The government is expected to soon release new estimates of how many poor people there are in Pakistan—but expect a fair amount of debate. The figure is likely to be a national total and not by province as those figures could make some people look bad.
If the government gave numbers by the province, the Pakistan Tehreek-e-Insaf government in Khyber Pakhtunkhwa might have cause to celebrate. According to initial estimates it may have achieved a significant decline in poverty in the range of 5 to 6 percentage points while all the other provinces may not have shown such marvelous results.
It would be safer to go with a national number otherwise the government may have to justify why poverty did not drop in the double digits during the Pakistan Muslim League-N tenure given the claim that the country achieved a higher growth trajectory. It could find itself facing the question of why this did not translate into poverty reduction.
Controversy
Doing the math on poverty is thus always a political quagmire. The exact number of people living in poverty in Pakistan has, therefore, been a contested figure under both military and democratically elected regimes.
These numbers become controversial because the ruling elite and its policy makers are always loathe to have any data rebut the notion that their economic policies are achieving a trickle-down effect for the poor. The truth is, however, that there is a disconnect between official claims and ground realities. As the saying goes, Islamabad is 20 kilometers away from Pakistan.
As there is usually a disagreement over the exact estimates of people living below the poverty line, to its credit, the Planning Commission asked a committee to calculate the latest figures. This special committee is headed by renowned economist GM Arif who has chaired previous committees on the subject. He was affiliated with the Pakistan Institute of Development Economics and is retired. The committee members include poverty experts and economists such as Dr Idrees, Dr Naeem ul Zafar, Dr Aaliya, Iftikhar Cheema and Dr Nasir. The World Bank is involved in the effort.
GM Arif told TFT that they had already met twice in recent months and were expected to finalize their report within the current fiscal year and before the PML-N government wraps up its tenure. The next meeting will be convened soon. They are working to calculate the latest poverty figures in accordance with the new and old methods in order to ensure consistency. He confirmed that the committee would only come out with national figures.
Pakistan is not unique in such a controversy. It has lingered in India as well. A committee formed in 2012 had calculated poverty at 21% on the basis of Energy Food Intake just as Pakistan did. But then another committee estimated poverty at 29% by changing the method to include other needs. The Indian government had not endorsed any poverty figure since 2012.
Old method
Earlier on, in Pakistan poverty was calculated with the help of the CPI or consumer price index. The government collected data on prices from select cities to calculate the cost of calorie intake. It was pegged at Rs1,600 per person cost per month for someone to consume 2,375 calories daily. (During the Musharraf regime, this calorie intake requirement was reduced from 2,375 to 2,175 in order to show a reduction in poverty levels.) The CPI data set does not give a proper picture of the poverty levels of people living in the countryside.
Using the old calorie of food, energy intake method meant that only 9.3% of Pakistan was found below the poverty line in 2013-14. This was 17 million people.
New method
The good news is, however, that the government has changed its method of measuring poverty and economists and experts believe it is closer to assessing the basic needs of the people.
During the tenure of former finance minister Ishaq Dar, the PML-N government changed the method from looking at the food, energy intake to assessing Cost of Basic Needs. This means it is adding expenses on health and education as part poverty calculation.
With the Cost of Basic Needs method, the new poverty line emerges at Rs3,030 per adult per month using the latest Household Income Expenditure Survey of 2013-14.
The government is going to use the latest Household Income Expenditure Survey (HIES) instead of the CPI. For clarity’s sake, one should mention that it has been renamed the HICS (Household Income and Consumption Survey) for 2015-16.
In 2015-16 it was estimated that 29.5% or 55 million people were living below the poverty line. But there is one more thing. The new HICS-based estimates are going to have to also factor in the 2017 census data.
Earlier on, the population total used for poverty estimates was 198 million. But since the new census has revealed Pakistan’s population has grown nine million to 207 million, this new figure has to be used. When you do the math, the number of poor people goes up a commensurate three million from 55 million (2015-16) to 58 million. So, as the population increased by nine million and almost 30% of people were earlier estimated to be living below the poverty live, three million more poor people have fallen into the poverty trap.
Interestingly, if we use the new poverty standard and look back at 2001-2002, when the Consumer Price Index method was used, poverty would have actually been 64.3%, or more than double the old rate. It is worth mentioning that the Multidimensional Poverty Index developed by the UNDP and Planning Commission had estimated that the headcount of multidimensional poverty in 2014/15 was 38.8% while the intensity of deprivation was 51%.
The Planning Commission’s committee of experts will have to reconcile the HIES and HICS data because the 2015-16 HICS survey had more questions in order to gather more details from the selected 24,000 households representing all provinces.
The Planning Commission sent out the questionnaire of both HIES/HICS to one international expert on poverty affiliated with the World Bank. He had given his endorsement that the data collected on the HIES/HICS pattern could be reconciled and the upcoming poverty estimation could be declared consistent and in line with international standards. However, the government will have to explain one thing: When the HIES/HICS data represents all provinces why is it reluctant to calculate poverty on provincial levels?
Planning Commission Chief Economist Dr Nadeem Javaid told TFT that the latest poverty estimates would be released within the financial year and would be national with urban and rural divide distinctions. No provincial figures will be released.
If the government gave numbers by the province, the Pakistan Tehreek-e-Insaf government in Khyber Pakhtunkhwa might have cause to celebrate. According to initial estimates it may have achieved a significant decline in poverty in the range of 5 to 6 percentage points while all the other provinces may not have shown such marvelous results.
It would be safer to go with a national number otherwise the government may have to justify why poverty did not drop in the double digits during the Pakistan Muslim League-N tenure given the claim that the country achieved a higher growth trajectory. It could find itself facing the question of why this did not translate into poverty reduction.
Controversy
Doing the math on poverty is thus always a political quagmire. The exact number of people living in poverty in Pakistan has, therefore, been a contested figure under both military and democratically elected regimes.
These numbers become controversial because the ruling elite and its policy makers are always loathe to have any data rebut the notion that their economic policies are achieving a trickle-down effect for the poor. The truth is, however, that there is a disconnect between official claims and ground realities. As the saying goes, Islamabad is 20 kilometers away from Pakistan.
As there is usually a disagreement over the exact estimates of people living below the poverty line, to its credit, the Planning Commission asked a committee to calculate the latest figures. This special committee is headed by renowned economist GM Arif who has chaired previous committees on the subject. He was affiliated with the Pakistan Institute of Development Economics and is retired. The committee members include poverty experts and economists such as Dr Idrees, Dr Naeem ul Zafar, Dr Aaliya, Iftikhar Cheema and Dr Nasir. The World Bank is involved in the effort.
GM Arif told TFT that they had already met twice in recent months and were expected to finalize their report within the current fiscal year and before the PML-N government wraps up its tenure. The next meeting will be convened soon. They are working to calculate the latest poverty figures in accordance with the new and old methods in order to ensure consistency. He confirmed that the committee would only come out with national figures.
Pakistan is not unique in such a controversy. It has lingered in India as well. A committee formed in 2012 had calculated poverty at 21% on the basis of Energy Food Intake just as Pakistan did. But then another committee estimated poverty at 29% by changing the method to include other needs. The Indian government had not endorsed any poverty figure since 2012.
Using the old calorie of food, energy intake method meant that only 9.3% of Pakistan was found below the poverty line in 2013-14. This was 17 million people
Old method
Earlier on, in Pakistan poverty was calculated with the help of the CPI or consumer price index. The government collected data on prices from select cities to calculate the cost of calorie intake. It was pegged at Rs1,600 per person cost per month for someone to consume 2,375 calories daily. (During the Musharraf regime, this calorie intake requirement was reduced from 2,375 to 2,175 in order to show a reduction in poverty levels.) The CPI data set does not give a proper picture of the poverty levels of people living in the countryside.
Using the old calorie of food, energy intake method meant that only 9.3% of Pakistan was found below the poverty line in 2013-14. This was 17 million people.
New method
The good news is, however, that the government has changed its method of measuring poverty and economists and experts believe it is closer to assessing the basic needs of the people.
During the tenure of former finance minister Ishaq Dar, the PML-N government changed the method from looking at the food, energy intake to assessing Cost of Basic Needs. This means it is adding expenses on health and education as part poverty calculation.
With the Cost of Basic Needs method, the new poverty line emerges at Rs3,030 per adult per month using the latest Household Income Expenditure Survey of 2013-14.
The government is going to use the latest Household Income Expenditure Survey (HIES) instead of the CPI. For clarity’s sake, one should mention that it has been renamed the HICS (Household Income and Consumption Survey) for 2015-16.
In 2015-16 it was estimated that 29.5% or 55 million people were living below the poverty line. But there is one more thing. The new HICS-based estimates are going to have to also factor in the 2017 census data.
Earlier on, the population total used for poverty estimates was 198 million. But since the new census has revealed Pakistan’s population has grown nine million to 207 million, this new figure has to be used. When you do the math, the number of poor people goes up a commensurate three million from 55 million (2015-16) to 58 million. So, as the population increased by nine million and almost 30% of people were earlier estimated to be living below the poverty live, three million more poor people have fallen into the poverty trap.
Interestingly, if we use the new poverty standard and look back at 2001-2002, when the Consumer Price Index method was used, poverty would have actually been 64.3%, or more than double the old rate. It is worth mentioning that the Multidimensional Poverty Index developed by the UNDP and Planning Commission had estimated that the headcount of multidimensional poverty in 2014/15 was 38.8% while the intensity of deprivation was 51%.
The Planning Commission’s committee of experts will have to reconcile the HIES and HICS data because the 2015-16 HICS survey had more questions in order to gather more details from the selected 24,000 households representing all provinces.
The Planning Commission sent out the questionnaire of both HIES/HICS to one international expert on poverty affiliated with the World Bank. He had given his endorsement that the data collected on the HIES/HICS pattern could be reconciled and the upcoming poverty estimation could be declared consistent and in line with international standards. However, the government will have to explain one thing: When the HIES/HICS data represents all provinces why is it reluctant to calculate poverty on provincial levels?
Planning Commission Chief Economist Dr Nadeem Javaid told TFT that the latest poverty estimates would be released within the financial year and would be national with urban and rural divide distinctions. No provincial figures will be released.