Inclusive growth is inevitable to sustained reduction in poverty. Inequality is considered an attached subject of poverty. Nonetheless, it is not necessary that they are moving in the same direction. Poverty estimates show a declining trend since 2001-02; nevertheless, the same cannot be proclaimed for inequality.

Economic activity is alarmingly low due to the COVID-19 pandemic. Millions of people were expected to face job losses—casual and piece rate workers mostly. After the lives of people, economic downturn, livelihood, well-being, and poverty are among the first few concerns during the current pandemic. This is one of the reasons why the premier is reluctant to opt for a complete lockdown and followed partial and smart lockdown. A few possibilities of lockdown are discussed in PIDE’s Bulletin.

Poverty has been declining for the last two decades. The initial six years of this decade have shown an increase in the rate of decline compared to the decade of 2000-2010. The annual average decline in poverty surged to 9 percent compared to the previous decade, i.e., 5-6 percent. Overall, poverty declined by 2.86 percent every year since 2001-02. Forecasting the same trend, it is optimistic and ambitious to assume that by 2023, poverty will be reduced to single digits. Notwithstanding the current pandemic and lower growth; poverty might not reduce rapidly.

Logically speaking, the unambiguous decline in economic activity, employment losses and livelihood issues directly affect the poverty level of the country. On the contrary, since poverty is computed using consumption data given in HIES this may not be the case; poverty may not increase but remains the same or declines during the pandemic. Why?

Our argument for poverty not declining during the pandemic is based on the inclusion of 12 million households under the Ehsaas programme, deferment of payments of borrowed principle amounts and markup payments for 6 months to one year, a decline in electricity bills by reducing fuel price adjustments and waiver of income taxes on electricity bills etc. Besides the government’s stimulus packages, the private sector, NGOs, civil society and other individuals in society have generously donated items such as 15-day to monthly rations, medicines, masks, sanitisers and soaps to needy households. Philanthropists distributed prepared food at designated places.

These philanthropic deeds are part of religion, thus, what people are doing is not a surprise. BBC, while interviewing a person reported his statement, “I am answerable if any of my neighbours go to bed hungry. How can I have an overstocked pantry while one of my neighbours is in need?”

Consequently, consumption may not decline due to the tremendous philanthropic activities. It is expected that their consumption, overall, becomes higher and secured especially in the first three to four months than previously. Nevertheless, a pertinent question is; how much time would the philanthropists do this for—3 months, 6 months or a year?

Nevertheless, we may not see the impact of the pandemic on poverty due to non-availability of data. The current available data which will be used to estimate poverty will give us the numbers of 2018-19, i.e., before the pandemic and the next data will be collected next year in 2020-21 and the estimates will be available in 2022.

Inequality, at the same time, has vital and interesting dimensions. Although we are strong believers in the idea that inequality does not matter much until it passes some significant threshold and growth of rising inequality is significantly higher and persistent. Pakistan is experiencing moderate inequality for a very long period of time. Although official estimates are not available, available numbers show mild up and down movements in Gini coefficients.

Inequality reduces when there is a fair distribution of resources, wealth and redistribution of wealth/income which in turns reduces poverty as well. In the current scenario, households have been experiencing an income loss. Ignoring the elite capture of resources, redistribution of money through the Ehsaas programme and philanthropic activities by local society manages the distribution and redistribution of resources. In addition, capitalists are losing their income due to lesser or no businesses. All of these facts are consequently showing a decline in inequality due to better distribution of resources.

The lockdown is over and people can find work in different industries and the service sector. But due to global decline in output, the demand for our products may not go up. The income of workers may decline and remain lower due to lesser business, hence lower weekly or monthly wages. Few estimates are available that depict a scary situation of prolonged unemployment. Rehiring and employing new entrants in the labour market may have issues in the next one year at least.

Thus we are proposing four measures to be taken. The second round of impact will be crucial after the dust settles. Decline in global trade may affect many industries very harshly. Therefore, domestic demand-led growth will be the only feasible option for the next few years. The decline in the economy directly affects the livelihood of people. The government’s interventions such as the Ehsaas programme lessen the adverse impact on livelihoods. Moreover, philanthropic activities would also mitigate the impact of hunger and poverty. Ehsaas may increase the scope and range of its programme until the pandemics ends. Philanthropists must not reduce aid to needy people.

In the meantime, over-regulated sectors need to be deregularised to create new businesses that reduce unemployment as well as the burden on the government’s budget. As a result, inequality would also improve amid better distribution of resources. The next HIES dataset may capture the longer-term repercussions of the pandemic on poverty. However, there is a need to design a short survey that covers at least data on (i) job losses and (ii) possibilities explored by the different households to do other businesses during the pandemic.