New poverty line makes a third of Pakistanis poor

Islamabad: At least 60 million Pakistanis are living below the poverty line, posing a challenge for the government.

The number of poor increased owing to the adoption of a new methodology for measuring poverty which uses the 2013-14 survey data, Dawn online quoted the country's Planning, Development and Reforms minister Ahsan Iqbal as saying on Thursday.

Addressing a seminar on 'Poverty Estimation', co-chairing with Finance Minister Ishaq Dar, Iqbal said that the incumbent government was committing itself to a greater challenge because 2001 poverty line formula that placed 20 million people under poverty line was outdated and misleading.

The new poverty line estimated the number of poor households at 6.8 million to 7.6 million. "So we are raising bar for ourselves. But we have decided to do so," the minister said.

Using 2013-14 data, the poverty headcount ratio comes out to be 29.5 percent of the population.

In monetary terms, poverty line stands at Rs.3,030 per adult equivalent per month, the minister said.

Under the old poverty line, the percentage of the poor fell by around 25 percentage points, from a high of 34.6 percent in 2001-02 to 9.3 percent in 2013-14.

Further analysis of the past data under the new poverty line estimates the poverty headcount ratio at 63.3 percent in 2001-02, which has now fallen to 29.5 percent.

"We needed to choose from reference group, measure of welfare (calories) and method," the minister said, adding: "We have chosen 10-40 percent of distribution as reference group, 2,350 calories as minimum welfare measure and cost of basic needs as method."

The 2001 model of poverty measurement was based on food energy intake (FEI), which was not a representative one. To make it more transparent and coherent, the government has also incorporated costs of basic needs (CBN) for capturing non-food expenditures in the new formula.

Non-food items will include expenditures on education, health and mobile phones. These will be added to basket for calculating the exact number of poor in the country.