The last few years have been very difficult for those who have been living below the poverty line or were just above the poverty line and have been pushed below it by events beyond their control. The 'inflation' over the last five-ten years, stubbornly staying in double digits, was the prime culprit, but the slow growth in the economy, lack of equitable growth, lack of employment opportunities, and lack of opportunities to acquire marketable education or skills were other factors that complicated the life of the poor. The last year and a half have added a lot of fuel to the fire. The rise in oil prices and consequent inflation were bad enough. Add to it the fact that food price inflation has been much higher than overall inflation and since the poor spend more than 70 percent of their income on food purchases, the effect of high food price rise has been quite devastating. And the relative food shortages have not helped either. They have created temporary price hikes and spikes that have encouraged hoarding and speculation making the market even more vulnerable to local and temporary shocks. The poor, least able to smooth income spikes, become even more vulnerable to suffering in case there are even temporary and local shocks in the system: if a suburb of Sheikhupura has atta shortage, the poor of the area will suffer more than the rich of the area as the rich can either afford higher prices or they can get atta from Lahore or other areas around Sheikhupura, while the same might not be possible for the poor. Some estimates, rough ones as we do not have the surveys to do a more detailed job right now, show that millions of people have been added to the roll of the poor in the last couple of years. And since inflationary pressures have not abated and inflation, and especially food inflation, continues to be high, millions are being added to the number of the poor even now. But there are even more ominous signs on the horizon. The world is on the verge of a recession and it is unlikely that world demand will increase substantially for the next year or so. Pakistani economy is in trouble and it looks like even in the best of scenarios we will have to implement a strong stabilisation programme over the current and possibly next fiscal year. Stabilisation programme will, hopefully, bring down inflation, but it will inevitably slow down growth as it is dependent on expenditure reduction, raising more taxes (so a tight fiscal policy) and a relatively tight monetary policy as well. As development and other government expenditures are curtailed and as more taxes are raised, economic activity will slow down, existing jobs might be lost and new jobs will not get created at the rate that we need, while salaries will not keep up with inflation. Tighter monetary policy, possibly in the form of slightly higher interest rates (maybe a couple of percentage points) would squeeze demand as well and it will dampen investments as well as consumer spending. So, given that demand is going to be squeezed due to both internal imperatives as well as external events, the pressure on poverty and the poor is likely to increase or at least remain high for the next year or so. If stabilisation is successful and the world also pulls out of the current crisis, and growth comes back, things will get better, but we cannot expect this to happen in the next year or so. The government is well aware of the pressure that the poor have been under and are likely to be under for the next couple of years at least. And they have even tried to take a few steps to address the situation. The announcement of Rs 950 per 40 kg, as the support or floor price of wheat, a substantial increase from last year, though designed to elicit a supply response from farmers, will help get more income into rural areas and will help in reducing or slowing the increase in rural poverty. Of course the major beneficiary will be the larger farmers, but the small farmers will also benefit. Come April if there is a good crop response and we are blessed with a bumper crop, whether international prices are high or not, rural economy will benefit from the higher floor prices. We are assuming, of course, that the floor will be an effective one and the government will not renege on the promise to buy the crop at Rs 950 per 40 kg if market price is indeed below this. On the other hand, the higher procurement price of wheat will put pressure on the government to raise the price of atta in the domestic market or it will have to dole out a much larger subsidy if it wants to keep atta prices around where they are right now (Rs 400-500 per 20 kg). If atta prices go up, consumers, especially urban ones, will suffer. If they do not, the government will have to pay through a general subsidy. In either case the situation is not going to be easy for the government to bear. But on the whole the price increase in wheat will help the rural areas, where most of Pakistan's poor currently reside, and hence the policy will have some anti-poverty impact. Secondly, the federal and provincial governments have launched some new anti-poverty programmes as well. The Benazir Income Support Programme (BISP) is the largest and the most ambitious of these. Some Rs 33 billion will be distributed amongst the poor of the country through the programme this year alone: target is some 3 million households. There are issues about how the poor are going to be selected, will Rs 1000 per month per household be sufficient support, and though three million sounds like a lot of households, it is only a fraction of the number of households that are among the poor in Pakistan, but it is still going to be a large programme that will, if it works even reasonably well, help quite a few of the poor in the country. However, the government will need to, over time, improve targeting mechanisms for selecting the poor and moving to help the poorest of the poor and supplement the cash transfer with other conditional transfers (stipends for school going children, nutritional supplements for pregnant women and lactating mothers, supplements for infants etc...the list can be large) and increasing the size of the programme to cover all of the poor, but despite the caveats, the programme has a lot of potential. Punjab government has also announced a Rs 22 billion food stamp programme for this year. Though it is called a food stamp programme, it is also a cash transfer programme for the poor. The issues identified for BISP also apply to this programme. And so do the conclusions: though there will be a need to improve implementation, the programme has the potential of helping a significant number of the poor in the Punjab. Other provincial governments are also either thinking of poverty programmes or implementing slightly different programmes: Sindh has a programme for distributing state land to the landless. All of these programmes, if implemented well, will and can help the poor. But the numbers we face and the larger problems of lack of growth that we have, are going to still make the battle against poverty a hard one this year. The general resource crunch is not going to help either, though given the scale of the problem, the government should still think about expanding these programmes, curtailing other expenses that it can, to increase financing for anti-poverty programmes. The next couple of years are going to be hard for the Pakistani economy even if we were to have a relatively quick recovery. But if the recovery is not quick, the situation is going to be even harder. The poor and relatively poorer groups are going to be especially badly hit: reduction in expenditures, increases in taxes, slowdown in growth and the continued high inflation are all going to play havoc with the lives of those who are in poverty or are on the margins of it. The government has announced some measures that will help some of the poor, but these are not going to be enough. The battle against poverty is going to be a grim one over the next few years. The writer is an associate professor and Head of Department of Economics, LUMS and senior economic analyst E-mail: