An average middle income household in Pakistan has been forced to cut down on food consumption and ignore health care in last ten years because of an unending price spiral of all food items and medicines.
The households have to squeeze out a part of the earned income to meet the rising cost of transport, house rent, fuel and lightening, laundry and education for children.
An official survey has revealed that the share of food cost in an urban and semi-urban family budget has gone down by 5.22 per cent, healthcare cost is on decline too in last ten years with a simultaneous increase in house rents, transportation cost, and education fees.
Poverty has not only extended its tentacles far and wide in the country by bringing in its fold greater chunk of population (more than 40 per cent), in last ten years, but it has hit most hard and literally sapped out all the vitality of the middle income groups. Thanks to firmness and consistency of the IMF-World Bank guided policies of open market economy, privatization and de-regulation during all the nine governments (four were elected but were not so democratic and five were imposed) that came and went since 1990, the so-called middle income groups have now been reduced to paupers.
Middle income group households are of course those who live on fixed incomes that come from their jobs and self-employment. These do not include the government employees (policemen, taxmen, district officials) who have many other avenues of income, the big business, the contractors and elite class of traders who have a capacity to hoard and dictate terms of selling on buyers and the zamindars who are still in full control of the affairs after successfully defying three land reforms in the country.
Recreation and entertainment are something hardly known to a large number of the 41,000 households covered under the survey. Time has forced these families to bring down entertainment and recreation expenses from 1.12 per cent of their budget to only 0.69 per cent. Their only recreation now is to go on increasing the number of family members.
But then healthcare has also not remain a priority for these households. These families were spending 2.38 per cent of their family budgets on medicines and medicare. Now it has come down to 2.21 per cent. It is not only the conventional medical care that has become expensive, the alternate systems—homeopathy, indigenous (hikmat) and bio-chemists—are also going beyond the reach of the households.
Unemployment is touching new heights, incomes are declining, prices of food are on the rise and so is the house rent, cost of transportation, education and health care, reducing middle income groups to virtually paupers. There are reasons to believe that per capita consumption of flour, rice, beef, mutton, poultry, fish, eggs, milk, butter, ghee and cooking oil has gone down considerably in the middle income groups.
The Federal Bureau of Statistics completed a Family Budget Survey in 2001 to determine consumption pattern and work out an average percentage expenditure of household of each item and group of commodities.
Covering 41,000 households in 52 urban and semi urban centres in all parts of the country, the information and data collected in the survey, have forced the home economists, market analysts and independent experts to have a hard look at the weightages given to different group of commodities in drawing up a new CPI with 2000-2001 as the new base year.
In the officially drawn CPI, food has been clubbed with beverages and tobacco. Only God knows why and how tobacco and beverages are being clubbed with food.
The recent Family Budget Survey has found that weightage of food, tobacco and beverages have come down from 49.35 percentage points to 44.13 percentage points in the new CPI to be introduced on trial basis in next few weeks. It is expected to be made official CPI by next July with 2000-2001 as the base year.
A drop of 5.22 percentage points in food expenditure budget of an average household in cities like Karachi, Lahore, Rawalpindi, Peshawar and Quetta to small towns like Chakwal and Mianwali in Punjab, Tando Mohammad Khan in Sindh, Khuzdar in Balochistan and Mardan in NWFP means that a good amount of money is being set aside to pay for rising house rent and to meet increasing transportation cost.
House rent now constitutes 21.69 per cent of the average family budget showing a significant increase of 2.71 per cent from 18.98 per cent. In cities like Karachi and Lahore a small two-room house in slum areas like Lyari and Baldia town, costs anywhere upto Rs 2,000 to Rs 2,500 a month which comes to 25 per cent of the family budget if the income is Rs 8,000 a month.”But then we calculate on average” an official justified 21.69 per cent house rent in the family budget.
Transport and communication now constitute 5.56 per cent of the family budget up from 5.08 per cent. The law of averages is being applied on transport cost of 35 big and small cities which will not reveal fully the impact of long distance transport cost of an earning member of the family and school or college going children in cities like Karachi and Lahore.
Education expenditure now claims 2.79 per cent of the family budget from 2 per cent in the CPI with 1990-91 as the base year. Most of the children go in the government-run educational centres in 52 cities covered by the Household Budget survey. Private institutions in Karachi, Lahore and other big cities charging exorbitant fees have been ignored.
Laundry claims more money on a family budget then education. Its share has now jumped upto 6.01 per cent of the budget from previously 5.40 per cent.
Rising cost is forcing the urban families to spend less on their dresses and footwears. Its share in the budget is coming down to 6.34 per cent from 7.56 per cent calculated way back in 1990 when poverty started knocking the doors of the middle income households.
Overall there are ten categories of commodities and services that constitute the main elements of a household budget. These are food, apparels, house rent, fuel, household furniture and equipment, transport, education, laundry, medicines and healthcare and recreation.
The share of each of the group’s cost varies with the incomes. A low income group spends most on the food and have little to spend on other things. Food cost does not claim as a big share in the budget of a higher income group as that of a low income group.
Taking note of growing criticism, the government has involved academics, economists and analysts of the independent research organisations, trade union leaders and faculty members. “We invited a large number of persons but only 20 turned up who now constitute the committee that has given guidance in survey and is processing the data and information’, a senior official of the Bureau said.
This committee is headed by the chief economist of the Planning Commission. The committee recommended a new list of items and services which were not included in the previous household budget surveys. In this new arrangement 141 items were excluded and 56 items have been added.
These include 17 medicines and drugs. Blood pressure drug, diabetics control tablets, cough syrups are now new elements of family budgets. Similarly fees of higher educational institutions, reading materials that include periodicals and children magazines are a part of the family budget. The committee has taken care of changes in tastes and consumption of the middle-class families.
The family budget survey has been carried out in 52 cities but CPI will be drawn up on the basis of information from 35 big and small cities of the country that will cover 65 per cent population of the country. It covers 375 items.
The SPI is designed to assess price movement of 51 essential consumer items from 53 markets in 17 cities every week. The WPI is designed to measure the change of price in the primary and wholesale markets. It is based on prices of 99 commodities of all groups collected from 18 cities.