Pak fight against poverty at risk: study

ISLAMABAD
The consumption share of the richest 20 percent population was more than five times the share of poorest 20 percent population in the year 2011–12. Similarly spending share of top 10 percent of population was 31 percent while poor 40 percent of population’s spending share was only 20 percent; this means 18 million richest people spend one and half time more than 72 million poor people.
According to a new study, jointly conducted by Dr Abid Burki, Dr Rashid Memon and Dr Khalid Mir of Lahore University of Management Sciences (LUMS) in coordination with Oxfam Pakistan, Pakistan’s fight against poverty is at risk as multiple inequalities persist across the country impeding long term growth potential.
The research signifies the causes of inequality in a number of ways, including: lack of opportunities to access health care and education, unequal distribution and access to land and capital.
In terms of intra-province inequality, Sindh is the most unequal province in Pakistan with highest Gini index- which means the divide between rich and poor in Sindh has widened- followed by Punjab, while Khyber Pakhtunkhwa (KP) and Balochistan provinces have the lowest levels of inequality. The level of urban inequality is considerably higher than rural inequality which indicates that urban prosperity is not equally shared.
The research reveals that due to tax exemptions Pakistan loses Rs500 billion annually, which is 1.5 times the annual budget for education. Pakistan can get additional tax revenue of Rs80-115 billion if the exemptions on agriculture are withdrawn. Lack of tax revenues puts pressure on the budget and leads to inflationary monetary policies – which have an important impact on the distribution of real income of poor. Low tax base also implies that there is little room for investments in nutrition, public education and health.
Between 1996–2002, few companies received 45 percent larger loans than other companies. These firms had a 50 percent higher default rate on loans as well. The defaulted loans were inefficiently invested, leading to a further loss of an estimated 1.6 percent of GDP per year which makes a total of Rs67bn.
The research also identifies the inequality traps. Over time mobility between classes has worsened, in 1994–95, roughly 30 percent of those born to both rich and poor fathers remained in the class they are born which shows mobility was rather easier. Now 40 percent of sons born to poor fathers remain poor; only 9 percent make it to the rich class.
While 52 percent of sons born to rich fathers remain rich. There has been a growing difference between the income of the rich and poor during the period of 1990–2011.