Momna Mansoor, Samaha Saif
Introduction People are experiencing poverty when they are deprived of basic human needs such as food, clothing, shelter, safe drinking water, healthcare and sanitation, and minimal educational opportunities. Worldwide statistics show that people born into poverty are likely to remain poor especially when the economic system of the country works against them with no access to healthy food, decent housing, and proper sanitation facilities. This is called the cycle of poverty. Therefore, the concept of poverty, whether absolute or relative, isn’t simple. It doesn’t only involve economics but it is also a social and political problem in nature. Is poverty increasing or decreasing? Over 12.5 million Pakistanis fell below the poverty line in the past one year and now nearly 40% of the country’s population is struggling to get its basic needs met, the World Bank has said as it urged the cash-strapped country to take urgent steps to achieve financial Poverty in Pakistan rose from 34.2% to 39.4% in just one year, with 12.5 million more people falling below the poverty line of the $3.65 per day income level. About 95 million Pakistanis now live in poverty. Pakistan also has the lowest per capita income in South Asia and highest out-of-school kids in the world. The bank said Pakistan’s average real per capita growth rate was just 1.7% between 2000 and 2020 — less than half the average per capita growth rate (4%) for South Asian countries. “While Pakistan’s per capita income was among the highest in South Asia during the 1980s, it is now among the lowest in the region. Poverty in economists’ spoint of view Major policy shifts required’ Tobias Haque, the World Bank’s lead country economist for Pakistan, said the nation is facing serious economic and human development crises, and is at a point where major policy shifts are required. “Pakistan’s economic model is no longer reducing poverty, and the living standards have fallen behind peer countries.” This may be Pakistan’s moment for significant policy shift,” said Najy Benhassine, the country director for Pakistan at the World Bank. The World Bank suggest that Pakistan should immediately increase the tax-toGDP ratio by 5% and cut expenditures by about 2.7% of GDP – measures aimed at putting the unsustainable economy back on a prudent fiscal path. The Washington-based lender’s note on improving revenue-to-GDP ratio by 5% includes withdrawal of tax exemptions and increasing the burden of taxes on the real estate and the heavily subsidized agriculture sectors. Pakistan has the capacity to collect taxes equal to 22% of the GDP, but its current ratio is only 10.2%, said the World Bank. It said that another PKR 70 billion can be saved by devolving the Higher Education Commission to the provinces, and PKR 217 billion savings can be ensured through cost sharing of BISP (Benazir Income Support Programme) with the provinces. Pakistan’s inflation soared to 27.4% in August after the cash-strapped country received $1.2 billion from the International Monetary Fund in July, a part of the $3 billion bailout programme to support the government’s efforts to stabilise the country’s failing economy . Pakistan’s economy has been in a freefall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation. Is poverty an economic or a social problem? The United Nations has stated that the problem of poverty is an ethical, social, economic and political imperative of mankind. It has suggested that governments across the globe address its root cause and provide solutions to ensure the people have access to productive resources such as credit, education, and a healthy standard of life. A social perspective throws light on the problem of poverty in all its dimensions. This approach offers a different perspective on poverty eradication. It advocates the empowerment of people living in poverty and their full participation in all aspects of political, social, and economic life while also designing and implementing policies that affect the most vulnerable groups of society. An integrated strategy towards poverty eradication requires implementing policies geared to a more equitable distribution of wealth, income, and social protection coverage. This social perspective should contribute to the debate on the effectiveness and limitations of current poverty reduction strategies. From a socio-economic perspective, to understand poverty we require a thorough evaluation of the impact of economic and social policies on the poor and vulnerable groups of society. A Poverty and Social Impact Analysis (PSIA) serves as a tool to assess both economic and social impact reforms on the different social and income groups in society. Solutions to the problem of poverty The UN aims to eradicate poverty by 2030 as part of the Sustainable Development Goals and has already set in place a number of economic policies to tackle this problem. Over the past decade, there has been marked progress in reducing poverty. The year 2015 recorded about 10.1% of the world’s population living below the absolute poverty index and this number fell to 9.3% in 2017 according to United Nations Statistic Division. Although the proportion of people who live on $1.90 has dropped by 52 million, the rate at which poverty has dropped has slowed down. Between 1990 and 2015, the rate at which poverty dropped was one percentage point annually, whereas it was half a percentage point between 2015 and 2017. Policies to reduce poverty in developing economies To reduce poverty in developing economies, the focus may be on different policies. • Education: greater spending on education and training can enable a higher-skilled workforce. • Foreign aid: aid from developed countries can be used to invest in better health care and education. However, some argue aid can encourage dependency. • Diversification of economy away from agriculture to manufacturing: this enables greater economic development but may be difficult to do without the right skills and infrastructure.
