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Question of real economic growth

At a time the government is trying to recover from the shockwaves of Panama leaks, another disappointing news has appeared in a section of the press that 60 million people are living below the poverty line in Pakistan. The startling fact has been revealed by none others but Finance Minister Ishaq Dar and Minister for Planning, Development and Reforms Ahsan Iqbal, questioning the credibility of the Pakistan Muslim League-Nawaz government that the economy of the country is improving. The ministers say that a new methodology has been adopted to measure the level of poverty and it has multiplied the number of poor by three. A formula adopted in 2001 had placed the number of poor at 20 million. The government has completed three quarters of its tenure and burdened the country with additional IMF and World Bank loans, but the country still has one of the lowest human development index in the world.

Jointly addressing a seminar on poverty estimation, both the ministers defended the government by committing to face great challenges. They termed the 2001 formula ‘outdated and misleading’ as the new assessment places the number of poor households between 6.8 million and 7.6 million. According to the ministers, the model of poverty measurement was based on food energy intakes in 2001, but the government has incorporated the costs of basic needs and non-food items in the new formula. The non-food items such as educational, health and mobile phone expenditures are added to the basket for calculating the exact number of poor in the country. Though the official poverty figures have not been released since 2005-06, the estimates of the world financial institutions, according to the old formula, show that poverty level has declined in Pakistan since 2001, falling from 34.7 percent in 2000-01 to 9.3 percent in 2013-14. However, the finance minister broke a good news for the nation that the government will not go for another International Monetary Fund programme but will take steps to promote economic growth in the country. He says that the foreign exchange reserves have increased to historic level and poverty level will be further curtailed.

The country needs real economic growth and it should not depend on foreign loans anymore. Independent economists believe that Pakistan has not fully utilized its potentials of economic growth and is groping in the dark without a visible direction. Though exports have decline, but can be increased if timely steps are taken and concessions are given to the industrial sector. The government should also have to invite foreign investors to set up large-scale industrial units along the economic corridor in the country.

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