ISLAMABAD: A new report released on Thursday by the World Bank (WB) on inequality in South Asia, says that energy subsidies have disproportionately benefited the better-off.

In the case of Pakistan, the poorest 40 per cent of households received less than 30pc of total electricity subsidies, while the richest 20pc received close to 40pc.

The report titled “Addressing inequality in South Asia”, says the distribution of benefits improved after the October 2013 tariff increase in Pakistan, but electricity subsidies remain regressive.

Under stress a large majority of households in the poorest quintile borrow money, reduce expenditures, switch to lower-quality food, or reduce the quantity of food they consume.

Equally important, 11.5pc of the poorest households reported selling agricultural assets to cope with the shock, a strategy that compromises their long-term ability to earn an income.

In contrast, the wealthiest groups are much less likely to use these mechanisms. Social protection spending is largely progressive across the entire region. When assessed on the basis of absolute spending per person, social protection programmes are progressive in Bangladesh, Pakistan, and Sri Lanka.

The report says inequality may damage trust, the foundation for social cohesion, and thus weaken collective decision making. In Pakistan, a 6,000-person survey was conducted to measure attitudes toward four militant organisations. Contrary to expectations, poor Pakistanis dislike militants more than middle-class citizens.

South Asia performs poorly in terms of opportunity, the report shows, with access to basic services partial at best, and often dependent on circumstances such as gender, location, or caste. On the other hand there is substantial upward mobility in the biggest countries in the region, and it is driven by jobs and migration. Mobility has been increasing over time, and it is high even among socially disadvantaged groups.

Growth has been effective at reducing poverty in South Asia, as it was earlier in East Asia. In both regions, higher levels of income per capita have been associated with a lower share of the population living on less than $1.25 a day in Purchasing Power Parity (PPP).

Published in Dawn, December 5th, 2014