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Noor Aftab

The News

Published Date: Mar 12, 2015

Pak fight against poverty at risk: study

 

ISLAMABAD:
The consumption share of the richest 20 percent population was more than
five times the share of the poorest 20 percent population in the year
2011-12.

 

Similarly, spending share of the top 10
percent of population was 31 percent while the poor 40 percent of
population’s spending share was only 20 percent; this means 18 million
richest people spend one and a half time more than 72 million poor
people.

According to a new study, jointly conducted by Dr
Abid Burki, Dr Rashid Memon and Dr Khalid Mir of the Lahore University
of Management Sciences (LUMS) in coordination with Oxfam Pakistan,
Pakistan’s fight against poverty is at risk as multiple inequalities
persist across the country impeding long- term growth potential.

The
research signifies the causes of inequality in a number of ways,
including: lack of opportunities to access healthcare and education,
unequal distribution and access to land and capital. In terms of
intra-province inequality, Sindh is the most unequal province in
Pakistan with the highest Gini index, which means the divide between
rich and poor in Sindh has widened — followed by the Punjab, while
Khyber Pakhtunkhwa (KP) and Balochistan provinces have the lowest levels
of inequality. The level of urban inequality is considerably higher
than rural inequality, which indicates that urban prosperity is not
equally shared.

The research reveals that due to tax
exemptions, Pakistan loses Rs500 billion annually, which is 1.5 times
the annual budget for education. Pakistan can get an additional tax
revenue of Rs80-115 billion if the exemptions on agriculture are
withdrawn.

Lack of tax revenues puts pressure on the
budget and leads to inflationary monetary policies – which have an
important impact on the distribution of real income of poor. Low tax
base also implies that there is little room for investments in
nutrition, public education and health.

Between 1996-2002,
few companies received 45 percent larger loans than other companies.
These firms had a 50 percent higher default rate on loans as well. The
defaulted loans were inefficiently invested, leading to a further loss
of an estimated 1.6 percent of GDP per year, which makes a total of
Rs67bn.

The research also identifies the inequality traps.
Over time, the mobility between classes has worsened, in 1994-95,
roughly 30 percent of those born to both rich and poor fathers remained
in the class they are born which shows mobility was rather easier.

Now
40 percent of sons born to poor fathers remain poor; only 9 percent
make it to the rich class. While 52 percent of sons born to rich fathers
remain rich. There was a growing difference between the income of the
rich and poor during the period of 1990–2011.

Source: http://www.thenews.com.pk/Todays-News-13-36368-Pak-fight-against-poverty-at-risk-study