ISLAMABAD: As the country’s population is estimated to be around 200 million, the new poverty line set by the government will allow 6.8 to 7.6 million households or 53 to 59 million people to be classified as poor, according to a Planning Commission document.

This demonstrates the government’s commitment to reaching low-income households through its policies and interventions, and to improving the lives of all of Pakistan’s people, the document says.

Read: New poverty line makes a third of Pakistanis poor

The commission says that by resetting the poverty threshold the government is reaffirming its commitment to a sustainable and inclusive development path which is aligned with its policy priorities.

According to poverty rates based on the 2013-14 re-estimation, the new poverty line is Rs3,030.32 per adult equivalent per month, and 29.5 per cent of the population will be considered poor.

Based on the most recent Household Income and Expenditure Survey, conducted in 2013-14, Pakistan’s poverty line was equal to Rs2,259.4 per adult equivalent per month. This number translates into Rs2,502.32 per person per month.

The commission mentioned its commitments on Sustainable Development Goals (SDGs), a robust social protection programme, and the creation of more and better jobs for the poor.

According to the commission, most developing countries revisit their poverty threshold when poverty rates get as low as those seen in Pakistan today.

In light of this, the government has made a decision to raise the bar on which it will consider the poor in Pakistan today.

Pakistan has performed exceptionally well in reducing monetary poverty over the past 15 years, down from nearly 35pc of the population in 2001-02 to under 10pc in 2013-14.

The last time a poverty line was set in Pakistan was in 2001-02. The line used the food energy intake method, with a reference group that included the bottom three quintiles of the distribution of expenditure as the reference group.

It also used a caloric threshold of 2,350 calories per adult equivalent per day — higher than the FAO standard used in much of the region.

In Pakistan, the reduction in poverty led to an increase in dietary diversity for everyone. For the poorest, the share of expenses devoted to milk and milk products, chicken, eggs and fish, as well as vegetables and fruits increased.

In contrast the share of cereals, which provide the cheapest calories, declined steadily between 2001-02 and 2013-14.

Since foods like chicken, eggs, vegetables, fruits and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption increased the amount that people spend per calorie over time.

The commission’s document says that many secondary and tertiary cities have sprung up in the rural periphery and, with them, the informal economy has burgeoned. This needs to be better captured in national data, including the GDP, and is likely an important source of the reduction in poverty.

An important indicator is the lack of change in the share of the employed in the rural economy combined with the reduction in male participation in agricultural work.

These issues need to be carefully examined in order to understand both the key determinants of the decline in poverty thus far and the prospects for a continued robust decline in poverty.

Published in Dawn, May 31st, 2016