An analysis of the poverty alleviation plan

By Humzah Haroon

Prime Minister Imran Khan, on Wednesday, announced a massive poverty alleviation plan worth Rs. 80 billion. The program is called “Ehsas” and will be aimed at providing financial, societal and medical support to the poor and downtrodden members of society.

After the implementation of this program, the social protection spending will reach approximately Rs. 120 billion by 2021. Referring to the program, PM Khan said that, “the government has launched a war against poverty.”

To make sure that the program is legitimate, PM Khan added that an amendment will be made to the constitution of Pakistan. The amendment would be moving Article 38 (d) from the “Principles of Policy” into the “Fundamental Rights” section.

Other poverty combating institutions such as the Pakistan Baitul Mal and the Benazir Income Support Program (BISP) will become a part of a new ministry. PM Khan said that the sole reason for the creation of a new ministry is to alleviate poverty. This ministry will only work for the poor and lower class citizens of the country.

Other announcements that PM Khan made regarding this plan were:

  • Adding more cash into the “Kifalat” program. This will provide women and families access to nutritional assistance.
  • The creation of a “multi-sectoral nutrition coordinating body”. To ensure food fortification and supplementation.
  • 5.7 million women will be given savings accounts.
  • 500 BISP and Pakistan Baitul Mal offices will be transformed into digital hubs. Within these hubs, the government will allocate their IT, technology and innovation resources.
  • The cash transfer amount under BISP will increase to Rs 5,500.
  • The creation of a safety net, called “Tahaffuz”. This will track cash transfers, through which the government will then give education grants, legal aid and health assistance.
  • The government will also set up shelter homes across the major cities of Pakistan. This will provide housing for the poor. According to PM Khan, “in the next four years, the Baitul Mal will provide shelter for 10,000 orphaned children.”
  • Increase in monthly pensions from Employees Old Age Benefit Institution (EOABI) from Rs 5,250 to Rs 6,500.
  • E-learning content will be made available for no cost to children where there are dispersed populations.
  • The government will work on improving microfinance services so that they can reach isolated areas.
  • The age of enrollment will be changed from 18 to 15 for technical training. This will encourage skill training for those right out of matric.

Considering the wide variety of subjects that the PM has announced to tackle, this is a very positive prospect for the country. If implemented with care and integrity this will pave the way for societal growth and development in a way that the country may have never seen before.

PM Khan’s initiative to bring societal equality and development is of great importance to the socio-economic visions of the country.

Why will this be economically beneficial?

Before we can discuss why this plan will prove to be beneficial to the country, it is important that we identify the problem here.

Pakistan seems to be stuck in a scenario, which in economics is referred to as the ‘poverty trap’. This refers to the instance under which it becomes very difficult for the people living under poverty to escape it. A more economically inclined definition of this scenario is when a system requires a significant amount of capital, so that they can earn enough and escape poverty. Therefore, when certain individuals in society, living on or under the poverty line, fail to come up with enough capital, it reinforces the cycle of poverty.

Many factors add to the poverty trap, including: corruption, of which there is great abundance in Pakistan, education, lack of skills, limited financial government support, inefficient resource allocation, horrible health care, etc.

To escape the poverty trap is difficult but not impossible. With regards to the policies and the initiatives that the PM has discussed yesterday, all the points mentioned earlier will help counteract this economic issue. It is also well known that to escape this issue, individuals in this system must be given sufficient aid from the outside. An example of this is the BISP, which provides women with a monthly stipend or ‘aid’ to use on daily activities. This not only encourages economic activity but also raises the standard of living for the families who are in this program; which will inevitably lead the family/families away from poverty.

But this is not easy either. To escape the folds of the poverty trap an individual, a family or a society needs to become self-sufficient and not reliant on the constant support from other institutions. A major societal issue in Pakistan is that people are increasingly dependent on outside support and never take the time out to become self-sufficient. This can be attributed to the inability to work, lack of skills or just pure laziness, which is probably the biggest issue.

According to Jeffrey Sachs, an American economist and public policy analyst, in his book ‘The End of Poverty’ he recommends that a way of countering the problem of the poverty trap, organizations that provide aid should act as venture capitalists that fund start-ups. He proposes that just like any start-up they should receive the full amount of aid necessary to reverse the issue of poverty trap.

And that is what PM Imran Khan is trying to do. Many do not agree with policies that the current government has made but it would be foolish to disagree with the “Ehsas” initiative that the PM has promised to launch. If implemented with due diligence this program will be one that will change the socio-economic landscape of Pakistan in the years to come.

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