FINANCE Minister Ishaq Dar in his budget speech avoided dwelling upon the state of poverty in the country. He was happy to sing a song on the higher growth rate, single-digit inflation, fattened reserves, the rupee’s appreciation and a rallying stock market.
But while digging into the economic numbers, one comes across the rate of poverty at an alarming 50pc. It means that one out of two people in a population of over 188 million live below the poverty line — defined as earning less than $2 a day, based on international standards for middle income countries.
According to the World Bank’s Poverty Head Count Analysis 2014, the situation is even more precarious. It puts the country’s population living below the poverty line at 60.19pc, of which 21.4pc fall under the category of ‘extreme poverty,’ with incomes of less than $1.25 a day.
‘If you give a man a fish, he will eat for a day, but if you teach him how to fish, he would eat for a lifetime’ — Chinese saying
“The state of affairs in the last eight years have gone from bad to worse,” says an economist, supporting his claim by the Economic Survey 2005-06, when only 22.3pc of the population was shown living below the line of poverty. He believes that half the population categorised as poor ought to be the highest in the country’s history.
Muzammil Aslam, MD Emerging Economics Research, agrees that poverty has been on the rise. He recalls that before the advent of democratic governments, the poverty rate was 36pc. What has pushed almost 30m more people in the last few years to join the ranks of the poor?
Aslam draws up a list of reasons, on top of which is the contraction in industrial growth, which has resulted in lack of creation of new jobs. He recognises the improvement in the GDP growth rate to 4.1pc from 3.15 in the last six years, but points out that the economy had grown at a higher average of 5pc for 10 straight years from 2003-13.
Industrialist Majyd Aziz warns that the country is in ‘dire straits’ as far as poverty is concerned. He mentions that independent economists had long since warned of growing number of poor in the country, but it is possibly the first time that the government has admitted it to be a fact.
He believes that provision of full employment and of ‘key public goods’ such as food, medicine, clothing and other necessities should be of prime concern for the government. The Economic Survey concedes: “The poor spend 60pc of their income on food-related expenditure”.
The latest Survey identifies the labour force at 60.3m people, with 3.8m without jobs, indicating the unemployment rate at 6.2pc. “As the population has grown by 1.95pc to 188m people, with the youth making up 56pc of the tally, what is an unemployed young man likely to do,” asked a concerned citizen. Dar mentioned in his budget speech that 900,000 jobs would be created as a result of the introduction of 3G-4G technologies.
Surprisingly, the Economic Survey points to increasing wealth of people, as per capita income rose by 3.5pc to $1,386 in 2013-14, from $1,339 a year ago.
“It shows that the gulf between the rich and the poor is widening,” says Aziz. Another indication of the growing rich/poor divide is apparent in the table of ‘inflation by income group’. While the government has calculated inflation at 8.3pc, the CPI index shows that CPI for the low income group, earning up to Rs8,000, is the highest at 9.2pc. An analyst observed that the increase in per capita income reflected the sprawling undocumented economy.
An official in the ministry of finance was provoked by the mention of half-hearted measures for the underprivileged. “The government is taking care of the poor,” he asserted. “There is the Prime Minister’s Youth Programme and the Benazir Income Support Programme (BISP), which is the biggest effort to help the poor though cash transfers.” He added that the government had raised the allocation for BISP to Rs118bn for 2015, from Rs75bn last year. The cash had reached 4.1m families.
Another government sympathiser stressed higher allocation of Rs10bn for health, Rs64bn for education and Rs2bn for ‘social protection,’ as well as the low cost housing schemes as measures to alleviate the sufferings of the underprivileged. He also said that to take care of the poor, the government had raised the minimum wage by Rs1,000 to Rs11,000, and increased the minimum pension from Rs5,000 to Rs6,000. He pointed out that the stipend under the BISP was raised from Rs1,200 to Rs1,500.
Professor Abdul Saleh, who teaches economics at a business school in Karachi, was amused at the increase in doleouts by as tiny a sum as Rs300. He recalled what a Chinese saying had said a long time ago: “If you give a man a fish, he will eat for a day, but if you teach him how to fish, he would eat for lifetime”.
All of this calls for the government to redouble its efforts at creating jobs, which would result in full employment. And that in turn would be possible if the state reduces its borrowings so as to provide credit to the starved private sector and guarantees incentives for setting up new industrial ventures, with the assurance of uninterrupted supply of power and a safe working environment.
Published in Dawn, June 9th, 2014