Trends in Rural & Urban Poverty: Pakistan

Pakistan’s growth record over the past three and a half decades has been impressive. Real per capita income doubled and open unemployment remained low. Increasing real wages brought on by the expanding domestic economy, the strong demand for agricultural labour following the green revolution in the earlier years, and migration of workers to the Middle East in the late 1970s, have managed to spread the gains from this growth. There is a consensus that this growth has translated into declining levels of poverty over the decades of the 1960s and 1970s and even more rapidly during the 1980s. There are indications that the incidence of poverty has increased in the 1990s. Despite impressive economic growth and notable reductions in the in the incidence of poverty, poverty reduction remains the most formidable development challenge for Pakistan.

The recent estimates of the trends in poverty incidence, based on the micro data of HIES for the years 1984-85, 1987-88 and 1990-91 and using a poverty line derived from the minimum calorie requirements per adult equivalent of 2,550 calories per day are presented by Malik (1994).

Data show that the headcount of poor which had declined from 18.3 percent to l6.6 percent over the 1984-85 to 1987-88 period increased marginally in 1990-91 to 17.2 percent. This implies that 17.2 percent of the total households in Pakistan were not able to meet the minimum calorie requirement in 1990-91. These estimates also show that rural poverty is higher than urban poverty. These results are consistent with the performance of functional income distribution which has exhibited improvement up to 1986-87. The share of wage income in the GDP increased from 30.2 percent in 1980-81 to 33.0 percent in 1986-87. However, it has declined to 30.0 percent by 1990-91 — a clear indication of worsening functional income distribution [see Chaudhary (1992)], An important aspect of these results is the considerable variation in the number of poor across provinces and sectors. Based on these headcount measures, it is possible to develop an index for proportion of poor relative to the proportion of the population in each sector and province. A value one hundred for this indicator implies an equal share. The higher the value of this indicator is from one hundred, the greater is the concentration of the poor relative to the population. Focusing on this index for 1990-91, it is found that rural areas on aggregate have a greater share of poor. The provinces of Punjab and NWFP on aggregate and the rural sectors of Punjab, Sindh and NWFP have a higher share of poor as compared to the share in population. According to these estimates, the highest concentration of poor is in rural Punjab followed by rural NWFP. These results highlight the importance of effective targeting for poverty alleviation.

Table 2, which compares various indices of poverty, brings together information about the trends of poverty during the ‘80s and early ‘90s. First, it shows clearly that, irrespective of the poverty measure used, overall poverty has gone down in Pakistan during the ‘80s; and the same is true for both urban and rural fetors. However, poverty in Pakistan has risen marginally in 1990-91 as compared with 1987-88, but it is still lower than the levels in 1984-85.

Second, provincial data present a mixed result. Poverty has declined in both the rural and urban areas of Punjab during 1984-85 and 1990-91. Poverty in Sindh has, however, increased significantly during the same period. The number of people below the poverty line increased from 15.3 percent in 1984-85 to 22.7 percent in 1990-91. The increase in poverty was more pronounced in urban Sindh where number of people below the poverty line increased from 7.0 percent to 14.1 percent during the period under review. The disturbed law and order situation in Sindh in general and urban Sindh in particular appears to be responsible for increase in poverty there. As a result, the growth in large-scale manufacturing has decelerated sharply from an average of 9.0 percent during 1980-81 to 1987-88 to an average of 4.8 percent during 1988-89 to 1994-95. Similar increasing trends in poverty is observed in both the rural and urban areas of NWFP. Like Punjab, Balochistan also witnessed a sharp decline in poverty in its both rural and urban areas during the period under review.

Third, the incidence of poverty in Punjab and Balochistan was higher than average; in all other provinces, it was lower than the average in 1984-85 but has turned higher than the average there-after with the exception of Balochistan, irrespective of the measure of poverty used.

It is, thus, safe to assert that a relatively high growth rate in Pakistan has been associated with a steady decline in poverty. The recent slowdown in economic activity appears to have increased the poverty, though marginally, in Pakistan. The disturbed law and order situation in Sindh in general and urban Sindh in particular has increased poverty in this province. Also, there is reason to believe that if the law and order situation is not improved, poverty is likely to increase in Sindh as well as in Pakistan in the future.

TABLE 2

HEADCOUNT, POVERTY GAP, FOSTER-GREER-THORBECKE POVERTY MEASURES BY PROVINCE (1984-85, 1987-88 AND 1990-91)

Source: Malik (1994).

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