Monday	Sha'aban 24, 1427

THE federal government claims that the economic opportunities created by the high economic growth has brought down the ratio of population living below the poverty line from 34 to 25 per cent. However, what has not been acknowledged is that some 56.2 per cent population remains vulnerable and is on the verge of falling in the poverty trap.

The poverty becomes more apparent when you enter any goth, village, deh or killi—situated not more than even two kilometres from any urban centre. Worn-out households, unhygienic living conditions, small children working, unemployed youth and a number of social ills speak volumes of the way people live.

The fact that some 60,000 skilled and non-skilled labourers have opted to work in the war-torn Afghanistan to earn more than what they were earning in Pakistan can be regarded as a strong evidence of the alarming proportion of the poverty found in Pakistan.

No doubt, the government has taken initiatives to find ways and means for dealing with the situation. However, the achievement of the end objective to improve people’s living standards would largely depend on the success of the future socio-economic strategy.

Official sources say that the government has undertaken is formulating ‘social protection strategy’ by targeting segments of society most vulnerable to fall below the poverty line.

The need to have an effective policy and undertaking full-scale measures to counter the poverty threat emanates from a lending agency’s findings that one in four Pakistanis is poor and one in every two vulnerable to fall prey to poverty.

The analysis is based on the findings of the World Bank’s study which states that “56.2 per cent of Pakistan’s population faces more than 50 per cent probability of finding itself in poverty in the next few years”.

The study distinguishes between the vulnerable – those with a high probability to find themselves in poverty and the non-vulnerable. Within this vulnerable group, some are already in poverty (32.5 per cent), while others are currently not so poor (23.8 per cent).

According to the study, 21.9 per cent of the population is poor. It also predicted to be poor in the near future as they are chronically poor and vulnerable.

The large proportion of the population vulnerable to fall prey to poverty are the children under 15 years of age. About seven million children in the 10-14 years age group are not enrolled in schools as a result of which they run high risk of falling in poverty.

According to the World Bank’s assessment, an estimated 2.5 million children - one in every six children – is working which reflects that the incidence of child labour is higher among the chronically vulnerable, as one in four children in this category is a worker.

In addition to children, rural household with low levels of assets/land have also been described as the most vulnerable to become poor. The assessment contains that lack of assets together with unemployment and under-employment as key sources of vulnerability in rural areas.

Highlighting the significance of having an effective policy with concrete measures to tackle the issue, the draft strategy says that “there is currently no overarching social protection strategy in Pakistan, this leads to lack of direction and poor co-ordination on the part of individual agencies and programmes working in this area.”

The government spends about 0.5 per cent of gross domestic product, on the social protection schemes, an amount which is inadequate by any means in view of the growing needs.

“Economic restructuring and recessions have led to the high levels of poverty and vulnerability, it is therefore important to ensure that economic growth is shared by poor households,” says the study.

The strategy, being devised to target the most vulnerable groups, aims at strengthening social assistance to provide protection against poverty to large households with children and elderly persons and these households constrained by limited income.

In addition to pleading for a comprehensive health insurance system, the strategy asks for strengthening the labour market regulations and natural and environmental risk management through nationwide planning.

Sources say that the strategy has evolved under the medium-term development framework asking for sustained increase in poverty reduction planned expenditure from 4.25 per cent of GDP in 2004-05 to 5.07 in 2006-07 and 6.49 per cent in 2009-10 financial year.

This means that the government would need an additional amount of Rs46 billion in 2005-06, Rs55 billion in 2006-07, Rs66 billion in 2007-08, Rs78 billion in 2008-09 and Rs92 billion in 2009-10 financial year.

“Currently, social protection expenditure is a fraction of poverty reduction expenditure and would need to grow more than proportionately to accommodate the increased expenditure in the proposed programmes,” says the draft strategy, which has also put forth four proposals vis-à-vis cash transfer programme to target 10 per cent of the poorest.

This would need a greater amount of funds than what the government is presently spending on schemes that can be regarded as meant to provide social protection but which are not so effective.

The government’s expenditure on such schemes comes to about Rs25 billon per annum out of which an amount of Rs5.86 billion is spent under the Zakat distribution, another Rs4.5 billion through Bait-ul-Maal and some Rs700 million through Tawana Pakistan.

Other than that, an amount of Rs8 billion is extended as wheat subsidy by the federal and provincial governments which do not benefit the poor.

The draft strategy says : “Each of the broad programmes has a number of projects which reflects the ad hoc nature of how programmes were added on over time, the lack of coordination, sometimes even within programmes, and the lack of an overall strategy for social protection”.

About the wheat subsidy, the government’s own findings are that though it is the biggest safety net, it is a non-targeted poorly packaged scheme that has, at best, a very small impact on the poor.

According to officials, the government has been proposed to establish an institutional structure with defined functions and responsibilities for various public sector entities to carry out the strategy side by side strengthening and reforming the current Bait-ul-Maal enabling it to become an effective agency.

For any poverty reduction programme to succeed, the government needs to take measures to create economic opportunity at the grass root level as social protection policies would only keep the poor dependent on doles.