The damage inflicted by the floods on the livelihoods of millions of people has once again raised concerns about the high and rising level of poverty in Pakistan.

The long-term trend of poverty is dependent on the trend in food prices, level of per capita income and unemployment.

The poverty line is defined as the cost of ensuring the intake of the minimum nutritional requirement by an individual of 2,350 calories per day. The cost of other necessities like shelter and clothing are added to the cost of food to yield the poverty line.

Therefore, the higher the poverty line the larger the likely incidence of poverty in the country. The Planning Commission had estimated the monthly poverty line per adult equivalent as Rs 3,757 in 2018-19. This has not been updated.

Similarly, the World Bank had defined the poverty line per day for countries as USD 3.60 per capita measured in 2017 PPP. This poverty line is close to the poverty line defined by the Planning Commission. However, it was raised recently to USD 4.20 per capita per day, measured in 2021 PPP. According to this higher poverty line, the incidence of poverty in 2018 in Pakistan was as high as 45 percent.

Clearly, the poverty line is very sensitive to food prices, especially in relation to the overall price level. Estimates are that if the rate of inflation in food prices is higher by 1 percentage point over the overall rate of inflation in the consumer price index, then this tends to increase the incidence of poverty by over 2 percentage points.

The estimate as of 2024-25 of the poverty line in Pakistan is of Rs 8,513 per adult equivalent per month. The adult equivalent in terms of nutritional........

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