ISLAMABAD: If $2 is considered to be the minimum daily wage, then more than half of the country lives below the poverty line, Finance Minister Ishaq Dar said on Monday as he unveiled the Pakistan Economic Survey for 2013-14.

Mr Dar said that in the survey from 2007-08, overall poverty stood at 17.2 per cent, while the minimum wage was considered to be $1.25. “I disagree that the daily minimum wage in the country is currently $1.25.”

Presenting solutions to stem rising poverty and increase employment in the country, the minister emphasised the need for drastic improvement in economic and industrial growth.

Poverty line is the threshold that separates the poor from the non-poor. The Ministry of Planning, Development and Reform measures poverty on a consumption-based approach using data from the Household Integrated Economic Survey.

Finance minister disagrees with minimum wage estimate, praises BISP

According to the economic survey, the official poverty line in Pakistan is calorie-based and consumption-based absolute poverty is estimated after converting the household consumption level to its adult equivalent, based on the recommended nutritional requirements of 2,350 calories per person, per day.

According to the survey, which contradicts the finance minister’s own words, overall poverty had declined as per the consumption-based methodology. The data shows that poverty declined from 34.4pc in 2000-01 to 22.3pc in 2005-06. The overall poverty situation appears to have improved by 2010-11. Poverty headcount, based on consistent consumption-based estimates, stood at around 12.4pc in 2010-11, being 7.1pc in urban areas and 15.1pc in rural areas.

According to the World Bank’s Poverty Head Count Analysis for 2014, if income per adult in Pakistan is taken as $1.25 per day, then 21.04pc of the population lives below the poverty line (according to 2008 population estimates). But if the poverty line is raised to $2 per day in line with international standards for middle income countries, then 60.19pc of the population falls below the poverty line.

The survey praises the PPP’s initiative of the Benazir Income Support Programme (BISP), which was continued by the PML-N government. The government also increased the cash grant amount to Rs1,200 per household per month. According to the survey, the number of beneficiaries increased from 1.7 million families in 2008-9 to nearly 5.25m in 2013-14, while BISP’s annual disbursements rose from Rs16.0 billion in 2008-9 to Rs48.18bn in the first three quarters of 2013-14.

“The decline in poverty can be associated with a number of factors, including increased allocations to social safety programmes such as BISP, Pakistan Poverty Alleviation Fund, better support prices for agricultural products, better seed varieties that yielded better agriculture outputs and an improvement in remittance inflows,” the minister said.

Targeted interventions, including BISP cash disbursements, subsidies, an increase in individual and corporate philanthropy and a rise in the number of women in the labour force in rural areas might also have contributed to the decline in the consumption-based poverty head count numbers, he said.

The survey revealed that while Pakistan was better off than India or Bangladesh, it was lagging behind Sri Lanka, China and the Philippines.

Social safety nets

According to the survey, social safety net programmes targeted casual and informal workers, low-capital self-employed, low-rank formal sector workers and women and children without family or community support, etc.

The survey reveals that a national framework for social protection will encompass all provincial policies and contribute towards a national social protection system. “All existing social protection programmes are to be brought under one umbrella so they have a unified and transparent inclusion criteria, better targeting system and efficient monitoring mechanism,” it reads.

Expenditure on pro-poor sectors in 2009-10 stood at 13.4pc of the gross domestic product (GDP). The spending declined to 12.1pc of GDP in 2010-11 and 10.4pc in 2011-12. These were, however, well above the requirement under Goal-I of the United Nations Development Programme’s Millennium Development Goals. In 2012-13, the total expenditures for these sectors decreased slightly, amounting to Rs1,911.30bn, which is 12pc of the GDP.

From July to December in FY13-14, Rs588.105bn was allocated for these sectors to improve people’s standard of living.

In FY13-14, under the Zakat head, the federal government provided Rs2,162 million to Punjab, Rs894m to Sindh, Rs520.9m to Khyber Pakhtunkhwa, Rs192.6m to Balochistan, Rs131.3m to Fata, Rs99.7m to Islamabad and Rs52.692m to Gilgit-Baltistan.

Published in Dawn, June 3rd, 2014