The Dynamics of Rural Poverty in Pakistan: A Time Series Analysis

Abstract

At the start of the 21st century, almost one-fifth of humanity-1.2 billion people-live on less than a dollar a day. Pakistan is confronted by a multifaceted dilemma. The major issues facing the country are poverty and income disparity, particularly among the rural segments of the society. And evidence indicates that both have worsened. The impact of poverty is particularly acute on the most vulnerable sections of the society. In the year 1990-91, 39.42 percent of the total 31.81 percent of the population below the poverty line were termed as absolute poor including 34 percent chronically and 61 percent extremely poor. During the last decade or so, nearly 2 million people are added to the clusters of extremely poor, 5 million to chronically poor, 7 million to transient poor. Thus bringing nearly 59.11 percent of the poor population out of poverty is to a certain extent easier than bringing the remaining 40.89 percent out of the poverty trap. Pakistan has witnessed a decline in the growth rate from 6.1 per cent during the 1980s to 4.2 percent during the 1990s. However, the Poverty Equivalent Growth Rate (PEGR) analysis reported in this paper indicates that the pro-poor growth scenario is improving in rural Pakistan. If growth remains pro-poor in the subsequent years as it was in the year 2000-01, there is a likelihood that the growth will trickle down to the poor more than the non-poor. Punjab province also showed an improving trend in terms of pro-poor growth in the analysis. In order to improve PEGR, the poverty alleviation policy must be accompanied by rational income distribution.