In a recently released report on internationally comparable poverty estimates, the Asian Development Bank (ADB) has set a new Asian Poverty Line at 1.35 dollars a day income. It also says the previous one-dollar-a-day income standard remains an appropriate benchmark for estimating the incidence of extreme poverty in Asia that, it notes, has witnessed rapid economic growth.
And hence it might also be time to evaluate the incidence of poverty using a benchmark that reflects the region's dynamism. This method of measuring poverty on the basis of income may be relevant to Asia's fast growing economies such as those of China and India having acceptable inflation levels, it has little relevance to our economic situation which, at this point, is anything but dynamic while inflation has hit through the ceiling.
Measuring poverty generally is a dodgy business with some people preferring to use the daily caloric intake as a standard and others favouring consumer price index (CPI), or as recommended to us by the World Bank, the survey based Tornqvist Price Index. How different methods may yield different results is obvious from the previous government's claim, based on CPI, that poverty had retreated from 34.46 percent in 2001 to 23.94 percent in '05, while as per the WB findings the figure for poverty head count in '05 was around 29.2 percent.
The claim, though, may also have something to do with our economic managers' proclivity to fudge figures in order to hide unpleasant facts. Notably, at the time most people familiar with the issue were saying that over 30 percent people in this country lived below the poverty line, the government declared that the figure was around 24 percent, directing the statistics department to use the same in its official documents.
To justify the feat, it simply shifted its model of measuring poverty from CPI to caloric intake. Then there are discrepancies in the figures put out by the Federal Bureau of Statistics and the State Bank, which surely is not helpful for those responsible for addressing the issue, especially at the present time when the highest ever inflation has pushed a lot more people into poverty.
As per State Bank estimates, the overall CPI inflation in July of the current fiscal year reached 24.3 percent as against 6.4 percent in the corresponding month of the last year. And the food inflation rose from 8.5 percent from a year ago to a staggering 33.8 percent during the current period.
These CPI based statistics clearly indicate that transient poverty - caused by an unprecedented increase in international prices of oil as well as protracted political uncertainty at home - has reached a level where a much higher proportion than 24 percent of the population would find one dollar or 1.35 dollars a day income a lot less than sufficient to make ends meet. For those living in chronic poverty mere survival would be an even bigger struggle.
It goes without saying that the prevalence of poverty, both transient and chronic, needs to be determined and addressed on an urgent basis. Which requires change in past practice. It means that first of all the relevant statistics must be stated correctly. Secondly, there is need for use of a consistent method to define poverty. And thirdly, CPI together with survey based price index should be used to determine the incidence of poverty.