Poverty diagnostics

The official poverty figures are out after a gap of nine years. According to the Planning Commission, 29.5 percent of the population or roughly “60 million” (as per the official statement, implying Pakistan’s population is 180 million) is living below the new poverty line of Rs3030 per capita per month.

One-third of the population living below poverty line in Pakistan is comparatively closer to reality than the earlier official figures. Earlier, poverty in Pakistan was measured through the monetary value of minimum per capita caloric intake. However, there were two major flaws in that method. One the caloric baseline was much lower than the internationally recommended minimum caloric requirements. Second, merely consuming a particular number of calories does not ensure a balanced diet. One can consume all the required calories from a single food item. This consumption would meet one’s caloric requirements but not nutritional requirements. Moreover monetisation of those calories and coming up with a poverty line in rupees always ignores the expense on non-food items.

Under the old poverty line, the percentage of the poor fell by around 25 percentage points, from a high of 34.6 percent in 2001-02 to 9.3 percent in 2013-14. This figure was so unrealistic that the government decided not to release it and to revise the poverty estimation formula.

One appreciates that the government revised the formula and raised the bar for itself by coming up with an increased poverty number. Three things are included in the revised formula – reference group, welfare measure (2,350 calories, which are still less than the international standards), and cost of basic needs for capturing non-food expenditures. In this formula, the cost of basic needs includes expenditures on education, health, and mobile phones. The poverty line would turn even higher if cost of living, cost of energy, and cost of transportation etc were to be included in the basic needs.

In monetary terms, the poverty line of Rs3030 per month is still $1 per capita per day. The finance minister has been repeatedly saying over the last two years that he would like to follow international practice for capturing the real poverty numbers in Pakistan and go for at least 1.5 per capita per day, if not the World Bank’s revised poverty line of $1.75 per capita per day. The point to be noted is that if at $1 per capita per day 30 percent of the population is living below poverty line, then raising this bar to $1.75 would automatically imply 52 percent population living under poverty – and so on so forth. It is pertinent to mention that as per the National Nutrition Survey of 2010 and the SDPI’s Food Security Report 2013, the number of people undernourished and food insecure were 51 percent and 48.5 percent respectively.

Accuracy of data is the second issue with the officially released new poverty numbers. The revised formula is applied on the Pakistan Social and Living Standards Measurement (PSLM)’s Household Integrated Economic Survey (HIES) data 2013-2014. The HIES 2013-14 covered 17,989 households, yet the representativeness of the HIES data becomes questionable due to over delayed census in Pakistan.

Unfortunately the census has again been postponed indefinitely and we are not sure how many of us are living in Pakistan. Guesstimates range from 180 million to 210 million. The 30 million heads here or there for calculating the population living below poverty line would alter the population percentage living in poverty altogether. This would in turn have a huge negative impact on poverty reduction policies and planning.

The third issue with the revised poverty assessment formula is that it sticks to an old school of thought that poverty may be measured through expenditure-based monetary measurement of poverty. This formula assumes that markets exist for all goods and services, without considering that in many parts of Pakistan these goods and services are either simply not available or people use several non-market goods and services.

Another shortcoming in this formula is the assumption that economic affordability automatically gets translated into actual utilisation of the valuable goods and services. The point to be noted is that poverty is not only economic poverty. A family may be living above the poverty line but still be deprived of clean drinking water, sanitation facilities, clean air, education and health facilities etc.

In fact, poverty of opportunities, powerlessness, lack of say in decision-making, lack of freedom of choices, vulnerabilities to different natural and manmade disasters etc are all different manifestations of poverty. That is why poverty is measured through multidimensional poverty assessment methods in many parts of the world. The policies and plans to achieve SDGs cannot only be based on economic poverty figures. SDG 1 talks of eliminating poverty in all its forms and thus requires a realistic assessment of multidimensional poverty for making successful policies and for their effective implementation.

The Planning Commission has not released the detailed poverty profile yet. It is hoped that any such profile would capture the disparities at different levels – urban-rural, inter provincial, inter and intra–district etc.

The Sustainable Development Policy Institute and Pakistan Poverty Alleviation Funds’ forthcoming multidimensional poverty assessment report (which is also based on PSLM data) reflects stark inequalities between rural and urban populations in the poverty headcount ratio which in relative sense are widening over time despite a higher absolute decrease in rural than urban poverty. It also reveals that multidimensional poverty (MDP) is 2.57 times higher in Balochistan than Punjab. MDP in Balochistan is 1.6 percent higher than in Khyber Pakhtunkhwa or Sindh. Narrowing these inequalities would be a must for Operation Zarb-e-Azb’s success and for building a political consensus around the CPEC.

Pakistan’s official poverty numbers also reflect another worrisome trend. The country’s per capita income is increasing on a year-to-year basis, while the poverty level is also rising. What does that mean? It simply means that the rich are getting richer and the poor are getting poorer. In other words, income inequalities at an individual level are also on the rise. In the long run rising income inequalities erode the basic social fabric of a society.

When the excluded and marginalised living in a highly unequal society get a collective identity, be it ethnic, provincial, rural-urban or sectarian, they identify themselves as a group of ’have-nots’ getting oppressed by a group of ‘haves’. This in turn creates a ‘low trust’ society, with a weak writ of state providing an inbuilt justification for mob justice, and a conflict between the haves and the have-nots.

The mere fact that the Planning Commission realised flaws in the old system of measuring poverty and proactively came up with a revised formula clearly reflects the positive intentions of the decision-makers at the commission. Declaring that the poverty level in Pakistan is 30 percent and not 10 percent is a bold political move. While trying to make policies and plans to get this 30 percent out of the poverty trap, the planners should also work on multidimensional poverty measurement in Pakistan.

It is said that correct diagnosis is half treatment. To treat the malice of poverty in Pakistan we will have to begin by diagnosing it right.

The writer heads the Sustainable Development Policy Institute. Email: suleri@sdpi.org

Twitter: @abidsuleri