In less than a week, the blatant economic disparities in Pakistan were bare for all to see.
The untold, hidden riches of the ruling elite surfaced unexpectedly from the Panamanian waters. A few days later, the government admitted to what was known to the rest for decades: millions more Pakistanis have been hand to mouth than what the economists and politicians in Islamabad had admitted to in the past.
In a seminar on poverty estimation, two senior ministers, Ishaq Dar and Ahsan Iqbal, unexpectedly declared that almost one in three Pakistanis was now ‘officially’ poor.
They announced that no fewer than 60 million Pakistanis were living below the poverty line.
Pakistan needs the whole truth
Why the sudden change in admitting the partial truth? I say partial because poverty in Pakistan is even more pronounced than what the learned ministers have reluctantly disclosed.
The ministers revealed that new data on household incomes and expenditures from 2013-14 motivated the revised estimates for poverty. Updated thresholds for poverty set poverty at Rs 3,030 per adult per month.
Had the government not changed its arbitrary standards for poverty, its incidence would be at a ridiculously low value of 9.3 per cent in 2013-14. With the revised standards, which prescribe minimum caloric intake of 2,350 and the provision of other essential needs, the poverty incidence in Pakistan now stands at 29.5 per cent.
In July 2015, I reported on the widespread incidence of poverty in Pakistan. While the government claimed a mere 9.3 per cent of Pakistanis were poor in 2013-14, the leading economic experts estimated 44.2 per cent of Pakistanis to be poor.
The Multidimensional Poverty Index (MPI), developed by researchers at the Oxford Poverty and Human Development Initiative, exposed the systematic under-reporting of poverty in Pakistan. The incidence of poverty is even worse in Balochistan (71 per cent) and Sindh (53 per cent).
Poverty and politicians
From Prime Minister Nawaz Sharif’s perspective, the poverty revelations from his two trusted lieutenants, Ishaq Dar and Ahsan Iqbal, could not have come at a worse time. Mr Sharif has been struggling to protect his family’s repute after recent revelations forced the Sharifs to admit owning millions stashed in offshore accounts in tax havens.
Only a few days ago, and in quite a contrast, Pakistanis got a glimpse of the vast riches of their ruling elites. Documents released by the International Consortium of Investigative Journalists, known as the Panama Papers, revealed millions of dollars in hidden assets held by Prime Minister Nawaz Sharif’s children. Mariam, Hassan, and Hussain are owners of the firms incorporated in the early 1990s in the British Virgin Islands.
Documents listed the firm’s address as one Saroor Palace in Jeddah. Another document, dated June 2007, showed that the companies owned by Prime Minister Sharif’s children secured $13.8 million in loans by putting their real estate in London, England, as collateral.
While the Sharifs might have amassed (and hid) their riches without breaking any laws, they are certainly guilty of hypocrisy if not tax fraud or graft. Earlier in opposition, they routinely accused late Benazir Bhutto’s family of robbing the poor in Pakistan and stashing their wealth abroad. Yet the Sharifs, now we know, are equally duplicitous with foreign properties and cash-fed accounts, hidden from the taxman's prying eyes.
The divide between the haves and the have-nots is widening globally.
Even in North America, incomes of the middle- and lower-middle-income classes have been stagnant. In fact, economists argue that, when adjusted for inflation, real incomes of the lower middle-income households have declined in North America. In Toronto, where I live, the disparities between the wealthy and poor have also widened. Professor David Hulchanski at the University of Toronto shows how the middle-class incomes have fallen in Canada’s largest city.
While income polarisation is a growing concern across the globe, such disparities have a dire effect in low-income countries. Because unlike Canada or the United States, worsening of living standards of the destitute in Pakistan and India becomes a matter of life and death.
For instance, hundreds of children in rural Sindh recently died because of food shortages and water-borne diseases. Earlier in 2011, Pakistan National Nutrition Survey revealed that chronic malnutrition caused 44 per cent of young children to be stunted.
Last year, while writing for Dawn.com, I pleaded that in order to “make a meaningful and sincere attempt to alleviate poverty at the national and subnational levels, one needs to define and measure poverty adequately. The gimmicks to make poverty appear less in official statistics than it really is fools no one.”
The government in Pakistan has grudgingly admitted that poverty is much more prevalent than the ridiculously low numbers it professed earlier. This is a step in the right direction. Yet, it falls short of admitting the whole truth, which suggests that poverty in Pakistan stands at 44 per cent (as per MPI), significantly higher than the government’s revised estimate of 29.5 per cent.
What Pakistan needs is a greater embrace of truth and full disclosure.
The uber rich in Pakistan, who also constitute the ruling elite, have to admit to the riches they have amassed and hid from the starving masses. Only then will the elite be able to appreciate the widespread misery among the people they rule.