Introduction to Inequality
The concept in which “sense of justice” and “conception of good” prevails as the moral ground is known as human development. Human happiness depends on a positive growth rate and a reduced poverty rate. Only economic growth cannot improve the quality of human life. Therefore, creating a healthy and educated society is important by enhancing individual capabilities and functioning by eradicating all inequalities (income and non-income poverty) and human deprivation (Naqvi, 2010).
Pakistani economist Dr Mahbub ul Haq introduced the concept of inequality in the human development theory. Later, Dr Haq’s research and Amartya Sen’s work on human capabilities lead to the Human Development Index. In 1990, UNDP published the first Human Development Report according to the concept of HDI. HDI has the following three dimensions (WHO, 2022):
- Health (Measured by life expectancy)
- Knowledge means Education (Measured by education Index)
- Standard of living (Measured by GNI per capita)
According to World Bank figures from 2018, roughly 734 million people live in extreme poverty worldwide. It means they have less than US$ 1.9 in daily spending power (World Bank, 2018). Since 2013, the wealth of the world’s billionaires has climbed by 35.5 per cent to US$ 8.5 trillion (UBS/PwC, 2019). The public’s understanding of these inequalities has sparked protests from millions of individuals all around the world.
As a result, inequity has emerged as a major global issue in recent years (UNDP, 2021). This inequality in various areas, such as income, assets, social status, health, education, and rights, is defined as gaps. It includes discrimination in access to opportunities based on religion, gender, caste, or policy manipulation by those in positions of power (Dr. Hafiz A. Pasha, 2021).
Inequality in Pakistan
Article 25 (1) of Pakistan’s constitution declares all citizens equal and entitled to equal protection under the law. Article 37 of the constitution dictates the promotion of all citizens’ socioeconomic well-being by promoting social justice and eliminating social ills. Similarly, article 38 of the constitution affirms the necessity to elevate the living standards of people by giving equal rights to everyone and reducing income inequalities. Therefore, Pakistan’s constitution firmly supports the mission of eliminating all forms of inequity in the country.
Recently, concern has been rising over economic development disparities in underdeveloped countries. Some areas are experiencing rapid improvement in development while the majority still lack technological and social change (Williamson, 1965). It is the state’s responsibility to ensure the well-being and improvement of the living standard of people by providing them with basic human needs.
If we consider human development as an indicator to measure the performance of the governments and hold them accountable, then data suggests that the successive governments in Pakistan have failed to deliver effectively (Kalia, 2015). Pakistan is characterised by geographical and regional disparities in education, physical infrastructure, and health (BURKI, et al., 2010).
Some districts of Pakistan have state-of-the-art human and physical infrastructure, but on the other hand, many have made very little progress in this regard (Ahmed, 2011). Studies show that during the 1970s, there were significant developmental disparities not only among all four provinces but also within regions of provinces (Pasha & Hasan, 1982).
There was a significant change in the development order ranking of different districts, especially among the districts that were on the intermediate level of development in Pakistan during the early 1970s to early 1980s (Pasha, Malik, & Jamal, 1990). Similarly, according to the calculation made by UNDP (2013), a huge human development gap exists among different districts of Pakistan (Kalia, 2015).
Current State of Human Development Disparities in Pakistan
Inequality in Pakistan is widespread at all levels among all segments of society. For instance, there exist huge disparities among all provinces and within provinces. Therefore, the National Human Development Report of Pakistan described the human development inequality in Pakistan as a divide between the rich and poor class by calling it two Pakistans.
One Pakistan (rich people) for those who have an abundance of opportunities to access quality education, a responsive healthcare system, better lifestyle and one (poor people) for those who do not have access to all of these (Dr. Hafiz A. Pasha, 2021).
Inequality between the Rich & Poor
The world’s 1% of richest people have wealth twice the world’s 6.9 billion people’s wealth, and half of the world’s population is living on $5.5 per day (Oxfam International, 2021). Looking at income inequality across different segments of society reveals the realities of inequality in Pakistan. The poorest 1% population in Pakistan hold only 0.15% of total national income, while the richest 1% holds 9% of the total national income (UNDP, 2021).
According to the data of UNDP (2019), the HDI value of Pakistan is 0.570. In the last 27 years, it has improved only by 35%, which is relatively less than other countries in South Asia. The HDI for the richest 20% of people of Pakistan falls in the high human development category with a value of 0.698, contrary to only 0.419 HDI value of the poorest 20% of people (UNDP, 2021).
Historical data suggests that when economic growth (GDP) was high (2001-2008), the per capita income growth of the poorest 40% of the population was lower than the overall income growth of the entire population. However, from 2008 till 2019, when the economic growth (GDP) was relatively slow (around 4%), the per capita income growth of the poorest 40% of the population was more than the overall income growth of the entire population (Dr. Hafiz A. Pasha, 2021).
This data also demonstrates that rapid growth does not always guarantee prosperity for all. Similarly, the middle class’s plight worsens due to rising inflation, unemployment, and declining purchasing power parity. According to recent figures, the overall population of the middle class has decreased to 36% from 42% ten years ago (UNDP, 2021).
In Pakistan, while some provinces have witnessed improvements in development, others, such as Balochistan and Khyber Pakhtunkhwa, have lagged. Necessary measures were adopted to accelerate the development in these provinces, but still, they are straggling behind Punjab and Sindh in terms of human development.
The recent National Finance Commission (NFC) Awards aimed to increase the per capita transfer of funds to these provinces by promoting fiscal equalisation (Dr. Hafiz A. Pasha, 2021). Punjab and Sindh dominate the country regarding their share in the national economy. The per capita gross regional product (GRP) has been increasing in all provinces except Balochistan (Pasha D. H., 2019).
Analysis of Pakistan’s quintiles composition shows that Balochistan and Sindh share the poorest 20% of the country’s population, while most of Khyber Pakhtunkhwa is among the lower-middle classes and Punjab is among the two richest quintiles (Dr. Hafiz A. Pasha, 2021). Huge disparities exist between provinces in the domain of human development.
As the 2015-16 data depicts, the special territories of Pakistan, such as Azad Jammu and Kashmir, are more developed than the rest of the country, with an HDI of 0.621. AJK has a literacy rate of 78.8%, higher than the national literacy rate of 57.4%. Similarly, the overall infant mortality rate in Pakistan is 66 deaths per 1000 births, whereas, in AJK, it is 58 (UNDP, 2021).
Punjab is home to almost 110 million people (Pakistan Bureau of Statistics, 2017). It has the country’s best education and health facilities (Dr. Hafiz A. Pasha, 2021). Still, there is a huge disparity between the rich and the poor in different regions of the province. The top 20% of richest people in Punjab have 5.2 times greater GDP per capita and 1.6 times greater HDI value than the poorest 20%.
Inequality between rich and poor increased in Punjab with time in terms of GDP per capita and income (UNDP, 2021). Income inequality is greater in Panjab compared to inequality in access to health and education facilities. Among health and education, educational inequality is more prominent in Punjab.
Centralised decision-making, issues in public finance administration, and a lack of capacity are all major causes of educational disparity. Although Punjab’s education budget has expanded over time, the underutilisation of the development budget remains a major stumbling block to advancement in this area (Javed & Naveed, 2018).
Sindh is home to almost 47.9 million people (Government of Sindh, 2020). It is traditionally considered the trading hub due to its coastline and seaport. The top 20% of richest people in Sindh have 5.3 times greater GDP per capita and 1.8 times greater HDI value than the poorest 20%. The province experienced a steady increase in income inequality from 2006 to 2016.
Khyber Pakhtunkhwa (KPK)
KPK is the third largest populous province in Pakistan, with a population of 35.525 million people (Government of KPK, 2019). It has seen some progress in human development in recent years, and income inequality has also been decreasing in the province after 2006. Nevertheless, the top 20% of richest people in KPK have four times greater GDP per capita and 1.4 times greater HDI value than the poorest 20% (UNDP, 2021).
Balochistan is the largest province of Pakistan in terms of area. It has a population of 12.34 million, while it covers 44% of the land area of Pakistan (IFPRI, 2021). Balochistan’s performance in human development is the lowest among all four provinces.
The top 20% of richest people in Balochistan have 3.7 times greater GDP per capita and 1.8 times greater HDI value than the poorest 20%. The province has not shown any improvement in income inequality and has a poor state of health, education, and quality of life (UNDP, 2021).
Rural and Urban Divide
Almost 64.84% population of Pakistan lives in rural areas (Trending Economics, 2020). Disparities among urban and rural areas vary in income, poverty, and human development. Urban areas have greater GDP per capita but also have more income inequality as compared to rural areas. Balochistan has the highest level of urban-rural inequality, while KPK has the smallest urban-rural inequality (UNDP, 2021).
Driving Factors of Human Development Disparities in Pakistan
This prevailing human development situation takes us to identify different factors that drive these disparities in Pakistan. This section critically analyses the National Human Development Report (2021) to understand different factors of inequality or disparities in Pakistan.
Power is a term used to describe groups of people that exploit policies and policy gaps for their ill-gotten gains. It is an example of structural inequality imposed by these groups to gain more power and privileges at the expense of the country’s deprived citizens. The nature of the political process in the country allows these groups to acquire privileges and label them as “elite state capture”.
These groups get special treatment from state institutions. Their vested role in economic growth, relationships with public authorities, lobbying with public officials in higher positions, and other factors all play a role in this preferential treatment that they enjoy from state institutions (Dr. Hafiz A. Pasha, 2021).
In the context of Pakistan, these groups include people from segments of the state, including feudal lords, corporate and business entities, the military establishment, exporters, large-scale dealers/traders, state-owned businesses, and high-net-worth individuals. These groups enjoy privileges in the form of tax incentives, lower inputs (in the pricing of energy, water, and machinery), higher output prices (prices of their interests and monopoly), and preferential access (UNDP, 2021).
These groups enjoy privileges and benefits worth PKR 2.66 trillion, which is 7% of Pakistan’s GDP. However, the total worth of Pakistan’s social protection programs is PKR 624 billion, which is only 24 per cent as compared to elite privileges of PKR 2.66 trillion. Therefore, if the government transfers merely 24% of these elite privileges to impoverished Pakistanis, their benefits will be doubled (Pasha D. H., 2019; UNDP, 2021).
According to the report of National Human Development by UNDP, people are also one of the major drivers of inequality in Pakistan. It refers to deeply ingrained beliefs that promote and encourage people to hold prejudices against specific groups of people based on their social identities. People become the driving reason for inequality when they treat anyone or any community based on their origin or status.
Inequalities based on social identities include not allowing girls to attend school, not hiring people from various religious minority groups, and not treating any transgender patients in hospitals. This treatment of vulnerable social groups results from biases and discrimination perpetrated by people in various public realms, which has a detrimental effect on their income, education, health, and other opportunities (Dr. Hafiz A. Pasha, 2021).
Recognising that an individual’s identity can be complicated, diverse, and dynamic is important. In general, women in Pakistan have fewer opportunities and a lower standard of living than men, but if a woman comes from a wealthy family, she will have more opportunities and a better quality of life than any other poor male in the country (UNDP, 2021).
Another key element in Pakistan’s human development disparities, according to the National Human Development Report (2021), is policies that are either against the fundamental principles of social justice or inefficient. Policies that support or oppose inequality are influenced by the prior two factors (power and people). Powerful people can either indulge in policymaking or lobby for policies that benefit them.
Similarly, policies can increase inequality for particular community sections by either failing to establish a legal framework to defend their rights or failing to implement policies that do so. Similar situations exist in Pakistan, where policy formulation involves using a top-down approach that ignores the citizens’ concerns (Dr. Hafiz A. Pasha, 2021).
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