EDITORIAL: Social Policy and Development Centre (SPDC) has calculated the poverty rate at 43.5 percent – 14.3 percent in excess of the official figure calculated by the Pakistan Bureau of Statistics of 28.9 percent gleaned from the Household Integrated Economic Survey 2024-5.
The Centre however acknowledged that the difference arose from the different methodology used – the former adopted a calorific or food energy intake approach defined as the minimum caloric requirements for basic sustenance and calculates the level of household spending needed to meet those needs while the latter estimates poverty on a cost of basic needs approach which updates the poverty line using the Consumer Price Index rather than re-estimating it from fresh household data.
It is also relevant to note that the caloric method was also used by the World Bank which estimated poverty rate at a high of 42.4 percent for 2025 (at 3.65 dollar per day 2017 purchasing power parity), arguing that economic instability and rising inflation eroded purchasing power further attributing the rise since 2020 to “a series of overlapping crises have exposed weaknesses in the country’s poverty reduction story.” In its publication titled “Poverty and Equity Brief” the Bank contended that a population growth rate of 2 percent translates into 1.9 million additional people falling into poverty last fiscal year.
SPDC maintains that the average consumption basket used to calculate the CPI is shaped mainly by spending habits of the better off households, disregards national CPI disparities especially in remote areas and include items irrelevant to poor households while overlooking essential costs associated with informal healthcare and clean drinking water. In acknowledgement of data deficiencies by PBS the International Monetary Fund in its December 2024 loan approval documents noted that “important shortcomings remain in the source data available for sectors accounting for around a third of GDP, while there are issues with the granularity and reliability of the Government Finance Statistics” - shortcomings that prompted the Fund to extend a technical assistance to the PBS to formulate a “new Producer Price Index and the PBS to begin fieldwork for four major surveys ahead of the upcoming National Accounts rebasing in fiscal year 2026,” which is scheduled for completion by end June 2026.
The World Bank stated in the Poverty and Equity Brief that “despite a stabilizing economy and easing inflation, Pakistan’s 2.6 percent economic growth remains insufficient to reduce poverty. External remittances surged by 33 percent in H1 FY25, but the impact on the poorest remains limited as only 3.2 percent of the lowest-income households receive remittances. However, for vulnerable households just above the poverty line, remittances play an important role in preventing them from falling into poverty in the face of shocks. Rising emigration since 2020, particularly among low-skilled workers, may help extend remittance benefits to poorer households as well. On the social protection side, recent increases in the Benazir Income Support Program benefits above inflation rates, along with a planned expansion to 500,000 additional households by fiscal year-end, should support household consumption and help buffer the poor against short-term market shocks.”
Efforts made thus far to buffer the poor from inflationary pressures by the state have been further compromised due to the ongoing Middle East conflict and while the government’s efforts to seek a resolution to the conflict must be appreciated yet the fact remains that the protagonists’ demands are widely divergent at present and the possibility of an escalation has risen in recent days instead of abating. One can only hope that better sense prevails and the warring sides seek a rapprochement instead of going up the escalation ladder.
Copyright Business Recorder, 2026
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