POVERTY is the major challenge faced by developing economies. It represents, simultaneously, a failure on the part of the polity to improve the stock of the least fortunate amongst us as well as a considerable drag on the further expansion of the economy.

Perhaps more than any other indicator of success, poverty reduction is used to judge development policies. And the surest way of reducing poverty is rapid economic growth, despite legitimate criticism of the unequal distribution of economic growth between the wealthy and the poor. A rising tide lifts all boats, or so the argument goes. Economic growth is not by itself a panacea, but it is the integral ingredient.

It was curious, therefore, when a national daily reported recently that a study commissioned by the Planning Commission found that both ‘absolute poverty’ (the proportion of all households subsisting below a pre-calculated poverty line) as well as ‘relative poverty’ (the relative difference in expenditure between the bottom fifth and the rest) had declined in the last three years. Curious because it coincided with a period of low levels of economic growth. The report used data from annual household surveys conducted by the Pakistan Bureau of Statistics (PBS).

The decline is not small. The report suggests a decrease in absolute poverty from 17.2 per cent in 2007-08 to 12.4 per cent in 2010-11. That is a substantial fall of 28 per cent in the proportion of poor people in three years. It would mean that approximately 8.5 million people have escaped poverty in a very short period despite low economic growth.

The counter-intuitive nature of the finding is not new. In 2004, PBS (known then as the Federal Bureau of Statistics) data found that the proportion of poor had fallen from 34 per cent to 25 per cent in just a few years. The finding was widely panned by experts in the field at that time for being wildly inaccurate. In 2008, another report found that poverty had dropped to 17.2 per cent since the 2004 finding. Read in this context we have experienced a decade of significant poverty reduction.

Note that the emphasis on the calculation of the poverty line in this case is on the household expenditure necessary to ensure food consumption that provides the minimum calories required per day. The expenditure survey covers non-food expenditure as well, but caloric intake is an important aspect of the calculation. This is one way of looking at poverty.

This makes the findings of the report even more perplexing as it follows a recent United Nations report suggesting an increasing proportion of the population is undernourished. In fact the UN’s The Millennium Development Goals Report 2011 listed Pakistan among the countries with high levels of undernourishment (more than 25 per cent of the population was undernourished).

So what is going on here? Has there really been a drastic reduction in poverty in Pakistan? Or are the numbers wrong?

First, let’s explore the scenario where the numbers are right. What could be causing poverty to drop despite dismal economic growth? One answer could be the changing terms of trade within the economy. Increasing food prices have allowed rural incomes to rise over the last few years while simultaneously reducing urban disposable income. This phenomenon alone represents a redistribution of income from the urban to the rural.

At the same time, non-food inflation (fuel and energy costs), energy shortages and law-and-order problems have disproportionately affected urban incomes. Assuming that the majority of Pakistan’s poor are rural, these phenomena would go some way in explaining the reduction in poverty rates.

Of course it could be that the statistics are wrong. There are a number of methodological and statistical reasons that could be raised. With so many persons displaced through floods and extremist violence, so many migrating between regions, and so many no-go areas, there is a chance that the sampled households do not capture the most vulnerable and most poor. This would lead to an underestimation of poverty.

The use of different estimates of prices for the basket of food items used to calculate the poverty line leads to significantly different estimates of poverty. The use of a more conservative estimate would make poverty appear much higher. Finally, the use of household expenditure is a limited way of capturing poverty.

Regardless, the possible methodological problems highlighted here do not represent a fatal blow to the statistics, which need further examination and comparison with other surveys. It may in fact be that poverty is declining.

But show these statistics to many Pakistanis and they’ll laugh them off. They’ll point to the squalor and decrepitude so many appear to live in. They will highlight the vast millions with poor access to clean drinking water, sanitation facilities, healthcare, education and justice. In cities they will point out the teaming multitude that is homeless and has to scratch and beg for a meal. In villages they will point to the landless who survive on seasonal jobs or are forced to migrate to cities and eke out a living.

The thing about poverty is that it can be defined in so many ways. The government’s definition of poverty (analogous to the World Bank’s ubiquitous ‘dollar a day’ definition) is a useful but narrow way of measuring poverty. If things are, in fact, getting better for the poorest in our society based on such narrow measures, society will simply move the goalposts. Definitions of what we think is poverty will adjust and new expectations will emerge.

And that is how it ought to be. Tackling poverty is not simply a matter of helping people over an arbitrary line. It is about creating access and opportunity. It is about tackling income inequality in a meaningful way and it is a continuous endeavour.

The writer is an Islamabad-based policy analyst.

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