OPINION: Findings of the household survey

The Pakistan Bureau of Statistics (PBS) has released recently the findings from the Household Integrated Economic Survey (HIES). This survey was undertaken of a stratified random sample of 32,814 households in diverse locations throughout the country in 2024-25. This implies a sampling fraction of one sample per 1250 households.

This survey has been undertaken after a gap of six years, as the last HIES was in 2018-19. Earlier, the survey had been conducted more frequently, with a gap of two to three years. Therefore, the HIES of 2024-25 has a special significance as it informs the status of households who have been through COVID-19 in 2019-20, the devastating flood of 2022-23 and the extremely high inflation in 2022-23 and 2023-24 with little growth in the GDP.

The first indicator of importance is the change in real per capita household income between 2018-19 and 2024-25. The nominal average monthly household income is reported at Rs 82,179 in 2024-25, with the average household size of almost 6. This implies a per capita income of Rs 13,742.

The corresponding magnitude in 2018-19 was Rs 6,658. This indicates a cumulative increase in the nominal per capita income of over 106 percent.

However, the Consumer Price Index (CPI) has shown a cumulative increase from 2018-19 to 2024-25 of 125.3 percent. Therefore, there has actually been a fall by 2024-25 in real per capita household income to Rs 6,099 per month at 2018-19 prices. Cumulatively, this is a fall of 8.4 percent. Therefore, on average households in Pakistan are significantly worse off in 2024-25 compared to the situation in 2018-19.

This is in sharp contrast to the estimates by PBS of the National Income Accounts, according to which the real per capita GNI has actually increased by 8.7 percent between 2018-19 and 2024-25. This is in sharp contrast to the fall of 8.4 percent reported by the HIES.

This divergence is too large and will have to be reconciled by the PBS. Clearly, high income households tend to underreport their incomes or refuse to respond in a household survey. However, this is a factor which is common in all HIES.

An attempt has also been made to identify the inter-provincial disparities in per capita household income from the 2024-25 HIES. Punjab emerges as the only province with a per capita income above the reported national average. The magnitude is 9.8 percent.

The other three Provinces have a per capita income below the national average by 5.7 percent in the case of Sindh, 12.2 percent in Khyber-Pakhtunkhwa and as much as 30.3 percent in the case of Balochistan. The relative backwardness of Balochistan is clearly visible.

Further, the difference in the trend in urban and rural per capita incomes has also been quantified. The fall in urban per capita income is larger at 13.8 percent, while it is 5.9 percent in rural per capita income.

The stagnation in the industrial sector in recent years has clearly had a disproportionate impact on urban incomes.

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The next question relates to what has been happening to inequality among households in Pakistan. This is measured by the ratio of the share of total income with the top quintile versus the combined share of the bottom two quintiles.

The estimate for 2024-25 is 2.21 and for 2018-19 it is 2.06. Therefore, income inequality has increased significantly between 2018-19 and 2024-25 by 7.3 percent. The increase is much more pronounced in urban areas at 43 percent. However, the good news is that income inequality has declined in rural areas by 30 percent. Clearly, the direct tax regime has failed to reduce the inequality among urban households.

A truly surprising finding from the 2024-25 HIES is with regard to the budgetary position in different quintiles. It appears that the savings rate is actually higher in the lower quintiles. It is reported at 7.8 percent of income in the bottom quintile and 6.1 percent in the second quintile. It reaches a peak of 8.8 percent in the middle-income third quintile. Thereafter, it falls to 5.4 percent in the fourth quintile and to only 1.4 percent in the top quintile.

Apparently, high income households in Pakistan are maintaining extravagant consumption standards and thereby keeping the national savings rate low. The higher savings rate of low income households is probably a hedge against any future unemployment or loss of income in self-employment.

There have also been significant changes in the shares of different income sources. The share of wages and salaries has increased marginally to 42 percent. The good news is that the share of social insurance and gifts has increased significantly from 5.2 percent in 2018-19 to 8.4 percent in 2024-25. This is probably a reflection of expanded coverage under the Benazir Income Support Program. Also, there is a big increase in the share of foreign and domestic remittances from 8.6 percent to 11.6 percent.

The employment status distribution has a perhaps surprising pattern among the quintiles. The share of the self-employed is larger in the upper income quintiles and lower of employees. This indicates that higher levels of income are generated through management of risks associated with self-employment.

We turn finally to the level of real per capita food expenditure by quintile. It is unfortunately the case that it has fallen by 7.5 percent in the lowest quintile, by 5.2 percent in the second quintile and by 3 percent in the third quintile. However, it has gone up significantly in the top two quintiles.

The level of food expenditure required to enable a minimum level of nutrition is basis for the poverty line. The fall in real per capita food expenditure in the lower three quintiles indicates the likelihood of a big increase in the incidence of poverty between 2018-19 and 2024-25.

Overall, the findings of the 2024-25 HIES are worrying in nature. They indicate a big fall of 8.4 percent in real per capita income, contrary to the national income estimates which show an increase of 8.7 percent. The only province with a real per capita income above the national average is Punjab.

In particular, Balochistan has a 30 percent lower per capita income. There appears also to have been a significant fall in real per capita income in both rural and urban areas.

Also, income inequality has tended to increase sharply in urban areas while a significant decline in inequality is observed in the rural areas. An extremely surprising result is that the savings rate is lower in the upper quintiles.

Finally, the precipitate fall in real per capita food expenditure in the lower three quintiles confirms the big increase in the incidence of poverty, as measured by the basic needs approach, in the last few years. However, there is some evidence of increased social protection in the country.

Copyright Business Recorder, 2026