To measure poverty, govt mulls new methodology

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ISLAMABAD: In a bid to present a more realistic figure, the government has decided to change the methodology of measuring poverty, which is likely to increase the percentage of people living below the poverty line from the current estimate of 8% to as high as 30% of the total population.

The government on Friday discussed the possibility of including non-food items like availability of education and health facilities in its calculations while working out the new poverty level in the country.

The Ministry of Finance and the Planning Commission have decided to work together to sort out a decade-old issue and are expected to announce the new poverty figure by the mid of next month, said Finance Minister Ishaq Dar.

In September 2013, the incumbent government had made an attempt to change the methodology.

According to the current method, if a person is able to consume 2,350 calories per day, which costs Rs1,745 per month, the individual is assumed to be living above the poverty line. The methodology is food-centric yet it does not fully reflect changes in dietary patterns of the last seventeen years.

The 2,350 calories per day per person is not a realistic assumption and we need to raise the bar, said Dar while talking to The Express Tribune. He said a new figure will be ready by April 15.

Dar said that the 2,350-calories level would not be reduced in order to avoid any controversy. He said the government would give two numbers, one with current methodology, and the second on the basis of new methodology to let the people know the reality.

Figure history

Last time, Pakistan gave the official poverty number in 2005-06 when it reported that 23.9% people lived below poverty line. In 2007-08, the government did work out the poverty number, which was at 17%, but it was never announced due to questions over its credibility.

Then the PPP government made an attempt in 2010-11. The unofficial figure in 2010-11 was 11.4%, which the then government did not announce due to criticism from the donors. Nobody believed that poverty had reduced due to sluggish economic growth and double-digit inflation.

Poverty was assessed on the basis of the Household Integrated Economic Survey (HIES) 2010-11.

On the basis of HIES 2013-14, the Planning Commission has estimated that the poverty has further declined to around 8%, said an official who attended Friday’s meeting. Due to this low level of poverty, international donors can also withdraw their pro-poor financial assistance, said the officials.

Only by keeping the basket of goods constant but changing their weights, the poverty would increase to 29% in 2013-14, he added.

It has been discussed that the poverty line in monetary terms would be changed in addition to adding new items in the basket used for calculating poverty, said the officials.

Secondly, the poorest of the poor, who are receiving assistance under Benazir Income Support Programme (BSIP) could be excluded for making the figure more representative. Due to official assistance, the BISP beneficiaries consumption patterns change, which may show them above the poverty line.

The officials said that after change in methodology the poverty figure could jump in the range of 25% to 30%.

An assessment of poverty would enable the government to determine proper development objectives, including redistributive policies and Sustainable Development Goals (SDGs), said the Finance Ministry.

According to the United Nations Multidimensional Poverty Index, about half of Pakistan’s population lives below poverty line. The UN uses various indicators including sanitation for measuring poverty.

The Planning Ministry would now send a concept note for the approval of the finance minister before changing the methodology.

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