Poverty in Pakistan and Its Eradication

INSTITUTE OF BUSINESS AND TECHNOLOGY Poverty in Pakistan and its Eradication
Prepared By RAM GUPAL SINGH BM-250XX Course Code : MKT-606
MBA (Banking and Finance)
FACULTY OF MANAGEMENT AND SOCIAL SCIENCES FALL - 2010
Poverty in Pakistan and Its Eradication
ACKNOWLEDGMENT
I first of all - thank Allah, the Almighty, for making the achievement of this endeavor possible. It has been a great experience and a time I was given the opportunity to put to practice what I have been taught. I would like to thank my Project instructor Dr. Noor Ahmed Memon for the Guidance and support he gave me through my journey of writing this project, though I am finance student I decided to write something about Poverty eradication, Its my dream to eradicate poverty or at least reduce to some extent if I had the chance to do so. then I submitted to my instructor for giving permission though I was worried what would be his answer, but he gave me the permission and I was so excited for chance I was given. This report is the product of teamwork and cooperation; a team that included everybody who has contributed to this research in one way or the other - from the individuals who generously accepted to respond to my questionnaires and interview questions to those who gave their constructive criticism about the content of the report. At the head of this very long list of individuals to whom I would like to extend our most sincere thanks and appreciations goes my Research Project instructor Dr. Noor Ahmed Memon who has guided me during the research. Your constructive criticism has helped shape this report into something I feel so proud of. Special thanks also go to Mr and Mr for their support while working on this research. The following individuals were a good source for the information presented in this report which is also the basis of the conclusion and recommendations. They have helped me with information that one could hardly find in published material. I thank you all for your selfless contributions. _____________________________________________________________________
Institute of Business and Technology
INSTITUTE OF BUSINESS AND TECHNOLOGY

ABSTRACT SUBMITTED BY: DISCIPLINE: TITLE OF PROJECT REPORT: MONTH OF SUBMISSION: Kamal Guled Mohamed MBA (BANKING AND FINANCE) Poverty in Pakistan and its eradication April, 2010
NAME OF PROJECT SUPERVISOR: Dr. Noor Ahmed Memon ABSTRACT The project about is about poverty eradication. This work which i consider a success under the circumstances will discuss topics Such as poverty measurement, factors that impact poverty rates, poverty reduction, and strategies that have been proved effective in combating poverty. It will present an analysis on the findings from our research as well as suggest methods to reduce or eradicate poverty. Other interesting perspectives on The topics as well as those we have just mentioned are presented in this report. The report might be used as another reference material on the subject of poverty in Pakistan and its eradication. However, it might also be used as a blueprint for a poverty reduction strategy that might be put to work in not only Pakistan but the world at large The important points of my article are: 1. Understanding Poverty 2. Poverty Factory 3. Measurement of poverty 4. Poverty: prevention, reduction or eradication
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CHAPTER 01: INTRODUCTION

1.1 1.2 1.3 1.4 Introduction... 04 Research Objectives05 Literature Review .06 Research Methodology ..............07
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1. INTRODUCTION
1.1 Introduction According to a UNDP-published glossary, this report, which is the product of a research I have conducted, revolves around the issue of poverty and the possibility of its eradication. It explores the means of poverty reduction and their effectiveness. The objective is to facilitate the formulation of initiatives and strategies to counter poverty, eradicate it (if possible) or at least reduce its rate. The coverage of this report is geographically limited to Pakistan; it takes into account the poverty factors in that area and the social issues that impact the poverty rate. It does not discuss or compare poverty facts Poverty is the state of in the other poverty-stricken regions of the world; however, being deprived of the essentials of well-being poverty combating scenarios and strategies in other parts such as adequate of the world will be show-cased as examples or models to housing, food, sufficient income, employment, be followed. access to required social services and social status. The research whose fruit/culmination is this report has been assigned to me as part of the coursework for the Research Project course. . Noor Ahmed Memon the course instructor - has authorized its initiation and given me till the end of the semester as the deadline for its submission. The completion of this task - including all its subtasks has taken us approximately four months. The sources of information and facts in the report include primary ones such as questionnaires and interviews, as well as secondary ones mostly comprising of material published on the Internet or printed in research papers or magazines. For the questionnaire, we have selected a sample size of 100 individuals randomly chosen as respondents. Five scholars who have knowledge of the
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economic state of Pakistan and poverty in the country have been interviewed to get their valuable insights. The report might be used as another reference material on the subject of poverty in Pakistan and its eradication. However, it might also be used as a blueprint for a poverty reduction strategy that might be put to work in not only Pakistan but the world at large. In the process of carrying out the research and writing this report, we have faced some challenges whose struggle to overcome taught us a lot and helped us gain hands-on experience on research methodologies. The language barrier was the most obvious of these challenges. Most of those people with whom we had to interact during the data gathering phase could not speak English. With the help of some native friends, we eventually resolved this issue. Other obstacles included the vast amount of published material on the subject we had to go through to get to the information that was relevant to our research purposes. Filtering all that information was time consuming but worthwhile. The product of this work which we consider a success under the circumstances I will discuss topics such as poverty measurement, factors that impact poverty rates, poverty reduction, and strategies that have been proved effective in combating poverty. It will present an analysis on the findings from our research as well as suggest methods to reduce or eradicate poverty. Other interesting perspectives on the topic as well as those we have just mentioned are presented in this report. 1.2 Research Objectives
The main objectives of this project poverty in Pakistan and its eradication are to find solutions and ways for eradication poverty or at least a strategic ways of reducing poverty, poverty is the mother of crime, not only poverty means we lack money or the life's necessities, but our hearts are poverty, Such as we lack the legal consciousness, moral consciousness or something else. So getting _____________________________________________________________________
solution poverty will help the world to live in peace and prosperity, so the main goal is to find any sign that we can eradicate poverty
1.3 Literature Review Different researchers and authors on the subject have different opinions about poverty, its current status in the country and the strategies for its reduction or eradication. They subscribe to different schools of thought that end up with different strategies for poverty combating. The most common areas of the subject that have had their share of controversy are poverty measurement and poverty reduction schemes. In the light of poverty measurement, Dr Akmal Hussein, a prominent researcher on the topic of poverty, believes that unless we develop an effective paradigm for poverty measurement and unless we view poverty as occurring when the individual household in a fragmented community is locked into a nexus of power that systematically perpetuates poverty., we will not be able to solve the poverty crisis. In reducing poverty, thus the analysis and evidence within this new poverty paradigm suggest that the key to overcoming poverty is to empower the poor to get better access over markets, governance, and the institutions that provide public services such as health care, education and justice. Empowerment in this specific sense means establishing autonomous community based organizations of the poor at the local level. According to his study, Mr Hussein suggests that the poor lose as much as one-third of their income due to unequal access over input and output markets and extortions by the local administration.
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Unless we develop an effective paradigm for poverty measurement and unless we view poverty as occurring when the individual household in a fragmented community is locked into a nexus of power that systematically perpetuates poverty., we will not be able to solve the poverty crisis.
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Many other researchers agree with him in this respect, and the details follow in the rest of our report. What most of these researchers fail to recognize is the use of other poverty combat scenarios that have been successful as role models upon which to base their long term solutions. The other shortcoming of the solutions proposed by them is the implementation of the projects and poverty solutions which mainly focus on urban areas, thereby disregarding and ignoring the neediest of the community.
1.4 Research Methodology In this study/research, we used two methods for gathering primary data. We also had to go through earlier studies of the subject and used already printed material as a secondary information.
Primary Data Collection

Two important tools for data collection has been used: 1. A Questionnaire (a copy is included in the appendix) which collects information on the individuals and their poverty related issues. This questionnaire is intended to serve as a tool to collect information for the study on Poverty Eradication in Pakistan. It is to facilitate the gathering of reliable, unbiased facts about the actual poverty status in the country. 2. Interviews conducted with scholars and academicians in the area of poverty fighting.
The Sample Size: I have distributed 120 questionnaires to be filled out by representatives of households or any individual who is in the capacity of providing reliable information about his/her household. 105 were responded to, and the remaining 15 have been wasted. _____________________________________________________________________
Sample Unit: The sample unit in this survey is an individual household represented by each respondent to our questionnaire. Secondary Data The Secondary data mostly involved reading already printed material and searching for what has been said about the subject earlier. We had to go through a junk of reports and studies from the past.
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CHAPTER NO. 2 THE PERCEPTION OF POVERTY

2.1 2.2
Understanding the Poverty.10 Voices of Poor................................................................13 Poverty Cycles ..18 Poverty and Power ........................................21 Pacts on Poverty in Pakistan.23
2.3 2.4 2.5
2. THE PERCEPTION OF POVERTY

2.1 Understanding Poverty _____________________________________________________________________
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Poverty is defined as a state in which a familys income is too low to be able to buy the quantities of food, shelter and clothing that are deemed necessary. For some people, the term 'poverty' is relative; it has a specific meaning to each group or individual since some people are poorer than others. However, there is a universal conception of poverty which is determined by the lack of sufficient food and other very basic human needs such as shelter. Scientifically, poverty is defined with reference to a poverty-line which is measured considering factors such as family size, age composition, educational level, etc. Families below the poverty-line are assumed to be poor. Although poverty is a factor of a number of issues such as educational level and employment, some families tend to be poor and still remain so for generations and generations. This phenomenon, known as the poverty live cycle, has been observed far too commonly, and is an indicator that if we really want to eradicate poverty and eliminate anything to do with it, we should go to the root of the problem and find what generates these cycles. Being poor does not only cause inability to eat something decent or edible. Most poor people face other difficulties that make recovering from this inability almost impossible. Poor people are often discriminated which in turn deprives them from rights including earning decent wages or even getting employed. It deprives them from being accepted at educational institutions which discourages them from studying further or joining schools. In more than one region of this world, poverty has created other worse circumstances and unfair social class systems that exaggerate discrimination. Discrimination and social classes shift the power balance in societies, making a group of people inferior to another only because of their economic statuses. These class systems give power to the richer class or classes, letting these classes make all their decisions. Two basic levels or types" of poverty are identified in the development _____________________________________________________________________
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literature: absolute poverty and relative poverty. Simply put, absolute poverty is defined as the cost of the minimum necessities needed to sustain human life. The World Bank currently regards people earning less than US$ 1 a day (in 1993 purchasing power parity) to be absolutely poor. Relative poverty is defined as the minimum economic, social, political and cultural goods needed to maintain an acceptable way of life in a particular society. The European Union defines the relatively poor as ... persons, families and groups of persons whose resources (material, cultural, social) are so limited as to exclude them from the minimum acceptable way of life in the ... persons, families and groups of persons whose resources (material, cultural, social) are so limited Terms such as poverty eradication as to exclude them from the minimum acceptable way of life in the member state in which they and poverty alleviation are often live. used interchangeably in the member state in which they live. development discussing literature. causes, Before The European Union defines the relatively poor aspects,
policies and approaches to either eradicating or alleviating poverty, it is important to distinguish what these terms imply. While absolute poverty can be eradicated, relative poverty can only be alleviated, because what is minimally accepted today may vary over time, from villages to urban areas and from country to country. 1 Relative poverty also varies with levels of economic development, and the perceptions and expectations of the majority on what is minimally acceptable. For example, while clean piped water may be a minimum acceptable standard of living in a city, it may not be a minimum requirement in a village. Similarly, while possessing a telephone may be a minimum necessity in a country like the United States, it may not be a minimum requirement in a country like Pakistan. The essence of this chapter and the rest of the ensuing subtopics in it, revolve around poverty and the poverty cycle, and social classes and the impact of poverty on social power.
1Regional High-Level meeting on Asia and Pacific region development, October 2000
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Poverty in Pakistan is a major economic issue. Nearly one-quarter of the population is classified poor as of October 2006. The declining trend on poverty in the country seen during the 1970s and 1980s was reversed in the 1990s by poor Federal policies and rampant corruption. This phenomenon has been referred to as the "Poverty Bomb". The government of Pakistan has prepared an "Interim Poverty reduction Strategy Paper" that suggest guidelines to reduce poverty in the country. According to the World Bank, the program has had tangible success, with the World Bank stating that poverty has fallen by 5 percent since 2000.2 As of 2006, Pakistan's Human Development Index is 0.539, higher than that of nearby Bangladesh (0.530), which was formerly a part of Pakistan, but lower than that of neighboring India (0.611). Incidences of poverty in Pakistan rose from 2226% in the Fiscal Year 1991 to 3235% in the Fiscal Year 1999. They have subsequently fallen to 25-26% according to the reports of the World Bank and UN Development Program reports. These reports contradict the claims made by the Government of Pakistan that the poverty rates are only 23.1%. The CIA fact book places the 2006 poverty rate at 24 percent.
2Wikipedia the Free Encyclopedia, Poverty in Pakistan
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2.2 Voices of Poor At the turn of the new millennium, the World Bank collected the voices of more than 60,000 poor women and men from 60 countries, in an unprecedented effort to understand poverty from the perspective of the poor themselves. Voices of the Poor, as this participatory research initiative is called, chronicles the struggles and aspirations of poor people for a life of dignity. Poor people are the true poverty experts. Poor men and women reveal, in particular, that poverty is multidimensional and complex -- raising new challenges to local, national and global decision-makers. Poverty is voicelessness. It's powerlessness. It's insecurity and humiliation, say the poor across five continents. The immediate impetus for the Voices of the Poor study was to prepare the World Development Report 2009/01. Published every year by the World Bank, the World Development Report is a leading resource on development strategies. In the World Development Report 2009/01 on" Attacking Poverty", the World Bank wanted to make sure the voices of the poor - their experiences, priorities, and recommendations - would be taken into account. The poor view wellbeing holistically Poverty is much more than income alone. For the poor, the good life or wellbeing is multidimensional with both material and psychological dimensions. Wellbeing is peace of mind; it is good health; it is belonging to a community; it is safety; it is freedom of choice and action; it is a dependable livelihood and a steady source of income; it is food. The poor describe ill-being as lack of material things - food especially but also lack of work, money, shelter and clothing -- and living and working in often unhealthy, polluted and risky environments. They also defined ill-being as bad experiences and bad feelings about the self. Perceptions of powerlessness over one's life and of voicelessness was common; so was anxiety and fear for the future. _____________________________________________________________________
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"Poverty is like living in jail, living under bondage, waiting to be free" Jamaica "Poverty is lack of freedom, enslaved by crushing daily burden, by depression and fear of what the future will bring." Georgia "If you want to do something and have no power to do it, it is talauchi (poverty)." Nigeria "Lack of work worries me. My children were hungry and I told them the rice is cooking, until they fell asleep from hunger." An older man from Sialkot, Sindh. "A better life for me is to be healthy, peaceful and live in love without hunger. Love is more than anything. Money has no value in the absence of love." a poor older woman in Somalia. "When one is poor, she has no say in public, she feels inferior. She has no food, so there is famine in her house; no clothing, and no progress in her family." a woman from Uganda. "For a poor person everything is terrible - illness, humiliation, shame. We are cripples; we are afraid of everything; we depend on everyone. No one needs us. We are like garbage that everyone wants to get rid of." a blind woman from Tiraspol, Moldova. "I repeat that we need water as badly as we need air." a woman from TashBulak, The Kyrgyz Republic. "The waste brings some bugs; here we have cockroaches, spiders and even snakes and scorpions." Nova California, Brazil.
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Insecurity has increased. Violence is on the rise, both domestically and in the society. And the poor feel they have been bypassed by new economic opportunities. By and large poor people feel they have not been able to take advantage of new economic opportunities because of lack of connections and lack of information, skills and credit. Unemployment and lack of food and money appear as problems in many communities. The poor, who work primarily in the informal sector, report experiencing life as more insecure and unpredictable than a decade or so ago. This is linked to unpredictability of agriculture, jobs that are unreliable and with low returns, loss of traditional livelihoods, breakdown of the state, breakdown of traditional social solidarity, social isolation, increased crime and violence, lack of access to justice, extortion, and brutality from the police rather than protection. Illness is dreaded and lack of affordable health care pushes many families into indebtedness and destitution. "Everyday I am afraid of the next" Russia "Wasta (nepotism or connections) is the most important thing. If one has wasta then one can work." Egypt "Life in the area is so precarious that the youth and every able person has to migrate to the towns or join the army at the war front in order to escape the hazards of hunger escalating over here." a discussion group in rural Ethiopia Gender inequity is widespread, domestic violence pervasive and gender relations stressed. With increased economic hardship and a decline in poor men's income earning opportunities, poor women across the world report "swallowing their pride" and going out to do even demeaning jobs to bring food to the family. In their struggles to adapt to changing economic roles in the household, women widely report greatly increased work burdens; and men in many communities express _____________________________________________________________________
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frustration and humiliation with the lack of livelihood opportunities. This loss of traditional male "breadwinner role" and female "caretaker role" is traumatic for both genders, and family breakdown, domestic violence and increased alcoholism among men are often mentioned. In some communities, awareness raising by NGOs, churches and women's groups is contributing to changing social norms and eventually to harmony and equity within the household. "Sister, if you don't beat them they'll stop being good. And if they're good and you beat them, they'll stay that way." Bangladesh "Men rape within the marriage. Men believe that paying dowry means buying the wife, so they use her anyhow at all times. But no one talks about it." Uganda "When my husband died, my in-laws told me to get out. So I came to town and slept on the pavement." a middle-aged widow in Kenya, "Rather than suffering from poverty, we should better go sweep up the garbage in other people's houses." a woman in Moldova The poor want governments and state institutions to be more accountable to them. Corruption emerges as a key poverty issue. Corruption emerges as a core poverty issue. Poor people engaged in the study reported hundreds of incidents of corruption as they attempt to seek health care, educate their children, claim social assistance, get paid, and attempt to access justice or police protection, and seek to enter the marketplace. In their dealings with officials, poor men and women are subject to insults, rudeness, harassment, and sometimes assault by officials. Harassment of vendors in urban areas is widespread. Poor people's evaluations of institutions that are important in their lives show that while politicians, state officials and public servants are sometimes viewed as important they rarely show up as effective, trustworthy, or participatory. There are exceptions. Provision of basic infrastructure is valued and has made a difference. _____________________________________________________________________
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"The municipal Congressmen are all thieves they do not solve anything, there are no schools, no health care. They do not vote issues that interest the people." Brazil. "Nobody is able to communicate our problems. Who represents us? Nobody." discussion group in Foua, Egypt "If you have no relatives among high government officials, people treat you as second rate. If you have any problems with your business, or get in trouble with the police, you will lose your case and won't have your problems resolved. Those who have power and money will always win." At Bashi, The Kyrgyz Republic "We keep hearing about monies that the government allocates for projects, and nothing happens on the ground." South Africa "People place their hopes in God, since the government is no longer involved in such matters." Armenia Healthcare "Before everyone could get healthcare, but now everyone just prays to God that they dont get sick because everywhere they just ask for money." Vares, BosniaHerzegovina "If you dont know anyone, you will be thrown to the corner of a hospital!" India "[I]n the hospitals they dont provide good care to the indigenous people like they ought to, because of their illiteracy they treat them badly they give us other medicines that are not for the health problem you have." -- a young man from La Calera, Ecuador
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Education "Teachers do not go to school except when it is time to receive salaries." Nigeria "The school was ok, but now it is in shambles, there are no teachers for weeks. There is no safety and no hygiene." Vila Junqueira, Brazil "If parents do not meet these payments, which are as high as Rs. 40 to 50 per month, the teachers were reported to beat the student or submit a failing grade for her/him." Pakistan 2.3 The Poverty Cycle This creates some kind of poverty chain or cycle that continues or generations due to the lack of the necessary resources to get out of that cycle or loop. These resources include but are not limited to financial capital, education and connections that enable them to access these resources. The nature of the income of the families or individuals in this category can be described as hand to mouth. This means that most or all of what they earn in the form of wages are not more than what they consume or spend in a single day or payment period; therefore they become unable to make savings or spend in their own development. The poverty cycle is an impediment to human development. It reduces the potential for skill-based and knowledge-based development since the impoverished cannot invest anything in education. They have to work for a living and can hardly get the time to invest in education. On the other hand, they cannot afford to invest in education since whatever they earn can barely cover their nutritional requirements. As to the reasons or causes of the poverty cycle, there exist different schools. Some belief that the poverty cycle is created and promoted by racism, social injustice and social inequality. This leads to a situation where the wealthy keep earning more wealth and the poor are not able to create enough of it. Another _____________________________________________________________________
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school has it that the poverty cycle is the product of the strong presence of the state (i.e. Government regulatory agencies, etc) in the economy erodes property rights thus killing the incentive to create wealth. The two major factors in the creation of poverty are: 1. Unbalanced distribution of wealth: Lack of education, or human capital, is thought by many to be one of the biggest causes of the poverty cycle. Education in a modern knowledgebased economy is one of the conditions to achieving economic growth, as it increases skill. A maximized education would require devoted time and energy, or extra-curricular reading. Children who are from poor families and have to work cannot maximize their education, even if the education is free. It would also require a conducive and hygienic environment, which is often not available to the poverty-stricken. Tertiary education is often not free. Some theorists believe that children often will not be able to break out of poverty because their reduced skill-set reduces their potential income. With no means to provide a conducive educational environment for their own children, the cycle begins again.
2. Excessive intervention by state or government: Many neoliberals attribute certain cycles of poverty to insufficient protection or recognition of property rights. To be more exact, in an environment where one's property can be stolen at any time, such as countries with a weak rule of law, there is very little incentive to save and invest. Free market proponent Hernando De Soto argues that poverty is sustained by government over-regulation that generates high costs to property ownership through bureaucracy and big government. He argues that many of the poor in the world economy are unable to own or develop property because this regulation is too costly to overcome. As a result, _____________________________________________________________________
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they argue they are unable to generate wealth in a legal market that is full of regulation and are forced to resort to operate in an extralegal market that hampers wealth creation, thus hampering their ability to be pulled out of poverty.3 Economists such as Milton Friedman argue that tariffs, income taxes, payroll taxes, savings tax and tax on investments all provide perverse incentives toward wealth creation that hurt the poor the most. He further argues that some of these arrangements are also wealth transfers from poor to rich; such as tariffs and social security. He argues that these regressive tax burdens encourage low productivity and little savings and investment that would otherwise lift the poor out of poverty. Others have argued that welfare perpetuates poverty by providing incentives counter to wealth creation. Proponents of the Fair Tax and economists such as Milton Friedman favor eliminating welfare programs that prevent benefits from those earning above a certain income. They believe that these income caps as eligibility to receive benefits provide an incentive for laborers to earn less than they actually could in order to gain free benefits from government programs. In the same way, incentive to find work can be reduced by the effect of income tax on low-income earners. As money is earned by a person receiving welfare, the amount of welfare they receive is reduced. This money earned - for example, through part time work - may also be taxed. Thus, there is reduced incentive for those who are part of the cycle of poverty to find work.
The solutions to the poverty cycle vary. Some modern governments have taken to the improvement of public education and welfare as methods to break the poverty cycle. In many places the rule of law also needs to be strengthened, by creating efficient legal systems that protect the acquired capital of the poor. Mixed-income housing is being implemented in more and more cities as a possible solution to poverty issues. It is an attempt to bring middle and lower
3Wikipedia, the free encyclopedia
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class families together in the same neighborhoods. This interaction between low and middle-income families, according to supporters, helps the low-income families. Others who believe in free markets disagree with the above theory. Free market economists argue that planned economies and welfare will not solve poverty problems but only make them worse. They believe that the only way to solve poverty is not by shuffling and sharing existing wealth through redistributing wealth but by creating new wealth. They believe that this is most efficiently achieved through low levels of government regulation and interference, free trade, equal property rights, money systems, wages, and tax reform and reduction, thus converting even the poor members of society into capitalists. All in all, poverty essentially has three closely interrelated aspects: poverty of money, poverty of access and poverty of power. These make the working, living and social environments of the poor extremely insecure and severely limit the options available to them to improve their lives. Without choices and security, breaking the cycle of poverty becomes virtually impossible and leads to the marginalization and alienation of the poor from society.
2.4 Poverty and Power The poor suffer from both traditional and modern environmental health risks in urban areas. They suffer from diseases associated with poor sanitation, lack of clean water, overcrowded and poorly ventilated living and working environments, as well as from modern risks caused by air and industrial pollution. While the poor suffer the most from dysfunctions in cities, they are the least able, as individuals, to influence how cities are governed.4 In many Asian cities, both the formal structures of government and the culture of governance tend to exclude the poor from decision-making and tend to concentrate decision-making among a small number of formal and informal elite.
4. Unites Nations Economic and Social Commission for Asia and the Pacific, paper on urban poverty alleviation.
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The poor have a greater possibility to influence decision-making under conditions of good governance, i.e., a system of government and a culture of governance that is participatory, inclusive, consensus-oriented, based on the rule of law, responsive to the needs of the population, efficient, transparent and accountable. Another important aspect of power is information. The poor often lack access to information that they can use to advance their case when dealing with other actors in the city. Even when information is available, it is often in media and forms that are neither not accessible to nor understandable by the poor. How do we alleviate the poverty of power? 1. Supporting Collective Mechanisms: Experience from the region has shown that whenever the poor have been organized, united and in possession of technical and managerial skills, they have improved their own conditions and broken the cycle of poverty. They have resisted stronger groups, been able to influence decision-making and build equitable partnerships with governments and other actors in society. Several non-governmental organizations have made valuable attempts to catalyze coalitions of the poor in the form of slum and squatter dwellers federations, rickshaw pullers associations and hawkers welfare cooperatives. These coalitions have strengthened the bargaining positions of the poor and have assisted them in building beneficial partnerships. Experience has also shown that many of the collective mechanisms of the poor have been short-lived, particularly those that developed in response to external threats such as evictions, or around a particular issue such as provision of water or housing. Often once the external threat was resolved, these community-based organizations disintegrated. While making important contributions, such organizations are often transitory in the struggle to break the cycle of poverty. On the other hand, community-based organizations and collective mechanisms that are developed around issues of long-term concern, and that are able to engage the poor continuously and sustainably, such as community or trade-based _____________________________________________________________________
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savings and credit schemes, have a greater potential for empowering the poor and breaking the cycle of poverty. This is because they create a core, organized group within communities around which other issues of common concern can be discussed and addressed by activating other community members. Another reason for the failure of organizations of the poor is a lack of skills in the operational and financial management of organizations, in group interaction and in negotiation and consensus-building. Governmental and non-governmental organizations that assist the urban poor in acquiring such skills help to empower them. In contrast, those who speak on behalf of the poor or provide them with services, while doing valuable short-term work, often tend to make the poor dependent on them. 2. Increasing Access to Information: One of the key components of power and wealth creation is access to information and knowledge and the ability to use that information or knowledge for economic or social gain. Programms and initiatives that seek to provide information to the poor in easily understood media and forms greatly contribute to their empowerment. A free flow of information also contributes to transparency in decision-making. Some governments in the region, for example, now require public hearings before large infrastructure projects are initiated. Even where such public hearings are impartial, the poor are often unable to participate or influence decisionmaking because they do not have the financial or human resources to interpret the information provided. Some non-governmental organizations and academic institutions are working to fill this gap. Most notable among these initiatives are urban resource centers (URCs). The URC approach links non-governmental organizations and academic institutions to analyze and evaluate trends and the feasibility and impacts of programmes and projects in the city, and where needed, to work out alternative solutions to governmental proposals. This information is then provided in an understandable form to the groups and communities that would most likely be affected. Equipped with such information, _____________________________________________________________________
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several poor communities have been successfully able to resist projects that were either unnecessary or whose negative impacts would have been far greater than their potential benefits. 2.5 Facts on Poverty in Pakistan An analysis of poverty by socio-economic groups, focusing on key demographic and economic characteristics, reveals the following stylized facts of poverty in Pakistan.
Poverty in Pakistan has remained fairly stable during the 1990s,
from 29.3% in 1993- 94 to 32.2% in 1998-99.

Poverty is considerably higher in rural as compared to urban areas.
According to calculations by FBS based on PIHS data poverty headcount in 1998-99 was 36.3% and 22.4% for rural and urban areas of Pakistan, respectively. Poverty incidences vary significantly between provinces. NWFP has the highest rural as well as urban poverty followed by Punjab. Baluchistan data for 1998-99 shows relatively low poverty; however, poverty in Baluchistan is as high as in NWFP as in other years. Poverty is strongly related to lack of basic needs, especially education and cultivable land The poor have a higher dependency ratio, as households with a large number of children, and single earning member, are more likely to be poor. On average the poor have almost five household members less than 18 years of age, while the number for the non-poor is three. Average number of births by a poor woman (married and of age 15-49) is almost five, compared to four for a non-poor woman. More than one third of the poor households are headed by aged persons who are
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Dependent on transfer incomes, such as pensions and other forms of
social support. Education is the most important factor that distinguishes the poor from the non-poor. The percentage of literate household heads is 27 in poor households while for non-poor households it is 52. The poor are also characterized by relatively low access to health related infrastructure, like sanitation. While 76% of the poor live in households with no toilet with flush, compared to 53% of the non-poor. The poor are also less likely to have access to electricity and gas 60% and 10% of the poor live in households with electricity and gas connections, compared to 75% and 24% of the non-poor, respectively. Relatively poor communities also seem to have less access to health facilities and immunization coverage. 45% of the children in poor households aged one to five years have been fully immunized as against 58% in non-poor households. Poverty is (relatively) higher when head of the households are unskilled agricultural workers, engaged in services, transport, production, and sales occupation. The non-poor own 0.84 acres of cultivable land per capita, while the poor own only 0.27 acres per capita. In addition the poor are less able to diversify their agricultural production and are thus more susceptible to economic shocks.
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CHAPTER NO. 3 POVERTY FACTORS 3.1 3.2 Poverty Factor27 Causes of Poverty.29
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3. POVERTY FACTORS
3.1 Poverty Factors According to an ADB Poverty Assessment, there was a declining trend in poverty in Pakistan during the 1970s and 1980s was reversed in the 1990s. The incidence of poverty is estimated to have increased significantly after 1997, coinciding with the onset of a period of slow growth in the country. It increased from 26.6 percent in 1993 to 32.2 percent in 1999 and the number of poor increased by over 12 million people during this period. Since 1999, economic
Poverty in Pakistan has historically been higher in rural than urban areas. Poverty rose more sharply in the rural areas in the 1990s, and in 1999 the incidence of rural poverty (36.3 percent) was significantly higher than urban poverty (22.6 percent).
growth has slowed further, development spending has continued to decline, and the country has experienced a severe drought. It is therefore estimated that the incidence of poverty in Pakistan today is higher than in 1999. The identification of vulnerable elements within the poor has also received little attention in Pakistan. While poverty manifests itself as material deprivation, studies on poverty in Pakistan stress that the poor rarely speak of lack of income per se, but tend to focus on the constraints that they face in managing their assets, whether human, material, social or political. The capacity of the poor in Pakistan to access public entitlements like political processes or goods and services which determine human development contrasts strikingly with that of the rich - for example, 52 percent of the population in the highest income quintile will
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have attended school at some stage, but this proportion falls to 27 percent for the lowest income quintile. 5 Poverty in Pakistan has historically been higher in rural than urban areas. Poverty rose more sharply in the rural areas in the 1990s, and in 1999 the incidence of rural poverty (36.3 percent) was significantly higher than urban poverty (22.6 percent). Inequality also increased in Pakistan during the 1990s, in both urban and rural areas, which enhanced the negative impact on poverty of the slowdown in growth during this period. While agriculture is the predominant activity in rural society, a substantial proportion of the rural labor force, estimated at more than 40 percent, depends entirely on non-farm activities. The growth of non-farm activities appears to have been severely affected by low economic growth, decline in public sector development spending, and lower worker remittances during the 1990s. There are a number of attributes, besides location, which characterize the poor in Pakistan.
Education is the most important factor that distinguishes the poor from the non-poor, for example the proportions of literate household heads in poor households are almost half that in non-poor households.
Second, poor households on average had 75 percent more children that the non-poor households. Most of these children are not receiving any education, and thus the cycle of poverty is perpetuated.
Third, more than one third of the poor households were headed by aged persons who were dependent on transfer incomes, such as pensions and other forms of social support.
Fourth, the poor had few physical assets, and according to one study, if a rural household possesses physical assets (land/livestock) the probability of it being poor declines by 55 percent.
5Mr Mushraq Ali Shah presentation on Poverty Alleviation in Pakistan
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Fifth, the poor rely disproportionately on informal sector employment. The incidence of poverty is the highest among household heads with occupations such as day laboring in agriculture, construction, trade and transport sectors. Incidence of poverty is also high among self-employed, which includes street vendors in urban areas, and sharecroppers in rural areas.
Gender discrimination is another key attribute that characterizes the poor. Incidence of poverty among women in Pakistan is higher compared with men, and is characterized by low endowment of land and productive assets, unemployment, discrimination in the labor market, and limited access to economic options and political processes.
The poor are also characterized by their vulnerability to environmental degradation and deterioration of the natural resource base, given that they tend to be strongly dependent on the exploitation of such resources.
3.2 Causes of Poverty A number of factors explain the existence of and increase in poverty in the last decade. Poor governance has been identified as the key underlying cause of poverty in Pakistan. Poor governance has not only enhanced vulnerability, but is the prime cause of low business confidence, which in turn translates into lower investment levels and growth. Governance problems have also resulted in inefficiencies in provision of social services, which has had serious implications for human development in the country. The lack of public confidence in state institutions, including the police and judiciary, have eroded their legitimacy and directly contributed to worsening conditions of public security and law and order observed throughout most of the 1990s. With regard to economic factors, decline in GDP growth is the immediate cause of the increase in poverty over the last decade. In the 1990s, growth declined in all sectors and was slower than average in labor intensive sectors. However, the causes of the slowdown in growth may be divided into two categories, i.e. structural and others, with the former being more long-term pervasive issues, _____________________________________________________________________
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which have persisted because of deteriorating governance. Among the structural causes, the burgeoning debt burden and declining competitiveness of the Pakistan economy in the increasingly skill-based global economy are the most important. While the former occurred due to economic mismanagement, the latter was because of Pakistan's low level of human development. With regard to the debt burden, increasing debt service requirements resulted in a growing fiscal squeeze, which in turn led to a declining proportion of GDP being spent on development and social sectors in the 1990s. Falling public investment, together with unsuccessful attempts at macroeconomic stabilization also adversely affected private investment. At the same time, reduction in tariffs, exhaustion of simple import substitution opportunities, and elimination of export subsidies in the 1990s meant that international competitiveness became an increasingly important determinant of investment opportunities in Pakistan. Because of the low level of human development and poor state of physical infrastructure, areas where Pakistan was competitive were not many. As a result, investment declined significantly, bringing about a fall in the economic growth rate. The effects of poor governance, furthermore, served to reinforce the adverse impact of structural factors. In a rapidly integrating global economy, countries need to diversify their export base, and encourage low cost production of more value added high technology products to stay competitive. This in turn requires the mobilization of a highly skilled and specialized labor force. If this key resource has not been developed, as is the case in Pakistan, the economy tends to be mired in a low value production mode. The adverse impact of structural factors was reinforced by other problems such as ethnic and sectarian violence, poor state of law and order, and a high degree of economic and political uncertainty because of the many changes in government. Throughout the 1990s, the Government was implementing a series of medium term structural adjustment programs under the aegis of the International Monetary Fund (IMF). However, because of frequent changes in government, adherence to the adjustment program was unsatisfactory, and as a _____________________________________________________________________
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result, the 1990s can be characterized as a decade of stop-go stabilization policies, with the attendant negative impact on growth, but without the desired improvement of macroeconomic fundamentals. Economic factors can explain primarily short-term fluctuations in poverty indices. The existence of pervasive poverty, wherein a significant proportion of the population remains poor over an extended period of time is, however, attributable more to social than to economic factors. For example, cultivated land is highly unequally distributed in Pakistan. About 47 percent of the farms are smaller than 2 hectares, accounting for only 12 percent of the total cultivated area. Access to land, which is the basic factor of production, is crucial to reduce poverty in rural areas. Pervasive inequality in land ownership intensifies the degree of vulnerability of the poorest sections of rural society, because the effects of an unequal land distribution are not limited to control over assets. The structure of rural society, in areas where land ownership is highly unequal, tends to be strongly hierarchical, with large landowners or tribal chiefs exercising considerable control over the decisions, personal and otherwise, of people living in the area of their jurisdiction, as well as over their access to social infrastructure facilities.
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CHAPTER NO. 4 MEASUREMENT OF POVERTY

4.1 4.2 4.3 4.4 4.5 4.5.1 4.5.2 4.5.3 4.5.4 Poverty Measurement...33 Method of Measurement..33 Measuring Poverty at Global Level..................................36 New direction in Poverty Measurement........................................36 Types of Data37 Administrative Data..................................................................40 Population Census...............................................................40 Household Survey.......................................................................41 Qualitative Data.....................................................................44
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4.MEASUREMENT OF POVERTY
4.1 Measurement of Poverty
Discussing the issue of poverty measurement is a key to its eradication or reduction. It is also crucial for accurate and reliable reporting on the subject to facilitate the formulation of strategies to combat poverty. It has been found out that the estimates of poverty are very sensitive to the measure used to calculate poverty lines. The extent and nature of poverty, as defined by its three aspects and its impact on marginalizing and alienating segments of the urban society, are difficult to measure. UNDPs Human Development Index is an attempt to compile and compare all the above aspects of poverty. As the Human Development Report of 1999 shows, the extent and nature of poverty vary considerably in countries of Asia and the Pacific, and that of urban poverty varies considerably between countries, between rural and urban areas, among urban areas within a particular country, among neighborhoods of a given urban area and even within neighborhoods.6 Poverty also has a gender dimension. In most countries, the poorest of the poor tend to be households headed by women. Even within the family unit, the poverties of money, access and power vary based on gender, with women and female children suffering more exist. than their male counterparts. Thus to meaningfully measure poverty, disaggregated data and information are often needed, which in many countries do not
4.2 Methods of Measuring Poverty Poverty is a global problem being faced by nations around the world and happens to have no common definition which is generally accepted. However,
6UNDP paper on poverty alleviation in urban areas
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researches have looked at poverty at two perspectives as we mentioned in the first chapter of this report. These are the relative poverty and the absolute poverty. Giving an exact and accurate measure of poverty has never been easy, and comparing poverty data or information from different regions of the world has even been more difficult. The following methods are used to measure poverty:7 a. Head Count Ration: the individuals who earn income which cannot meet the daily intake of a certain amount of calories are considered to fall below the poverty line. For example, in Pakistan this certain amount of calories is approximately 2350 calories. Accordingly, a person whose earn is less than $874 per year is considered to have fallen below the poverty line. According to the head count ratio, the percentage of population living below the poverty line in 2005 has decrease from 34.46% in 2001 to 23.9% in the period 2004-2005, a decrease of 10.6 percent. b. Poverty Gap: This is an aggregate measure of the spread of the poor below the poverty line. It indicates the distance of all the poor individuals from the poverty line. A lower value indicates that most of the poor are circling around the poverty line. In Pakistan the value of the poverty gap has fallen from 7.03 in 2001 to 4.76 in 2005. c. Severity of Poverty: This indicator also shows the remoteness or distance of the poor individuals from the poverty line. Accordingly, the lower value shows that the majority of the poor persons are hovering around the poverty line. The severity of poverty in the country has decreased from 2.13 in 2001 to 1.48.
Table 1: The following table shows the above poverty indicators from 2001 to 2005 as published by Nasir and Hyder.
Pakistan Urban
Head Count 2001 2005 34.46 23.90 22.69 14.90
Poverty Gap 2001 2005 7.03 4.76 4.55 2.87
Severity of Poverty 2001 2005 2.13 1.48 1.35 0.84
7Economics of Pakistan textbook, Nasir & Hyder
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Rural
39.26
28.10
8.04
5.64
2.44
1.77
Earlier studies on poverty in Pakistan simply estimated the headcount rations i.e. The proportion of the poor in the population for single years based on the available household income and expenditure survey (HIES) data. These studies were limited by the grouping of published data from these surveys and by the selection of somewhat arbitrary poverty lines. The resulting estimates were very sensitive to the choice of the poverty line. By the mid 1970's and 1980's the focus shifted to estimating the extent of poverty and trends in poverty based on absorption of minimum diet for meeting nutritional requirements. Later work used the basic needs approach to estimate poverty lines. This approach refers to the position of the individual or a household in relation to the minimum cost of a set of basic needs and food consistent with the spending patterns of the poor. Measuring poverty at the country level A common method used to measure poverty is based on incomes or consumption levels. A person is considered poor if his or her consumption or income level falls below some minimum level necessary to meet basic needs. This minimum level is usually called the "poverty line". What is necessary to satisfy basic needs varies across time and societies. Therefore, poverty lines vary in time and place, and each country uses lines which are appropriate to its level of development, societal norms and values.8 Information on consumption and income is obtained through sample
surveys, with which households are asked to answer detailed questions on their spending habits and sources of income. Such surveys are conducted more or less regularly in most countries. These sample survey data collection methods are increasingly being complemented by participatory methods, where people are asked what their basic needs are and what poverty means for them.
8World Bank, Paper on Understanding Poverty
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Interestingly, new research shows a high degree of concordance between poverty lines based on objective and subjective assessments of needs. 4.3 Measuring poverty at the global level When estimating poverty worldwide, the same reference poverty line has to be used, and expressed in a common unit across countries. Therefore, for the purpose of global aggregation and comparison, the World Bank uses reference lines set at $1 and $2 per day (more precisely $1.08 and $2.15 in 1993 Purchasing Power Parity terms). It has been estimated that in 2001, 1.1 billion people had consumption levels below $1 a day and 2.7 billion lived on less than $2 a day. These figures are lower than earlier estimates, indicating that some progress has taken place, but they still remain too high in terms of human suffering, and much more remains to be done. The Global Poverty Monitoring Database, by Chen and Ravallion at the World Bank contains global and regional poverty estimates for the years 1981, 1984, 1987, 1990, 1993, 1996, 1999 and 2001 as well as data on the share of people living below the national poverty line by country for the years when household surveys are available. The methodology used for the Global Poverty Monitoring Database is explained by Ravallion and Chen in "How did the worlds poorest fare in the 1990s?" (2000). 4.4 New directions in poverty measurement While much progress has been made in measuring and analyzing income poverty, efforts are needed to measure and study the many other dimensions of poverty. Work on non-income dimensions of poverty -- defining indicators where needed, gathering data, assessing trends -- is presented in the World Development Report (WDR) 2000/01: Attacking Poverty . This work includes assembling comparable and high-quality social indicators for education, health, access to services and infrastructure. It also includes developing new indicators _____________________________________________________________________
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to track other dimensions -- for example risk, vulnerability, social exclusion, access to social capital -- as well as ways to compare a multi-dimensional conception of poverty, when it may not make sense to aggregate the various
In addition to expanding the range of indicators of poverty, work is needed to integrate data coming from sample surveys with information obtained through more participatory techniques, which usually offer rich insights into why programs work or do not. Participatory approaches illustrate the nature of risk and vulnerability, how cultural factors and ethnicity interact and affect poverty, how social exclusion sets limits to peoples participation in development, and how barriers to such participation can be removed. Work on integrating analyses of poverty based on sample surveys and on participatory techniques is presented in the WDR. An example of participatory work is given by the Voices of the Poor studies. 4.5 Types of Data Many sources of data can be useful for poverty analysis and the evaluation of policy interventions. Some data, such as central public finance data and national accounts, exist only at the national level. Often, these data are collected centrally by the statistical institute or the central bank. Local-level data are often collected through local offices of the statistical institute or the Ministry of Finance. Such data -- for example, data by region, province, or district -- often include availability and use of services, such as education, health, water, and electricity, and may include economic and price information, such as regional inflation. Few countries produce national accounts at the sub-national level. 9 Household or individual-level data on welfare components, such as income, consumption, illness patterns, and household priorities and perceptions, present the most disaggregated data. These data are typically gathered through household surveys, and they can be summarized at higher levels (at the local or
9Coudouel et al. (2002) paper on Poverty Measurement and Analysis
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national level) to produce aggregate statistics. For example, household-level data are needed to determine whether the members of a particular household are income poor. Aggregation across households will provide regional or national estimates of poverty. Along with providing national averages, local-level data can be important because local realities vary, and so do the key dimensions of poverty and the indicators that are useful to analyze and monitor. Moreover, some decisions increasingly more as decentralization advancesare made at the local level and require local information. In many instances, however, the collection and monitoring of local level data will be set up differently, since local capacities vary and there is greater potential for community involvement
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DATA National-level data : National accounts: Consumption,
AGENCY
SOURCE of
FREQUENCY
Poverty in Pakistan and Its Eradication National Monthly or quarterly
GDP, Central statistical System
Investment, agency
Accounts, trade statistics
where possible--trade statistics, for example; at least yearly Monthly or quarterly where possible--trade statistics for example; at least yearly Monthly; CPI basket updated at least every five years Yearly where possible
Exports, Imports, and so on Agencies Table 2: Data Types and Public revenues, category Consumer prices Social Indicators and finance spending data: Ministry by Finance, of Budgets and actuals central
statistical agency, sectoral ministries producer Central statistical Price surveys agency, central Administrative systems bank Management information systems (MIS) of sectoral ministries
Local-level data: Consumer and prices, climatic
producer Central statistical Price surveys, systems of data, agency, central national accounts
Monthly; CPI basket updated at least every five years
national accounts at regional bank level Availability of services Local administration, Use of services Multi-topic household surveys; employment
Yearly
sectoral ministries surveys, qualitative studies Local service Rapid Monitoring and Yearly
providers Satisfaction Surveys Individual and household-level data: Household consumption and Central statistical Household budget, income; living conditions, social indicators agency, Ministry of expenditure, income Labor/Employment surveys, multi-topic household surveys, demographic and health Population statistics, access to servicesno consumption or income; literacy Household living standards no detailed consumption or income; illness patterns, malnutrition, education profile Household Central statistical agency, Ministry of Labor/Employment , others Central agency surveys statistical Population census
Every three to five years
Every five or ten years
Rapid Monitoring Surveys, Yearly demographic and health surveys
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priorities, Central of well-being, agency, statistical Qualitative studies; Rapid Every one 40 three to sectoral Monitoring Surveys years
perceptions
user satisfaction
ministries, others
The role of administrative data and the population census are worth commenting upon: 4.5.1 Administrative Data In many countries, administrative data are the most accessible data source. Usually provided by line ministries and specialized agencies, these data describe specific activities and programs such as school enrollment, disease prevalence, malnutrition information, hospital expenses, road network information, and income and expenditure for decentralized units. This information is important in assessing levels of public and private inputs, outputs, and outcomes, as well as their distribution within the country. For example, it is possible to compare how the distribution of enrollment rates matches spending on primary schools; how the structure of health spending-- primary versus tertiary care --reflects disease patterns; or how agricultural productivity of main crops varies with land tenure patterns. Administrative data can often provide an important entry into poverty analysis, especially if it they are used to compare need and demand for services. However, administrative data do not allow for cross-tabulating or analyzing poverty across different dimensions. For example, it is generally not possible to look at enrollment rates of children by the income group of their parents. (Multitopic household surveys, which are discussed below, differ from administrative systems in that they allow the analyst to relate indicators with each other.) 4.5.2 Population Census A population census contains basic information on all citizens of a country. The census is carried out for all households to obtain basic information on the population, its demographic structure, and its location. The census is typically carried out by the national statistics institute, which then provides data to lower levels of government tailored to local information needs. Since the census covers the whole population, it is costly, and most countries conduct a census only once a decade. The census can provide policymakers with important data for planning _____________________________________________________________________
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in the years directly following its implementation, but its usefulness diminishes after that. Since the census is carried out across millions of households, the information gathered is, by necessity, limited. Information on household income, consumption, disease patterns, and poverty perceptions are generally not included. However, the census usually contains descriptive statistics of the housing stock, access to basic services such as water, electricity, and sanitation; information on education and employment patterns, and population statistics. The census has the advantage of being able to provide information at low levels of aggregation, such as the municipality level. Census data are also an important tool to check how representative other surveys are. The usefulness of sample surveys can be increased substantially if they are combined with census information, for example for providing poverty maps. 4.5.3 Household Surveys Household surveys are essential for the analysis of welfare distribution and poverty characteristics. At the same time, aggregate household-level analysis can provide only limited understanding of the intra-household distribution of resources, especially of income and consumption. Moreover, while the census covers the whole population in the country, surveys interview only a subset, generally a small fraction, of all households. This sample of households must be carefully chosen so that the results of the survey accurately describe living conditions in the country, and different parts of the country. Sampling should be based on mapping of actual settlements, including newlyformed informal urban settlements. Sampling is most often informed by a recent population census. The sample size -- the number of households interviewed -will vary with several factors, including:
the indicator that is to be measured (a survey that aims to measure countrywide averages of income may require a larger sample than a survey designed to measure the percentage of the population with water connection, in part because the later is easier to measure);
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the level at which the policymaker needs the information (a national electricity connection rate will require fewer households to be interviewed than regional or district rates).
Different types of household surveys are presented directly below.

Household Survey Multi-topic surveys Advantage poverty dimensions, their Limitations inter- evaluation) health Measurement of other
Measurement and analysis of different Time-intensive (collection and
relationships, and correlates Demographic and Health-poverty measurement, health surveys Employment surveys Single-topic behavior analyses, basic
poverty dimensions of poverty limited, poverty
diagnostics diagnostics limited Analysis of employment patterns, wage Limited use for
income analysis (link to education) measurement and diagnostics Income-poverty measurement (or one Limited diagnostics possible
surveys other dimension) Rapid monitoring Quick and cost-effective monitoring of Income-poverty measurement surveys surveys and key welfare indicators not possible, limited service satisfaction diagnostics
Living Standard Measurement Study (LSMS) surveys and other multi-topic surveys Multi-topic welfare surveys, like the LSMS, are geared towards measuring and analyzing poverty and are important instruments for poverty diagnostics. LSMS surveys collect information on household expenditures and income, health, education, employment, agriculture, the ownership of assets such as housing or land, access to services, and social programs. Dozens of countries have implemented multi-topic surveys and many now have several rounds of surveys _____________________________________________________________________
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that allow rich comparisons across time. Multi-topic surveys can also be used to measure the impact of public policies and programs on poverty. Demographic and Health Surveys These are special household surveys geared to exploring the incidence of diseases and use of health facilities. They collect anthropometric dataheight, weight, and age of children, that can be used to calculate malnutrition rates--and many other health and health behavior-related variables that enable such factors as survival rates, birth histories, and disease incidences to be computed. The surveys also contain basic data about housing conditions, educational attainments, and employment patterns. Although they do not include income or expenditure data, they can be used to calculate household wealth and carry out important poverty diagnostics. Employment surveys Labor ministries use employment surveys to gather information on employment and wages. These surveys include questions about household income, demographics, and housing features. They can be good sources for employment statistics, income-based poverty indicatorsif the income module is goodand input indicators such as access to basic services. Employment surveys tend to be more important information sources for heavily urbanized countries. Expenditure and income surveys Contrary to multi-topic surveys, expenditure and income surveys are narrower in scope. They are useful instruments to measure different dimensions of poverty such as income- or education-povertybut are limited in their ability to relate household well-being to underlying causes such as asset distribution or productive activities. Rapid Monitoring and Satisfaction Surveys These surveys are generally large, contain relatively short questionnaires, and include predetermined data entry packages. They are easy to implement and have a rapid turnaround time. The Core Welfare Indicator Questionnaire (CWIQ) widely applied in Africais one example. Unlike other surveys, the CWIQ is not designed to serve as a tool for measuring whether poverty levels are _____________________________________________________________________
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increasing or decreasing. It is intended only to measure whether or not public services and development programs are reaching the poor and benefiting them, and to monitor selected indicatorsthose that contain advance warnings of the future impact of policies and eventsand assess household living conditions, access to basic social and infrastructure services, and the satisfaction of the population with these services. Satisfaction surveys are best viewed as complements to multi-topic household surveys and have been used in many countries to monitor access to and quality of basic services. Specialized Surveys Many other, specialized surveys exist that can be used for poverty diagnostics. These can range from violence surveys--for example, in Lima, Peru--to opinion surveys--for example, those conducted by the Social Weather Station in the Philippines. Several countries also have surveys of health centers, schools, or other public institutions. Firm surveys can be essential to understanding the impact of crisis on employment and specific groups at risks and were used extensively in understanding the impact of the East Asian crisis. Food security assessments identify high-risk groups and are often used by relief organizations. Typically, the websites of national statistical institutes and international organizations will provide information about the availability of such data. 4.5.4 Qualitative Data Qualitative research tools range from participatory assessments to ethnographic and sociological case studies, and institutional to political investigations. Some of these tools are described below. These tools help in gathering information that household surveys are not able to capture, or can capture only partially, including:
Subjective dimensions of poverty and variations in perceptions along gender, urban/rural, or ethnicity lines; Barriers that poor people themselves believe are stopping them from advancing; Intra-household inequalities; poor peoples priorities for action;
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Cultural factors determining poverty, such as gender roles and some traditional beliefs; Political factors determining poverty, such as trust, corruption, and conflict; Certain social factors determining poverty, such as the role of community networks.
The tools may also help in the design appropriate household survey questionnaires-- for example, in the section on reasons for use or non-use of health and education facilities. Finally, the tools may help for assessing the validity of survey results at the local level and to evaluate how much general policy design should consider the heterogeneity of local conditions. Data Collection Methods for Qualitative and Participatory Assessments
Data Collection in: Beneficiary Assessments Ethnographic Investigations Longitudinal Studies Methods Participant observation and more systematic data collection methods like structured interviews over a limited time span. Anthropological research techniques, especially direct observation, to analyze the influence of ethnicity, gender, and village stratification on the household and group well-being and behavior. Village Wide variety of methods ranging from direct observation and recording (tabulation), periodic semi-structured interviews with key informants (for example, health center staff) and village population, to survey interviews Participatory Assessments in several different observation periods. Ranking, mapping, diagramming, and scoring methods are prominent besides open interviews and participant observation. The time horizon of participatory assessments is often short. They build on local populations describing and analyzing their own reality surrounding poverty and wellbeing.
Participatory assessments can help policy makers determine the type of indicators important for the pooris it housing, employment, or income?. They can also capture information that other sources cannot capture, for example, the incidence and effect of domestic violence. _____________________________________________________________________
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Beneficiary and participatory assessments, which can take different forms, also involve the population more than household surveys. In town-hall or village meetings, citizen groups or their representatives can discuss poverty problems and policies, rank what they consider the causes of poverty, and map out new infrastructures in actual planning exercises. Individual interviews can investigate the problems of women or children in households. Participatory methods do not necessarily guarantee, though, that all groups in the community are given an equal voice. There is a danger that women may be under-represented. This danger may be even more present for the very poor. Whenever possible, it is important to link participatory and qualitative investigations with household surveys and population censuses in a formal way. This can be done by:
Collecting variables in participatory studies that allow for easy comparison with regional or national averages obtained from quantitative sources; Designing qualitative case studies so that they are done on sub-samples of larger surveys; and Following formal sampling and data recording procedures that allow for systematic analysis and reliability of qualitative results.
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CHAPTER NO. 5 Study result and the household income expenditure report 5.1 5.2 5.3 5.4 5.5 5.6 Study Results and the HIES Report.48 Household Income and Expenditure Survey...52 Survey Methodology...54 Data Collection, Concept, Definition and Classification55 Data Processing, Analysis and Dissemination. 58 The result of our survey. 59
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5. STUDY RESULT AND THE HIES REPORT

5.1 Study Results and the HIES Report
The following data published by the World Bank points out the status quo of the economic situation in Pakistan and poverty related issues. One of the major reasons almost always cited for poverty is the ever-increasing population of the subject countries; Pakistan is no exception to that. It happened that many authors and researchers include the population phenomena in their list of poverty causes in Pakistan. However, it is believed by others that this is not the case, and there are always far more realistic causes of poverty and the poverty life cycle. These people cite the case of China as an example; China which has a population much more than that of Pakistan has managed to fight and reduce the poverty rate significantly.
POVERTY and SOCIAL 2006 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions) Average annual growth, 2000-06 Population (%) Labor force (%) Most recent estimate (latest year
Pakistan 159.0 800 126.7
South Asia 1,470 684 1,005
Low-income 2,353 580 1,364
2.4 3.8
1.7 2.1
1.9 2.3
available, 2000-06) _____________________________________________________________________

49
Poverty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% of population) Literacy (% of population age 15+) Gross primary enrollment (% of school-age population) Male Female
.. 35 65 79 38 91 47 87 99 75
.. 29 63 66 45 84 60 110 116 105
.. 31 59 80 39 75 62 104 110 99
Key Economic Rations and Long-term Trends The economic condition of the country is what defines the rate of poverty, and determines to a large degree the living conditions of the people. The GDP of Pakistan has increased significantly since the 1980s (232%). This data is also a publication of the World Bank Group. This table was prepared by country unit staff; figures may differ from other World Bank published data. The data is as it has been adapted from their website.
1986 GDP (US$ billions) 38.1
1996 76.2
2005 109.5
2006 126.8
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Gross capital formation/GDP Exports of goods and services/GDP Gross domestic savings/GDP Gross national savings/GDP Current account balance/GDP Interest payments/GDP Total debt/GDP Total debt service/exports Present value of debt/GDP Present value of debt/exports 1986-96 (average annual growth) GDP 5.0 GDP per capita 2.3 Exports of goods and services 8.0
18.5 10.3 6.7 16.5 -2.0 1.5 39.3 25.0 .. .. 1996-06
18.9 14.0 12.0 15.2 -6.0 1.6 39.1 28.3 .. .. 2005
19.1 15.7 15.2 25.6 -1.0 0.7 30.8 10.9 25.8 125.9 2006
21.7 15.3 13.7 23.6 -4.3 0.7 28.4 8.8 .. .. 2006-10
4.2 1.8 8.2
7.7 5.1 9.6
6.9 4.7 9.9
6.6 4.5 4.1
The Structure of the Economy 1986 (% of GDP) Agriculture 27.6 24.7 21.5 19.4 1996 2005 2006
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Industry
23.4
23.5
27.1
27.2
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52
Manufacturing
16.3
15.2
18.6
19.5
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Services
49.0
52.2
51.4
53.4
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Household final consumption expenditure 77.3 General govt final consumption 10.7 16.9
74.4 10.5 17.8
76.9 7.8 19.6
75.5 10.9 23.3
expenditure Imports of goods and services
(average annual growth) Agriculture Industry Manufacturing Services
1986-96 4.3 5.8 5.2 5.1
1996-06 2.4 5.5 7.1 4.8 3.7 4.5 2.2 3.1
2005 6.5 12.1 15.5 8.5 12.1 1.7 16.7 40.5
2006 1.6 5.0 10.0 9.6 3.3 48.3 12.1 18.7
Household final consumption expenditure 4.7 General expenditure Gross capital formation Imports of goods and services govt final consumption 3.0 4.3 4.3
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5.2 Household Income and Expenditure Survey
The Information in this section was acquired and is available from the Federal Bureau of Statistics, Statistics Division. Data have been collected by household survey since 1963.
Purpose and coverage
The following purposes are considered to be very important or of some importance:

To estimate household expenditure for national accounts To study the general structure of household incomes/expenditures To study income/expenditure patterns of disadvantaged groups, including pensioner households, single parent households, etc
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To study income/expenditure disparities among socio-economic groups To study consumer behavior among socio-economic groups For general poverty and/or income distribution studies To study effects on income and expenditure of policy changes, especially tax changes For market research purposes
Geographic coverage: National with the following geographic areas excluded: military restricted areas and protected areas of NWFP are excluded . Population coverage:
The following types of household are included in the data collection:

One person private households Private households with more than one person
The following types of household are excluded in the data collection:
Those in collective housing (such as long term hospitals, prisons, monasteries, military quarters) Non-resident households of nationals (households of nationals located abroad) Diplomatic households in the country Households of other foreigners in the country Armed forces residing in private housing within military base Armed forces residing in private housing outside military base
Units: Dwelling units are used in the sample selection and are characterized by:
Single structure - detached housing unit
Data are recorded for the household unit which is characterized by:
Two or more people living together:
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sharing meals
One or more persons living together and sharing meals
Data are recorded for the family unit which is characterized by:
Two or more people:

living in the same household sharing a single dwelling unit or compound sharing meals
Data are recorded for the income unit which is characterized by:
Two or more people:

living in the same household pooling their income to some extent
Unit members: Usual residents temporarily living away from the dwelling are included, if away continuously for less than 9 months. Visitors (not usual residents) temporarily living in the dwelling are not included as unit members. Domestic staff living in same dwelling/compound are included in the unit. Renters living in same dwelling/compound are not included in the unit. Boarders living in same dwelling/compound are not included in the unit. Head of unit: The concept of head of household/other unit is used in this survey and is characterized by:
Acknowledged as such by other household/unit members
Reference periods The time period to which income and/or expenditure statistics refer when released/published is from 01/00 to 12/00. This survey is conducted annually. The statistics are published annually.
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5.3 Survey Methodology Sample design The Primary, Secondary and Ultimate Sampling Units are enumeration area/district, none and household respectively. Stratification: Areas/districts were stratified using the following criteria:
Rural/urban
Households/Consumption Unit, Income Unit, Family Unit were stratified using the following criteria:
Income class
The sampling frames for the Primary Sampling Unit (PSU) and Ultimate Sampling Unit (USU) were the list of Census enumeration areas and none respectively.1 Primary Sampling Units (PSU) were selected using probability proportional to size and Ultimate Sampling Units (USU) were selected using systematic random sampling.. Errors/biases were minimized by using an updated sampling frame. Enumeration procedure: Enumeration uses a single round survey design in which each reporting unit is enumerated only once. The sample is not divided into representative sub-samples. No action is taken to select a smaller set of reporting units for more detailed questioning.
5.4 Data collection, concepts, definitions and

Income data
classifications
Income data are collected. Receipts do not have to be regular and recurring to be considered as income. Income excludes receipts resulting from the sale or
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reduction of assets and/or from incurring liabilities. Income includes receipts that are not currently available to the unit. The following receipts are collected separately:3

Wages and salaries Cash bonuses and gratuities Employee income in-kind provided free or subsidized: housing Employee income in-kind provided free or subsidized: meals Services from owner-occupied dwellings Interest received Dividends Other pensions Free government dwelling Subsidized government dwelling Other social insurance benefits Other social assistance benefits Regular support received from non-profit institutions serving households: goods and services
Regular support received from non-profit institutions serving households: free dwelling
Regular support received from non-profit institutions serving households: subsidized dwelling
regular inter-household transfers received from: free dwelling Regular inter-household transfers received from: subsidized dwelling
The following receipts are collected but not separately:3 Commissions and tips _____________________________________________________________________
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Remuneration for time not worked, e.g. leave pay Goods produced for own consumption Rentals (payment received for produced assets e.g. house) Rousing allowances Food subsidies Medical reimbursements Regular support received from non-profit institutions serving households: cash, e.g. scholarships
Regular inter-household transfers received from: family, e.g. alimony, child/parental support
Regular inter-household transfers received from: regular cash gifts Regular inter-household transfers received from: regular in-kind gifts Regular inter-household transfers received from: regular free services Social transfers in kind: medical services
The following receipts are classified as income from paid employment:

Wages and salaries Cash bonuses and gratuities
The following receipts are collected using the last month as the reference period:

Wages and Salaries Cash bonuses and gratuities
Income data were collected separately for each person receiving income. Components of income for an individual were collected directly from the individual. Negative values (business losses) were included when computing self-employment income.
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Expenditure data Data collection method: Diaries are not used to collect expenditure data. Interviews are used to collect expenditure data with the respondent completing the interview by recall only. Data for the following expenditure items are collected by referring:2
To expenditures in last one month:
other household non-durable goods clothing, footwear housing other durable goods households services personal services
To expenditures in last 12 months:

Other Data Collection Issues The following other topics are covered:

Demographic characteristics Education attainment of members Employment status of members Occupation of members Ownership of selected durable goods Savings Indebtedness
Households are not requested to indicate whether durable goods are new or second-hand when their acquisition is recorded. Non-response: There is no substitution for non-response, whether by noncontact or by refusal. Non-response is reduced using more than one repeat visits.
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5.5 Data processing, analysis and dissemination

Answers are pre-coded on data collection forms to the extent possible. The responses are edited field supervisors. Extreme values are deleted. Consumption of own production is included in the estimates, but in-kind receipts are not. Consumption of own production is valued using: the imputed by field staff using market prices. Treatment of owner-occupied housing: Values of owner-occupied housing are included in the total income/expenditure estimates and are valued using the current market value. ( ) Treatment of selected groups/values in analysis: Some households/units are excluded from analysis because of incomplete response. Missing values are imputed only on some occasions possible correct the values otherwise treat as missing values. Supplementary sources are not used to adjust estimates for under- or over-reporting. none are excluded from data analysis. Weighting: Weighting factors are used to adjust for:
Sampling
Sampling errors: Sampling errors are computed for for Internet analysis but these sampling errors are not available. Tabulation and Analysis: Statistics are presented showing averages per month and statistics are analyzed and tabulated for households only. The following classifications are used for tabulation and analysis of income statistics:

Age of reference person or head of household Sex of reference person or head of household Occupation of reference person or head of household Absolute income groups
Principal source of household income _____________________________________________________________________

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Household size
5.6 The Results of Our Survey This study - which focused on poverty and its status in Pakistan as well as the possibility of its eradication or at least its reduction depended on two activities as its source for information. The previous sections covered what other surveys and studies have said about the subject; the following section is going to discuss our small survey its outcome and indications. Although the objective of the study was to cover all Pakistan, the survey was conducted only in Karachi due to obvious reasons and obstacles most important of which is the fact that I am one student and do not have the manpower to execute such a large-scale research and study . Another reason is the limitation of our mobility and the fact that we cannot travel to other areas of Pakistan which should have been visited if a comprehensive information was to be gathered; a result of our being students with other binding commitments. The scope of the study have been restricted in different perspectives. The first is the geographical one and the second is the sample size restriction. Around above hundred individuals responded to the questionnaire, most of who where were considered victims of poverty, especially in financial terms, who live in the most poverty-stricken areas of the city. This was another limitation in the information presented in the study.
The Questionnaire/Survey Outcome
According to our survey, 70 percent of respondents said that their family size was between four to five members, while 15 percent said they belonged to families of seven to ten members. On the other extreme was those who said they belonged to families of two members; these formed around 10%.???? _____________________________________________________________________
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It was also apparent from the survey that most of the families were supported by male members. Only 13 percent of the respondents said their families were supported by female members (mothers or elder sisters mostly). The gender ratio part of the questionnaire has been included because of the impact of gender issues on the welfare of societies and their poverty rates. The ratio of male to female members according to the respondents was approximately 2 to 1. While almost the same ratio should have been maintained in the gender ratio in education, our results show otherwise; the results were almost the reverse claiming that the female members who are have been educated or are studying at the moment outnumber the number of male members in the same respect. In terms of the dependency ratio, the data shows that roughly 5 people depended for leaving on every working individual; that is to say that the ratio is 5:1. 79 percent of the respondents said that the working members of their family were self-employed, while the rest said they worked for the government in the civil service and armed forces sectors. 60 percent of these people worked for the government, while 31 percent worked in the business sector, and 9 percent were in the agriculture industry. The study showed that there is a strong relationship between education and the poverty condition of households; households with educated members seem to be in a better condition and less susceptible to poverty. According to our statistics, 50 percent of the total members of the families of the respondents are unschooled. The average income of 60 percent of the respondents' families were between 10,000 rupees to 30,000 rupees; whereas their average expenditure was about 6000 to 10000 rupees. 70 percent of the members lived in rented houses while the remaining 30 percent lived in their own houses. The Interview Results _____________________________________________________________________
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Members of the academia who have conducted earlier researches and who happen to be very knowledgeable about the poverty status in Pakistan have been requested to give one-on-one interviews to share their views and ideas towards poverty eradication in the country. The following is the sum of what they had to say as a response to the questions listed in the appendix. The micro-finance approach to fighting poverty has worked in different places around the world, and it is agreed that in those scenarios and cases it has been a success, however that same success cannot be duplicated in every other environment. There are certain other factors that that have a great influence on poverty and its rate in a community. A mostly cited example case is that of Bangladesh. The interviewees agree that micro finance is a temporary solution to the poverty crisis; and to ensure its success as a viable long term solution certain measures which involve the social behavior and the monetary should be taken. Consideration should be given to who is to be given the loan in a micro financing scheme. It is believed by some of the interviewees that women have a high probability of paying back the loans which makes the micro financing scheme more viable and effective since the loan money will be circulated among many individuals and groups, thereby increasing the number of beneficiaries from the program. Micro financing schemes to combat poverty in Pakistan have been launched. Among the well-known of these projects are the Yellow Cab scheme and the Presidential scheme for Rickshaws. The solutions to the poverty crisis as cited vary a lot. The common solution as suggested by the interviewees is working on the educational sector, improving educational development, and skill development. The government has done a lot about the education to fight illiteracy and ignorance, indirectly combating poverty. It has launched such schemes in Sindhi and Punjab in the form of scholarships and cash payments. In Sindhi the government has increased the money it used to give the students from 200 to 300 rupees. _____________________________________________________________________
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As to the causes of poverty, they have mentioned un-productivity on the side of the people and the fact that they do not consider saving for tomorrow, the everincreasing inflation, and the lack of proper governance of resources. Many NGOs are working in Pakistan at the moment under the theme of Poverty Reduction. These NGOs including Orel, AQWA and Rahim work in developing the individual capacity, creating job opportunities, dealing with social problems that exaggerate poverty, and building independent lives for the members of the community. Foreign Direct Investment (FDI) was a controversial issue among the interviewees. Some believe that it has benefited the economy of the country and hence helped reduce poverty to some degree. In addition to bringing investment into the country, the concerned companies have brought a long corporate culture and liberated the minds of the people. On the other hand, others believe that foreign direct investments have no impact whatsoever on poverty eradication or reduction since the profits mostly go to the pockets of the already-rich portion of the community. Privatization is agreed that if applied to certain institutions, it might affect the poverty rate and reduce it; however it must not be applied to the public service sector and should be in the hands of the government. Examples of these services include the utilities companies such as the gas, water and electricity bills. They [the interviewees] agree that the development and deployment of long-term plans and strategies and their implementation in a pilot approach on an area by area basis is the key to poverty reduction and eventually its eradication.
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CHAPTER NO. 6 Poverty: Prevention, Reduction or Eradication 6.1 6.2 6.2 Prevention, Reduction or Eradication...... 65 Poverty Combat Paradigms 68 The Task force of Poverty Eradication 70
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6. POVERTY: PREVENTION, REDUCTION OR ERADICATION

6.1 Poverty: Prevention, Reduction or Eradication
In earlier chapters we have discussed poverty and the creation of poverty cycles. We have also seen the determinants and factors that cause poverty and its propagation. Considering all those given factors, can poverty be eradicated? Or we can only reduce its rate? It is said that prevention is better than cure; a relevant question under this theme would be: can we prevent poverty in the first place? Knowing the factors that help poverty to spread and its cycles to create is one important step forward to finding solutions to the poverty crisis and finding _____________________________________________________________________
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answers to the questions above. Many countries and states have devised strategies to fight poverty; they have there own merits as well as their issues and opponents. Overcoming poverty means shifting the location of the poor in the local power structures from being victims to active subjects in achieving equitable access over markets and over institutions.10 About two-thirds of Pakistans population and almost 80 percent of the countrys poor live in rural areas. According to the 1998 census, 89.3 million people lived in rural areas of Pakistan in that year. Household incomes are lower and poverty rates are higher in rural areas than in urban areas. Average per capita expenditures of rural households in 2004-2005 were 31 percent lower than those of urban households (Rs 1259/month and Rs 1818/month, respectively). The poverty rate in rural areas is estimated at 34.0 percent, about 15 percentage points higher than the 19.1 rate in urban areas (World Bank 2006b). Rural, as well as total population growth rates are declining, which bodes well for future per capita income growth. Average fertility rates (the average number of births per woman over her lifespan) have declined sharply since the mid-1980s from about 6.8 children per woman to 4.1 in 2001, although this is still high compared to that of Bangladesh (3.3) and India (3.2). Rural population growth rates have also fallen from 3.5 to 2.6 percent. Nonetheless, the rural population is likely to continue to grow, reaching 122 million in 2015 (64 percent of the total population) at historic rates of migration of 1.2 percent per year. The urban population would reach 70 million in this scenario, and 82 million (43 percent of the population) if net migration rates doubled to 2.4 percent per year (See the Annex to Chapter one). During the 1970s and 1980s, agricultural growth was accompanied by substantial reductions in rural poverty, but rural poverty rates in Pakistan did not decline in the 1990s despite substantial growth in agricultural GDP. Even though real agricultural GDP rose by 4.6 percent per annum, the percentage of the rural
10Dr Akmal Hussein, paper on Poverty in Pakistan
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population living below the poverty line remained essentially unchanged between 1990-91 (36.9 percent) and 1998-99 (33.8 percent). Several factors explain the non-correlation between relatively rapid agricultural growth and rural poverty reduction, including a possible overestimate of agricultural GDP growth and an increase in real consumer prices of major staples since the mid-1990s. In addition, because of the skewed structure of ownership and access to factors of production in rural Pakistan, 46 percent of the rural poor in non-farm households do not share directly in incomes derived from agricultural crop production. Moreover, even accounting for growth linkage, effects from increases in traditional crop agriculture are relatively small in comparison with the sectors large size. Positive developments in agricultural output, rural poverty reduction and social welfare indicators in 2004-05 represent a sharp break with 1990s trends. These improvements have been achieved through a combination of increased overall development expenditures and improved service delivery at the local level (in some localities at least), supported by a sound macro-economic environment including a liberalized trade and exchange-rate policy regime with relatively low inflation. The latter in turn spurred high GDP growth and increased demand for construction and other labor-intensive services. Factors that are likely to be more transitory also played a role, including increased increases in workers remittances and bumper crops related to good weather The challenge now will be to extend the success of recent years to the medium term so as to further reduce still-high rates of rural poverty in Pakistan. The strategies adopted to achieve these goals will need to take into account gradual, but increasingly important long-term changes 2 Rural here is defined according to administrative definitions at the time of the 1998 census. Since the 2002 devolution, there has been no formal administrative distinction between urban and rural areas. Official government estimates show poverty at 35.9 percent in 1998-99 (Pakistan Economic Survey, 2005-06). Poverty estimates vary, however, because of changes in definitions of poverty lines over time _____________________________________________________________________
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and methodological issues related to price de-flators. Though levels of remittances and crop yields may be maintained, growth rates are likely to fall. In Pakistans economy, particularly rural-urban migration, a declining share of agriculture in total economic output and increasingly severe environmental constraints (particularly related to growing water demand in urban areas and environmental degradation due to drainage problems). Most importantly, a rural poverty-reduction strategy should focus not on rural sectors, but on rural people. Many of todays rural poor may migrate to small towns and large cities or be employed outside of rural areas for all or part of the year. Because of this, reducing rural poverty rates will not be merely a function of agricultural and rural non-farm growth, but also of development in urban areas (including small towns) and overall economic growth. Investment in rural and small-town infrastructure can facilitate these economic linkages. Likewise, investments in human capital (education and health) can increase the productivity and welfare of the rural poor irrespective of whether they remain in rural areas or not.
6.2 Poverty Combat Paradigms Those who are trying to find solutions to poverty have their own paradigms to analyze and take action against poverty. Dr Akmal and proponents of his ideology state that the current paradigm for poverty analysis and eradication is not effective. Organizations and other entities combating poverty mostly follow the approaches of providing micro-credit to the poor or increasing resources. He argues that the poor in Pakistan cannot simply be seen (as much of the literature does) as free individuals suffering from merely adverse resource endowments, and making choices in more or less free markets. It is such a paradigm, which induces the government to think that all it needs to do to reduce poverty is to allocate more resources to the poor or to the local governments who are supposed to represent them. _____________________________________________________________________
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By contrast one can propose an alternative paradigm within which one can understand poverty occurring when the individual household in a fragmented community is locked into a nexus of power that systematically perpetuates poverty. Within such a paradigm it is possible to understand a fact that eludes the conventional paradigm: The poor face markets, state institutions and local structures of power that discriminate against the poor and deprive them of a large proportion of their actual and potential incomes. This is documented for the first time on the basis of new survey data in the just published National Human Development Report. The data set is new simply because the underlying questions have not been asked before. Some of the questions one has raised are: How do distorted markets for inputs and outputs of goods and services result in the loss of the actual or potential income of the poor? If this is indeed the case then what is the magnitude of the income loss? How do local structures of power with respect to landlords, local administrative officials, and institutions for the provision of health, credit and dispute resolution deprive the poor of their income, assets and the fruits of their labor? Most studies on poverty in Pakistan have examined the problem simply in terms of measuring the number of people below certain poverty lines. However if poverty is to be overcome what is required is to understand the processes of poverty creation and to identify the points of intervention in the poverty process through which the poor can be enabled to overcome poverty on a sustainable basis. That is what one has attempted to do in the Report. The new survey evidence shows that the poor lose as much as one-third of their income due to unequal access over input and output markets and extortions by the local administration. For example, as much as 51 per cent of the extremely poor tenants, borrow money from the landlord. The leverage of power available to the landlord on the basis of tenants dependence for both operation of the land and loans from the landlord, enables the latter to appropriate the only resource which the poor have, namely their own labor. _____________________________________________________________________
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The evidence shows for example that of those tenants who borrow from the landlord as many as 57.4 per cent work on the landlords owner cultivated portion of the land without any wages at all, and 14 per cent work for a daily wage of only Rs 28 which is substantially below the market wage rate for unskilled labor. Similarly the extremely poor sections of the rural population when they are locked into a dispute related with land, water or theft, are forced to spend as much as Rs 18,333 in trying to resolve the dispute through local structures of power and yet only 38.5 per cent of the disputes get resolved. Since the expenditure on dispute resolution by the extremely poor is more than their annual income, involvement in disputes means borrowing money and getting into a debt trap. The evidence shows that health is a major trigger that pushes people into poverty and the poor into deeper poverty. As many as 65 per cent of the poor were ill at the time of the interview and lost as much as three months of the year to illness. Given the inadequacy of the governments health facilities as many as 85 per cent of the poor go to private allopathic medical practitioners for treatment. The expenditures on such treatment are so high that poor households are obliged to borrow mostly from informal sources to finance the medical expenses of their families. Consequently they gradually lose whatever few assets they have (such as farm animals) and being unable to earn a livelihood for long periods due to illness, they are then forced to borrow money even for food expenses. Access over good quality health services is a question not just of money but also of power and influence to get hold of a proper doctor or a hospital bed. Thus the analysis and evidence within this new poverty paradigm suggest that the key to overcoming poverty is to empower the poor to get better access over markets, governance, and the institutions that provide public services such as health care, education and justice. Empowerment in this specific sense means establishing autonomous community based organizations of the poor at the local level. These organizations would be quite distinct from the village organizations set up by large cross-district NGOs.
6.3 The Task Force on Poverty Eradication _____________________________________________________________________

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In the 1990's a task force on poverty eradication has been established with the purpose of formulating a strategy to combat poverty and eradicate it. To be more specific, on 25th March 1997, the Federal Finance Minister, Mr. Sartaj Aziz constituted the Task Force on Poverty Eradication (D. O. No. 25-FM/97, see Annexure 3). The Task Force completed its work and submitted the draft report on 30th May 1997. Within days of its submission the government adopted some of the major proposals of the Report and the Federal Finance Minister announced them in his budget speech on June 13, 1997. (See relevant extracts in Annexure 2). Subsequently, the government of Punjab initiated the process of establishing regional support organizations in the Punjab province as proposed in the Report. This is part of a major initiative by the Chief Minister, to alleviate poverty in the Punjab. As various departments and personnel in the federal and provincial governments begin to focus their energies on the task of facilitating the process of overcoming poverty in Pakistan, it is important to achieve clarity on the methodology and institutional mechanism of this process. The central goal of the institutional strategy articulated in this report is to enable over 4 million households (approximately 29 million people) who are currently living below the poverty line, primarily in the rural areas, to overcome their poverty. The strategy has five broad programs: I. A program for overcoming poverty over the next five to ten years through Participatory Development at the village and mohalla levels. II. A program for micro-credit to the poor in both rural and urban areas through which the poor would be able to develop an asset base which could increase their regular income earning capability. III. A mass training program in basic skills combined with an employment provision program through the proposed National Reconstruction Corps. This would enable the poor to make use of the employment opportunities _____________________________________________________________________
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which are expected to be available over the next decade. It should help generate the following types of employment: a) Employment in village based development projects. b) Self-employment in the urban informal sector. c) Employment as technicians in the formal large scale manufacturing i) sector and the large scale infrastructure construction projects expected to ii) be initiated over the next five years. iii) Jobs in the rural off-farm sector. iv) Employment in the computer software service industry. IV. A program for eliminating the practice of employing child labor in hazardous industries. IV. A food security safety net for ensuring availability of food for the indigent and the handicapped in urban areas, and free lunch for school children in poor rural schools. 6.4 The Government's Poverty Reduction Strategy The Government's poverty reduction strategy affirms that Pakistan is faced with the twin challenges of reviving growth and reducing poverty. The Strategy has identified five major areas of intervention for poverty reduction in the country. These are

Revival of economic growth Income generation Creation of employment opportunities Human development Strengthening of social safety net programs to reduce vulnerability Improvement in governance
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The Strategy also focuses on reforming formal institutions of governance while working towards attainment of specific human development goals in the areas of education, health, population welfare, water supply and sanitation. It incorporates the key features of the education and health reform programs launched in 2001, while addressing a broader agenda of structural reform. An increase in GDP growth rates will, however, only lead to appreciable reduction in poverty levels if growth is broad based. To generate employment opportunities on a scale needed for long-term poverty alleviation, it is necessary to create an environment conducive for private economic activity, and encourage domestic and foreign investment. That requires significant improvements in management of public resources, establishment and enforcement of the rule of law, and a move to a less intrusive system of economic regulation. 11 For the longer term, it is imperative to not only bring about a significant decrease in the incidence of poverty, but also to reduce vulnerability to economic fluctuations, and alleviate the feeling of powerlessness that is the most important intangible that shapes the lives of the poor. Poverty alleviation thus has to be effected not only through macroeconomic policies, but also by bringing about significant improvements in the structure and functioning of systems of governance
11Asian Development Bank paper presented at the Institute of Public Administration in Lahore on Poverty Alleviation in Pakistan
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CHAPTER 07. CONCLUSION AND RECOMMENDATIONS

7.1 7.2 Conclusion......................................75 Recommendations75
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7. CONCLUSION AND RECOMMENDATIONS

7.1 Conclusion Poverty rates in Pakistan have been decreasing lately but not to a satisfactory degree. The measurement of poverty and the techniques used in that process have a great impact on the formulation of viable strategies to counter poverty and its aftermath. It is imperative to consider the social factors that accelerate poverty and create the poverty cycle. The factors affecting the poverty rate in the country are mostly ones caused themselves by poverty? The most obvious of these factors is education and the lack of it. If someone is poor, access to education (schools, educational material, etc) is limited, thereby discouraging education since the family has more pressing issues do deal with such as working for the daily living. This creates a cycle that is very hard to break out of. Good governance of resources is another commonly cited factor that impedes the poverty reduction efforts. The micro finance approach to fighting poverty has become somewhat controversial as a viable means of poverty combating. To make it work in _____________________________________________________________________
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Pakistan, this method that has become successful in some regions of the world, we should not merely copy it, but should shift ourselves and the attitude of the people in a way that it can operate effectively and produce tangible results. Privatization has been seen as another effort to fight poverty if the proper measures are taken to ensure that the advantages and profits reach those areas and portions of the community that has the most need for the resources. 7.2 Recommendation After conducting this research and perusing all the means we could put our hands on to find as much possible information on the subject of poverty eradication in Pakistan, we would like to present the following recommendation: 1. Reforms in the educational sector and syllabi in educational institutions should be made to teach the students not only about their subject matters but to be productive. The system should concentrate on skill development and vocational and technical training. 2. Amendments should be made to the governance policy of the resources to make it reach those who need it most. 3. Proper family planning and population control should be exercised since poverty is also a matter of fewer resources and more consumers. 4. Implementing micro finance in a more controlled setting by the government, non profit organizations and the business sector; and giving more attention to the really poverty stricken areas of the country. 5. Passing new resolutions and amendments to the national constitution that disallow land lordship since it is the source the unequal distribution of wealth in the country. If the individuals working for the landlords are given their share of the land as they deserve, their productivity might be increased, and they might generate an income more than the hand to mouth one they get at the moment under the land lordship system. 6. Allow privatization but in a restricted way, preventing the application of privatization to public services such as electricity and gas. 7. Allow foreign direct investment ensuring that the investment and their _____________________________________________________________________
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profits are distributed rationally across the country, thereby giving the poverty stricken areas the opportunity to take their share of the products of these investments. 8. Formulate long term strategies for poverty reduction or eradication and performing periodic evaluation of progress for effectiveness.
7.3 References & Bibliography

Altaf Zafar (2004), Poverty (practical solution to Pakistans economic problems), Ushba Publishing International, Pakistan Malik, S. (1992) A Study of Rural Poverty in Pakistan w.s.r. to Agricultural Price Policy. Ph.D. Dissertation submitted to the University of Sussex, U.K. Mr Mushraq Ali Shah (2002), Poverty Alleviation in Pakistan
Naseem, S. M. (1973) Mass Poverty in Pakistan: Some Preliminary
Findings. The
Pakistan Development Review 12:4 317360.
Regional High-Level Meeting on Asia and the Pacific (2000), Report on Poverty Reduction in South Asia SDC (2000), Social Development in Pakistan the Poor
World Bank (2005), World Development Indicators
Zaidi & Iftikhar (2003) Poverty Environment Nexus, series on Poverty Reduction and Human Capital Best Investment for Future
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QUESTIONNAIRE
1. Respondent Name (Optional): ___________________________________ 2. Role in family:
Father Mother Elder brother Elder sister Other ___________________________
3. In which area do you live?

Town/Area City Province
4. How many members does your immediate family consist of? (family size)
2 members 4 5 members 5 7 members 7 10 members More than 10 members
5. Who supports your family (in terms of living expenses, etc)? [Please tick all that apply]
Other _________________ _____________________________________________________________________

Father Mother Elder brother/sister Relatives
83
6. How many of your family's members are female and how many are male? Male Female
7. How many members of your family work? _____________________ 8. Please specify whether the members supporting the family are:
Self-employed
OR
Employed by another entity (i.e. Company or individual)
9. What area of profession do they belong to (if any)?***
Business Agriculture Government service Civil service Other _______________
10. What is the educational level of your family members? [Please indicate the number in each category below.] Never gone to school Elementary school Intermediate College/ Undergraduate Graduate and Higher education 11. What is the average income of your family?
Below 3000 PKR 3000 10000 PKR 10000 30000 PKR 30000 60000 PKR
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60000 100000 PKR Above 100000 PKR
12. Do you live in your own house or in a rented house? Own house Rented house
13. How much do you spend on living expenses? Less than 2000 PKR 2000 6000 PKR 6000 10000 PKR 10000 20000 PKR 20000 50000 PKR Above 50000 PKR APPENDIX II INTERVIEW QUESTIONS These sets of questions are for individuals, scholars and social workers who have knowledge of the Pakistani economy. The questions revolve around the possibility of poverty eradication, the causes of poverty in Karachi and other poverty related factors that affect its rate in the region. They also explore ideas that can be part of a greater initiative to combat poverty and its effects. 1. Do you believe that poverty can be eradicated? 2. What, in your opinion, are the major causes of poverty in Pakistan? What factors affect the rate of poverty in the country? 3. Some countries have devised plans to counter poverty; examples include the Micro-financing initiative started by Mohamed Yussuf a banker in Bangladesh. What do you think about the possibility of devising and implementing plans such as this one in Pakistan? If possible, what would you say, are the critical success factors of an initiative like this one? 4. Could you think of any similar plans to fight poverty in the country? 5. Are there any organizations doing something about the poverty issue in the country? Can you give examples? 6. Has the government done anything about the poverty in the country? If not, then what do you think might be the reason? Is it corruption, the very large population of the country, or simply that the government chooses to _____________________________________________________________________
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ignore the existence of poverty? 7. Do you think that foreign direct investments in Pakistan might help reduce poverty in the country? 8. What impact, in your opinion, does privatization have on poverty in Pakistan? Do you think it is a positive factor for the struggle against poverty?
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Poverty in Pakistan and Its Eradication

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INSTITUTE OF BUSINESS AND TECHNOLOGY Poverty in Pakistan and its Eradication

Prepared By RAM GUPAL SINGH BM-250XX Course Code : MKT-606

MBA (Banking and Finance)

FACULTY OF MANAGEMENT AND SOCIAL SCIENCES FALL - 2010