Jump in poverty level

The news that Pakistan's poverty rate has jumped from 23.9 percent to 37.5 percent in the course of three years due to severe economic shocks can only be described as devastating. According to a presentation made by the Planning Commission to the Prime Minister, the latest estimates indicate that 64 million people were living below the poverty line in 2008 as against 35.5 million people in 2005.
The main factors for such a plunge were slow economic growth, sudden external shocks, high inflation and shortages in certain cases. Pakistan's position in human development index was 136 out of 177 countries and 40 percent of the urban population was living in kachi abadis/slum areas. The Planning Commission was also not optimistic about future trends in this regard.
The condition to reduce the fiscal deficit to 4.2 percent of GDP during the current year had forced the government to slash the development programme which could lead to further unemployment and accentuate the present poverty trends. The PSDP has already been slashed by Rs 100 billion and the government could spend only 19 percent during the first six months of the current fiscal year out of a total allocation of Rs 371 billion for Public Sector Development Programme.
It was feared that achieving IMF conditions would ultimately force the authorities to ignore social sector spending and make it impossible for Pakistan to meet the UN Millennium Development Goals (MDGs). Although a rise in poverty level was expected between 2005 and 2008, the scale of increase as reported by the Planning Commission is simply baffling.
Intriguing is the fact that the previous government had been boasting about economic success and imparting resilience to the economy during this period, claiming that poverty level had been contained due to improved economic management.
Such a sharp deviation between the claims of the then government and the ground realities underlines the importance of following a consistent methodology to measure poverty in the country and avoiding political considerations in the compilation of data. Giving complete autonomy to the Federal Bureau of Statistics and other relevant statistical agencies is very crucial in this respect otherwise the statistics released by the government would continue to be suspect.
Coming to the present poverty level in Pakistan, the figures presented by the Planning Commission are highly disturbing and call for complete overhaul of policies to arrest the deteriorating trend. More worrying is the fact that spreading global economic crisis is going to make this task of the government much more difficult than under the ordinary circumstances.
According to the latest estimates of the World Bank, almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis, less than 10 percent faced little risk and the remainder were moderately exposed. Unfortunately, Pakistan was ranked among the 43 countries most exposed to poverty risks.
This high level of exposure is compounded by the current Stand-By Arrangement with the IMF which, though essential under the prevailing conditions, stipulates a rapid reduction in budget deficit, necessitating a cut in development expenditures which could contribute to further increase in unemployment and poverty level in the country.
Although, under the present conditions, it looks difficult but a way must be found to reduce poverty level in the country and ensure that people on the fringes continue to get at least basic necessities of life like food and medical care at affordable rates during this difficult period.
Continuing with the present trend will not only be perilous but such approach will reflect lack of pity or compassion. It is, therefore, critical to finance job creation, delivery of essential services and infrastructure and safety net programmes for the most vulnerable groups of society. To achieve these objectives, it is essential to redesign fiscal strategy boldly and imaginatively.
The restoration of investor confidence is another area which needs to be given high priority in our context. A higher level of investment would automatically create more jobs, reduce poverty level and promote economic growth. There is no dearth of advice on the subject but a meticulous planning and a committed leadership is needed to get out of the present crisis without indulging in statistical trickery.