Contribution of Zakah & Ushr to the Average Disposable Income of Lower-Income Deciles

Although the FGT poverty measure captures the extent of income inequality among the poor, yet it is not commonly understandable. Therefore, in Table 3, estimates of zakah and ushr contribution to the average disposable income of lower-income deciles are presented. The table shows that zakah and ushr contribution to the average disposable income of the lowest income decile in 1990-91 was 38.55 percent for Pakistan, 38.68 percent for the urban areas and 38.53 percent for the rural areas of Pakistan. The contribution of zakah and ushr to the average income of other income deciles was negligible. It is worth mentioning that zakah and ushr is paid even to the fifth income decile, whereas several deserving households of the lower income deciles are not paid at all. This indicates mistargeting of zakah and ushr transfers. There is higher probability that voluntary payment might be going to the deserving and mistargeting of funds is likely to be in the official distribution channels.

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.