KARACHI, July 15: The income distribution situation has been worsening since 1988 and has continued after 1999 indicated by the fact that the share of 20 per cent richest people in the national income has increased from 44 per cent in 1988 to 47 per cent in 1999 and to 48 per cent in 2000.

Correspondingly, the share of the poorest - 20 per cent population in the national income - has come down from nine per cent in 1988 to eight per cent in 1999 and to seven per cent in 2000.

The Social Policy and Development Centre (SPDC) launched on Thursday its review and analysis of the Economic Survey for 2003-04 and the budget 2004-05. "That the Economic Survey 2003-04 does not address the issue of income distribution, except cursorily, is disturbing," the SPDC document emphatically states.

The SPDC researchers find 10 per cent richest households in Pakistan have increased their purchasing power by 33 per cent between 1998 and 2002. The poorest 10 per cent have suffered a further nine per cent erosion in their purchasing capacity.

An illustration of pauperization in the country is the continuous fall in the manufacturing wages since 1999 estimated at 3.1 per cent in the year 2004. Yet another observation of the SPDC is the emerging North-South divide in Pakistan where the two northern provinces - Punjab and NWFP - have poverty incidence of less than 30 per cent and Sindh and Balochistan, the two southern provinces, have over 30 per cent.

The rural Sindh has nearly 40 per cent poverty. Balochistan is even a worse case where poverty incidence is 50 per cent. One of the journalists on the occasion reminded that Punjab and NWFP are constantly shifting their poverty to Sindh, which was endorsed by the SPDC researchers.

SPDC managing director Kaiser Bengali said that the income generated by NWFP was less than income accrued, indicating that the income was coming from remittances. The outward flow of income from Sindh reduces its generated income.

The rising unemployment has been partly attributed to contractionary macro-economic policies designed to serve stabilization objectives at the cost of growth. But the SPDC has appreciated government's shift to growth in the budget 2004-05 where Rs202 billion for development budget has outgrown defence allocation for the first time after several years.

"On the basis of 2004 prices at least Rs255 billion or five per cent should have been kept for the development," Kaiser Bengali said. He said 1977-78 was the only year when the development budget had outgrown the revenue budget.

Since then there has been a decline and it has now been reduced to a very small and insignificant share. The SPDC has been pretty harsh on the officially estimated poverty trends according to which the Economic Survey for 2003-04 claims a reduction of over four per cent in poverty in last four years.

The poverty reduction claim is based on the fact of the 35 per cent increase in average monthly consumption during 2002-04 as against a four per cent rise in consumption in 1999-02.

"This is the average growth rate and average conceals the possibility that consumption growth in upper income households can be significantly larger and consumption in low income group households can be lower and even negative."

The Economic Survey does not report consumption growth by income groups, the SPDC document says. The SPDC observes "even more serious problems" in terms of statistical methodology.

It recalls that the government did not accept the results of the Pakistan Integrated Household Survey conducted by the Federal Bureau of Statistics that showed a rise in poverty during 1999-2002.

The government carried out a household expenditure survey in April-May this year based on sample of 5,046 households. By comparison, the PIHS 2001 survey sampled 14,536 households.

Giving details of methodology adopted by the government in drawing a comparison of the 2004 and 2001 surveys to establish in Economic Survey that poverty has reduced in the country, the SPDC document calls it a "questionable and spurious methodology and the results clearly doubtful".

According to the SPDC estimates, based on consistent methodology applied for years, poverty in the year 2002 increased by 3.3 per cent from 30 per cent in 1999. During this period urban poverty increased from 25 to 30 per cent.