4nn019 Faling poverty? | Business Recorder BUSINESS RECORDER Founded by MA. Ziiberi Home sArtcles and Letters » Articles » Faling poverty? Falling poverty? A ORHIAFIZ APASHA fh AUG 71ST, 2018 ARTICLE Contrary to perceptions, the extremely good news is that poverty is apparently declining sharply in Pakistan. The National Poverty Report published recently by the Planning Commission has revealed that the incidence of poverty has fallen sharply from 44.1% of the population in 2007-08 to 24.3% by 2015-16. In other words, over 23 million people have been taken out of poverty in these eight years. The report also highlights that the reduction of poverty has been widespread, 32.7% of the urban population was poor in 2007-08. This has fallen to only 12.5% by 2015-16. Similarly, during the corresponding period, the decline in poverty is from 49,7% to 30,7% in the rural areas of the country. The Planning Commission has based these findings on analysis of the various Household Integrated Economic Surveys (HIES) carried out periodically by the Pakistan Bureau of Statistics. The last such survey was carried out in 2015-16. Therefore, the report does not present poverty estimates for the last two years. The success in poverty reduction has to be seen in the context of an economy which was going through a period of low economic growth and employment. Between 2007-08 and 2015-16, the GDP growth rate was down to 3.4% and the annual rise in employment of 2% only, while the population growth rate was 2.4%, as per the Population Census. The extent of which the process of growth in the economy is pro-poor is measured by the Ssebxtent to which the incidence of poverty changes with the rise in per capita income. This is referred to in the literature as the poverty-growth elasticity, Growth is considered to be pro- poor if poverty falls at about three time faster rate than the rise in per capita income, tps brecorder.com/2018/08/20180821401036) 1ana019 Foaling poverty? | Business Recoréer According to the Planning Commission's estimate the annual percentage decline in the incidence of poverty between 2007-08 and 2015-16 was as high as 7.6%. The rise in real per capita income annually was just under 1%. Therefore, the poverty-growth elasticity is 76. This implies that Pakistan may have been experiencing low growth but the growth process was extraordinarily pro-poor, with a big decline in income inequality in the country, The absolute magnitude of the elasticity of above 7 makes this one of the most pro-poor episodes any time anywhere in the world ‘There was a need for the report to include a chapter by the Planning Commission on what policies and actions led to such extraordinarily pro-poor growth in Pakistan. This is certainly a testament of the high quality of policymaking and implementation by the two democratic governments of PPP and PML (N) after a long period of governance by a quasi- military government. It is, of course, surprising that this is not reflected in the outcome of the last two elections in favor of these parties. The report may have also have referred to other contradictory findings on the level and path of poverty in Pakistan during the same period, 2007-08 to 2015-16. The first other report is that by the Planning Commission itself on Multi-Dimensional Poverty published in 2016. The approach adopted in the latest report is fundamentally different. The poverty estimates are based on the application of the cost of basic needs approach. The earlier report focused on indicators of access to basic services like education and health and the standard of living as a way of quantifying the extent of poverty. The problem is the very big difference in the estimate of the poverty head count. According to the Multi-Dimensional Poverty report, the percentage share of poor population was 38.8% in 2014-15 while the latest report quantifies it at a much lower level of 24.3%, only a year later in 2015-16. Also, the former report estimates a lower rate of decline annually in the incidence of poverty at 4% as compared to over 7% in the latter report. The question is which estimate should be taken as a more accurate measure of the incidence of poverty in Pakistan, especially since both reports are by the Planning Commission There is an even bigger divergence in relation to the findings on poverty by the Social Policy and Development Centre, one of the two leading think tanks in Pakistan. A recent research report produced by the SPDC presents a somewhat dismal picture on the level and trend of overty up to 2015-16. The same data set has been used as the Planning Commission of the latest HIES and the same cost of basic needs approach has been adopted. According to the SPDC Research Report the national incidence of poverty was as high as tps brecorder.com/2018/08/20180821401036) 204112019 Fling poverty? | Business Recorder 38% in 2015-16, as compared to the much lower estimate in the recent Poverty Report of 24.3%, Further, the former report presents a fundamentally different picture of the trends in poverty. Apparently, the incidence of poverty actually rose from 34% in 2007-08 to 38% in 2010-11. Thereafter, it has remained constant at 38% in 2015-16. These findings of SPDC are more in line with the common perception of the worsening state of poverty in Pakistan ‘The new government has made a strong commitment to the rapid eradication of poverty in Pakistan. It is essential that for planning purposes and for formulation of pro-poor policies there should be a consensus on the level of poverty in Pakistan and what has been happening to its incidence over the last decade. A perhaps appropriate suggestion is that the Planning Commission may organise a National Conference of Poverty in the next few weeks. The objective of this Conference should be not only to reconcile the different estimates of poverty but also to identify structural reforms and policies which are likely to be most effective in reducing poverty. Civil Society organizations, academia, representatives of farmers’ associations and labor unions may be invited. In addition, government institutions like the Benazir Income Support Program, Pakistan Poverty Alleviation Fund, Baitul Maal, Punjab Social Protection Authority, etc., may also be invited to present insights gained from their operations. There is need to recognise that one of the litmus tests of the performance of the new government of Pakistan Tehreek-e-Insaf will be the success in the area of poverty reduction, given the solemn commitments in its manifesto (The writer is Professor Emeritus at BNU and former Federal Minister) Copyright Business Recorder, 2018 tps brecorder.com/2018/08/20180821401036) a9