The mockery of poverty reduction

Ever wondered why nearly a quarter of Pakistans population lives below the poverty line of $1.25 a day? A cursory look at the Ministry of Finances Poverty Reduction Strategy Paper (PRSP), updated a few days ago, might answer the question to a great extent. It will also shed light on why poverty levels have been rising considerably over the last few years.
Even though government expenditure on poverty reduction increased by 20 percent to Rs220 billion in the first quarter FY11, this has largely been brought about for the wrong reasons, to put it bluntly.
Of the total budgetary outlay for 1QFY11, the majority share was reserved for education, which constituted about 30 percent of the total spending on poverty. This appears laudable at first, but looking at it closely, the developmental expenditures in this regard, plausibly for new investments into education, have been negative for almost all subcategories in education.
It implies that expenditure on more strategic fronts such as disbursements for university-level research, teacher-training, and capacity expansion of primary and secondary schools to cater to the growing population have largely been muted.
Dismally indeed, the expenditure on other areas key for poverty reduction has been quite low. The total shares of health and social security were a meagre 8 and 6 percent respectively, while population planning, rural development and low-cost housing received less than 1 percent of the total poverty reduction expense.
According to a 2002 report by the Asian Development Bank, more than one-third of the poor households in Pakistan were headed by aged persons who were dependent on transfer incomes, such as pensions and other forms of social support.
At another juncture, the report states that "poor households on average had 75 percent more children that the non-poor households. Most of these children are not receiving any education, and thus the cycle of poverty is perpetuated". These points illustrate the importance of assigning greater weights to population planning and social security payments, which the Finmin has quite obviously ignored.
So where has all the spending gone? After education, a large chunk has been taken up by expenditure on law and order and subsidies, which take up 16 and 21 percent of the total budgetary outlays for poverty reduction.
Whats the relevance of law and order to poverty reduction? Not much, apparently, because you can really swap law and order for three meals a day.
According to Dr Asad Sayeed, Director at Collective for Social Science Research, "The PRSP includes all sorts of things; infrastructural developments like road and highway development, law and order, etc., are not directly related to poverty."
Dr Sayeed adds that this has been a fallacy of almost all the PRSP reports released so far, and that the job of the allocation of these expenditures shouldve been delegated to the Planning Commission rather than the Ministry of Finance.
One bets an overhaul of the PRSP is the order of the day for Pakistan, but then again, for a government shrouded in fiscal woes, as Dr Sayeed rightfully pointed, "Whos going to do it?"

=========================================================================

FEDERAL & PROVINCIAL DEVELOPMENT EXPENDITURE

=========================================================================

                                                                    Share

Rs (mn)                        Q1FY11      Q1FY10      CHANGE    of total

                                                             expenditures

                                                                 (Q1FY11)

=========================================================================

Roads, highways & bridges       5,536       8,728        -37%        2.5%

Education                      66,367      50,672         31%       30.3%

Health                         17,237      13,492         28%        7.9%

Population planning               771       1,094        -30%        0.4%

Social security and welfare    12,441      10,019         24%        5.7%

Rural development               1,092       1,333        -18%        0.5%

Law & order                    34,526      29,463         17%       15.7%

Low cost housing                   31          27         15%       0.01%

=========================================================================