Eradicating poverty through change of policies
By Alauddin Masood

The Institute of Public Policy, in a report, estimates the country’s poverty ratio at 33.8 per cent, while the Planning Commission of Pakistan declares it to be around 37.5 to 40 per cent. The Federal Bureau of Statistics, which conducts an official survey “Pakistan Social and Living Standard Measurement (PSLM) every alternate year, estimates the poverty ratio at 17.2 per cent, with urban poverty as low as 10.1 per cent and the rural poverty at 20.6 per cent. Compared to PSLM 2005-06 when the overall poverty ratio was 23.3 per cent and 2000-01 when it was 34.5 per cent, the incidence of poverty, at 17.2 per cent for 2007-08, indicates a drastic reduction of some 50 per cent in a period of eight years. This must be the highest rate of poverty reduction anywhere in the world.

However, with indicators far worse in 2008-09, PSLM poverty ratio sounds incredible. With a growth rate of 2.0 per cent, food inflation of 17.6 per cent, Sensitive Price Index of 16.8 per cent, over 14 per cent rise in the Consumer Price Index for income-earners of up to Rs5000 and a 32.5 per cent rise in the price of wheat flour, it is really hard to draw any other conclusion.

Answering a query about controversy on poverty figures, Advisor to PM on Finance Shaukat Tarin recently told journalists that the ‘government was discussing decline in poverty figures that touched 17.2 per cent but does not reflect the ground realities.

The Economic Survey 2008-09, however, states that while recent data, based on PSLM 2007-08, are being examined; independent estimates suggest that between 2005 and 2009 more than 12 – 14 million people may have been added to the ranks of the poor in Pakistan. This would translate into an increase in poverty from 22.3 per cent of the population in 2005-06 to between 30 – 35 per cent in 2008-09.

Meanwhile, to provide financial relief to the poverty-stricken section of the society, the government has announced to raise the budget of Benazir Income Support Programme (BISP) from Rs22 billion in 2008-09 to Rs70 billion – a huge raise of over 300 per cent -- in the budget for 2009-10. The range of BISP is being expanded to include: internally displaced people (IDPs) and also make an addition of five million people to the list of its recipients, who would get Rs1000 per month under this programme. This mix is becoming more complicated and one is not sure how the needy will be identified in the BISP as there are no data available on poor and needy classes.

Aimed at providing financial assistance to the needy as well as empowerment of women and child care, under BISP Rs22 billion was distributed among 1.8 million beneficiaries during the fiscal year 2008-09. According to State Minister for Finance Hina Rabbani Khar, the government is going to introduce notably health insurance for the poor and vulnerable, which would cover hospitalisation, pregnancy, day care treatment, diagnostic tests and accident compensation for earning member of the family to a maximum limit of Rs25,000 per family per year. ‘In addition, cash transfer programmes will be complemented to promote household independence via various poverty exit strategies, which can help upgrade the poor beneficiaries to the level of self-sufficiency by various means, including transition to conditional cash transfers; training and employment of one person per household; and provision of workfare through small public works under a social mobilisation programme, stated State Minister Hina in her budget speech. The initiative of social mobilisation programme is based on the concept of small development schemes for construction of paved streets, provision of water and sanitation facilities, at the local level, with the help and contribution of the community.

In recognition of the country’s track record and performance of Pakistan Poverty Alleviation Fund, the World Bank has also recently approved US$ 250 million for the poverty reduction project (PPAF-III) for the next five years. PPAF-III would focus on five key areas of social mobilisation and institutional building, livelihood enhancement and protection, microcredit access, basic services and infrastructure and project implementation support.

Being an overwhelmingly agricultural country, a majority of the poor people live in the rural areas of Pakistan. Inflation and sky rocketing prices of the foodstuff has added to the miseries of the poor, in particular those who do not possess any land holding of their own. The problem faced by a large number of people in the rural areas is the lack of employment during certain periods each year, impelling many communities to migrate seasonally to other parts of the country in search of work. This annual migration is a painful and disruptive process because it not only destroys the social fabric of the community, but also the family lives of the migrants with the antecedent possibility for discontinuity in the education of their children and the development of their area.

Furthermore, these forced migrants have to endure some of the worst exploitative conditions of work and living conditions, while those left behind in the countryside do not have enough to eat or the barest money for other basic necessities of life, causing malnutrition and starvation among them. Thus, when communities do not migrate, they have to endure a great distress at such times. Their food intake is reduced, their children are withdrawn from schools, they go into debt and they are unable to attend to their health problems. But, till recently, the rural areas in Pakistan lacked any worthwhile safety net or social security system to help relieve the distress of the poor and vulnerable population at such times.

As most of these poor people are constrained to work in the unorganised or informal sector, this aspect further adds to their miseries. To provide help and succour to such people, the UPA coalition government in India, headed by Dr. Manmohan Singh, enacted a legislation on August 25, 2005, titled as “The National Rural Employment Guarantee Act (NREGA), which is also known as National Rural Employment Guarantee Scheme (NREGS), on August 25, 2005.

The NREGA provides a legal guarantee for one hundred days of employment in every financial year to adult Indians of any rural household willing to do public work, related to unskilled manual work, at the statutory minimum wage. Introduced with an aim of improving the purchasing power of semi-skilled or unskilled people living below poverty line in rural areas, NREGA attempts to bridge the gap between the rich and poor in our neighbouring country. However, it binds that one-third of the stipulated work force must be women. The project figured prominently in UPA’s election manifesto in the Indian General election, 2004 and it was one of the major factors that gained UPA victory in the elections.

According to this Act, adult members of rural households, wishing to get employment, have to submit their name, age and address, with photograph, to the Village Panchayat. After making enquiry, the Panchayat registers households and issues a job card, containing details of the adult member enrolled and his/her photograph. The registered person can submit an application for work (for at least 14 days of continuous work) either to Panchayat or to Programme officer.

On receipt of valid applications, the Panchayat/Programme Officer issues dated receipts for every application; letter providing work is sent to the applicant and also displayed at Panchayat office. The employment is provided within a radius of five kilometre; if it is above five kilometres extra wages are paid. In case of inability to provide employment within 15 days from the date of the receipt of application, then daily unemployment allowance is required to be paid to the applicant.

Launched in 200 districts on February 2, 2006, the scheme stipulated to cover all 593 districts of India in five years. However, the Congress-led UPA government extended this scheme across the country at the beginning of the financial year 2008-09, the year when the government had to face general elections. The main importance of NREGA is that it is a good social safety net, which is audited by India’s supreme audit institution, the Comptroller and Auditor General of India who advises the government to plug any deficiencies/shortcomings in its operations, if and when detected. 

Pakistan’s BISP is also a good and commendable initiative. It can be used as a catalyst for change provided the funds are judiciously used and not doled out only amongst the “camp followers,” as was being alleged by some quarters. There is, of course, no harm in providing cash relief to the poor people, who were old and infirm and unable to do any work. In other cases, the funds and the manpower, comprising of the needy people, can be used for completing local level micro-infrastructure development schemes, as is being done in India where NREGA provided guaranteed jobs for 100 days in a year to one adult member (either sex) of every poor household willing to do public work at the statutory minimum wages. BISP can help in checking unnecessary seasonal migration by workers in the rural areas where majority of the poor landless people do not find any job during certain periods each year and are constrained to migrate to other parts of the country in search of work. This annual migration is a very painful and disruptive process. BISP can be used for providing work to the needy people, nearer to their homes, in local level development projects. Such a dignified approach would also help in preserving the self-esteem of the poor people.