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May 30, 2019

PM’s loan initiative

Editorial

 
May 30, 2019

Amidst news of new taxes and tough talk on the budget, it is good to see that the federal government is moving ahead with its Ehsaas poverty reduction programme. In its first steps for the programme, the PM will launch the Qarz-e-Hasna and asset transfer schemes next month. This will kick off the programme of distributing over 80,000 loans and the transfer of assets every month to deserving families. The loans will be distributed to youth and women to allow them to start their own business ventures. The first priority of the measures will be underdeveloped districts, which could allow more equitable development. Compared to the loan scheme, the asset transfer scheme will give people livestock, agricultural tools, sewing machines or small shops, to make or increase their livelihoods. In of themselves, these measures have more potential than pure cash transfers to improve livelihoods and contribute to broader economic development. Cash transfer programmes, such as the Benazir Income Support Programme, have limited economic impact beyond acting as a cushion for the lowest earning members of society. These are important in themselves, but they cannot uplift people from poverty into economically well-to-do members of society.

The PM has approved the injection of around Rs5 billion into the Pakistan Poverty Alleviation Fund to support the programme. The real focus of any poverty alleviation programme lies in providing dignified livelihoods to the poorest sections of society. Some of the narrative around what will be provided shows the right measures are in place, but one must wonder whether this programme will learn from the mistakes of previous governments on poverty reduction.

The focus has mostly remained on government support, rather than improving and enforcing the rights of labour and creating more dignified jobs. The chance of much of the asset transfers and loans being used to finance consumption remains high. What protections will be available to ensure that any goat provided to a poor family will not be sold to fund more immediate funding needs? Would it even be right to stop a poor family from selling such an asset if it has other pressing needs? The importance of nutrition initiatives itself is separate from the question of dignified jobs – and it is good to see the government move forward towards creating nutrition centres. Improving nutrition is connected to poverty – but this issue needs to be addressed on its own. There is much to praise about the Ehsaas initiative, but one must wonder what the impact of the programme will be in a time of low growth, high inflation and shrinking jobs. It might be too little to prevent poverty numbers from growing in the next few years.