June 11, 2008	Wednesday	Jamadi-us-Sani 06, 1429

ISLAMABAD, June 10: The gap between the rich and the poor has widened during years of President Pervez Musharraf’s rule.

However, according to the Economic Survey 2007-08, the inequality was accompanied by a decline in absolute poverty.

The previous government did not release figures relating to poverty since 2005.

The ratio of the highest to the lowest quintile, which measures the gap between the rich and the poor on the basis of consumption, deteriorated from 3.76 in 2000-01 to 4.2 in 2005-06 at the national level, indicating a growing rich-poor divide.

The inequality based on consumption expenditure is generally less than inequality based on income.

As the gap is calculated on the basis of food intake, the unexpected surge in food price reduced the purchasing power of the people, pushing them below the poverty line. “With a dramatic surge in food prices during the current fiscal year 2007-08, it will be naive for policy-makers and economic managers to ignore or downplay the likely impact of this on Pakistan’s poverty dynamics,” the report said.

The survey showed that consumption inequality was higher in urban than in rural areas. Moreover, urban inequality increased faster than the overall inequality during 2005-06.

Finance Minister Naveed Qamar said the poverty figures had been taken from previous surveys but the formula had remained the same based on calorie numbers.

He said the government would adopt a new approach for curbing poverty and not hide the real picture. “No one can hide poverty through statistics. It is clearly visible in daily life.”

The survey said: “The double-digit food inflation of more than 15 per cent during July-April 2007-08 is likely to be a major contributor to eroding the gains of poverty reduction. Whether the incidence of high inflation and the performance of key macro indicators during the current fiscal year will have any bearing (and to what extent) on the poverty profile in the country in 2007-08 will only be known once the results of latest round of Pakistan Social and Living Standard Measurement (PSLM) Survey data are available in the last quarter of 2008-09.”

High inflation and the performance of key macro indicators during the current fiscal year will have a far reaching impact on the poverty profile in 2007-08.

The latest estimate of inflation-adjusted poverty line is Rs944.47 per adult equivalent per month, up from Rs878.64 in 2004-05. The headcount ratio –percentage of population below the poverty line – has fallen from 23.94 per cent in 2004-05 to 22.32 from previous year, an improvement of 1.62 percentage points.

According to the survey, poverty in rural areas declined from 28.13 per cent to 27 per cent and in urban areas from 14.9 per cent to 13.1 per cent, respectively during the period under review.

Various poverty bands – extremely poor, ultra poor, poor –declined between 2000-01 and 2005-06. However, the proportion of quasi non-poor increased from 35 to 36.6 per cent.