Non-food items to get into basket to know exact poverty figure

ISLAMABAD: In a bid to resolve the lingering controversy over poverty figures, Minister for Finance Ishaq Dar Friday decided to change methodology by adding non-food items such as expenditures on education, health and mobile to the basket for calculating the exact number of poor people in Pakistan.

“We will not change calorie intake of 2,350 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, we will release series of poverty figures on the basis of both new and old methodology since 2001,” Dar told a few reporters here at the Parliament House.

Upon request of Planning Commission, Dar chaired a high-level meeting for resolving years-long controversy over estimation of poverty.  Unlike the 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 poverty was estimated at 23.9 percent, the surveys were done in 2007-8, 2010-11 and 2013-14 and experts calculated poverty at 17 percent, 12.4 percent and finally around 8 percent respectively showing declining trend and governments preferred not to release these figures, contrary to ground realities.

By changing the methodology, the government has decided to form a 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 to the food basket based on CPI based inflation that will determine jacked up poverty line from existing Rs1,800 to Rs2,500 to 3000 and then the poverty figures will go up. 

The latest figures of poverty on the basis of survey done in 2013-14 will be published along with upcoming Economic Survey 2015-16 which will be released just ahead of next budget.

However, Dar told reporters that the Ministry of Finance and Planning Commission had held an important meeting on exact estimates of poverty and decided to come up with fresh figures by mid April 2016.  “We want to come up with credible figures,” he said and cited that if poverty figure was calculated at 29 percent for latest survey then the poverty figures would be aligned with the Sustainable Development Goals (SDGs).

The sources said the consumption pattern showed major changes in all quintiles of income ranging from poorest to affluent segments of the society indicating the consumption pattern was shifting from making more expenditure on food to non-food items such as on private education, health facilities and using mobile phones.

It was also decided that in order to remove benefits of Benazir Income Support Programme (BISP) as the monthly  stipend increased to Rs1,500 per month that resulted into increasing consumption of poorest in a major way so the lowest quintile of 10 percent would be deleted from the basket.

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.

It is the mandate of the Planning Commission to calculate poverty so they will send concept paper to Ministry of Finance. Then a committee of experts comprising economists and poverty gurus will be established to evolve consensus on changed methodology and then figures will be released.

According to official statement issued by Ministry of Finance Friday night, Dar chaired a meeting to review the progress of poverty assessment in the country.  Federal Minister for Planning, Development and Reforms, Ahsan Iqbal also participated in the meeting.

The meeting was apprised that no data had officially been released on poverty assessment for a decade.  The present government has earnestly undertaken measures on developing the methodology to assess poverty rate and firm up the data, which will help the government design its policies and interventions accordingly.

A comparative analysis of the FEI (food energy intake) and CBN (cost of basic needs) methods was presented before the meeting.  It was informed that the FEI method has been in use in Pakistan but is no longer in common use, while the CBN method was now in common use all over the world. 

The meeting noted that an assessment of poverty would enable the government to determine proper development objectives, including redistributive policies (safety net) and Sustainable Development Goals (SDGs).

It was decided that the work on the adoption of an updated poverty line for 2013-14 and earlier years based on an improved methodology in accordance with international/regional standards be expedited and completed by 15th April 2016. 

It was decided that the nutritional standard being followed in Pakistan since 2000-2001, i.e.,2350 calories per person will be maintained, instead of the lower standard of 2150 calories per person which is being adopted by many countries in region to determine the poverty line.  

It was further decided that that technical review meetings may be held with reputed academics and think tanks before finalizing the new methodology. 

These meetings should share the technical work on validating the trend on the old line and setting of the new line in the context of the government’s inclusive growth strategy and the Sustainable Development Goals. 

The finance minister appreciated the efforts being undertaken for developing the new methodology and collecting credible data on determining the poverty line.  

He emphasized increased functional coordination between federal and provincial bureaus as it would help increase efficiency, enhance capacity and coverage and ensure requisite data for monitoring SDGs.