POVERTY: Poverty levels in South Asia

(July 15 2010): The Oxford Poverty and Human Development Initiative in conjunction with the Human Development Report Office of the United Nations Development Programme have developed a new Multidimensional Poverty Index (MPI) that disturbingly found that half of the world's poorest live in South Asia and, and contrary to popular belief, only a quarter live in Africa.The index notes that 421 million MPI poor reside in six Indian states namely Uttar Pradesh, Bihar, Madhya Pradesh, Orissa, Rajasthan and West Bengal - this number vying with 26 of the poorest African countries. The responsible factor is evidently unchecked population growth rates in these six states, with a growth rate higher than the Indian national average, and poor literacy rates as a consequence of small outlay by these six states on education.Statistics on poverty are critical in determining a government's expenditure priorities by focusing public attention on those areas that are sadly deficient. In Pakistan under the Benazir Income Support Programme, designed to provide Rs 1000 per month to 2.7 million poorest households, the government was compelled to abandon its earlier methodology of inviting parliamentarians across the political divide to identify a limited number of poor in their constituencies and, at the World Bank's insistence, began to develop a poverty scorecard.This scorecard is essentially a 13 indicator instrument which identifies the poor and requires information that includes household size, composition, education, employment, and certain household assets. Ignored by this scorecard are other critical information that are used by the MPI to determine poverty namely health, environment and gender dimensions.The scorecard, analysts argue, has other limitations also that include an overwhelming focus on assets, consumption considered a dependent variable and assuming a cardinality of ordinal data and perfect substitutability across dimensions. A paper published in January 2009 titled "Estimation of Multidimensional Poverty in Pakistan" notes that indicators of financial poverty, human poverty, poor housing and lack of physical assets were combined to get a composite index of poverty across multiple deprivations. These income and non-income indicators were developed using Household Income and Expenditure Surveys for the years 2004-05 and 2000-01.The empirical findings "reveal that about 54 percent of the people of Pakistan were in the state of multiple deprivations in the year 2004-05. Rural incidence was about 69 percent, while 21 percent of urban population faced extreme poverty in terms of indicators used in the construction of multidimensional poverty. An important finding of this study is that the magnitudes of equity-sensitive multidimensional poverty aggregates (poverty gap and poverty severity) are quite high as compared with income poverty.This situation indicates high inequality among the poor in terms of non-income poverty dimensions. Inter-temporal consistency of methodology facilitates future monitoring of multidimensional phenomenon of poverty." Many argue that BISP is a start and would eventually include health insurance as well. And given the severe resource constraints the government is unable to invest more in providing social safety nets that are required given our rising poverty levels.That argument is consistent with the state of the economy however where our government continues to show poor performance is in allocating expenditure priorities, a reflection of poor governance, where current expenditure continues to reflect profligacy and development expenditure continues to be slashed to accommodate the rise in current expenditure. That must change.
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