Pakistan in the summer of 2022, was hit by unprecedented rains. A third of the country was under flood water; greater than 2,000 people lost their lives and millions of others lost their homes and livelihoods. Most of the displaced are still living in temporary camps and struggling to make ends meet.
Long before the disaster, Pakistan struggled with visible poverty and disparity. Statistics showed that the Government of Pakistan performs poorly compared to other South Asian nations. For it, the ratio of the average income of the poorest 10 percent of the population to the richest 10 percent is 6.5. In other words, the average income for the richest is greater than 16 times the average for the poorest. The ratio is 7.5 percent for Bangladesh, 8.6 percent for India and 11.1 percent for Sri Lanka. The ratio of the average incomes of the poorest 20 percent of the population to the richest 20 percent is 4.8 percent for Pakistan and Bangladesh, 5.5 percent for India and 6.8 percent for Sri Lanka. The Gini coefficient — a measure frequently utilized to indicate the extent of inequality — is the worst for Pakistan: 29.6 as against 32.4 for Bangladesh, 35.7 for India and 38 for the world as a whole.
The Government of Pakistan presently proposed a Rs14.46 trillion budget in which it allocated about 50 percent for interest payments. This implied that only meager resources would now be obtainable for other expenditures such as poverty alleviation. Poverty in our country had grown because of unemployment resulting from last year’s devastating floods and a major spike in inflation amounting to 38 percent in May. At this time, it is estimated that approximately 100 million people have gone below the poverty line.
| Population In Pakistan (Million) | ||
|---|---|---|
| Indicators | Population Census 2017 | 2022 |
| Population | 207.68 | 229.22 |
| Rural Population | 132.01 | 144.53 |
| Urban Population | 75.67 | 84.69 |
| Male Population | 106.31 | 117.11 |
| Female Population | 101.34 | 112.1 |
| Population Density/sq.km | 260.88 | 287.93 |
The people were affected by the recent floods while the prices of food items increased manifold. The unemployment rate had surged to 11 percent, though it was less than 7.0 percent before the Covid-19 pandemic 4-year ago. The Government measures to restrict imports and price hikes have rendered 3.5 million more workers jobless. Pakistan proclaimed to improve the Benazir Income Support Program (BISP) allocation by Rs50 billion to Rs450 billion recently. However, it is said that the gap between income and poverty was somewhere almost Rs1.7 trillion, and the government should have covered at least one-third of it. The government should have raised BISP allocation to at least Rs635 billion and taken steps to decline flour prices. It has not done these two things in the budget. BISP allocation was too small under the circumstances.
As per the 2019-2020 Pakistan Social and Living Standards Measurement Survey (PSLM), 37.8 percent of Pakistan’s population lives in multidimensional poverty. Although the proportion of Pakistan’s population living in poverty has been declining over the years – it is said to have halved over the past 2-decade – it is expected to increase as a consequence of the 2022 floods. One such initiative is the Ministry of Planning’s 5-year development plan for 2022-2027 for 20 of the poorest districts of Pakistan, many of which were severely affected by the floods. These districts were carefully chosen through the government of Pakistan and the UNDP’s multidimensional poverty index (MPI) survey. Sources recorded that the scope of targeted cash benefits should have been enlarged both in terms of numbers and scope, counting food stamps. The Fiscal policy alignments needed under the challenging times for the people below the poverty lines are missing. Taxation remains largely dependent on indirect procedures which is also anti-poor.
No steps have been taken to raise the income of poor and vulnerable segments of the society. There is nothing in the budget that can be for the poor and the vulnerable segments in terms of countering inflation and creating opportunities for increasing their incomes as it is the budget by the rich and for the rich.
The finance minister has increased ad hoc relief allowance of government employees by 35 percent for grades 1-16 grades and 30 percent for employees falling in 17-22 grades while increasing pensions by 17.5 percent and proposed Rs32,000 minimum wage. As far as the income is concerned, the government has not changed the rates on the lower sides.
Experts say that there is no change in income tax rates but for the lower class, they proclaimed price reduction at utility stores but no special relief for the salaried class. The present minimum wage which is too low was not even being implemented through 60 percent in the formal and 90 percent in the informal sector. On the other hand, both government and private sectors contribute towards alleviating poverty. BISP and the Ehsaas Emergency Cash Programme managed through the government go a long way in reducing extreme poverty. In Pakistan, private philanthropy also contributes to poverty alleviation significantly.
According to the Pakistan Giving Report 2021 prepared through the Pakistan Centre for Philanthropy, 8 out of 10 Pakistanis assisted the poor or gave charity during the year. Eradication of poverty requires an appropriate mix, including periodic cash transfers to poor households, to address short-term needs and support for improving the capabilities of poor households so that they can come out of poverty in the medium to long term.