Causes of Poverty in Pakistan

Poverty
Poverty refers to the condition of not having the means to afford basic human needs such as clean water, nutrition, health care, education, clothing and shelter.
Poverty in Pakistan-Challenges
Poverty is one of the major social problems Pakistan is facing. It is one of the most important and sensitive issue not only for our self but for the whole world. Poverty can cause other social problems like theft, bribe, corruption, adultery, lawlessness, injustice.
To eradicate the evils of society we have to fight with poverty. We can't control theft by enrolling thousands of police men. Corruption and injustice can't come to an end through tight legislation but by demolishing poverty.
A low level of domestic income for an individual results in lack of access to education, health care, and other communal facilities like lake of sanitation, transportation and communication. Poverty is not just about providing food, clothing, & shelter. There are a lot more indicators that are needed to improve poverty such as education, stable employment with decent wages, health care, law and order security, minimum housing standards, & decent recreation environment all these factors when combined could have a dramatic affect on reducing poverty in Pakistan.
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Poverty Rate in Pakistan
Poverty in Pakistan is a growing concern. Poverty rate jumped from 23.9% to 37.5% in three years after severe economic shocks hit Pakistan last year. Although the middle-class has grown in Pakistan to 35 million, nearly one-quarter of the population is classified poor as of October 2006. As of 2008, 17.2% of the total population lives below the poverty line, which is the lowest figure in the history of Pakistan.
According to the recent data compiled by the United Nations, Pakistan’s Human
Development Index stands at 0.56. It is pretty close to Bangladesh, Yemen, and Nepal. It ranks 139 out of 179 countries reported in this analysis.
To eradicate poverty in Pakistan we have to fight with the causes and factors of poverty.
Unless the causes and factors of poverty will be settled the poverty will never end.
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Causes of Poverty in Pakistan
Pakistan is a poor country. Its economy is facing fluctuations now a day. At the time of independence Pakistan has very low resources and capital, so the processes of progress were very slow. Unfortunately the politicians of Pakistan were all not well aware of modern global system and the progress processes and the needs of country. Due to bad policies today Pakistan is facing a lot of problems. The continuous failure of policies leads the people of country to miserable conditions.
It is difficult to point out all causes of poverty in Pakistan but the major causes of are given below:
· Government Policies
· Government extra expenses and Corruption
· Population, Unemployment and Lack of Education
· Inflation, Smuggling and Large scale Imports
· Law and Order situation and Decline in Foreign investment
· Increasing Defense expenditure & Race of Weapons in the Region
· Role of West and IMF
Our discussion is basically focused on these root causes of poverty. Now let’s have a look on these causes separately given ahead.
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1. Government Bad Policies
Government is not well aware of present conditions of country. The policies of government are base on the suggestions of officials which do not have awareness about the problems of a common man. After implementation 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. The suitable medical facilities are not provided to people and they are forced to get treatment for private clinics which are too costly.
We have collected some bad policies of Pakistani Government which are given below.
Pakistan’s Gold and Copper reserves sold in pennies
Reko Diq is a small town in Chagai District, Baluchistan having the world´s largest Gold and Copper reserves. Reports emerging from various sources indicate that the US $ 65
Billion natural deposit might have been sold for US $ 21 Billion to Tethyan Copper of
Australia which has taken the contract to develop this mine while Barrick Gold
Corporation of Canada (a JEWS company) and Antofagasta of Chile have a jointownership of the copper-gold deposit at Reko Diq.
The Reko Diq deposit is being explored by Tethyan Copper
Company Pty Ltd (75%) and the
(BDA) Balochistan Development
Authority (25%). Tethyan
Copper Company is held jointly
(50:50) by Barrick Gold
Corporation and Antofagasta
Minerals.
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Currently the deposit is at scoping / pre feasibility stage. It is a world class copper / gold porphyry style deposit, typical of the tethyan belt. It has been sold to the Zionist controlled regimes by the Pakistani Government at a price of $21 billion. Rough estimates suggest that the gold and copper at the surface accounts for $65 billion worth of deposits. UPS and Batteries Imports
Pakistan’s UPS and batteries import is $10
Billion, but we require only $7 Billion on
Kala Bagh Dam Project by which we can generate 7500MW electricity at 0.60 paisa’s/unit only but our Govt. is not willing to pay attention on this……..
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. Not only this but Privatization is made on very cheaply basis, lets see…….
· Pakistan steel mill cost’s Rs.300 Arab but it is sold in Rs.21 Arab.
· Habib Bank Ltd. Cost Rs.140 Arab but sold in Rs.14 Arab.
· PTCL cost Rs.700 Arab but sold in only Rs.120 Arab
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2. Govt. Extra Expenditure & Corruption
We have collected some Facts and Figures about High Expense of Govt. Officials which are given below:
· 500000000 (5 Crore) per year is spend on the security of President and Prime minister. · Monthly expense of 1 minister = 30 Lacs
Monthly expense of 96 minister = 288000000 (28 Crore 80 Lacs)
Expence of 96 ministers per year = 3 Arab, 45 Crore, 60 Lacs
· National Assembly + Senate = 440 Members
Provincial Assembly = 636 Members
Total = 1076 Members
Every member have luxury and expensive vehicle, none of them is car less and also none of them is going alone to his office, they Have 4 to 8 vehicles security squad So 1076 x 4 = 4304 cars at least!
If each car consumes fuel of 500 daily then :
4303 x 500 = 2152000 per day
2152000 x 30 = 64560000 per month
64560000 x 12 = 77 Crore, 47 Lacs, 20 Thousands rupees per year, and this is only the estimate of fuel, now you can think yourselves about their eating expense, their salaries, their visits etc.
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· Flags and banners are used by each political party for their publicity. It is a rough estimate that only in Karachi a party put at least 50000 flags and change after 2 months, so if each party has 50000 then there will be some 250000 flags only in
Karachi. Then what will be the amount of flags through out the country?????
Each flag costs up to Rs.100, why should this money not be used for the help of poor people?
This is the Direct and visible way of wastage of the nation’s money but there is an invisible way as well to collect the money and left the people in the Web of Poverty, which is called Corruption!
Corruption
It is the condition when there is not morality and every one is trying to earn more and more by using fair and unfair means. Officials waste their time has low efficiency. Only one relationship that is exists in society is money. One has to pay a heavy cost to get his right. Law and order conditions are out of control and institutions are failed to provide justice to a common man. Justice can be bought by money only. But government is unable to control such type of things. In this whole scenario some corrupt people has been occupying the resources and common man is living in miserable conditions.
Let’s see an example that whenever there is an increase in the price of electricity, gas or petrol while state bank of Pakistan doesn’t issue the coins of paisa now.
Suppose if petrol is Rs.71.13 per liter, but we have to pay Rs.72 per liter (87 paisa extra)
Now total Petrol consumption in Pakistan = 50880000 Liter per Day
50880000 x 87 = Rs.44265000 per Day and what will be the amount for months or year.
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3. Population, Unemployment and Lack of
Education
The estimated Population of Pakistan in 2010 was over 169,478,000, making it the world's sixth most-populous country. The population growth rate now stands at 1.6%.
About 20% of the population lives below the international poverty line of US$1.25 a day.
Pakistan's population has increased from 34 million in 1951 to 144 million in mid 2001.
The addition of over 108 million Pakistanis in just five decades is due to the high population growth rates in the last thirty years. Continuing high population growth will amount to Pakistan’s population reaching 220 million by the year 2020. Coupled with poor human development indicators such as low literacy, high infant mortality and low economic growth rates, such a large population will undermine efforts being undertaken to reduce poverty and to improve the standards of living of the populace.
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Over one third of Pakistanis are living in poverty. The impact of population growth on poverty is obvious, since poorer families, especially women and marginalized groups bear the burden of a large number of children with much fewer resources further adding to the spiral of poverty and deterioration in the status of women. This large part of the population is constrained to live in poor housing and sanitation conditions and lack of access to safe drinking water. In particular, income poverty leads to pressures on food consumption and adversely affects caloric intakes and increasing malnutrition in poorer families and contributes to high levels of child and maternal morbidity and mortality.
Furthermore, rapid population growth contributes to environmental degradation and depletion of natural resources.
Unemployment
“A person is unemployed if he or she did not worked during the preceding week but made some effort to find working the past four weeks”
Unemployment rate in 2009 was 7.40 which is doubled in 2010, the current rate is
15.20%
Unemployment is one of the major problems of Pakistan. The level of unemployment is moving up. The socio economic system of the country and institutions has failed to provide employment to the increasing labor force. The rate of expansion in industrial sector is very slow. The increasing labor force has not been absorbed. Increasing output of general education institutions is the major cause of educated young men’s unemployment. Technical, professional and vocational institutions are limited in number.
When peoples are unemployed they consume the resources but are unable to contribute in overall economy, which results in poverty.
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Lack of Education
The literacy rate of Pakistan is very low. Most of people do not have any concept about the modern earning sources. Most people are unable to adopt technology for their business needs, that’s why business do not meet international standards and results as decrease in revenue which lead the society to poor financial conditions.
Literacy ratio in Pakistan still remains at 56 percent, mainly because of small budgetary allocations, lack of political will and delays in disbursement of funds. In the region, Pakistan has been ranked higher only than Nepal and
Bangladesh, which have literacy rates of 49 and 43 percent, respectively.
Other countries have far better ratios: the Maldives, 96 percent; Sri Lanka, 91 percent; and India, 61 percent.
Sindh has the highest percentage in education which stands at 54 percent followed by
Punjab (52 percent) and the NWFP (40 percent). Balochistan has the lowest ratio — 33 percent. Unesco attributed the low level of literacy rate to factors like weak organizational infrastructure, low professional capacity, lack of research, non-availability of proper training institutes, low public awareness and lack of evaluation and monitoring system.” Poverty can't come to an end unless we will spend much larger share of our GDP to the education sector. We have to open more primary and secondary schools especially in our villages. In the 1971 constitution we made primary education compulsory and free. The constitution made a pledge to made secondary education free with in next ten years.
Leave the secondary education we are not able to provide even free primary education both to boys and girls after passing 35 years.
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4. Inflation, Smuggling and Large scale Imports
Inflation is a rise in the general level of prices of goods and services.
Inflation is the Major cause of Poverty. Poverty in Pakistan is increasing due to the current layer of Inflation. Inflation decrease the purchasing power of society, peoples are unable to fulfill their needs and results in strengthen the Poverty rate.
Smuggling
Smuggling is the clandestine transportation of goods or persons past a point where prohibited. It is directly related with inflation; in fact it is the cause of inflation. Pakistan is recently facing the shortage of sugar and wheat due to the smuggling these items to neighboring countries.
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Pakistan is the 7th largest wheat producing country. Total wheat consumption of Pakistan is 20 million tones, while production of wheat last year was 23 million tones. But the newly elected government in 2008 faced wheat shortages as a lot of Pakistan’s crop had been exported or smuggled out of the country in response to high international prices. In response to the shortages, and the higher international price, the new government announced in their budget for fiscal year 2008-2009 that the government would now procure the crop at Rs 950 per 40 Kg bag, a hike of Rs 300.
Similarly Pakistan is 4th largest sugarcane producing country but facing the swear shortage of sugar. The price of sugar in Afghanistan is from Rs 75-80 per kg. The price of sugar in Pakistan is Rs 45-46 per kg. The price difference gives smugglers a chance which results in shortage of sugar. This condition forced the govt. to import sugar which increases the price of sugar and again affecting the poor.
Same is the case with Moong pulse. For the first time the rates of dal moong (green moong beans) have reached a record high level in retail and wholesale markets of the city due to short production of the commodity in the country coupled with record rates in the international market. Being a local product, moong pulse in the corresponding months of previous year was available in the wholesale markets at around Rs 35 per kilogram (kg) while at retail level at Rs 40 per kg, which was easily accessible in the buying capacity of a large segment of the population. However, owing to multifarious factors including its large-scale unhindered smuggling and less than anticipated crop in Pakistan like world over during the current season, its rates have shot up to record level of Rs 115 per kg at wholesale level while at retail level it is sold at Rs 120 to Rs 125 per kg pushing the commodity beyond the buying powers of an overwhelming segment of the population.
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
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establish own supply chains from our country natural resources the people will have better opportunities to earn. And it will help to reduce poverty.
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5. Law and Order Situation and Decline in
Foreign Investment
Law and Order
There are lot of problems regarding law and order. Terrorist attacks create uncertainty in stock markets and people earning from stock are getting loss due to which the whole country faces uncertain increase in commodity prices. Pakistani firms are unable to sign agreement with foreign investors due to the prevailing abysmal law and order situation.
According to economists, “although the global economic meltdown was also a reason of slow growth in FDI, the domestic shocks were major contributors in the declining trend of FDI. November was the third consecutive month in which the country posted decline in foreign direct investment. We were expecting some increase in the FDI during the current fiscal year ahead of positive economic indicators. The ongoing war in the
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northern areas and suicide attacks in different cities had restricted the foreign buyers from new investment in Pakistan.”
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. Political instability, terrorist attacks, power, gas and water shortage and weak law order control has led to falling trend in FDI. These are the major reasons due to which the foreign investors are not interested in investing their capital in
Pakistan. The after math always be faced by poor people.
The share of foreign direct investment, flowing into Pakistan, is negligible when compared to the opportunities and economic fundamentals of the country. The FDI inflow into the country is less than one per cent of its total, made globally. Since 1996, when received highest amount, FDI in Pakistan has been experiencing a declining trend.
Foreign direct investment (FDI) in Pakistan is a major external source to meet obligations of resource gap, human resource development and goal achievement. The FDI has played
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a vital role in the economic growth of Pakistan. To emerge as a promising nation Pakistan has to provide conductive environment for external economic flows.
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6. Increasing Defense expenditure & Race of
Weapons in the Region
Background: India achieved its independence from imperial Britain in 1947, after which it was divided into two countries - India and Pakistan, as per the Mountbatten Plan. After this partition, Pakistan chose to be an Islamic republic, aligned with United States while
India chose to remain politically neutral, as a secular socialist democracy. These choices turned out to the turning points in the political and military future of both these countries.
Pakistan’s defense budget for the year 2006-07 was $4.1 billion (~3% of GDP) in response to India’s hike in defense budget of 2006-07 at $20.11 billion (~ 2.5% of GDP).
Pakistan’s hike in military budget would be partially funded by its government coffers and partially by borrowing whereas India’s military spending would be entirely off its own funds. India’s ambitious budget prompted Pakistan to up its own military budget, despite the country’s widespread poverty and socio-political problems. Apart from its
GDP, Pakistani military also gets a considerable funding from United States. Considering that India has a far larger economy overall, its military budget is also several times larger, despite being a smaller share of India’s GDP.
India and Pakistan both are facing the common problem of poverty but at the same time both are increasing their defense expenditure with the passage of time. India is always trying to prove its superiority against Pakistan and for that reason India set up different agreements with other nations related to the purchase of weapons and technologies, and so Pakistan follows the neighbor and doing the same. But the point to worry is that India is an Economic power while we are begging from IMF. We have to think about our poor people first………
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7. Role of West and IMF
The International Monetary Fund (IMF) is the international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. IMF loans usually come with conditionalities, restrictions and requirements imposed by IMF on the borrowing country
Pakistan is also seeking the help from IMF on very dangerous conditions which are causing more poverty in the country. Some of the conditions are Listed Below:
Conditions
· Pakistan government has to gradually impose the central excise duty (CED) on services and agriculture sectors at the rate of eight to 18 percent in place of the general sales tax (GST)
· The Pakistani currency will also be devalued after slight changes in the discount rate and exchange rate will be decreased officially by six to seven percent.
· The International Monetary Fund ordered Pakistan to cut military spending by almost a third.
· Put an end to subsidies on all products.
· Taxes should be increased.
· Govt. expenditure should be stop.
There are some other conditions as well but condition listed above had a worst impact on the Pakistani society and poverty in Pakistan.
These negative Impact is given ahead :
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Impact of IMF’s Conditions
The reality is that Pakistan's IMF-approved stabilization program is aimed at making the country a better source of profit for international investors. While Pakistani economy will have no benefits
· Sakeeb Sherani of the Royal Bank of Scotland told a meeting organized by
Pakistan's Centre for Research and Security Studies that the IMF package will
"cause up to three million job cuts in deferment sectors and push another 5.6 million to 7.5 million Pakistanis into poverty over the next two years.”
· Shahid Javed Burki, himself a former World Bank vice-president and ex-Pakistani finance minister has strongly criticized the IMF/PPP-led government's
"stabilization" program saying that it will deflate the economy at a time when demand threatens to fall dramatically due to world recession while other Asian countries have introduced stimulation packages to generate growth, Pakistan has done no such thing. Pakistan is being advised, in fact, to cut expenditure when it needs to invest in employment generating projects. ... At the present rate, only high growth in poverty can be expected."
· This government is now asking for huge loans from the World Bank and the IMF which are reluctant to give money due to their own perilous condition. The
Pakistani economy urgently needs $4 billion or it will collapse. The imperialists will only give this money on their own conditions which include an end to subsidies on all products. Also they demand privatization which means more unemployment and infrastructure collapse. All this will force the millions of peasants and workers to come out onto the streets to find a solution to their miseries. · The conditions the IMF is attaching to its loan to Pakistan will severely impact the country's workers and toilers. They include: eliminating all subsidies on energy, petroleum products, and fertilizer; slashing government spending, including "nonpriority" development spending; and raising taxes.
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· In order to pave the way for the IMF loan, Pakistan's central bank raised its bank lending rate in early November by 2 percentage points to 15 percent and the government has let it be known that a further 1.5 percentage point hike will be implemented in January.The high-interest rate policy the IMF is imposing on the
State Bank of Pakistan has caused consternation among large sections of
Pakistan's business elite, including various trade and industrial lobby groups.
According to an Asia Times Online report, Anjum Nisar, the president of the
Karachi Chamber of Commerce and Industry, has said, "Pakistan's industrial landscape may soon be marked with dead and sick units and there will be massive unemployment because of the devastating impact on businesses of the higher cost of bank loans arising from the interest rate increase."
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Solutions to Remove Poverty from Pakistan
· Govt. should make the Policies in Favor of Pakistan, and Pakistani people.
· Govt. should not waste national assets and utilize them to remove the poverty
· Corruption should put to an end and Judiciary should take some action against corrupt people.
· Population rate should be controlled.
· Govt. should make policies to provide employment to the Labor force.
· Education budget should increase and policies should be made to Boost up the Literacy rate.
· There should be price control in the state to decrease the inflation which will give some benefit to the poor.
· Smuggling should be stop by enforcing the Law and Order.
· Law and order situation must be improved to bring back the Foreign Direct
Investment (FDI).
· Govt. should think first about the healthcare, education, energy crisis instead of Defense and Armory.
· We should relay on ourselves instead of IMF
By taking these steps Poverty rate will be reduce and there will be a relief for the poor
THANKS!
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