Tuesday, December 5, 2017

Rising Share of Income of Poorest 20% Pakistani Households

The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990 , according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region.

Income Share Change in Asia's Poorest Quintile: 

The countries where people in the poorest income quintile have increased their share of total income include Kyrgyzstan (from 2.5 per cent to 7.7), the Russian Federation (4.4 per cent to 6.5), Kazakhstan (7.5 per cent to 9.5) and Pakistan (8.1 per cent to 9.6).  India's bottom income quintile has seen its share of income drop from 9% to 7.8%.

Bottom Quintile Income Share Change. Source: UNESCAP Statistical Yearbook

Although more people in China have lifted themselves out of poverty than any other country in the world, the poorest quintile in that country now accounts for a lower percentage of total income (4.7 per cent) than in the early 1990s (8.0 per cent). The same unfortunate trend is observed for a number of other countries, including in Indonesia (from 9.4 per cent to 7.6) and in the Lao People’s Democratic Republic (from 9.3 per cent to 7.6).

Credit Suisse Wealth Report 2017:

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

World Bank Update on Pakistan: 

A November 2016 World Bank report says that Pakistan has successfully translated economic growth into the well-being of its poorest citizens. It says "Pakistan’s recent growth has been accompanied by a staggering fall in poverty".

Rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.

Another recent report titled "From Wealth to Well Being" by Boston Consulting Group (BCG) also found that Pakistan does better than India and China in translating GDP growth to citizens' well-being.

One particular metric BCG report uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

Big Poverty Decline Since 2002:

Using the old national poverty line of $1.90 (ICP 2011 PPP) , set in 2001, the percentage of people living in poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than 75 percent. Much of the socioeconomic progress reported by the World Bank since 2000 has occurred during President Musharraf's years in office from 2000-2007. It has dramatically slowed or stagnated since 2010.

Source: World Bank Report Nov 2016

Using the new 2016 poverty line of $3.50 (ICP 2011 PPP),  29.5 percent of Pakistanis as poor (using the latest available data from FY14). By back casting this line, the poverty rate in FY02 would have been about 64.3 percent.

Pakistan's new poverty line sets a minimum consumption threshold of Rs. 3,030 or $105 (ICP 2011 PPP) per person per month or $3.50 (ICP 2011 PPP) per person per day. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.

Multi-dimensional Poverty Decline:

UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. MPI goes beyond just income poverty.

The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.



First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.



Housing quality in the bottom quintile also showed an improvement. The number of homes constructed with bricks or blocks increased while mud (katcha) homes decreased. Homes with a flush toilet almost doubled in the bottom quintile, from about 24 percent in FY02 to 49 percent in FY14.

Dietary Improvements for the Poorest 20% in Pakistan:

Decline in poverty led to an increase in dietary diversity for all income groups.

For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

Summary:

Pakistan is among the most economically egalitarian nations in the world.  In spite of the country's many challenges on multiple fronts, it has successfully translated its GDP growth into the well-being of its poorest citizens. The share of national income of Pakistan's poorest 20% of households has increased from 8.1% to 9.6% since 1990, according to the United Nations Economic and Social Commission for Asia and Pacific (NESCAP) Statistical Yearbook for 2015.  It's the highest share of income for the bottom income quintile in the region. "Pakistan’s recent growth has been accompanied by a staggering fall in poverty", says a November 2016 World Bank report.  An earlier report by Boston Consulting Group reached a similar conclusion.

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor

6 comments:

Anonymous said...

Pakistan
Country Indicators

Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population)
7.9% 2011 6.1% 2013
Shared Prosperity: Annualized growth in per capita real survey mean consumption or income (%), circa 2009 - 2014
2.8% bottom 40% 2.5% total
Population, total (millions)
189.4 2015 193.2 2016
GNI per capita, Atlas method (current US$)
$1,430 2015 $1,510 2016
GDP growth (annual %)
4.7% 2015 5.7% 2016

http://povertydata.worldbank.org/poverty/country/PAK


India
Country Indicators

Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population)
31.1% 2009 21.2% 2011
Population, total (millions)
1,309.1 2015 1,324.2 2016
GNI per capita, Atlas method (current US$)
$1,600 2015 $1,680 2016
GDP growth (annual %)
8% 2015 7.1% 2016

http://povertydata.worldbank.org/poverty/country/IND

Riaz Haq said...

India’s richest 20% account for 45% of income
Middle India is largely rural and uneducated, shows the ‘Household Survey on India’s Citizen Environment & Consumer Economy’

http://www.livemint.com/Politics/AvHvyHVJIhR0Q629wkPS5M/Indias-richest-20-account-for-45-of-income.html

India’s richest quintile accounts for 45% of aggregate household disposable income while the poorest quintile earns barely 7% of the aggregate income pie, according to the latest data from a nationally representative survey conducted this year.

The Household Survey on India’s Citizen Environment & Consumer Economy (ICE 360° survey), covering 61,000 households, is one of the largest consumer economy surveys in the country since the National Sample Survey Office (NSSO) conducted the consumer expenditure survey in 2011-12.

The survey results show that households in the top quintile earn nearly four times as much as households in the bottom quintile. But given that poorer households also tend to be bigger, the difference in per capita incomes is greater. The per capita income of the top quintile, at Rs7,974 per month, is nearly 6.5 times that of the bottom quintile. Given the lower income and the bigger household size, poorer households end up spending most of what they earn. The poorest quintile is able to save just 10% of household earnings. In contrast, the top quintile is able to save 47% of household earnings, the survey shows.

Riaz Haq said...

From Household Integrated Economic Survey (HIES) of Pakistan

Bottom Quintile Per Capita Expenditure Rs. 2,295 in 2015-16 up from Rs. 1,972 in 2013-14

Top Quintile Per Capita Expenditure Rs. 10,937 in 2015-16 up from Rs. 8,768 in 2013-14

Total Per Capita Expenditure Rs. 5,166 in 2015-16 up from Rs. 4,372 in 2013-14

Ratio of top to bottom quintile in 2015-16 is 4.76 up from 4.35 in 2013-14


TABLE 3.5.C PER CAPITA MONTHLY CONSUMPTION EXPENDITURE BY QUINTILES AND REGION
QUINTILES

2013-14 2015-16

URBAN RURAL TOTAL URBAN RURAL TOTAL

1ST 2021 1962 1972 2357 2284 2295

2ND 2764 2769 2768 3203 3165 3174

3RD 3538 3522 3527 4074 4058 4063

4TH 4612 4592 4601 5394 5340 5363

5TH 9371 7917 8768 11920 9364 10937

TOTAL 5493 3700 4327 6888 4239 5166

See table -22 in the main body of this report for further disaggregation.


http://www.pbs.gov.pk/sites/default/files/pslm/publications/hies15-16/write%20up%2015-16-HIES-final.pdf

Riaz Haq said...

Per Capita income in #Pakistan grew 22% since 2012, half of the 43% growth in #India during the same period. #China topped with 48%

China: 48%
India: 43%
Turkey: 32%
Indonesia: 29%
Pakistan: 22%
UK: 15%
US: 15%
Japan: 15%
Germany: 13%
Canada: 13%
France: 11%
Saudi Arabia: 10%
Greece: 9.5%
Russia: 8%
Italy: 8%
Nigeria: 7.5%
Brazil: 0%

Source: https://twitter.com/spectatorindex/status/938475909971152897 

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&locations=PK&start=2012

https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2016&locations=PK&start=2012

nayyer ali said...

what are the rates of malnutrition and stunting in Pakistan and India? Is the more equal income distribution affecting these outcomes?

Riaz Haq said...

NA: "what are the rates of malnutrition and stunting in Pakistan and India? Is the more equal income distribution affecting these outcomes?"

India (43%) has the highest percentage of underweight children. The percentage of underweight children in China is 4 percent, Brazil (2%), South Africa (9%). The percentage of underweight children in Pakistan is also very low comparatively to India. Pakistan has only 32 percent of underweight children. The health condition of children is worst in India comparatively to other developing countries.

https://www.omicsonline.org/open-access/health-status-of-children-in-india-2471-9870-1000138.php?aid=87163

At least one study found that there's only a weak link between income and nutrition.

According to RSOC (2013-2014) data, high prevalence of stunting (26.7%) and wasting (13.0%) exists amongst under-five children belonging to highest wealth index communities. India possibly cannot achieve the 2025 Global nutrition targets for reducing the rate of stunting and wasting amongst Under-five children, unless efforts are also directed towards this group.


https://www.ncbi.nlm.nih.gov/pubmed/28607215