ISLAMABAD: After witnessing consistent decline in poverty that has come down to 9.3 percent population in accordance with latest estimates, the government has decided to change methodology for push up poverty line which is going to double poverty figures in the range of 20 to 30 percent.
Now the government has made up its mind to abandon Food Energy Intake (FEI) model 2001 which is not as good, and adopt incorporate Cost of Basic Needs (CBN) for capturing non-food expenditures which has become more important over time in Pakistan.
By using new method, the official poverty figure will go up to around 25 percent. The Planning Commission has invited experts on Thursday (today) in order to hold consultation with them and in the afternoon Federal Minister for Finance Ishaq Dar and Minister for Planning Ahsan Iqbal will jointly apprise the media about changed methodology to measures poverty levels in the country.
On the basis of CBN, the policy makers will have to take decision either to choose reference group that is relative to which socioeconomic start run for measuring poverty and second how to identify reference group in terms of its consumption group i.e. wheat is the socially minimum acceptable consumption for not being poor.
There can be choices for reference group as currently the Planning Commission is using lower 60 percent as reference group to estimate poverty so alternately they proposed to use 10.40 percent, 20.40 percent, 10.50 percent and 20.40 percent.
According to official presentation available with The News reveals on Wednesday that the poverty levels were on decline since 2001 as it reduced from 34.7 percent in 2000-1 to 23.3 percent in 2004-5, 21.9 percent in 2005-6, 16.5 percent in 2007-8, 12.2 percent in 2010-11, 12.4 percent in 2011-12 and 9.3 percent in 2013-14 as estimated by World Bank staff. The official poverty figures were not released since 2005-6.
The Planning Commission argued in its presentation that as the income rose, the food share declined. Pakistan’s data was checked for affordability purposes of consumption basket providing minimum calories, it does not show evidence of food budget squeeze. Another important contributor may be labour market change which effects nutritional needs out of food home consumed.
In a bid to resolve lingering controversy over poverty figures, it was now decided to change methodology by adding non food items such as expenditures on education, health and mobile into the basket for calculating exact number of poor living into clutches of poverty in Pakistan.
The government will not change calorie intake of 2350 per day per adult requirement but will add some more things for changing the methodology to come up with more accurate figures. For the purpose of transparency, they will release series of poverty figures on the basis of both new and old methodology since 2001.
Unlike PPP led regime that preferred to keep mum on poverty figures by not resolving it, the poverty figures remained a political issue in Pakistan. Since 2005-6 when the poverty was estimated at 23.9 percent, the surveys were done in 2007-8, 2010-11 and 2013-14 and experts calculated poverty but governments preferred not to release these figures, contrary to ground realities.
By changing the methodology, the government has decided to form committee of experts and present different models that were used in India, Vietnam and Bangladesh to resolve this controversy. It is likely that the poverty figures may go up in the range of 20 to 30 percent population in accordance with the changed methodology as some non food items will be added into food basket based on CPI based inflation that will determine jacked up poverty line from existing Rs 1800 to Rs 2500 to 3000 then the poverty figures will go up.
Citing example of India, the sources said that Tendulkar committee and afterwards Regannathrajan committee resolved this issue by adding more items along with taking into account other factors for calculating poverty.