Cause Of Poverty In Pakistan

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Poverty in Pakistan is the major cause of food insecurity. It has been estimated through consumption based methodology by planning commission of Pakistan’s Millennium development goal report 2013, that poverty in Pakistan is reduces to 12.4 percent in 2011-12 as compare to 22.3 in 2006-07. This decline in poverty is basically due to substantial allocations for social safety net programs in fiscal policy of Pakistan. Pro poor expenditures, BISP, PPAF, Better support prices of agriculture and food products are included in these programs.
4.1.1 Pro poor Expenditures PRSP (Pakistan Rural Support Program): The PRSP include expenditures that are essential for improving human capabilities, to reduce income inequality and assuring greater participation
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The increase in interest rate surge the cost of producer and other mediators involved in the process of food processing and marketing that relay on these credits to finance their investments. The food production will decrease or effect of this increased production and marketing cost can be labeled decrease in food production, or increase in food prices as a consequence of cost-push inflation. The investment decline has not only its effect on the food chain at one stage, but it also have a negative implication for the volume and stability of future food supplies. According to monetary policy in May 2014 the interest rate remains at 10 percent. It is estimated by SBP (2000) that 80 percent of farmers participate in credit market, and 70 percent of agri-credit requirements are met by informal credit providers who charge high interest rates. According to one of the study conducted by Lahore School of Economics 46.5 percent of farmers return their credit after the sale of their crops, and 45.5 percent farmers return their loans whenever they receive money from other sources. Economic survey of Pakistan 2013-14 stated the 7.5 percent growth rate in credit to agriculture sector. A loose monetary policy fuels high levels of inflation, which has a long term impact on food prices. The inflation therefore discourages investment, and unpleasantly affects the purchasing power of the poor. The central bank decided to leave the benchmark interest rate unchanged at 9.5 percent. The inflation rate in Pakistan is averaged at 8.7 percent during 2013-14 against 7.7 percent of last year. The food inflation increase has driven up the overall inflation upward. The food inflation in 2013-14 has estimated at 9.3 percent as compare to 7.1 percent of the last

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