“No country with a very low ratio of people with buying power can excel,” said Prime Minister Imran Khan at a ceremony to mark the approval of over Rs100 billion housing loans under Mera Pakistan Mera Ghar Scheme.

To protect the eroding purchasing power of the low-income groups hit by rising inflation, unemployment and poverty and for the uplift of the marginalised, his government has been expanding the scope and reach of its flagship Ehsaas programme.

The latest is the Ehsaas Ration Card scheme with a targeted subsidy of Rs120.6bbn on essential food items of which 35 per cent will be provided by the federal government and 65pc by the provinces. Sindh has however declined to participate. The impact of the scheme may also somewhat be neutralised by inflation fueled by the proposed withdrawal of sales tax exemptions and energy tariffs.

As the ground realities indicate, the challenges are enormous. “The obvious disconnect between the elite and the common man has never been as stark and assiduously entrenched as it is today,” says a well known political, security and defence analyst Shazad Chaudhry. And “poverty creation is often pioneered by the state itself,” to quote from an article on ‘Manufacturing Poverty,’ by Naeem Sadiq, an occupational health and safety professional dedicated to the advocacy of social issues.

A reason for the slackening demand for low-cost housing may be the shrinking purchasing power of low- and middle-income groups — this reality is reflected in PTI’s major setback in the first phase of Khyber Pakhtunkha’s local elections.

The Ehsaas programme, launched on March 27, 2019, can broadly be categorised into conditional/unconditional direct cash transfers to the vulnerable and the support provided to the people to opt for productive pursuits. Initiated in the budget 2021-22, Kamyab Pakistan Programme (KPP), to quote a political economist, was a “strategic shift from handouts perpetuating dependence to investment in productive self-reliance.” He regrets that not only the KPP size has been substantially slashed but its implementation delayed.

This has coincided with the decision to cut federal development spending budgeted for this year by 22pc despite the stipulated increase in tax revenue target under the International Monetary Fund’s (IMF) persuasion. To be meaningful, social service needs to be an essential part of a people-centred development strategy.

The 2021-22 budget has allocated Rs260bn for the Ehsaas programme to provide relief to 14 different categories of low-income groups including students. Some 50pc of the beneficiaries of all initiatives under the Ehsaas Programme are stated to be women, and officials say their number is improving day by day.

It is not clear how the IMF-induced austerity programme will actually impact the Ehsaas project. However, the Asian Development Bank will provide $603 million from a $1.5bn loan agreement signed last month to strengthen and expand the Ehsaas programme.

Under Mera Pakistan Mera Ghar scheme the banks have so far disbursed Rs32bn out of the Rs109bn approved housing loans. The CEO of a leading firm engaged in building structure designing says only big projects of incentivised top builders are moving at the normal pace.

The projects eligible for the same stimulus initiated by medium-sized companies handled by his company have however been put on hold. He explains it may be because of the soaring cost of building materials such as cement and steel etc or policy uncertainty or something which was not within his knowledge.

Perhaps, yet another reason for the slackening demand for low-cost housing may be the shrinking purchasing power of low- and middle-income groups. They have been hardest hit by uncontrollable food prices, rising unemployment, costly substandard educational and health facilities. This reality is reflected in PTI’s major setback in the first phase of Khyber Pakhtunkha’s local elections.

There is a strong need for stepping up the mobilisation of community organisations and the private sector to share the government’s social responsibility in a big way.

Published in Dawn, The Business and Finance Weekly, January 3rd, 2022

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