Pakistan's growing poverty

By YesPakistan.com Staff Writer

Poverty rates in Pakistan began climbing in the 1990s after a sharp decline in the 1980s. Generally, rural poverty increased at a much faster rate than urban poverty and income inequality in the 1990s was greater than at any time in the country's history.

Pakistan's rising poverty can be explained by successive governments' inability to translate economic growth into reduction of poverty and sustainable development prospects for the poor. The country has maintained an average GDP growth rate of six percent per year since the late 1940s.

We can define poverty narrowly by saying it is a lack of sufficient food or income. Or we can use the broader definition of a lack of access to opportunities. Either way, a quarter to a half of all Pakistanis live in poverty. Pakistan's income poverty has increased from 25% in 1985 to 30% in 1995.

This 30 percent figure is a sharp increase from 20 percent in 1990. In practical terms, it means that between 1990 and 1995, as many as 18 million people may have been added to the ranks of the absolute poor in Pakistan.

During the 1980s, the proportion of absolute poor of the total population was estimated to have gone down from 38 percent in 1980 to 20 percent in 1990. In other words, the number of absolute poor decreased by at least 10 million, from 34 million in 1980 to 24 million in 1990.

This diminishing poverty between 1980 and 1990 was not because of government policy or initiative. Rather, it was the result of a number of developments in the private sector.

The most important factor in poverty's decline in that ten-year period was the influx of remittances from Pakistani workers in the Middle East. These remittances made up 10 percent of the country's GNP at their peak and benefited about 25 million Pakistanis, mostly from the lower middle class.

A second factor was the Green Revolution of the 1970s. This reform helped increase the productivity of small and middle-sized farms and did not just benefit large farms.

The third factor in Pakistan's poverty decline during the 1980s was the rise of small industrial enterprises borne out of a more liberal import policy for steel and other raw materials.

However, the situation has deteriorated considerably since 1990. Pakistan's GDP growth rate slowed to 4.4 percent per year between 1990 and 1995. In addition, the remittances from the Middle East have dwindled to a mere 4.6 percent - roughly $2 billion -- of the country's GDP.

As well, there has been a significant slowdown in small-scale industrial growth and small-farm production. Rising inflation has also translated into a heavier burden of indirect taxes. And Pakistan's notoriously widespread corruption and endless political confrontations have taken their toll on the poor.

Other structural reasons for poverty in Pakistan include unequal income and asset (especially land) distribution, inadequate investment in providing basic social services to all Pakistanis and the country's powerful feudal structure which aims to hinder the benefits of growth to the ordinary Pakistani, instead concentrating such benefits among the country's small elite.

Date/Time Last Modified: 6/18/2002 8:06:31 AM

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