ABSOLUTE poverty in rural areas has reduced, but malnutrition has doubled in the country, according to the World Bank Report 2014.

However, the gains made in poverty reduction are fragile, as their levels are just above the poverty line and may drop below the line if the issue is neglected.

Out of the country’s 180m population, 65pc of the people are living in rural areas, and a majority of them are employed in the agriculture sector. Farming contributes only 21pc to the GDP. This implies a very low agricultural productivity, which is one of the factors contributing to rural poverty.

The tax structure is another reason for poverty; there is widespread tax evasion and avoidance. The tax burden is inequitable due to tax exemptions and concessions and a disproportionate share of tax revenue is being generated through indirect taxes. This is regressive in nature. Low-income earners are paying more in taxes on purchases of commodities as a ratio of their income as compared to the rich people.

Yet, a key factor for poverty is the lack of a trickle down effect of economic growth. There is a direct nexus between growth and poverty, and the benefit of growth must be equitably shared to reduce poverty.

The national and provincial poverty alleviation programmes operate on the periphery of the mainstream economic activity. The people should be enabled to earn their livelihood with dignity

The national and provincial poverty alleviation programmes operate on the periphery of the mainstream economic activity. The people should be enabled to earn their livelihood with dignity. Micro credit financing should be stepped up to promote entrepreneurship among the poor and they should be provided cheaper credit.

Then, population, education, income and health have both direct and indirect impacts on poverty alleviation. The population growth needs to be constrained.

Meanwhile, education is directly linked with poverty alleviation. The net enrollment rate in Pakistan is only 56pc, compared to 90pc in India, and 93pc in Bangladesh and Malaysia.

Similarly, higher education enrollment is only 4pc, against 11pc in India and 32pc in Malaysia. Pakistan spends only 2pc of its GDP on education, compared to 4pc in India, 2.5pc in Bangladesh and 8pc in Malaysia. Furthermore, the youth literacy rate in the country is the lowest among Saarc countries.

One reason for the low enrollment rates and high dropout rates is that, generally, male teachers are employed in primary schools instead of female ones, who better understand how to handle children. Furthermore, primary schools should be administered by union councils, instead of provincial governments.

On the other hand, financial inclusion is low because over 32pc of businesses are informal, 11pc have bank accounts and only 10.2pc have access to micro finance. The effort is largely concentrated in central and upper Punjab and Karachi in Sindh, and there is no priority for sector lending.

Published in Dawn, Economic & Business, March 30th , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play