Alkire, S., Jindra, C., Robles, G., and Vaz, A., (2016), “Multidimensional Poverty Index 2016: Brief Methodological Note and Results,” OPHI Briefing 42, University of Oxford.
This paper was prepared by Giorgia Albertin.
The government adopted in 2016 a new poverty line, with the World Bank support, which set a higher and more inclusive standard of well-being compared to the poverty line set in 2001. Based on the Cost of Basic Needs method, a PRs 3,032 per adult/per month poverty threshold was identified, leading to a poverty headcount of 29.5 percent of the population in 2013, with about 60 million people in Pakistan classified as poor. Under the former 2001 poverty line based on the Food Energy Intake method, the poverty threshold was at PRs 732.4 per month/per person leading to poverty headcount rate of 34.7 percent in 2001, declining to 9.3 percent in 2013. Back-casting the new 2016 poverty line, the poverty headcount was at 64 percent in 2001, with the same declining trend during 2001–13.
Pakistan has one of the lowest poverty incidence within the South-Asia region, based on the US$1.90 a day poverty line.
World Bank Development Indicators (2016).
The Balochistan region represents 6 percent of the overall population.
The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being sufficiently educated, and have a decent standard of living. The health dimension is assessed by life expectancy at birth, the education dimension is measured by mean of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita.
Stunting is defined as the percentage of children under five whose height-for-age ratio is two standard deviations or more below the World Health Organization (WHO) Child Growth Standards. Wasting is defined as the percentage of children under five whose weight-for-height ratio is two standard deviations or more below the WHO Child Growth Standards. World Bank Development Indicators used in the analysis are based on the Pakistan Demographic and Health Survey (PDHS) 2012–13. New data on stunting and malnutrition will be released in the PDHS 2017/18.
Data on gross enrollment ratio distribution per quintile is based on Pakistan Social and Living Standard Measurement Survey 2013–14.
The Gender Gap Index (World Economic Forum, 2015) measures the gap between men and women in four categories: economic participation and opportunity, educational attainment, health and survival, and political empowerment.
Few empirical studies have so far provided an empirical assessment of the impact of the informal economy. Elbadawy and Loayza (2008) show that an increase in informality leads to a decrease in economic growth thus hurting inclusiveness while having a positive impact reducing the incidence of poverty.
Social safety nets are noncontributory measures designed to provide regular and predictable support to poor and vulnerable people and are a component of larger social protection systems (World Bank, 2015). Social safety nets include noncontributory transfers (unconditional and conditional cash-transfers, food and other in-kind transfers, school feeding programs), noncontributory social pensions, measures to provide access to essential services as education, health and housing through fee-waivers, public works and social care services. Generalized subsidies are typically not considered as part of social safety nets due to their regressive nature.
This paper focuses on non-contributory social assistance programs at the federal level. Several provincial initiatives, including the Punjab Khidmat Card, the Insaf Card and low cost provision housing in Sindh also contribute to alleviate poverty. Furthermore, contributory social protection programs are also in place in Pakistan, such as the Employees Old Benefits Initiative and other social security programs.
Efficient social safety nets are characterized by broad coverage and appropriateness of benefits, poverty-based targeting using proxy means testing, consolidation of fragmented programs, unified registry of beneficiaries to be used by different programs, modern service delivery mechanisms, programs to strengthen human capital, strong governance and dissemination of information to the poor on available programs (IMF (2014), World Bank (2012)).
The BISP cash transfer is paid to the adult woman in the household, defined as every ever-married woman in the household with a valid Computerized National Identity Card.
In addition to UCTs and CCTs, other complementary programs are implemented under BISP as Waseela-e-Rozgar providing educational training to the youth, Waseela-e-Haq providing micro-loans to female beneficiaries and Waseela-e-Sehet providing health insurance to beneficiaries.
A cut-off income threshold for eligibility to BISP was established (PRs 6,000 monthly income per family), families could apply for income support, and each parliamentarian was assigned to review an equal number of applications, irrespective of political affiliation, and decided on the family’s eligibility.
The survey was conducted on the basis of a questionnaire relying on a wide range of questions, including composition and characteristics of household roster, age, education, employment and disability status of household members, nature of dwelling, moveable and fixed assets. The Poverty Scorecard generated a poverty score for each surveyed households (from 1–100) and household below the established cut-off score (of 16.17) were considered eligible to receive cash transfers through BISP.
BISP quarterly stipends were increased from PRs 3,000 at end-June 2013 to PRs 4,700 at end-June 2016. In particular, stipends were increased by 4.5 percent in FY 2015/16 in order to protect the beneficiaries’ purchasing power.
A second round impact evaluation analysis was conducted in 2014 to assess the impact of BISP on beneficiaries against key objectives of the program: poverty reduction, women’s empowerment, improved household and child nutrition, and increased asset retention. A quasi-experimental method was used, based on a comparison between a treatment group of beneficiaries of BISP against a control group of households’ non-beneficiaries of BISP but just above the BISP threshold scorecard (Oxford Policy Management, 2015). This followed the first round evaluation impact analysis conducted in 2013.
The cost of schooling includes costs of uniforms, books, supplies, transports and others (Oxford Policy Management, 2015).
A tax levy (2.5 percent) used to be imposed on financial assets of individuals, including bank deposits above a certain threshold, and collected into the Central Zakat Fund. Since 1999, the supreme court ruled for zakat to be voluntary.
The Workers Welfare Fund is financed by contributions from industrial firms with total income above PRs 5000,000, which have to provide to the Fund two percent of their profits.
This includes private, corporate and diaspora philanthropy (Pakistan Centre for Philanthropy).
The Tariff Differential Subsidy (TDS) is the main component of electricity subsidies, a transfer from the government to the power distribution companies (DISCOs) to compensate for the difference between tariff that would allow each DISCO to fully recover their costs and the Uniform Minimum Tariff notified at the national level. In addition, certain categories of consumers are protected by being charged a tariff which is below the determined minimum tariff.
To ensure cross-country comparison, poverty incidence data used in the frontier analysis are based on a US$3.1 per day poverty (World Bank Development Indicators). This leads for Pakistan to a poverty rate of 38 percent, higher than under the 2016 national poverty line (29.5 percent).
Private schooling is sizable in Pakistan, with enrollment representing more than 1/3 of enrollment in public schools.