An old but interesting in depth article on Pakistan’s regional inequalities.
Deprivation profile of regions
By Syed Shahid Husain
BALOCHISTAN is the poorest province in the country and, Musakhel (Balochistan) the poorest district. Of the 100 districts in the country, 34 of them are in Punjab, 26 in Balochistan, 16 in Sindh and 24 in the NWFP. In Punjab, Rajanpur happens to be its poorest district, Badin is the highest on deprivation index out of 16 districts of Sindh and Kohistan is highest on deprivation index in the NWFP.
Out of 34 districts of Punjab, 10 or less than one-third fall under the high deprivation category. Karachi is the least deprived district of Pakistan, while Lahore is the least deprived district of Punjab and ranks second after Karachi on the national level. Of the 24 districts of the NWFP, Peshawar is the least deprived whereas Quetta is the least deprived district of Balochistan.
Of the 10 least poor districts in Pakistan, seven are in Punjab and the remaining three are equally distributed among the remaining three provinces. Punjab seems to have done better than the other three provinces of Pakistan with 83 per cent of its population being the least poor. This raises questions of equity and fairness in a federation and its sustainability.
According to the distribution of provincial population by the deprivation category, it is as high as 88 per cent for Balochistan, 51 per cent for the NWFP, 31 per cent for Sindh and only 25 per cent for Punjab. It is the distribution by rural and urban areas that is most striking. Contrary to the pattern, Balochistan has 100 per cent high deprivation rates for urban areas and 89 per cent for rural areas. Sindh has 23 per cent for urban areas and 49 per cent for the rural areas. The NWFP has 60 per cent for urban areas and 25 per cent for rural areas. Punjab has 30 per cent for rural areas and 26 per cent for urban areas. Disparity between rural and urban areas in Punjab is the minimum. Deprivation index takes into account the following four factors, education, housing quality and congestion, residential housing services and employment.
These are the findings of the Social Policy and Development Centre (SDPC). The report goes on to say that, of the 100 districts in Pakistan more than half, 57 that is, fall in the high deprivation category. 24 of them are in Balochistan. Punjab has the least number of districts in high deprivation category. Twenty-five per cent of its population as against 88 per cent for Balochistan is in high deprivation category. Between the remaining two provinces, the NWFP is poorer than Sindh with 51 per cent of its population in high deprivation category as compare to 31 per cent of Sindh.
According to the Asian Development Bank (ADB) report on “Poverty in Pakistan” - Issues, Causes and Institutional Responses (July 2002)”, the incidence of poverty increased from 26.6 per cent in FY 1993 to 32.2 per cent in 1999. Economic growth has slowed further, development spending has continued to decline and ‘it is highly likely that the incidence of poverty in Pakistan today is significantly higher than the FY in 1999’. Vulnerable elements have received little attention in poverty assessments. Vulnerability can be economic or social. Education is the most important factor separating the poor from the not so poor. Poor households on average have 75 per cent more children, most of who do not receive any education and thereby perpetuate the cycle of poverty.
The government never tires of proclaiming at the top of its voice that it has brought about a revolution of sorts having accumulated foreign exchange reserves in excess of $ 7 billion, achieved economic stability and controlled inflation. One achievement of the government, which has received plaudits abroad but not at home, is the control of inflation, which has been brought down from 10.4 per cent per annum from 1996 to 4.4 per cent in 2001, resulting largely from improved macroeconomic and financial policy management. One has to suspend one’s belief to lend credence to these figures because any housewife will tell you the prices of grocery and other household goods. Eleven raises in electricity rates over the last year or two and similar raises in gas and petroleum prices have broken the backs of the middle classes. The pains of controlling inflation have not been shared by the ruling classes who claim the credit but certainly by the poor and the miserable, who are mute and voiceless though not dumb and cannot even cry for want of strength as a result of undernourishment, disease and hunger.
It is claimed that we are about to reach a stage where we will say adieu to the IMF and its cohorts and achieve economic independence. It fails to notice the stark reality on the ground including strong anecdotal evidence that poverty has increased and the purchasing power of the people has declined or disappeared. Stabilization has been achieved at the cost of the vulnerable and the poor. It is not only the anecdotal evidence that strongly points towards the misery of a large population, it is the facts clearly, brought out by the UNDP, that support this hypothesis.
According to the UN Office for the Coordination of Humanitarian Affairs (OCHRA), poverty has touched new lows. Citing the case of one Rehmat Bibi, 67, a widow ‘who lives on private charity and a meagre monthly stipend from the government. Her total monthly income does not guarantee that she will sleep on a full stop or be able to buy medicine’. It goes on to say that ‘Bibi’s case is typical of millions of impoverished in Pakistan’. Only some of them have access to the “zakat” programme under which a destitute person is given just $ 8 (Rs. 480) per month, enough to buy a months’ supply of 40Kgs ‘atta’.
However, the reduction in the deficit was achieved at the expense of development spending, which was the lowest ever last year. The ADB report goes on to say “given the country’s high and rising level of poverty and its low level of human development, the government should significantly increase development spending”. The recipe recommended for achieving this objective, is ‘focus on revenue enhancement, including reforms to improve revenue collection by broadening the tax base and strengthening the tax administration’. Reforms end up costing a hefty packet and revenues refuse to rise. Stress on excising expenditure is either proforma or lukewarm at best.
According to the SPDC report, “The year 2000-01 has seen a perceptible fall in the budget deficit/GDP to 5.4 per cent”. It goes on to say that revenue shortfalls, current expenditure overrun and cuts in development expenditure have been the norm. In great majority of the years between 1998 and 2001, revenues have fallen short of targets and the current expenditure has exceeded budget allocations. The report goes on to say that the major burden on managing budget deficit has been borne by development expenditure, particularly during the last three years. The cuts in development expenditures reached a historic high of nearly 60 per cent of budgeted allocations in 2001.
Mr. Kaiser Bengali, is quoted to have said, that the policy stabilization of the economy came at the cost of growth and poverty. And while stabilization has contributed to the difficulties of the common man and increased poverty; it has been unable to draw foreign investment. According to Mr. A. R. Kemal, poverty reduction is primarily a function of employment generation, which itself is a function of growth investment. Since the government has brought about reduction in poverty by resorting to the simple device of redefining poverty at Rs. 20 per capita per day, it has adopted an attitude that not much needs to be done after accolades showered on her performance by lending agencies. A substantial proportion of rural labour force (almost 40 per cent) depends entirely on non-farm activities, which have been severely affected by low economic growth, coupled with a decline in public sector development spending.
The government has undertaken Khushhal Pakistan Programme (KPP as an integrated small public works programme. It has started playing direct role in providing micro finance services. The government had initiated. a similar programme under the name of Social Action Programme (SAP) in 1992 in two phases and the results have been assessed to be disappointing and ended in increase in the poverty. The poverty alleviation is impossible to achieve through programmes like SAP or KPP unless human development receives proper attention. The ADB, in its keenness to justify fresh loans, has endorsed the government’s poverty reduction strategy. Disappointing results can be foretold with certainty. Failure of governance has to receive the highest attention before remedial measures could even be contemplated.
According to Asian Development Bank report on “Poverty in Pakistan”, the rising poverty was the result of poor governance and slow economic growth
The ADB in its publication “Outlook 2002”, has, on the other hand and without realizing the irony in the assessment in the report quoted above, has complimented the government for its attempts “to rectify macro-economic imbalances and stabilize the economy in 2001” and for ‘significant improvement in macro-economic indicators’. The report goes on to say “prudent fiscal and monetary policies succeeded in reducing the budget deficit significantly”.
The forecast for the next year according to Outlook 2002 (ibid), is “that GDP growth is likely to be only slightly higher for the whole year than it was in 2001”. The prevailing uncertainty has led to further deterioration in investment climate and effectively forestalled the privatization process, which could have released domestic resources for poverty alleviation. Although the report goes on to say that “if the government continues to follow sound macro-economic policies and the implement the planned economic and governance reforms, it could fairly quickly achieve rapid and sustainable economic growth and poverty reduction”. And yet, there will be no relief to the poor either in Balochistan or Sindh or for that matter in the other two provinces. Growth does not translate into transfer of resources to the vulnerable sections of the population.
It is difficult to agree with the self-serving prognosis of the ADB. Adherence to the policies mandated by the lending agencies will only increase poverty and misery and might unravel the whole process of development adopted at their behest. GDP growth, which does not necessarily lead to reduction in poverty in view of unequal development, is likely to be adversely affected on account of expected lower crops of cotton and rice due to pest attacks. The break in the spell of drought this year might have beneficial effect on agriculture and GDP growth in spite of pessimistic outlook of the ADB may turn out to be better. But then, the poverty will not have been alleviated.