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Political Economy of Poverty

By Dr. Muhammad Shahid

Published in Daily Country Newss


The million dollar question is why some countries are calculating happiness index while others are busy in computing hunger index struggling with food insecurity, malnutrition, diseases, and deprivation. Why some countries are rich, prosperous and enjoying higher standard of living while others are poverty stricken. Getting the definitive answer to this question is not an easy job. However, this is not impossible to get the answer for the grinding poverty and growing inequality in our societies. As a socio-economic analyst, I will try to scratch the surface in this article.


No doubt, economic growth is the most powerful instrument for reducing poverty and improving the quality of life. The available literature provide overwhelming evidence that rapid and sustained growth is critical to making faster progress towards achieving sustainable developmental goals, particularly reducing poverty. Strong growth and employment opportunities improve incentives for citizen to invest in themselves and produce a quality human capital, quality institutions and good governance. Thus economic growth can generate virtuous circles of prosperity and opportunity and can make a society free from poverty and miseries.


But besides economic growth, there are many other factors and some of them are more important than economic growth for reducing poverty and human development. Chief among them is the prevalence of peace. There is a perception that we have enemies all around us. There are people who have fostered this paranoia and created the climate of fear in which we are living. There are groups who have nurtured extremism which hold our country backward, poorer and underdeveloped. We are spending too much on defense and government allocated Rs.1370 billion for defense services in the budget for the fiscal year 2021-22. There is an increase of 6.2 per cent and the allocated amount is 2.54 per cent of the GDP. Additionally 360 billion rupees would be paid to the retired military personal would come from the civilian government’s current expenditure instead of the defense budget.


The government does not seem willing to shift its spending priorities despite the burgeoning socio-economic challenges. On the basis of supposed threats from neighboring countries, government seems more interested in keeping the powerful military than providing support for the millions of struggling Pakistani citizens. The military believes that any cut on defense budget would adversely affect its ability to counter threats facing the country. This is why it is unwilling to limit its spending to create fiscal space for the government. If this is the case, the government would not be in a position to meet the needs of the growing population. According to the budgetary documents, the government has allocated insufficient resources for health and education sector for the fiscal year 2021-22. Government is also facing the challenge of feeding more than 25 million poor families that can no longer make a living due to COVID-19. 


Pakistan and India spent billions of dollars on nuclear weapons and missile technology. This is one of the main reasons for the grinding poverty in this region. Prevalence of diseases, absence of clean drinking water and other socio-economic deprivations are caused by the huge expenditures on building nuclear arsenals. The nuclear program of both the countries provides the necessary deterrence to minimize the chances of war. This means there is no need for an increase in defense spending. India and Pakistan can reap peace dividend by diverting resources from buying arms to spending on humans. This is high time to rethink and revisit our priorities. We cannot afford to ignore the massive challenge of poverty. We cannot tackle our economic and social development challenges effectively until we address the issue of bad relation with our neighboring countries. We need to work for regional peace and prosperity by a huge reduction in excessive military spending and a shift of resources to areas addressing human needs.


Furthermore, one cannot make good lemonade from bad lemons. Continued political instability in Pakistan prevented successive federal governments from making good and persistent economic policies. The gradual institutional decay, poor governance and corruption made things worse. There are people, elites, pressure groups and venal politicians who did dishonest, immoral things particularly financial wrong doings. This high level of corruption hold the country with unmet potential and made prosperity a distant dream in this unfortunate part of world. These corrupt and inefficient people ruined our institutions of prosperity that led to the destitution and impoverishment in our society. We cannot restrict the discussion only to the inefficient and corrupt bureaucracy. This entire episode of maladministration and institutional decay generated dysfunctional institutions, persistence of poverty, endless miseries and deprivation.


HDI findings are very also very painful. Statistics are gloomy and unpleasant when we apply every measure of prosperity, every measure of progress and every measure of happiness. Social and economic indicators are unspeakable. The dreadful poverty statistics indicate that around 30 percent of population is living below poverty line. The official statistic for poverty was 24.3 percent in 2015. Covid-19 and the dismal economic performance pushed million below poverty line further. Statistics about child labor and statistics about out of school children are dreadful. Data about the stunting children in the country is abysmal.


A prosperous society with zero poverty is of course a very ambitious task. This is also difficult to live in a society where there is no corruption, social neglect and inequality. But at the same time, we must be aware of the fact that any inability of the government and institutions to deliver would be a disaster for the world’s fifth-most populous country.


The author has a PhD Degree in Economics from PIDE and has 15 years’ experience as a journalist covering economy.


He also teaches Public Policy, Governance, Poverty and Development, Gender, Political Economy and Development Economics as a visiting faculty member.

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