THE budget proposals currently being debated in the National Assembly rely on a failed strategy to tackle the problems of poverty, inequality, underemployment and un­­employment.

The Pakistan Economic Survey 2014-15 did not report the poverty rate, but some official circles in Islamabad projected the rate at 12pc, down from 34pc in 2000-01.

The 2005-06 survey had reported the poverty rate at 23pc, which stayed unchanged in 2006-07 and then started crawling up afterwards. So when did it start falling and ultimately hit a low 12pc last year?

A member of Finance Minister Ishaq Dar’s economic dream team did not even try to defend the 12pc rate. “Well, I am not sure who invented this number but it is ridiculous,” he said over phone from Islamabad.

“As to why the Pakistan Economic Survey no longer deals with the issue of poverty and its dimensions and why the focus has now been limited to details of pro-poor spending, the question should be posed to the finance ministry, which publishes the survey. The planning commission has little say in the exercise,” said an officer who at one point headed the poverty cell in the commission.

Ahsan Iqbal, the planning and development minister, disputed the finance ministry’s unemployment rate figure at a press conference last week, arguing that joblessness cannot be reduced without a growth rate of 7pc

The unemployment rate is reported to have declined to 6pc in 2014-15 from 6.8pc last year. Some members of Prime Minister Nawaz Sharif’s cabinet refused to defend the projection, which they found to be removed from reality.

Ahsan Iqbal, the planning and development minister, disputed the finance ministry’s unemployment rate figure at a press conference last week, arguing that joblessness cannot be reduced without a growth rate of 7pc.

So far, the National Assembly’s budget debate has been high on rhetoric and low on substance, while the better prepared members of the treasury dominate the discourse. The fear is that a budget that perpetuates debilitating structural weaknesses will soon be cleared with minor adjustments.

In the absence of an effective, coordinated human resource management policy and the lack of capacity to understand and adjust to the transforming demographic and technological landscape — coupled with the private sector’s reluctance to invest in industry — new job openings over the years ahead are expected mostly in the unskilled categories like construction and agriculture.

The future prospects of the educated youth and the retrenched workers of sinking enterprises appear bleak in the short-term.

The findings of the latest Pakistan Living Standards and Social Measurement Survey, cited by the Institute of Policy Reforms (IPR) in its ‘fact sheet on the state of the economy 2014-15,’ reveal that some key social indicators have actually worsened.

“In 2014-15, the literacy rate fell from 60pc to 58pc; full immunisation coverage declined by 6pc to 76pc; the percentage of households with improved water source decreased by 4pc to 26pc; and the net primary enrolment rate remained unchanged.”

Dr Naeem uz Zafar, the planning commission’s member for the social sector, explained that the government is currently working on a methodology to report on poverty. His e-mailed message on the issue is reproduced here.

“The head count poverty is computed by inflating a monetised consumption basket over time and comparing the monetary value with people’s income: those who earn less than or equal to the threshold are poor and those who are above are not. The consumption basket and the inflator do change over time, and it is quite usual for countries to revisit their relevance periodically.

“In the case of Pakistan, the consumption basket was decided in 1998 and has not been revisited ever since; the same is true for the relevance of the inflator. Over the last 18 years, there have been many external and internal changes affecting people’s income, consumption, savings, and investment decisions, but the effects of these changes do not get factored in the consumption basket.

“This has probably resulted in a smaller poverty number which [is] not commensurate with the overall decline in income growth over the last decade. The planning commission has formed an expert group to conduct studies on the impact of the old consumption basket and the inflator on head count poverty. The group is deliberating and the results will be shared soon.”

It is intriguing that the slide in the poverty situation coincided with the revival of democracy in the country in 2008. The economic team of two mainstream parties that have been voted to power since then did not dedicate resources, time and energy on reducing poverty.

For them, direct cash transfers to the poor under the Benazir Income Support Programme, Watan Card and Zakat etc were good enough to establish their pro-poor credentials.

“The current budget is rooted in a mindset that values the feel good factor for the giver more than taking the trouble to reorient policies that are currently exclusively serving the elite at the cost of the working masses. There is no attempt to create an environment for people to improve their skills, find a place in a productive pursuit, and live a decent life with dignity,” commented an economist who wished anonymity.

Published in Dawn, Economic & Business, June 15th, 2015

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