Poverty Alleviation

[mumtazapiracha]

Poverty alleviation is a major issue in Pakistan. It needs to be tackled on a high priority. There are many ways to minimize poverty which is estimated to be around 30%-33% of the total population. The following steps need immediate attention.

1. Establishing vocational and occupational training centres throughout the country to impart training to produce electricians, plumbers, carpenters, motor mechanics, airconditioning mechanics, masons, tailors etc. The skilled persons will have the options of serving in the country or going abroad.

2. Prohibiting child labour by allowing subsistence allowance to families who depend on the earnings of their children and sending their children to school for general education upto primary or middle and vocational training thereafter.

3. Encouraging womenfolk to learn and earn from working at home and producing items that can be sold out in the market through third party outlets such as garments, handicrafts, dupattas etc. The women can be trained to become tailors and work at home.

4. Providing subsidized food, housing, transport, medical aid, education etc. to eligible families and helping them improve their lot.

5. Encouraging education of girls to become teachers, nurses, social welfare workers or doing work at home which could help them earn for their families.

 

[Flintlock]

Excellent post. You have summed up exactly what steps need to be taken.

Especially the part about vocational training. That is often forgotten about, and yet is as important as literacy itself, if not more important.

 

[Plasma]

Yes i think that the Vocational training might be the best thing needed right now. That is, for people who are past their education age. It will probably allow them to bring in more money then they are getting now and the children will not have to work. The children should go to schools, girls included. i think this is the best way to tackle this problem.

But it must be said that during the last 7 years or so, the poverty level has gone down 5 or 6 percent, which is very good and still a couple more years to go. I have also seen some difference, when i used to live in Pakistan in the 90s conditions were very bad, especially in villages. Now i went in 2005 and 2006 and its much different. Many poor families who had bicycles for transportation now have motorcycles. Many people in villages have rickshaws and if you work hard with them you can earn a fair amount. So it can't be said that nothing has been done about poverty so far, not that you did.

"Incidences of poverty in Pakistan rose from 22–26% in the Fiscal Year 1991 to 32–35% 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%[4]. The CIA factbook places the 2006 poverty rate at 24 percent."

Poverty in Pakistan - Wikipedia, the free encyclopedia

 

[Neo]

Poverty alleviation is a major issue in Pakistan. It needs to be tackled on a high priority. There are many ways to minimize poverty which is estimated to be around 30%-33% of the total population. The following steps need immediate attention.

1. Establishing vocational and occupational training centres throughout the country to impart training to produce electricians, plumbers, carpenters, motor mechanics, airconditioning mechanics, masons, tailors etc. The skilled persons will have the options of serving in the country or going abroad.

2. Prohibiting child labour by allowing subsistence allowance to families who depend on the earnings of their children and sending their children to school for general education upto primary or middle and vocational training thereafter.

3. Encouraging womenfolk to learn and earn from working at home and producing items that can be sold out in the market through third party outlets such as garments, handicrafts, dupattas etc. The women can be trained to become tailors and work at home.

4. Providing subsidized food, housing, transport, medical aid, education etc. to eligible families and helping them improve their lot.

5. Encouraging education of girls to become teachers, nurses, social welfare workers or doing work at home which could help them earn for their families.

Nice post!

 

[mujahideen]

Fallacy of poverty reduction

By Dr Akmal Hussain

WITH the prospects of a new government emerging, an assessment of the economic performance of the Musharraf regime and the lessons learned may be helpful for developing a new policy framework. An evaluation of two official claims may be central in this context.

First, did the relatively high GDP growth during the period 1999-2007 actually lead to a substantial poverty reduction as claimed by the government? Second, did the economic policies of the previous government initiate a process of sustained high economic growth? In this article we will examine the question of poverty reduction in the light of the latest research.

In a subsequent article we will evaluate the second official claim, that of achieving sustained high GDP growth.

The government has claimed that it has reduced the percentage of the population below the poverty line from 34 per cent in the year 2000-01 to 23 per cent in the year 2004-05, that is a reduction by 11 percentage points.

This means that almost one third of Pakistan’s poverty problem has been eliminated within a period of four years.

If true this would be one of the most dramatic economic achievements in the history of developing countries, including the Soviet Union under Stalin and China under Mao. India achieved a 10 percentage point reduction in poverty after 20 years with an average annual GDP growth rate of eight per cent.

We will examine the Musharraf government’s claim of a huge poverty reduction by first analysing the sources of GDP growth during the period and then putting the government’s poverty estimates to scrutiny, on the basis of a recent study done by Dr Haris Gazdar, Dr. Asad Sayeed and me.

An analysis of the sources of growth during the period 2000-01 to 2004-05 shows that the composition of growth during the period was pro-rich rather than pro-poor. It was fuelled mainly by the services sector, (particularly banking and communications) which contributed 60 per cent of GDP growth during the period and the manufacturing sector – primarily manufacture of automobiles, luxury consumer electronics, cement and textiles – which contributed 30.4 per cent of GDP growth during this period.

It is clear that GDP growth during the period was overwhelmingly pro-rich since none of the sectors which mainly constituted the growth were either producing goods for the poor or directly providing employment to them.

In fact the labour force survey data of the government shows that unemployment rates rose sharply from 6.1 per cent in 1999 to 8.3 per cent in 2004. Therefore the nature and composition of GDP growth during this period could not be expected to have substantially reduced poverty.

Let us now scrutinise the poverty estimates of the government. With respect to the estimation procedure it is important to understand that the magnitude of change in the incidence of poverty depends on two factors: (a) the base year used for comparison at two points in time, (b) the inflation rate used as a deflator to estimate changes in the consumption over time at constant prices.

Now, regarding the first factor the government’s estimate of poverty reduction uses the year 2000-01 as the base year which is a year of bad harvest, and compares it to the year 2004-05 which is a good harvest year. Clearly, comparing a drought year with a good harvest year will, ceteris paribus, exaggerate the magnitude of poverty reduction.

It is therefore more appropriate to compare the year 1998-99 with the year 2004-05. With respect to the second factor, the government’s poverty estimate uses an inappropriate inflation rate based on the consumer price index, which only covers 16 urban centres. It does not take account of prices in the rural areas where the majority of the poor reside.

Indeed inflation rate data based on both urban and rural areas was available from the Pakistan Living Standard Measurement (PLSM) survey. The PLSM data of course shows a much higher inflation rate. The government instead chose the CPI index for inflation which would yield an artificially low inflation rate and thereby a much higher magnitude of poverty reduction.

Mr Talat Anwar, in an earlier study, has attempted to correct the biases in the official poverty estimates by using the year 1998-99 as the base year and the inflation rate drawn from the PLSM data.

His estimate shows that during the period 1998-99 to 2004-05 poverty declined by only 1.8 percentage points, from 31.1 per cent in 1998-99 to 29.3 per cent in 2004-05.

Our own poverty estimate also takes account of the inconsistencies in the Sindh sub-sample and yields a poverty reduction estimate of only 0.6 percentage points with poverty declining from 31.3 per cent in 1998-99 to 30.7 per cent in 2004-05.

One can conclude therefore that, there has been no significant poverty reduction during the period 1998-99 to 2004-05. This conclusion is consistent with the sources of growth analysis based on national income data.

In the three years after 2004-05 the demand-supply imbalances in the economy resulting from design errors of the economic policy led to accelerated inflation, particularly food inflation, severe shortages of flour, electricity, gas and fuel. The accelerating inflation rate particularly for items in the poor man’s basket would be expected to have worsened the poverty situation.

Therefore in the Musharraf period as a whole (1999-2007), while high GDP growth rates were generated, they failed to significantly reduce poverty. It is important to draw the scientifically correct lessons in order to redesign the economic policy to address the central economic policy challenge that still remains: Initiating a process of sustained high economic growth that is restructured in favour of the poor to achieve rapid poverty reduction.

The writer is Distinguished Professor, Beacon house National University and Senior Fellow, Pakistan Institute of Development Economics.