Special problem

Sumaya noor

2014-Ag-4148

MS Finance 3rd semester

Session 2018-2020

Submitted to: Dr Sahar Munir

Institute of Business Management Sciences

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 Poverty its measure and solutions in Pakistan

INTRODUCTION:
In Islam, poverty is a great curse and unfortunate. Our beloved Prophet Hazrat Muhammad
(PBUH) also prayed to Allah to save him (PBUH) from Poverty. Poverty is the state in which
one lacks a usual or socially acceptable amount of money or material possessions. Poverty is said
to exist when people lack the means to satisfy their basic needs.

“Poverty is a multi-dimensional trend which is characterized by lack of income and non-

fulfillment of basic needs as well as lack of access to social infrastructure.”

The word poverty derived from Latin word “pauper” means “poor”. Poverty refers to the
condition of not having the means to afford basic human needs such as clean water, nutrition,
health care, clothing and shelter. Poverty is the condition of having fewer resources or less
income than others within a society or country, or compared to worldwide averages. Poverty is
one of the major social problems which Pakistan is facing. It is one of the most important and
sensitive issue not only for Pakistan but for the whole world. Poverty can cause other social
problems like theft, bribe, corruption, adultery, lawlessness, injustice etc.

It is the fundamental duty and responsibility of the country to fulfill the basic needs of its people.
Basic needs of man comprises of shelter, food and clothing. When these needs are not fulfilled
they bring about problems termed as socio-economic problems. Pakistan has also been suffering
from these problems. The real issue is not the presence of these problems in the society. But the
extent to which they are being paid attention and solved.

“Poverty A situation in which a person or household lacks the resources necessary to be able to
consume a certain minimum basket of goods. The basket consists either of food, clothing,
housing and other essentials (moderate poverty) or of food alone (extreme poverty).The most
common method used to define poverty is income-based.”

According to Jean Guenon

“He is poor who doesn't have enough; he is poorer who cannot get enough".

“A person is considered poor if his or her income level falls below some minimum level
necessary to meet basic needs. This minimum level is usually called the poverty line”.

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Current situation in Pakistan:
Poverty has been one of the biggest problems that Pakistan faces today. It is rightly said that
poverty anywhere is a threat to prosperity everywhere. Nearly 60 per cent of the population of
Pakistan lives in villages. According to an analysis, poverty has increased roughly from 30% to
40% during the past decade. It means that 40 per cent of the country’s population is earning their
livelihood below the poverty line. In such condition people are depressed of their basic
necessities of life. Proper education and medicine are becoming distant from them. They are
forced to think of their survival only of due to poverty and unemployment, parents instead of
sending their children to schools, prefer child labor for them. They make them do so to support
their family and use them as earning hands from the early age.

Over the last decade, Pakistan’s poverty headcount has witnessed a persistent decline, both at
national and regional levels. The percentage of people living below poverty line has declined
from 50.4% in 2005-06 to 24.3% in 2015-16, according to Pakistan Economic Survey 2017-18.

Poverty in both rural and urban areas has been declining with a poverty headcount of 12.5% in
Urban and 30.7% in rural areas in 2015-16.

Poverty incidence
year national urban rural
2005-2006 50.4 36.6 57.4
2007-2008 44.1 32.7 49.7
2010-2011 36.8 26.2 42.1
2011-2012 36.3 22.8 43.1
2013-2014 29.5 18.2 35.6
2015-16* 24.3 12.5 30.7

The decline is more pronounced in urban areas than rural areas. Declining trends are shared at
national as well as urban and rural areas. The largest percentage decline in poverty headcount
was observed in the year 2013-14, when it dropped by 6.8 percentage points – with 6.2
percentage points decline in Urban and 7.5 percentage points in rural areas.

Change in poverty headcount

year national urban rural
2007-2008 6.3 3.9 7.7
2010-2011 7.3 6.5 7.6
2011-2012 0.5 3.4 -1.0
2013-2014 6.8 4.6 7.5
2015-16* 5.2 5.7 4.9

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Poverty headcount has declined by 5.7 percentage points in urban areas and 4.9 percentage
points in rural areas between 2014 and 2016, thereby leading to an overall decline of 5.2
percentage points decline in the incidence of poverty.

Multidimensional Poverty in Pakistan:

The concept of Multidimensional Poverty (MP) recognizes poverty as being a multi-facet
phenomenon that constitutes multiple aspects of deprivation.

2004-5 2006-7 2008-9 2010-11 2012-13 2014-15

National Rural 70.3 69.5 65.2 62.3 56.0 54.6
Urban 24.0
Overall 55.2
Punjab Rural 62.7 61.0 57.0 53.4 46.9 43.9
Urban 19.7
Overall 49.7
Sindh Rural 88.1 88.1 87.4 81.0 71.9 75.7
Urban 22.7
Overall 57.3
Kpk Rural 72.9 72.8 68.0 64.8 57.1 57.7
Urban 30.5
Overall 65.8
baluchistan Rural 91.6 91.9 90.7 89.3 85.8 84.5
Urban 49.4
Overall 83.4

As the table shows, there are stark regional disparities in Pakistan. The poverty in rural areas is
higher than urban areas. Similarly at province level, Punjab has the lowest multidimensional
poverty while Balochistan has the highest incidence. It is also important to study the progress
made by provinces in reducing poverty over the period under analysis. Figure 2 demonstrates the
relative change in MPI at national and province level. Punjab accounts for the highest relative
reduction in MPI (39.8percent) while Balochistan showed the slowest progress in reducing
multidimensional poverty with a relative change of only 18percent.

Causes/Reasons of poverty in Pakistan:

Government Policies
Government is not well aware of present conditions of country. The policies of government are
based on the suggestions of officials which do not have awareness about the problems of a
common man. After implementation of the policies do not get effective result. After the failure
of one policy, government does not consider its failure and announces another policy without
studying the aftermaths of last one. Heavy taxes and unemployment crushes the people and they
are forced to live below poverty line.

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 Education
Education sector plays a very vital role in the progress of any country. Unfortunately, the
condition of education sector in Pakistan is very miserable. The lack of quality education our
country is unable of dealing with the challenges of the 21st century. Due to poverty people are
unable to afford quality education for their children. The primary completion rate in Pakistan
given by UNESCO is 33.8 % in females and 47% in males, which shows that people in the 6th
largest country of the world are unable to get the basic education.

Overpopulation
Pakistan is facing the dragon of overpopulation. The growth rate of Pakistan is very high and is
among the highest in the world. Since 1947, the population has become more than triple.
Pakistan is almost touching 180 million marks. Population expansion has been a real issue of
concern for all governments. With limited resources it is very difficult to control the growing
population.

Unemployment
Pakistan is poorly faced with the problem of unemployment. The existing unemployment rate is
15%. Thousands of young doctors, engineers and other educated people are out of job. There are
no opportunities for youth to utilize their capabilities or abilities in right direction. Pakistan is
facing the problem of brain drain due to unemployment because we are unable to utilize their
precious hands in the progress of the country.

Poor governance
Owing to poor governance, the government is losing control over law and order situation. When
individuals put themselves in front of institutions, they set a bad example

Division of Agricultural Land

Pakistan is an agricultural country. Most of people are farmers by profession. One has land
which is fulfilling the needs of his family but he has to divide the land into his children when
they got young. After division the land is not sufficient to support a family. Now the families of
his children are suffering and spending their lives below poverty line.

Large Scale Import

The import of Pakistan is greater than export. Big revenue is consumed in importing good every
year, even raw material has to import for industry. If we decrease import and establish own
supply chains from our country natural resources the people will have better opportunities to
earn.

Fluctuated Foreign investment

Foreign investor comes to local markets. They invest millions of dollars in stock markets and
stock market gets rise in index. Then the investor withdraws his money with profit and market
suddenly collapses. The after math always is faced by poor people.

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 Privatization
Government is unable to manage the departments and country has low reserve assets. So the
meet the requirements some companies run by government are sold to foreign investors. The
commodities or services provided by the companies are becoming costly. For example if
government sold a gas plant then prices for gas in country rises.

Political Instability
Pakistan has been facing political crisis .Political instability is a situation when the uncertainty
among the government structure expand due to some basic causes and it eventually end up the
current government. That’s why; our country has failed to develop healthy political institutions, a
lasting democracy and impartial judiciary.

Solutions to Overcome the Poverty in Pakistan:

 Poverty can be removed by broking the vicious circle of poverty.
 Control on inflation is compulsory to eliminate the poverty.
 Government should provide more facilities to investors to increase the investment to
reduce the unemployment.
 Use of modern techniques of production and subsidies in utility charges is necessary.
 Development of agriculture and industrial sector will reduce the poverty in Pakistan.
 Government should make easy, more and in time availability of various types of credits.
 We should save more to reduce the poverty.
 Govt. should reduce the rate of tax and increase the rate of capital formation.
 Govt. should allocate more funds for education to increase the literacy rate.
 Proper maintenance of law and order in necessary to remove the poverty.
 Check on nepotism is necessary to reduce the poverty.
 Developing investment friendly environment
 Allocating equal resources

Conclusion:
Poverty is not bad but to remain poor and to accept poverty is really bad. In Pakistan, poverty is
increasing day by day. Effective steps of government are required to reduce it. Government
should provide credit facilities and use labour intensives techniques of production to reduce the
poverty. With doing proper planning and making proper policies can overcome the poverty and
helps in solving the problem. People need to cooperate fully with government and should be
sincere with their own country and put all their energies for eradication of poverty.