KARACHI: Low economic growth, relocating of industry, high food inflation and rising joblessness have together made the life of urban poor more painful and uglier, say economists, who are firm in the belief that the country is all set to miss the MDG targets.
The policy thrust of the government has been on stabilisation since 2008, having a direct bearing on overall economic activities. As a result, meagre GDP growth has pushed millions more below the poverty line.
Planning Commission Deputy Chairman Nadeemul Haq, when approached by Dawn, was reluctant and even got irritated by the query, saying he was in Dubai and receiving calls would cost him dearly.
Sartaj Aziz, a distinguished economist and former finance minister, said urban poverty was increasing mainly due to high food inflation, stagnant real incomes, rising unemployment and shrinkage of industrial base due to the rising cost of doing business and security issues triggering flight of capital and forcing many industrialists to relocate their businesses to other countries.
He said that in an environment of falling foreign and private investments, the incidence of poverty had not shown any signs of easing. In fact, the numbers have gone from bad to worse, he said, citing data from a recent report by the Social Policy and Development Centre.
The level of poverty had declined from 34.4 per cent of the population in 2001 to 28 per cent in 2005-06, but the high food inflation in the last three years has brought it back to 33 per cent, pushing at least 11 million people below the poverty line. When he was asked about the rising sale of mobile phones, refrigerators and other electronic goods, he said it was not an indicator of falling poverty, adding that many of these goods were import-intensive which put further pressure on the foreign exchange reserves.
He said an economic growth of six to seven per cent could reduce poverty as it generates employment opportunities and increase real incomes of the poor. “Only economic revival is the answer to poverty and other social problems,” he remarked, noting that the investment-to-GDP ratio had fallen to 13-15 per cent from 20 per cent in 1990s.
Arif Hassan, an expert on urban development and member of the UN committee that designed the goals for poverty reduction, said there was no reliable figures available depicting true picture of poverty ratio, but he was sure that during the last five years the urban-rural disparity had widened sharply.
He said poverty is not only about incomes, but also of access to quality health, education, justice, entertainment etc. He cited shrinking state sector, bad governance, corruption, low tax-base and anti-poor policies as the main culprits for the prevailing situation.
He said the per capita infrastructure investment in poor localities was not more than 10 per cent of what the settled localities received. He termed the foreign-funded initiatives cosmetic which were designed to misappropriate well-being funds of the poor. He said the cost of infrastructure projects was shown six to seven times of the actual to allow excessive profiteering by all concerned. “It is a system of loot and plunder,” he remarked.
For tackling poverty, he was of the view that the country didn’t need to look to the donors, but to capitalise on the national potential.
Dr Qaiser Bengali, former adviser to the Sindh Chief Minister on economic affairs, said macroeconomic indicators suggested urban poverty had risen because of stagnant industry and slowing services sector in the last four years. He, however, hastened to add that the agriculture sector was doing comparatively well, helping rural poor to fare better.
“Eliminating poverty has never been the strategic national economic policy of the state and there is no institutionalised framework available for performing this task,” he remarked. “Adopting a common agenda for eliminating poverty by developing a consensus of all players can only deliver the result,” he suggested.
Economist Syed Akbar Zaidi said poverty in urban areas was much lower than its rural component. “Poverty had fallen in the Musharraf period, but began to rise again in 2007 onwards till it went down in 2009 again. I agree with findings made by the World Bank and by PIDE that poverty has been falling over the last decade.”
According to poverty analysis done on the basis of data obtained through the Pakistan Social Living Standard Measurement (PSLM) survey in 2010-11, overall poverty had fallen to 12.4 per cent, with urban poverty at 7.1 per cent and rural poverty at 15.1 per cent. “These figures might not be accurate, but the important thing is the trend of decline. It would seem odd that even when the economy is performing poorly, poverty would decline, or at least, not rise. Probably the biggest poverty alleviation factor is the increase and distribution of remittances,” he said.
He, however, was of the view that most of the government figures didn’t capture real changes in the poverty.
About the best strategy to deal with dwindling indicators of well-being in urban poor, Zaidi said economic growth, which creates jobs, was essential for the alleviation of urban poverty, as is education and human capital.
Also, if better economic conditions and opportunities exist in small towns and even in so-called rural areas, that may stem the tide of the migrants who join the urban poor. Land reforms granting ownership of economic units of agricultural land would be a good strategy to curb both rural and urban poverty.
About direct government intervention to reduce poverty, he said evidences from the 1980s onwards suggested that economic growth is important, as are remittances, and these have been the main tools for poverty alleviation.
“Direct government intervention in the form of Baitul Maal and Zakaat transfers has been seen to show huge holes for corruption. The government should help by providing employment in public works and public infrastructure schemes. The Benazir Income Support Programme (BISP) is a handout which has lost its real value over time due to inflation. Credit for the micro and small-scale industry is also a better means to allow people to stand on their own feet rather than just give handouts,” he suggested.