Govt to use rebased inflation basket to determine poverty figures

ISLAMABAD: A high-powered committee constituted by the PTI government has decided to utilize rebased inflation basket for ascertaining the latest poverty estimates in the pre-Covid-19 pandemic scenario in Pakistan, a top official disclosed to The News on Sunday. This high-powered committee is also considering to calculate rural and urban poverty separately.

With the revised CPI basket, poverty is bound to decline slightly, so the PTI led government will have to concede that the prevalence of poverty had declined during the tenure of the PML-N led regime in the wake of improved macroeconomic figures and GDP growth.

The government is all set to release the latest official poverty figures along with the Economic Survey for 2020-21 just ahead of the upcoming budget. The PML-N led regime ruled over Pakistan from 2015-16 to 2017-18. But this data was collected in the fiscal year 2018-19 so PTI might claim that the poverty declined under its dispensation of the one-year rule in 2018-19.

The CPI-based inflation was utilized on the last base year of 2007-8 to ascertain the basket for calculating the poverty estimates and the committee calculated the latest estimates on the basis of old basket.

But now it has been decided that the rebasing of CPI-based inflation was done from 2007-8 to 2016-17, so the CPI basket should also be updated for utilising its data to calculate the latest poverty numbers. After heated debate, the

high-powered committee is working under Chairperson Dr. Aliya to estimate the latest poverty figures on the basis of Household Income Expenditures Survey (HIES) in 2018-19. “The high-powered committee working on the prevalence of poverty will have to revise the last estimates of 24.3 percent done in 2015-16 on the basis of updated CPI-based basket,” top official sources confirmed to The News here on Sunday.

Keeping in view even the fresh CPI-based basket, the poverty is bound to decline slightly and it will be awkward for policymakers for telling masses that the official poverty has declined in Pakistan when Covid-19 pandemic had severely hit the country. The policymakers have decided that it would be explained that the poverty declined in pre-Covid-19 pandemic but it might have worsened after the outbreak of this deadly virus.

The Planning Commission’s research think tank Pakistan Institute of Development Economics (PIDE) had already estimated that poverty declined by 2.8 percent from 24.3 percent in 2015-16 to 21.5 percent in 2018-19.

The PIDE study shows that among the provinces, Balochistan and KP are on top with 40 percent and 27 percent population living below the poverty line in 2018-19.

In overall Pakistan, the incidence of poverty in rural areas decreased from 30.7 percent in 2015-16 to 27.6 percent, registering a decline by 3.1 percent. The poverty in urban areas also slashed down by 1.8 percent, coming down from 12.5 percent in 2015-16 to 10.7 percent in 2018-19.

The official poverty estimates are based on the recent HIES conducted by the Pakistan Bureau of Statistics (PBS). The sample size of the HIES 2018-19 consists of 24,809 households; 15,936 households from rural areas and 8,873 households from urban areas of the country. The Government of Pakistan has adopted the cost of basic need (CBN) methodology in 2013-14 to estimate poverty. The estimated poverty line for 2013-14 was calculated at Rs3,030 per adult equivalent per month. The same poverty line was adjusted for 2015-16 using Consumer Price Index (CPI) based inflation. The updated poverty line for 2015-16 was Rs3,250 per adult equivalent per month. Using the CPI based inflation, the updated poverty line for 2018-19 is Rs3,776 per adult equivalent per month.