Human development in Pakistan

The Global Human Development Report (GHDR) of the UNDP was released recently in Islamabad. This report constructs a Human Development Index (HDI) for 189 countries. This ranking of countries has emerged as a key measure of the level of development in relative terms of different countries.

The HDI has three components, viz., per capita income, health and education. The health index is measured by the life expectancy. The education index includes expected and mean years of schooling. Per capita income is measured at 2011 PPP $. Equal weight is attached to the three sub-indices to arrive at the composite HDI.

The GHDR enables a comparison of the HDI of major South Asian countries like Bhutan, Bangladesh, India, Nepal, Pakistan and Sri Lanka. The perhaps not so startling revelation is that Pakistan has the lowest HDI ranking among these six countries. The ranking of Pakistan is 152 out of 189 countries. Sri Lanka has the highest ranking among the six countries, followed by India and Bhutan. The absolute value of the HDI ranges from zero to one. The HDI value of Pakistan is 0.570 as compared to 0.780 of Sri Lanka, 0.647 of India and 0.614 of Bangladesh.

Has Pakistan always had the lowest position in the HDI among South Asian countries? The answer is no. The HDI of countries was first constructed by the UNDP in 1990. The intellectual leadership for this path breaking work was provided by two outstanding economists of South Asia, namely, our Dr Mahbubul Haq and Dr A. K. Sen of India.

The first ranking of 1990 placed Pakistan ahead of Bangladesh and Nepal. The HDI value for Pakistan then was only 6 percent behind India. Following extraordinarily rapid growth in HDI, Bangladesh went ahead of Pakistan in 2000. Nepal performed exceptionally well from 2000 to 2010 and achieved a higher ranking than Pakistan in 2010. The gap in the HDI of India and Pakistan has continued to widen and now stands at 14 percent.

Where does Pakistan perform poorly in the sub-indices? The life expectancy of the population of the country is 6 percent less than the average for South Asian countries. Similarly, the per capita income is lower by 20 percent. The biggest gap is in the expected years of schooling of as much as 27 percent. Clearly, the relatively backward position in the HDI is more attributable to the relatively poor performance in providing education to its population.

There are also significant differences in the performance with respect to the rate of improvement in HDI in different periods. The country saw the fastest growth in the HDI between 2000 and 2010 and the slowest between 2010 and 2018. The annual growth rate of the HDI in the former period was 1.5 percent which fell to only 0.8 percent in the latter period.

The slowdown in the rate of improvement in recent years raises some fundamental questions. Why did this occur despite the big increase in Federal transfers to the Provinces after the 7th NFC award? The Provincial Governments account for over 88 percent of the public expenditure on education and health. Increased transfers did lead to higher outlays on social services. The total government spending on education and health combined was 2.4 percent in 2009-10, the last year of the 6th NFC Award. Thereafter, it has risen to 3.5 percent by 2017-18.

Why did the outcomes in terms of the health and education indicators not improve in the period after the 7th NFC Award became operative? There is need first to contrast the performance from 2010 onwards with the significantly better improvement in the earlier period of 2000 to 2010 when resources allocated for health and education were smaller as a percentage of the GDP.

One important reason was the decentralization of delivery of basic social and economic services to elected district governments during the Musharraf era. This enabled a better reflection of peoples' preferences on allocation of expenditures and greater accountability of functionaries in the delivery of services. Consequently, there was faster increase of enrollments at the primary, middle and high school level.

The post-Musharraf period has witnessed a reversion back of the delivery of social services to Provincial Line Departments in most parts of the country. There have been some concerns about the quality of service provision and of greater leakages from expanding budgets, especially in the presence of inadequate institutional capacity.

Also, while the level of spending on education and health as a percentage of the GDP has increased it still remains generally low by South Asian standards. In 2017-18, public spending on these two services combined was 3.5 percent of the GDP in Pakistan as compared to 5.2 percent of the GDP in India; 5.4 percent of the GDP in Sri Lanka; 3.2 percent of the GDP in Bangladesh and 5.7 percent of the GDP in Nepal. This is a reflection of greater pre-emption of public resources by debt servicing and defense expenditure in Pakistan and a relatively low tax-to-GDP ratio in comparison to India.

There have also been problems with priorities in allocation of expenditure within education and health respectively. In the former service, the fastest growth in expenditure has been on higher education. With a population which is one sixth of India, Pakistan has almost one fourth of the number of universities. There is clearly a need for expanding the network and improving the quality especially of public schools and linking them more closely with vocational and technical training. Also, within health, bulk of the spending is on curative services. Consequently, preventive health programs and population planning have been given much less priority.

Further, there is need to recognize that the rise in real per capita income was faster in the earlier period. Between 2000 and 2010 the growth rate achieved was 2.4 percent which fell to1.8 percent between 2010 and 2018. This also had a significant negative impact on the rate of improvement of the HDI of the country, which is now the slowest growing in South Asia.

Overall, the GHDR of 2019 must continue to serve as a major eye opener for the authorities in Pakistan. There is need to recognize the strong virtuous cycle between human development and economic growth. Perhaps the best example of this in the South Asian context is Bangladesh.

Today, even the IMF has recognised the value of investment in the people. Among the indicative targets for 2019-20 in the EFF of Pakistan with the IMF, a target has been set for the first time on the floor to spending on education and health. This is indeed a major step forward in attempting to achieve stabilization with a human face. The target has been set at 3.9 percent of the GDP in 2019-20. Last year this spending had fallen to 3.4 percent of the GDP. We hope that the Federal and Provincial Governments will make a strong effort to achieving this target and to simultaneously improving the quality and impact of such spending.

(The writer is Professor Emeritus at BNU and former Federal Minister)