ISLAMABAD – Government has adopted new model to measure poverty effectively.
By resetting the poverty threshold, the government has announced a new poverty line of Rs 3030 per adult per month or less than $0.97 per day.
By taking the threshold to less than a dollar a day, the government also reiterated its resolve to bring down the poverty level to zero by adopting pro-poor investments, enhancing economic growth rate and further strengthening social safety nets.
According to the old poverty line of Rs 2259 per month per adult there were 20 million poor in Pakistan but after the introduction of new threshold the number has now increased to 60 million.
It is pertinent to mention that the new global poverty line is set at $1.90 using 2011 prices. Globally when a new set of purchasing power parity exchange rates (PPPs) were published in 1993, the poverty line was $1.08 per day. PPPs were revised in 2005, and the line was upped to $1.25 and in 2011 it was again increased to $ 1.90.
Jointly addressing a press conference, with the planning, development and reforms minister Ahsan Iqbal here, finance minister Ishaq Dar also announced that the government is not going to IMF for the next programme. To a question, the minister replied, “The country does not need another IMF programme,” and added: “We have to do a lot of work to sustain the current achievements”.
He said that no body will be allowed to derail the current growth. He said that he is leaving on April 12 for attending the World Bank-IMF Spring meetings in Washington.
The finance minister claimed that poverty in Pakistan is declining and said that government has adopted new international best practices where the non-food items, including health and education, have also been included in the new basing of poverty estimation.
He expressed the hope that this new poverty estimation methodology would be useful for the researchers and policy-makers in the country.
The finance minister said that due to prudent economic policies of the government, the poverty ratio has been showing downward trend and in future, it would further decline to the lowest level.
Ishaq Dar said that Pakistan has seen an exceptional decline in poverty in the last fifteen years, down from 35 percent in 2001-02 to under 10 percent in 2013-14.
He said that after having achieved macroeconomic stability the government is actively pursuing economic growth and employment generation.
Ishaq Dar said that the economy was on the right track and all economic indicators were moving in the positive direction. The minister said that for the first time the Federal Board of Revenue has met its target of revenue collection and said that prior to PML-N government, the revenue growth used to be around 2.5 to 3.0%, which has now increased to 19.7%. The minister said: “When PML-N came to power the net international reserves were less than one billion dollars which are now about $ 6.5 billion. Finance minister said that now Pakistan is becoming a favourite destination for the international companies. Companies from Saudi Arabia and Qatar are keen to invest in Pakistan.
Particularly Kuwait is interested in energy sector in the country.
Addressing the press conference, Ahsan Iqbal said that the issue of poverty estimation was lingering on since 2008 and various steps were taken to resolve this issue. “I, soon after becoming planning minister, formed a Technical Committee to resolve the issue. Group of experts deliberated upon the issue and gave various suggestions.”
“We have incorporated the suggestions of all the experts in our work.
Moreover, we also sought advice of renowned poverty and development gurus like Martin Ravallion and John Gibson to review our findings and they all endorsed us,” he said.
“Head count poverty was computed in Pakistan in 2001.Since then the ground reality has changed altogether. There have been many structural reforms, liberalization, social safety nets, increase in remittances and natural calamities,” he added.
Pakistan did not reset poverty breaches threshold of 10% every country rest it, and we are no exception.
According to 2001 data current poverty in 9.3% and therefore it needs resetting.
“Capitalizing on opportunity of resetting and brining it in harmony with socio-economic realties, development policies, and massive foreign investment we have decided to make some choices,” he maintained.
“We needed to choose from reference group, measure of welfare (calories), and method.
We have chosen 10-40% of distribution as reference group, 2350 calories as minimum welfare measure and cost of basic needs as method,” he added.
“Using 2013-2014 data head count poverty comes out to be 29.5%. In monetary terms, poverty line comes out to be 3030 rupees per adult equivalent per month,” he said.
“Setting aside politics, we have committed ourselves to a greater challenge because continuing with 2001 poverty line would have tagged roughly 20 million people as poor, while resetting has raised the number to 60 million.
So, we are raising bar for ourselves, but we have decided to do so,” the minister explained.
The government is making this process more and more transparent and will make sure that the micro data, computation method and relevant literature is made available to all researches so that this delay in head count poverty measurement should not happen again, Ahsan Iqbal said.
He said that the methodology, data and literature will be shared on the Planning Commission website so that practitioners, academicians, development partners, government functionaries may be able to use and improve it. The government has strengthened the social safety nets and trying to create more opportunities for everyone. Pakistan Vision-2025 has promised a better living for everyone, he added.