Factor affecting the poverty in Pakistan

Vicious circle of poverty

Vicious circle of poverty is the largest reason of poverty. Developing countries including Pakistan are trapped into VCP. A poor country is poor forever due to the VCP.

Unemployment

            Unemployment is the major cause of poverty. Unemployment means no source of income and result is poverty. Rate of unemployment is 5.5%, 16% is underemployed and 20% is disguised unemployed in Pakistan.

Lack of foreign investment

            Due to the backwardness, political instabilities and improper availability of infrastructure the attraction for foreign investment is not suitable. Foreign employment opportunities and poverty.

Low national income

            Poverty in Pakistan is also results of low level of national income. Low level of national income means low level of saving and low level of investment. All these factors contribute towards poverty.

Use of backward technology

            Techniques of productions used by developing countries are backward. Due to outdated methods of production, productivity level is low. Low level of productivity means narrowness of market and reduction in exports and increase in imports.

Increase in utility bills

                     Utility charges like water, gas, electricity, telephones bills etc. are increasing day by day in Pakistan. More utility charges lead to reduction in the saving of population and its result is poverty.

Low per Capital Income

                      Per capita income of Pakistan is as low as $ 1095. Low per capita income means low level of saving and low level of investment. Its result is poverty.

Backward Agriculture Sector

                  In agriculture sector people have adopted just subsistence farming styles. They are not farming according to the commercial pattern. Sometimes due to natural calamities and use of backward techniques of production, there is reduction in production and it decrease the income of poor farmers.

Absence of Credit Facilities

                  Poor population needs credit facilities to take an active part in economic activities to remove poverty. But in Pakistan, availability of credit is not desirable. Poor people have no access to credit it is only for rich landlords. Conditions for credit issuing are so tights and credit is not given in time.

Improper income distribution

                  Imbalanced distribution of resources is an additional cause of poverty in Pakistan. This situation leads to increase the gap between rich and poor. Due to undesirable distribution of income and wealth, poor population is unable to take part in economic activities to remove poverty.

Low level of Savings

                  Low level of savings is mainly due to low income. It leads to less investment and less return. Due to less return people remains poor forever. Domestic savings are 9.9% of GDP in Pakistan.

Inflation

          High rate of inflation is an extra reason for poverty. Due to inflation much amount of money is not enough to purchase much amount of goods and services. Inflation decreases the savings and investment of poor people and they remain poor.

Imposition of taxes

          Government has to impose taxes to raise its revenue. Imposition of taxes reduces the disposable income of people. Lack of disposable income mean low savings and low investment and poverty.

Non-productive expenditures

          Government has to make a lot of unproductive expenditures on social heads and to make strong defense. These high expenditures are also a reason of poverty.

Low rate of capital formation

          Rate of capital formation in Pakistan is very low. Low rate of capital formation in Pakistan is very low. Low rate of capital formation means low opportunities of employment, low level of productivity and deficit in balance of payment that leads to poverty. Rate of capital formation is just 5% and it should be more than 20%.

Population pressure

          Rapidly raising population is also a cause of poverty. Existing population is already not provided basic necessities of life. So increase in population will lead to increase in poverty. Total population is 169.94 million at the growth rate of 2.05%.

Dishonesty and corruption

          Poverty is also due to dishonesty and corruption in management, officers receive a huge amount of illegal money for the legal and illegal job. These unnecessary payments reduce the savings of poor and result is poverty.

Illiteracy

          Lack of education and training is also a cause of poverty. It reduces the abilities to work. Sometimes a worker due to illiteracy remains unemployed or underemployed. Similarity, lack of skill in entrepreneur also reduces his profit and its result is poverty. Literacy rate is 57% in Pakistan.

Backward infrastructure

          Non-availability or availability of backward infrastructure is also an additional reason of poverty. Low level of education, backward state of technology, poor health, inefficiency of labor and poor system of transportation & communication are caused in poverty. These entire things create no attraction for investment.

Low living standard

          Pressure of foreign countries in our economic activities, backward standard of productivities and improper basic facilities to population reduce the living standard of population. Low living standard is a symbol of poverty.

Law and order

          Law and order conditions are at their poor stages. A huge portion of saving of population is wasted in costly and lengthy legal process Chief Justice Iftikhar Muhammad Chowdhury has to wait for justices for a long period in Pakistan.

Poor Governance

          Instable government and instability in the policies of government is another cause of poverty. Every government remains fail to establish such policy that leads to reduce the poverty.

Landlordism

          Ignorant but big landlords control our whole economy. They have no sense of social welfares. In government they take those actions that are in their personal interests.

Nepotism

          Nepotism means the murder of talent and abilities. It refers to the employment opportunities according to relation not according to the worth. If population is poor but is talented it remains poor due to nepotism.