Abstract
Pakistan is a poverty ridden country where ample population lives below a money metric poverty threshold. There
are varying trends of poverty across regions and over time. This paper invites the attention of policy makers and
researchers on the importance of segregating poverty measures at administrative divisional levels while
addressing both rural and urban poverty in the country. It is aimed at diagnosing the incidence of poverty
dynamics both in rural and urban areas of Pakistan at national, provincial and divisional levels while addressing
some specific questions minutely. There is a little research work of this nature found in poverty literature of
Pakistan. Our findings revealed that poverty increased from 25.73 percent to 30.57 percent between 1998-99 and
2001-2002 which reads a proportionate increase of 18.81 percent during the interregnum period. This increasing
trend in incidence of poverty was found to be more in rural areas (20.07 percent) as compared to the urban areas
(14.60 percent) followed by pronounce decline of 40.66 percent in overall poverty till 2004-05. Moreover, rural and
urban areas witnessed almost the same decreasing trend in the incidence of poverty though rural poverty is more
than the urban poverty in absolute terms. In this way, overall poverty dynamics for the whole period (1998-2005)
what we call “difference of difference” depicted a decrease of 21.85 percent in the population of poor persons in
the country. It is quite interesting to note that Punjab province was the worst of all provinces in terms of incidence
of poverty in 1998-99. There was about 30.44 percent of the population living below the poverty line. NWFP,
Sindh and Baluchistan were in following the row of incidence of poverty at the proportion of 28.05, 21.49 and
16.07 percent, respectively. But the inter-provincial poverty dynamics changed much during the seven years
period thereby reshuffling the ranking position of provinces significantly. Rural Punjab was almost double poor
than the urban Punjab. Moreover, it was further realized that rural poverty had been decreasing at a great
momentum in Rawalpindi, Gujranwala, Sargodha and Faisalabad. This demonstrated that the poverty alleviation
strategies initiated by the government had worked well in rural economy. The “difference of difference” revealed
that there was highest decrease in poverty in Larkana followed by Karachi. But Hyderabad and Mirpur Khas (rural
in particular) depicted increasing trends of poverty. This might be attributed to the unequal transfer of resources
by the provincial government during this period for being fewer representatives of these areas. The overall
dynamics revealed that Peshawar, Mardan and Kohat witnessed increasing trend of poverty while there was
decreasing trends of poverty in all other administrative divisions. The broad based estimation of poverty
suggested that the problem of poverty should not be tackled at national level rather some area specific policy
matrix should be designed and resources be mobilized accordingly. It suggested that a small internal or external
shock at monetary and fiscal level can abruptly change the status of poverty in the country. In this way, a two
pronged policy initiative is required. First, opportunity box should be expanded for those who are already poor by
providing employment, water management, land reforms, health, sanitation and education facilities. Secondly,
effort must be made to keep the vulnerable poor staying below the poverty line by sustaining their livelihood
pattern under shock scenarios.
