Institutional Imperatives of Poverty Reduction in Pakistan


He who is without empathy for the suffering of others, has no right to be called human.
[Jalal-ud-Din Rumi, 1207-73]

Inflation in food prices over the past few years has pushed 11 million people into a state of hunger and poverty. In the recent dilemma, if no policy actions are taken, an additional 22 million people will be victims of poverty. According to World Food Program Survey 77 million people up to March 2008 are deemed “food insecure”. Food insecure people is defined as those people who consuming less than 2350 calories per person per day.
Poverty occurs when the individuals in a fragmented community is locked into a nexus of power, which deprives the poor of their actual and potential income. The poor face markets, institutions and local power structure, which discriminate against access of the poor over resources, public services and governance decisions which affect their immediate existence. (A. Hussain, 2000). Inequality and poverty are built into the structure of the growth process itself. According to world bank report 2006, it is widely recognized that inequality adversely affects both the sustainability of growth as well as its capacity for poverty reduction.
Until 2003, most of the studies on poverty in Pakistan only examined poverty by the poverty line. Hover if we wat to overcome the poverty it is essential to understand the factors that are causing poverty and we have to identify the major points through which the poor can be enable to overcome poverty on sustainable basis. Poverty is rooted in the institutional structure of society and state of Pakistan. Therefore, overcoming poverty will involve inducing changes in both the polity and the economy as part of an integrated process of institutional change (A. Hussain, 2008).
Most of the population in Pakistan is linked with the agriculture, most of them are uneducated and unskilled labour, they have more influenced on their decision making by landlords. In landlords dominated areas, where landlords control the local state apparatus as well as the credit market the poor tenants are locked into a nexus of power and debt bondage with landlords. In the result they have to work on landlord’s farms as labourers either less than market wage or no wage at all, which systematically deprive the poor of their actual and potential income, increases inequality and engenders persistent poverty.
Landlord’s power also impacts the disposal of the produce by poor farm household which have direct effect on their food consumption. Due to asymmetric tennurial arrangements, the extremely poor farmers has to pay a large portion of their produce to the landlords as rent due to this they face a food deficit near the end of the year. As they run out of food grain, latter they are obliged to purchase grain in the market at higher prices. Such households are then faced with the necessity of borrowing for food consumption. According to Pakistan Human Development Report 2003, it has been argued that local elite power structure in rural areas distort markets in favour of the rich and against poor. The poor farmers face input and output markets where they have to pay a higher price for their inputs and get a lower price for their outputs compared to large farmers. Due to this discrimination poor farmers lose their almost one third income. (Hussain, 2003)
There is a strong relationship between poverty and illness, studies show that prevalence of disease amongst those who are slightly above the poverty line is a major factor in pushing them into poverty. Due to inadequate diet and lack of access over safe drinking water and sanitation 65.1 percent of the extremely poor and 55.6 poor face health problems. Already poor get pushed into poverty as result of loss of income due to absence from work, and high medical fees. Unequal access to public health facilities and high probability of diseases amongst the poor becomes a structural factor that further increase poverty and inequality.
Due to low school enrolment rate the number of adult illiterates is expected to rise during the coming decade, thereby increasing poverty even if greater employment opportunities become available. In Pakistan, 91.6 percent (Majid, 1997) of the labour force is unskilled, with low productivity and poor adaptability to technical changes. This constitutes a significant structural constraint to both growth and poverty reduction.
Most of the poor live in localities both in rural and urban areas, which is inadequately policed and in case of theft or violence the cost of seeking redress through the judicial system is unaffordable which look the poor into permanent debt. This is another factor which increase poverty and reinforces inequality.
Other factors that increase poverty are; low domestic saving rate, discrimination in taxation, bad export structure, corruption, slow and unstable crop sector growth, and institutional constraints to growth in the large scale manufacturing sector.
Following are the policies that can undertake to overcome the structural constraints to sustained and equitable growth.
Empowering the Poor for Market Access; better access for the poor over the market for labour, land, agriculture inputs and outputs, means changing the balance of power in favour of the poor at the local level. Enabling poor to access credit, training, and technical support for increased employment, productivity, and income. Land for Landless; land reforms must be done, in order to minimise the problem of landlessness, government must launch a program to allotting state owned land to the needy people as part of its overall strategy of growth with poverty reduction.
Health Policy for Poor; we saw in the above discussion that illness is a major factor that pushes people into poverty therefor it is compulsory for government to improve health conditions and nutrition to reduce poverty. Improved diagnostic and treatment capabilities at local levels to deal with the crisis of health and poverty. Education for Development; improve the coverage and quality of schools, particularly for girls. Skilled the labour with technical vocational training. Capacity building of selected universities to enable them to conduct research and teaching at world class standers.
Other remedies are; Combating Corruption, Institutional Policies for Stabilizing Crop Sector Growth, Institutional Change for Sustaining in the Manufacturing Sector, Institutional Framework for Pro Poor Growth, and Mainstreaming the Poor through Equity Stakes.

• Akmal Hussain, “Poverty, Growth and Governance”, Chapter in: V.A. Pai Panandiker (ed): Problems of Governance in South Asia, Center for Policy Research, New Delhi, 2000.
• World Development Report 2006 on Equity and Development, World Bank and OUP, New York, 2005, and Nanak Kakwani, Pro-Poor Growth: Concepts and Measurement, paper presented at the PIDE/PSDE 19th Annual General Meeting and Conference (13-15, January 2004).
• Akmal Hussain, with inputs from A.R. Kemal, Imran Ali, A.I. Hamid and K. Mumtaz, Poverty Growth and Governance, UNDP, Pakistan National Human Development Report 2003, Oxford University Press, 2003, Table 14, page 63.
• Nomaan Majid, Pakistan: An Employment Strategy, ILO/SAAT, December 1997. pages 34, 35
• Akmal Hussain, Power Dynamics, Institutional Instability and Economic Growth: The Case of Pakistan, Drivers of Change Study 2007-08, The Asia Foundation, Islamabad (Mimeo), 14th March 2008.
• Akaml Hussain, “Institutional Imperatives of Poverty Reduction” Institute of Public Policy, Beaconhouse National University, Lahore 17th April 2008

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