The most recent poverty assessment on Pakistan finds economic growth as the main determinant of poverty reduction and improved shared prosperity. Despite falling and increasingly volatile but positive per capita growth, poverty declined over the last decade in Pakistan.
According to project report of World Bank, the share of the population below the national poverty line fell from 34.7 percent in 2001-02 to an officially estimated 12.4 percent in 2010-2011 (the latest available poverty data in Pakistan). Real per capita consumption of the bottom 40 percent of the population-a measure of shared prosperity-also exceeded that of the top 60 percent in the same period. BISP cash transfers were an important contributor to the volatile and low but positive rise in income per capita during the period. Analysis also shows that growth has been broadly inclusive, with the national Gini coefficient falling from 0.34 to 0.29 between 1998-99 and 2010-11. This operation supports inclusive growth through several channels. First, by supporting measures to foster private investment, the operation aims to contribute to the creation of more and better jobs. Second, the measures to support financial inclusion among the most vulnerable, should, by raising their access to credit, increase household incomes and consumption. Third, the measures to create fiscal space and reallocate expenditures to priority education and health provincial outlays should contribute to the creation of human capital and increased access to opportunity for the poorest segments of the populations. Fourth, by eliminating tax-exemption privileges, the operation fosters tax equity. And fifth, the measures increase the volume of unconditional cash transfers efficiently targeted to the poor and vulnerable to protect them from volatile growth and frequent natural disasters; and conditional cash transfers to support access by poor children to primary school and, more broadly, build the human capital assets of the poor.
WB report observed that the BISP is an efficient way to reach the poor and its National Socio-Economic Registry is helping improve the targeting performance of other programs. To provide income support to the poorest and vulnerable and compensate them against the electricity subsidy reforms (and GST tax rate hikes) under the IMF program, BISP has expanded its safety net cash transfers to the poor households, objectively identified by using a proxy means test with enhanced benefit amount of Rs 1500 per month per family, effective FY 14-15. About 40 percent of the transfers are received by the bottom quintile of households, and 64 percent by the bottom 40 percent.
Supported by the actions of FSIG-I, the predictability of cash transfers to the poorest through timely release of funds by the Ministry of Finance has been ensured. Furthermore, under FSIG-II, BISP increased budgetary allocation has considerably expanded the coverage of eligible households, further improving its targeting performance. BISP is actively pursuing enrolment of new beneficiaries to expand the coverage of cash transfers from current 4.7 million to about 5.3 million families by end of FY 2014-15. In addition, the introduction of CCTs as a top-up cash transfer program to eligible households in 27 districts, will assist the poor children to attend schools, thus raising enrolment rates among the poorest and girls. Overall, safety net reforms through BISP are expected to have a positive social and poverty impact through improved pro-poor targeting and added girls' enrolment using technology based delivery systems.
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