Main Issue of Pakistan- Elimination of Poverty

Muhammad Arif
Muhammad Arif: Chairman Centre of Advisory Services for Islamic Banking and Finance (CAIF), Former Head of FSCD SBP, Former Head of Research ArifHabib Investments and Member IFSB Task Force for development of Islamic Money Market, Former Member of Access to Justice Fund Supreme Court of Pakistan.

Now on political and economic front most of vocal voices say that within 9 months it was not possible to bring any change. Further it is also being said that whole crisis is due to those who were on rule before PTI. Pakistan huge debts and twin deficits have been created by gone rulers and now angels are there to resolve matters and to get Pakistan out of crisis.

True! But everybody wants to hear that what the core issue of Pakistan is. If we just find it than we can plan our economy and politics around it to get this issue settled.

 If we get away from ongoing rhetoric that corruption is the main issue than we would be able to see that our 80% population live below poverty line and people like us  have no concern with these who live like animals with no food, shelter, health care facilities education. These innocent poor people have not even time to think about their issues. Officially below poverty line is stated to be 23% of population but this does not count undocumented economy which is considered 50-70% of total economy. So by this poverty in different layers crosses 80 to 90% range.

In fact Pakistan is facing extreme issues like electricity and Gas shortage, terrorism, unemployment only due to poverty that culminate corruption among them and particularly elites who rule them through exploiting common men and women. So you come from east or west or north or south you would find that for any negative act in Pakistan poverty is the main cause.

Poverty level income varies depending on the number of people residing in a home. The poverty level of Pakistan is $ 150 for a family of six.

The question is that how we have reached to this point. In this regard poor governance is the key underlying cause of poverty in Pakistan in spite of periods of Military rule or by politicians. 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 inefficiency 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 during 1990-2018.

With regard to economic factors, decline in the Gross Domestic Product (GDP) growth rate in 2019 falling below 3.5% is the immediate cause of the increase in poverty over the last decade. Onward 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, 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 portion of GDP being spent on development and social sectors in the 1990s and currently in 2019. 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 under their influence, as well as over their access to social infrastructure facilities. Environmental degradation is also a cause of poverty in Pakistan. The environment-poverty nexus manifests itself most particularly in health effects. For example, waterborne diseases are widespread because 17 percent of the urban and 47 percent of the rural population does not have access to clean drinking water. The poor also tend to be more vulnerable to the effects of air and water pollution, both in rural and urban areas, given their limited access to quality health care. The prevalence of disease exacerbates poverty firstly by compelling the poor to devote ever increasing proportions of their limited income to health costs, and secondly by reducing productivity.

In Pakistan however, a number of initiatives aimed at helping the poor were shown to be taken but cosmetically by marginal improving governance and functioning of public sector institutions; creating assets, employment, and Income generation opportunities; revamping social safety net systems; and improving access to basic services and also by Non Governmental Organizations (NGOs) and the private sector. Microfinance in the country has been provided by NGOs and private sector but their growth has remained dismal as these institutions cost more than a bank as they have to access funds at higher rates.

 Among the social safety net systems the other steps have been to create Zakat collection fund, then comes the Employees Social Security Scheme, Workers Welfare Fund Scheme, and schemes run by the Employees Old Age Benefits Institution (EOBI). Benazir Support fund and distribution of lap tops also come under these steps. Other four major areas identified on this front are elementary education (primary and middle schooling), primary health care, drinking water supply and rural sanitation and population welfare. The impact has been mixed, with no improvement in health indicators and any appreciable development in primary education and other areas.

Wealth distribution in Pakistan  varies with the top 10% of the population earning 27.6% and the bottom 10% earning only 4.1% of the income According to the United Nations Human Development Report, Pakistan’s human development indicators, especially those for women, fall significantly below those of countries with comparable levels of per-capita income. Pakistan also has a higher infant mortality rate (88 per 1000) than the South Asian average (83 per 1000).

Country’s social and economic status resources for development emerged as Pakistan’s foremost developmental problem. Corruption and political instabilities such as the insurgency in Baluchistan and decade long armed conflict with the Taliban in Waziristan region resulted in reduction of business confidence, deterioration of economic growth, reduced public expenditure, poor delivery of public services, and undermining of the rule of law. The perceived security threat on the border with India has dominated Pakistan’s culture and has led to the domination of military in politics, excessive spending on defense at the expense of social sectors, and the erosion of law and order.

Pakistan has been run by military dictatorships for large periods of time, alternating with limited democracy. These rapid changes in governments led to rapid policy changes and reversals and the reduction of transparency and accountability in government. The onset of military regimes has contributed to non-transparency in resource allocation. Those who do not constitute the political elite are unable to make political leaders and the Government responsive to their needs or accountable to promises. Development priorities are determined not by potential beneficiaries but by the bureaucracy and a political elite which may or may not be in touch with the needs of the citizens. Political instability and macroeconomic imbalances have been reflected in poor credit worthiness ratings, even compared to other countries of similar income levels, with resulting capital flight and lower foreign direct investment inflows.

In addition, Pakistan’s major cities and urban centers are home to an estimated 2 million street children. This includes beggars and scavengers who are often very young. The law and order problem worsens their condition as boys and girls are fair game to others who would force them into stealing, scavenging and smuggling to survive. A large proportion consumes readily available solvents to starve off hunger, loneliness and fear. Children are vulnerable to contracting STDs such as HIV/AIDS, as well as other diseases.

The main reason for wealth disparity is unequal land distribution and no job or highly less paid jobs in the cities. In villages 51% of poor tenants owe money to the landlords. The landlords’ position of power allows them to exploit the only resource the poor can possibly provide.

So it is not easy to reform Pakistan to get rid of poverty. They require steps from all sides including media to make poverty as focal point of Pakistan with changes on macro and micro level of economy and political struggle going on in between “haves” and “have not’s”.


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