A RECENT research paper by a leading US investment bank (JP Morgan Chase Bank) has commended most aspects of the current state of Pakistan’s economy except the social sector and the fast deteriorating current account situation. Particularly, the paper has shown a fair degree of concern about the highly skewed income distribution which has been classified by the World Bank as a low income country earning less $1,000 per capita.

It should indeed be a matter of serious worry for a country showing rapid and accelerated growth for almost four years in the run, if the poorest of its 20 per cent receive only about 6.6 per cent of the total income versus almost 50 per cent going to the top 20 per cent.

Also, according to this research report almost 23 per cent of the urban population and 40 per cent of the rural population are classified as poor. And while pro-poor public spending has gone up significantly as a percentage of GDP (from 3.6 per cent to about 4.6 per cent in the past two years), it remains inadequate, the paper maintains.

And while Pakistan’s social and infrastructure spending has increased significantly in the past few years, this spending is required to grow even faster to make the country’s Millennium goals achievable, the paper said.

The government seemingly recognises the enormity of the problem and over the years it has been operating a number of projects like the microfinance scheme, the Khushal bank and the recent Rozgar scheme to name a few to alleviate poverty.

The Zakat system is also being operated with a lot of official zeal. And statistically speaking the government has apparently made a lot of advances on this front as the latest official poverty figures claim that it has come down from 35 per cent five years ago to 23 per cent.

However, the widening gap between the poor and the rich as recorded in the paper shows the official statistic for what it is. Every successive government during its tenure has launched and operated a number of poverty alleviation schemes similar to the one being launched by the present one. But such schemes have never been known to have made any significant difference to the reality of poverty on the ground.

Most of the time such schemes have fallen victim to either the official red tape or have provided one more avenue to the unscrupulous officials with discretionary powers to rip off the poor.

In the first place schemes launched through banks more often than not remain inaccessible to the poor because in the first place the information about these schemes does not trickle down to the target population, most of whom are illiterate; secondly even if they come to know about it, their incomprehension of the way the banks work and the awesomeness of coping with its complexities keep them from approaching the teller’s window.

Grameen Bank of Bangladesh is said to have made a significant progress on this front, but still not only it has not been successfully replicated in any other developing country nor has it made any significant dent in the poverty in Balngadesh itself.

Indeed, financial institutions by and large have remained in the vanguard of crass capitalism from the day they were launched by wealthy people needing more money to become even wealthier.

Lately, perhaps over the last about 20 years the concept of using micro-finance to reduce poverty is being popularised by multilateral financial institutions like the World Bank and the Asian Development Bank. However, this concept has still not taken off in many countries. Such institutions have so far reached only a small segment of the potential market. The industry remains fragmented with most individual micro-finance firms operating well below efficient scale.

In Pakistan, the financial institutions have all along played a highly anti-poor role all these years. Those manning these banks have been trained only in mobilising dirt cheap deposits and advancing these at lucrative rates to the rich to make them and the loaning banks richer. They have continued to help the process of concentration of income at the upper levels of society by drawing even on the crumbs floating down the bottom.

There are many definitions of poverty. But the simplest one in the context of Pakistan is that those who lack land and/or livestock assets and those who lack knowledge (education) remain perpetually poor with no hope of moving above the poverty line, no matter what the concept and the direction of the officially launched poverty alleviation projects. It is these people who need to be brought out of their deep dungeons of poverty.

But then if these poorest of the poor are provided a pair of cows or a small piece of land for cultivation with the ownership remaining with the provider until the cost is paid back in full over a reasonable period of time things would surely take turn for the better.

Arrangements could also be made to buy from them the milk or the produce of the land to be transported to and marketed on their behalf in the wholesale market. The proceeds from this transaction could then be given to the client after deducting a small instalment by way of repayment of principal and interest.

And there is no way, the sons and daughters of the poor could compete in life against those of the rich who get the best at every level of their academic career. But if all these children of the poor are provided an opportunity to get free but quality basic education, say until the high school then perhaps, there is a hope for at least the brighter among them to wrench themselves out of the grip of poverty.

But this a job only a government aware of its responsibilities towards its people and one which sincerely believes in empowering the people at the grass roots can deliver.

And if it is sincere and responsible as it claims to be, then the government in Islamabad should first give up its colonial attitude towards the people at large and let them take decisions on their own for their own welfare and development.

But before one could wish the power to traverse this route to the grass roots, the centre would first have to let the four federating units function autonomously in the fields of finances, economy, politics and social sectors particularly health and education.

Let the provinces do even foreign investment prospecting on their own. Let them also borrow inside and outside the country against the collaterals of their assets for development purposes. And let them collect their own taxes, keep what is required to finance their current and development budgets and pass off to the federal government the balance for its up keep—security, communication, currency and foreign affairs.

This way, one can first take care of the regional economic and social disparities and then with each province having regained its stake in the welfare of its people could embark on a development that is not only based on its own comparative advantages but is also equitable in the context of its districts.

And then the districts would have to be encouraged to take their own decisions particularly in health, education, infrastructure and of course in advancing its own well-being.

Even for the trickle down theory of the so-called Washington consensus to succeed, we do need smaller administrative units taking care of themselves with less and less interference from the distant capital.

Of course this would not lead to the divide among the rich, middle classes and the poor disappear completely. But the gap among them would surely be less iniquitous and it would not be too difficult for the deserving members of the poor and the middle classes to move up the ladder.