A recent Gallup survey showed that Pakistanis are the least satisfied among South Asians when it comes to government efforts to help the poor in their respective countries. Interestingly, unlike India where it is the poor segment which is the least satisfied or Afghanistan where the poor themselves are the most satisfied with their government policies, the low levels of satisfaction is shared across the income segments in Pakistan.
The trouble is that their views about their future well-being relative to their present statuses are also the most pessimistic among their South Asian peers. And here too, one can help notice that pessimism about future well-being is shared across income segments in Pakistan.
Published in a just-released World Bank report called "Addressing Inequality in South Asia", these survey findings should ring alarm bells in the corridors of political power, though, of course, some would claim that these bells are already ringing in the form of rallies, sit-ins and what not.
The authors of the report Rama M, Mitra P et al shed light on a long list of inequalities, its nature and causes and consequences in Pakistan and elsewhere in South Asia. Summarizing all of those might require full-page column, but three takeaways are worth reiterating.
First, the rural-urban divide accounts for a growing share of consumption inequality. Except for Sri Lanka, where rural-urban divide has decreased substantially over time, the divide accounts for a substantially larger share of overall inequality now than it did 10 or 15 years ago. In Pakistan, when households are separated along rural-urban lines, differences between groups accounted for nearly 7.5 percent of total inequality in 2010, from 2.5 percent in 2001.
Second, is the fact that taxes in Pakistan are not performing their redistributive function. Pakistani "households in the lowest decile pay about 2.4 percent of total taxes, while they account for 3 percent of total consumption; households in the highest decile pay a little over 40 percent while accounting for about 32 percent of total consumption". However, "effective tax rates are basically flat across most of the population until the richest group is reached," the report said.
Third, a similar inequality is visible in the share of electricity subsidies, which takes up a sizable portion of the public spending in Pakistan. The report notes that in the case of Pakistan, the poorest 40 percent of households used to receive less than 30 percent of total electricity subsidies, while the richest 20 percent received close to 40 percent of total subsidies. The distribution of benefits improved after the October 2013 tariff increase, but electricity subsidies remain regressive".
How well have Pakistani governments, the one in charge now or the one before, have responded to these growing disparities? Most economic observers know quite too well.
How well any government might perform on these accounts in the future, might depend on how strongly does the society push these inequalities away. Given Pakistans fragile political, security, and law and order framework, growing inequalities can have grave consequences; consequences that Pakistan can ill-afford.

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