Report on MPI demands action

One initiative that the PML-N regime can fairly claim as an historic step forward is the introduction of a more refined poverty measuring yardstick - the Multidimensional Poverty Index (MPI) - by the Ministry of Planning, Development & Reforms under Professor Ahsan Iqbal. As expected, this index shows that four out of 10 Pakistanis now live below the poverty line.
Of the many findings of the report on MPI, official circles are emphasising that, compared to 55.2 percent of the population below the poverty line in 2004-05, in the following decade (during which the PPP and PML-N ruled Pakistan for seven years), this percentage was brought down by 16.4 percent and now only 38.8 percent of the population is below the poverty line.
There is though a critical aspect that needs investigation to convince the people about this report's conclusions; did the data gathered 11 years ago for calculating the poverty level in 2004-05 conform to the requirements for calculating the poverty level as per MPI yardsticks? If that's so, the poverty level certainly went down, but not otherwise.
Besides, this claim must be examined keeping in view the situation in areas like FATA and Baluchistan where, according to this report, the proportions of individuals falling in the 'vulnerable to poverty' and sufferers of 'severe poverty' categories add up to over 70 percent of the population. This should be an eye-opener for the federal and provincial governments.
There is another disturbing disclosure in the MPI report. Although, according to this report (13 Table 4.1) while the MPI index improved from 0.292 in 2004/05 to 0.197 in 2014/15, and of the number living below the poverty line fell by over 16.4 percent, the average deprivation share of the poor declined from 52.9% to 50.9%, or by just 2 percent.
That's why, while releasing the MPI report Professor Ahsan Iqbal had to say that reducing MPI is "Vision 2025's" core objective, and inclusive and balanced growth benefiting all, particularly the marginalized segments of the population, is the aim of the PML-N regime. But will ever-higher reliance on indirect taxes that tax the rich and poor alike permit achieving this objective?
In his latest book - The Great Divide - Nobel laureate and former chief economist of the World Bank (asked to quit on orders of the White House) Joseph E. Stiglitz expresses mega concerns about the distribution of wealth because conservative economists focus on expanding the economy via GDP growth ignoring the rising poverty-escalating income inequalities. He is right. After Brexit, other states may follow suit since EU's deficit containing strategy of reducing subsidies for essential civic services has increased poverty in its member states.
Even in the US, 46.7 million (one out of seven Americans) now live in poverty. In the last 25 years, working Americans' share in total national income fell by 5 percent, and the middle class is now the smallest in the last three decades. The IMF has warned the US about rising income inequalities because they could further reduce American economy's already sliding growth.
The expanding gulf between the priorities of Pakistan's Ministries of Planning, Development & Reforms, and Finance needs to be plugged quickly and the primary responsibility for it rests with the Ministry of Finance; it must expand the tax net so that the share of revenue from direct taxes is doubled and that of indirect taxes halved, well before 2025.
Finance Ministry's over-satisfaction with GDP growth (vociferously contest by many researchers), with little concern for rising poverty reflects the uncaring mindset of the ministry's economists although stagnating income of the middle class eventually stagnates demand, leading to an economic slowdown. Isn't this Pakistan's ongoing tragedy?
Equally worrying is the attitude of other ministries towards controlling expenses that often reflect exuberance and waste. No federal or provincial ministry gives the impression of prudence in the context of their expenses, which is the major factor giving rise to fiscal deficits and prompting imposition of ever-higher taxes that are eroding the economy's competitiveness.
Shouldn't the ministries be given clear and strict guidelines for rationalising their expenses to cut the fiscal deficit that also forces reckless remedies like borrowing excessively, especially from the domestic market that, over the years, has crippled the country's economy, increased unemployment and poverty, and thus escalated mini and mega crime rates?
Isn't mega crime rooted in poverty that provides gangsters the manpower they need? That economic disparities eventually trigger retaliation is a historical fact. Don't we remember Robin Hood and Sultana Daku, and the French, Russian and Chinese revolutions? Besides, aren't the poverty-stricken also being used by anti-state elements? Yet, crime seems an uncontrollable problem.
The legislators can't see the build-up of a worrisome economic scenario despite mounting public debt and continued decline in exports. People (indebted to the extent of Rs 107,170 per person, courtesy public debt) want to know the benefits this staggering debt provided, and why the legislators can't push the corporate sector to check its greed because poverty-escalating price increases will eventually reduce both demand and profit.
The MPI relies on several indicators of each dimension of poverty. Under health, it covers nutrition and child mortality, under education it includes years of schooling and school attendance, and in the context of living standards it includes availability of cooking fuel, toilets, water, electricity, floor, and assets - areas wherein provincial and local governments must play their role.
Legislators in provincial assemblies ignore their extended role in containing poverty although, courtesy the 18th Constitutional Amendment, provinces receive a hefty share of the federal revenue to fund and administer all essential civic services, except supply of power and natural gas. Impliedly, containing poverty is their prime responsibility.
What a mess the civic services are is reflected by the condition of state-run schools, basic health units, water supply, sewerage, and garbage collection system, regulation of wholesale and retail markets, and public security, which reduced the commercial and industrial bases that create employment and reduce poverty. Yet, in FY16 provinces ended up with a surplus of Rs 339 billion while basic civic services remained in their miserable state.
That these regimes are always unprepared to contain tragedies inflicted by floods is also an historic reality although each flood escalated poverty because the poor living in small towns and villages lost whatever they had. How prepared is the Sindh government for confronting the imminent flood tragedy is portrayed by the miserable state of the three main waterways in Karachi, let alone Sindh's interior. The MPI report demands immediate countrywide reforms, especially empowerment of local governments to reverse the uneven poverty trends; the socio-economic stability whose rapid erosion threatens Pakistan's future needs swift containment.