17% Poverty rate in Pakistan - World Bank

[Hasnain2009]

WB, PC at daggers drawn over ‘real’ poverty figures

Monday, June 01, 2009
By By Mehtab Haider

ISLAMABAD: The World Bank (WB) has validated a decline in poverty by 5.1 per cent in Pakistan, suggesting that compared to the earlier 22.3 per cent of the population living below the poverty line, the number stands revised downwards to 17.2 per cent of the total population, official documents available with The News reveal.

The Planning Commission high-ups, however, are in no mood to accept this positive development and are reluctant to include the latest figures in the upcoming Economic Survey 2008-09, which will be launched before the budget for 2009-10. Their doubts stem from the apparent incredulity of the figure showing a positive trend during the economic recession.

The World Bank has endorsed the poverty figure of 17.2 per cent and verified the correct use of methodology to calculate this figure by the subordinate institution of the Planning Commission’s Centre for Poverty Reduction and Social Policy Development (CPRSPD).

But apparently, this is not enough for the Planning Commission bosses, who appear extremely averse to owning up this latest poverty figure, the because PC’s own panel of economists, led by renowned economist Dr Hafeez A Pasha, had estimated poverty in the range of 37.5 per cent just a few months back.

“It is an awkward situation for the Planning Commission, as from top to bottom, everyone talked about poverty line figure in the range of 35 per cent to 40 per cent and now, how they can endorse another analysis done by its another subordinate institution — CPRSPD — showing almost half of poverty of 17.2 per cent, compared to the Panel of Economist number of 37.5 per cent,” the official sources said.

According to the documents available with The News, the WB validated the decline in poverty from 22.3 per cent in 2005-06 to 17.2 per cent on the basis of the data collected in 2007-8 under the Household Income Expenditure Survey (HIES). The latest survey found that poverty in the urban areas stood at 10.10 per cent and in the rural areas, it stood at 20.60 per cent.

Planning and Development Division Secretary Ashraf M Hayat told The News that nothing had been finalised in this regard. When asked whether the government would release the latest poverty figures in the upcoming Economic Survey 2008-09, he said the government would review the situation, which could take a month.

Planning Commission Chief Economist Dr Rashid Amjad, when contacted, told The News that the government was reviewing the latest poverty estimates and nothing had been decided in this regard so far.

But when the Planning Commission’s Member Social Sector Shaukat Hameed was contacted, he said he was not going to verify any information regarding validation of the WB about the latest poverty estimates. When informed about the presentation given by the WB experts on May 29, a copy of which is available with The News, he said they were going to brief Planning Commission Deputy Chairman Sardar Assef Ahmed Ali on Monday (today) and a decision would be taken on the latest poverty estimates.

But sources claimed that the government had almost decided not to release this latest poverty number, because it did not match the ground realities and was contrary to the existing situation. Those, who favour the release of the latest poverty figures, argue that the government should not change its goal post, as this would ruin all the past efforts to stick to the consistent methodology, endorsed both by the donors as well as Pakistan’s relevant economic ministries. The poverty is estimated by using the CPI-based inflation in Pakistan and poverty’s Guru Nanak, Khakwani, also endorsed this way of calculating poverty during the Musharraf-Shaukat Aziz regime.

[Hasnain2009]

Despite 25% inflation, 30% depcreciation of exchange rates and low GDP output, poverty decreased to 17pc!

[Skeptic]

Congratulations. Eradication of poverty is a sure method to get Pakistan back on track and getting it below 18% is simply phenomenal. I hope India will also be sometime in near future be able to emulate the feat. Brings you guys ahead of Brazil and Turkey. Bravo

Even UAE has 19.5 living below poverty Line.

[forcetrip]

?? I am confused ?? are we upset that we were wrong about it being 37.5%? or are we upset that 17% is just not realistic for us begging anymore money?

[Mujahid91]

Good News we should work on making a strong middle class and to elimate poverty.

[s90]

Its confusing

[Hasnain2009]

No its not, our poverty level was 22 before few years, and now its 17!

[ajpirzada]

not that i dont want to believe this but it is confusing. poverty of 17% despite all the economic down turn?
may be bec the commodity prices have gone up so ppl livin in villages started earning more. eg is wheat. gov increased wheat price by a big amount (although it lead to inflation) which had a direct effect on farmers income.
anyways very interestin and also very encouraging if true

[Skywalker]

Originally Posted by forcetrip

?? I am confused ?? are we upset that we were wrong about it being 37.5%? or are we upset that 17% is just not realistic for us begging anymore money?

You have got it right mate. reduction in poverty rate means more people have buying power and more buying power means more inflation and less aoft loans.

[AgNoStIc MuSliM]

Originally Posted by Hasnain2009

Despite 25% inflation, 30% depcreciation of exchange rates and low GDP output, poverty decreased to 17pc!

If the role of the Pakistani economists and the WB team had been reversed, we'd have been accused of figure fudging from here to Kingdom come!

I'm really skeptical about the lower figures - though who am I to argue against the WB's methodology. Hopefully the two sides can consult over the methodology and data and ensure that whichever number it ends up being, it is accurate and determined per consistent and globally accepted standards.

The argument that, "the government should not change its goal post, as this would ruin all the past efforts to stick to the consistent methodology, endorsed both by the donors as well as Pakistan’s relevant economic ministries", has a lot of merit.

[Skeptic]

Originally Posted by Skywalker

You have got it right mate. reduction in poverty rate means more people have buying power and more buying power means more inflation and less aoft loans.

Sir, you explanation seems to be flawed. I am not an economics major but this is what I know:

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of the functional currency buys fewer goods and services; consequently, inflation is a decline in the real value of money—a loss of purchasing power in the internal medium of exchange which is also the monetary unit of account in an economy.

Simply put rise in inflation means lesser purchasing power or in a simpler term: Less Bang for the Buck. Pakistan has Inflation rate touching 30%, meaning if the same person was earning Rs. 10,000 last year to achieve the same he'd need to earn Rs. 13,000 now. So if prices of wheat will need to be increased beyond 30% to lessen the level of poverty or to increase the actual earning of the farmer. Please correct me if I am wrong here.

Purchasing power will increase only when the rise in income is more than Inflation. I am not aware what exactly was the rise in price of wheat, but It'd need to be higher than 45% to have this significant impact on poverty levels. Also, all the farmers will not be growing wheat, and even paying to purchase some. So rise in support price for all farm goods would need to be higher than 30% to move farmers above poverty line.

Again, I am not a thorough economist and stand willing to be corrected.

[ajpirzada]

Originally Posted by Skywalker

You have got it right mate. reduction in poverty rate means more people have buying power and more buying power means more inflation and less aoft loans.

actual causes of inflation in pakistan are quite different.
-first is the sharp increase in world commodity prices.
-second is the fall in output due to power shortage thus creatin supply shortage
-third is the recent increases in the energy price (electricity and gas).
-and fourth is gov fixed the minimum price level for wheat and other agricultural products at a much higher level than that of last year and therefore not allowin prices to fall when they came down in international market.

i dont think this inflation was caused due to excess demand in market rather due to various other factors.
and therefore idea of increasin interest rates to control inflation sounds flawed to me and that is wat our gov has done. it will only decrease growth rate and thats it. inflation would have come down next yr in any case

[Hasnain2009]

^^ U forgot govt borrrowings from state and comercial banks, which is major reaon behind inflation!

[Coolyo]

Has the illiteracy rate gone down as well?

That is another big issue!!!

[paritosh]

Originally Posted by forcetrip

?? I am confused ?? are we upset that we were wrong about it being 37.5%? or are we upset that 17% is just not realistic for us begging anymore money?

because...the loans and aids will be a problem.
there wont be any need for most of the millions...
nevertheless pakistan has set an example for us to emulate...bravo!