POVERTY REDUCTION STRATEGY PAPER

ON

SINDH

Planning and Development Department

Government of Sindh

Karachi

DECEMBER 2003

ii

ACKNOWLEDGEMENTS

This document reflects an extensive process of consultations and builds on the ongoing Reform

Program of the Government of Sindh.

Thanks are due to the present Government. Nazims, respective Administrative Secretaries, as

well as the District Coordination Officers for their input into this strategy paper.

This strategy reflects the hard work of the Planning and Development Department, the Sindh

Regional Plan Organization, and other departments of the Government of Sindh who also

worked hard to put it together in a very short time. The services rendered by Mr. G. M. Abro

Senior Chief, Science & Technology and Poverty Alleviation are also appreciated, who has made

untiring efforts in completion of the study.

The financial assistance of UNICEF especially its local office in Karachi and Technical support

of M/s Innovative Development Strategies (Pvt.) Ltd. are also gratefully acknowledged.

December 2003 Ghulam Sarwar Khero

Additional Chief Secretary (Development)

iii

ACRONYMS AND ABBREVIATIONS

ADB Asian Development Bank

AIT Agriculture Income Tax

AWB Area Water Boards

CCB Citizen Community Board

CBO Community Based Organization

CCO Citizen Community Organization

CRPRID Centre for Research on Poverty Reduction and Income Distribution

CWD Communications and Works Department

DAC Departmental Account Committee

DAO District Accounting Officer

DCO District Coordination Officer

DFID Department for International Development

EIROP Essential Institutional Reform Operationalization Project

EMIS Education Management Information System

EOBI Employees Old-age Benefits Institution

FBS Federal Bureau of Statistics

FMC Fiscal Monitoring Committee

GAVI Global Alliance for Vaccination Initiative

GTZ German Development Corporation

HMIS Health Management Information System

HR Human Resource

IM&R Instructional Materials and Minor Repair

IPRSP Interim Poverty Reduction Strategy Paper

LHW Lady Health Worker

M&E Monitoring and Evaluation

MICS Multiple Indicators Cluster Survey

MTBF Medium Term Budgetary Framework

NAB National Accountability Bureau

NGO Non –governmental Organization

NWFP North West Frontier Province

O&M Operation and Maintenance

P&D Planning and Development

PAC Public Accounts Committee

PFAA Provincial Financial Accountability Assessment

PIHS Pakistan Integrated Household Survey

PRP Poverty Reduction Plan

PRSP Poverty Reduction Strategy Paper

PSC Public Service Commission

PTA Parent-Teacher Associations

SBP State Bank of Pakistan

SME Small and Medium Enterprise

SPDC Social Policy Development Center

SWOT Strengths, Weaknesses, Opportunities and Threats

UNDP United Nations Development Program

WAPDA Water and Power Development Authority

iv

TABLE OF CONTENTS

Executive Summary viii Chapter 1 Introduction 1 Chapter 2 Poverty in Sindh 5 Chapter 3 PRSP Dialogue – The Consultative Process 38 Chapter 4 The Poverty Reduction Strategy 43 Chapter 5 The Medium term Budgetary Framework 73 Chapter 6 Monitoring and Evaluation 83

v

LIST OF TABLES

Table 1.1 Provincial and Urban Rural Differences in Selected Human Development

Indicators (1998-99) 2

Table 2.1 Poverty Trends in Pakistan by Province 5

Table 2.2 Poverty headcount, poverty gap and severity of poverty in Sindh during the 1990s by region

7

Table 2.3 Inequality (Gini): Mean per Equivalent Adult Expenditure—1998-99 8

Table 2.4 Trends in Gini index of inequality for Sindh during the 1990s 8

Table 2.5 Average Land Owned (Hectares) Per Household by Poverty Status (1998-99) 9

Table 2.6 Rural Poverty by Household Land Ownership (1998-99 10

Table 2.7 Average acres per capita owned, dependence on agriculture, and average number of crops cultivated by households depend only on crops Sindh

11

Table 2.8 Distribution of State-Owned Land 13

Table 2.9 Families and Livestock Affected by Drought in Districts Entirely Dependent on Rains

13

Table 2.10 Details of Affected Area by Sea Intrusion 14

Table 2.11 Household size, age composition and dependency ratio in Sindh by region, 1998-99

16

Table 2.12 Education Statistics of Sindh--1998-99 18

Table 2.13 :Population that has ever attended school – by expenditure quintile (Sindh—2001-02)

18

Table 2.14 Literacy rate - population 10 years and older by expenditure quintile (Sindh) 18

Table 2.15 Gross primary, middle and matric level enrolment rate by expenditure quintile (Sindh)

19

Table 2.16 Proportion of Government School Enrolment in Total Enrolment at Primary 20

Table 2.17 Percentage of children aged 1 to 5 years that have been fully immunized by poverty status by region in Sindh, 1998-99

20

Table 2.18 Infant Mortality in Sindh (deaths per 1000 live births 21

Table 2.19 Contraceptive Awareness and Contraceptive Prevalence Rates in Sindh (% Currently Married Women 15 - 49 Years

22

Table 2.20 Main Source of Drinking Water—Sindh 23

Table 2.21 Nature of toilet facilities by region—Sindh 23

Table 2.22 Type of Sanitation System in Sindh 24

Table 2.23 Garbage Collection System in Sindh (2001-02 24

Table 2.24 Crude Activity (Participation) Rates By Sex, and Rural-Urban Areas (Pakistan and Sindh)

25

Table 2.25: Percentage distribution of Civilian Labour Force by Gender,Pakistan and Sindh (1999-00

26

Table 2.26 Percentage distribution of employed persons, average monthly income and income share by type

27

Table 2.27 Percentage Distribution Of Employed Persons By Employment Status by Gender Sindh 1998-99

27

Table 2.28 Percentage Distribution Of Employed Persons By Employment Statusby GenderSindh 1998-99

28

vi

Table 2.29 Distribution of household income by source—Sindh 1998-99 29 Table 2.30 Sources of Consumption expenditure—Sindh 1998-99 30 Table 2.31 Deprivation Ranking – Sindh 31 Table 2.32: Deprivation Ranking--Sindh [ALL AREAS) [1=Least Deprived 16=Most

Deprived] 32

Table 3.1 Breakdown of District Participants by Categorie 38 Table 5.1 Summary Fiscal Accounts of the Government of Sindh (Rs. Million) 73 Table 5.2 Sindh - Public Finances, 1999/00-2005/06 (Percent of provincial GDP 74 Table 5.3 Composition of Expenditures, 1999/00-2005/06 Percent of Provincial

Expenditures) 74

Table 5.4 Composition of Expenditures, 1999/00-2005/06 (Percent of Provincial Expenditures)

78

Table 5.5 Sindh - Available Financing 81 Table 6.1 Health indicators 88 Table 6.2 Education indicators 84 Table 6.3 Monitoring Indicators Under GoS Reform Program = Corresponding to

National PRSP Targets 85

)

vii

LIST OF FIGURES

1. Trends in Poverty Headcount (Pakistan and Sindh) 6

2. Rural-Urban disparities in Sindh in money metric measures of Poverty 7

3. Extent of Water Logging (0 to 5 feet water table depth) - 2000 12

4. Rainfall Pattern in District Tharparkar 14

5. Decline in ADP share in overall budget of Sindh (1999-2003) 17

6. Decline in Annual Development Programme (1991-2003) 17

7. Water Utilization in Sindh against Water Accord Allocations from year

(1992-2003) 62

viii

EXECUTIVE SUMMARY

Sindh is resource rich province. It handles 90 percent of international trade. Large scale

manufacturing sector of Sindh contributes 43 percent and Small Scale Manufacturing sector

accounts for 25 percent to GDP. Contribution of Sindh’s agricultural sector in GDP is also

significant. This province is producer of 15 percent of wheat, 42 percent of rice, 31 percent of

sugarcane, 23 percent of cotton, 70 percent of marine fish and 28 percent of livestock. Sindh is

also a large producer of oil and gas in Pakistan. 62 percent of total oil production and 48 percent

of total gas production takes place in Sindh. About 39 percent of country’s electricity is

generated in Sindh. Of the 3.16 million tons of coal production, Sindh’s share is 31 percent.

Yet the incidence of poverty in areas of rural Sindh, especially its Southern Districts and the

urban and peri-urban areas excluding some parts of Karachi is amongst the highest in Pakistan.

The aggregate estimates of the poverty headcount based on the Household Income and

Expenditure Surveys (HIES) data hides this extremely high and growing incidence. The weight-

age of Karachi in the overall population of Sindh seriously distorts the overall picture. With

urban estimates including Karachi being low, the overall poverty level for Sindh is brought

down. However, as per calculations done for this study, if we remove the data of Karachi from

the estimations of poverty, it shows that poverty in overall Sindh based on the latest HIES

2000/1 data is 48.4 percent and 36.7 percent when included. This means that nearly one in every

two in Sindh is below the poverty line outside of Karachi and this includes all the people living

in the other important towns such as Hyderabad and Sukkur. Even within Karachi the

predominant proportion of the population mainly living in Katchi abadis and slums is extremely

poor. It is the extremely high levels of income of certain sections of the Karachi population that

distort the overall picture. Moreover, the rural-urban gap estimates from the HIES show the

largest disparity in Sindh. Not only this gap is large but it increased three fold from 12 percent in

1992-93 to over 36 percent in 2000-01. Poverty has worsened significantly overall and the gap

between urban and rural Sindh has widened. Based on the latest year estimates, more than one

out of every two rural person is living below the poverty line. In terms of human development,

Sindh is far behind the rest of the country with the largest rural-urban gap in the key indicators.

One out of every ten children born dies before his or her first birthday; one out of every nine

children dies before reaching five years of age. Every twenty minutes a woman dies from

complications relating to pregnancy and childbirth and four out of five women are anemic. Four

out of seven children are mal-nourished at one point or the other and three out of every seven

children are chronically malnourished (stunted). Three out of every five children aged five to

nine are not in school and four children drop out of school every six minutes. One in five persons

in Sindh does not have access to safe drinking water and one out of three persons do not have

access to proper sanitation. This proportion is nearly one in every two for Rural Sindh. Nearly

forty eight percent of the population of Sindh is under nineteen years of age and four out of six

children under the age of five are not registered in the birth and death register maintained at

Union Council/Municipal. The total population is currently estimated at about 30 million with an

annual growth rate of 2.8 percent. The province is becoming highly urbanized with nearly 15

million people living in cities and towns. The urban population is growing at a faster rate than

the overall population due in part to the rural to urban migration. This indicates the extent of the

poverty problem in Sindh.

ix

The poor of Sindh can be categorized into five groups each with its own attendant and unique

problems. The rural poor overall are cut off from access to essential public services and

reasonable means to generate sustainable incomes and are tied into traditional customs and

modes of production and livelihoods. Within this group is a sub group of ultra poor who lives in

the Southern districts and have been the repeated victims of successive natural calamities such as

drought, followed by excessive rainfall, flooding, cyclone, earthquake and of sea intrusion and

resultant loss of valuable soil quality due to increasing soil salinity. Losses due to these

catastrophies are enormous, Available estimates indicate that millions of people and livestock

were affected and losses run into several percentage points of the Provincial GDP in addition to

the enormous costs of the rehabilitation. The third group comprises of the growing peri urban

communities of squatters, who migrated from the rural areas either because of lack of safety or of

livelihood opportunities and are squatting around the towns of interior Sindh. Without adequate

employment this growing group adds to the burden on the already strained public services in

these towns and has little of no formal access to health, education and sanitation. The fourth

group represents the urban poor of Karachi. This is perhaps the fastest growing group of poor.

Its numbers are increased not only from the migration from interior Sindh but also from all the

other provinces of the country. This group more than the others is cutoff from its natural support

systems and traditional safety nets. Its growing weight adds not only to an ever increasing load

on public services but is also slowing down the productivity of the region by choking up the

social services, communications and infrastructure. The fifth and largest group of poor cuts

across the other four groups and represents more than 70 percent of the population. This group

comprises the large proportion of children under the age of 15 years and women of child-

bearing age. This group of the very vulnerable represents the special requirements of the Sindh

province in terms of poverty reduction.

There are several factors responsible for this sad and deteriorating situation in Sindh.

Land distribution in Sindh is highly skewed. Land ownership is a key factor in determining the

access to formal credit. Unequal land tenure patterns therefore have adverse impacts on

agricultural productivity. The prevalence of an unequal land distribution and acquisition is thus a

major cause of poverty, skewed income distribution and significantly enhances vulnerability. A

higher extent of water logging and salinity makes Sindh more vulnerable as compared to other

provinces.

The deterioration of the irrigation network due to poor maintenance, low water rates and

inefficient system of assessment and collection that recover only a third of the recurrent cost of

irrigation have lead to enormous wastage of scarce water resources and reduced availability of

irrigation water.

The province of Sindh has quite often been a victim of natural disasters such as drought,

cyclones, earthquakes and sea intrusion. These disasters and natural phenomenon have had both

short and long term effects on Sindh economy. The worst was that these affected the most

relatively more deprived districts. Economic activity in the affected four districts of lower Sindh

has squeezed. Though there are no numbers available at this stage, but incidence of poverty has

certainly increased in these areas. These areas would, therefore, require a special focus and

attention.

x

The performance of the education and health sectors has remained unsatisfactory in Sindh. There

are wide gender and rural urban differences in literacy, enrolment, infant mortality, and

immunization, in Sindh. Among the number of factors that may be responsible for low indicators

of education and health in Sindh, especially in rural areas, access to facilities is potentially

important. Rural Sindh suffers from poor access to education and health facilities alike. On

access to rural health facilities, the same story prevails. By any definition of health facility, rural

Sindh ranks behind rural areas of every province except perhaps Balochistan. Access to family

planning services also remain low in Sindh, which partly explains the relatively low rate of use

of contraceptives.

The poor households in Sindh suffer from lack of connectivity to a number of services, such as,

water, toilet, drainage, electricity, gas, etc. This has direct implications for their human

development. Available data reveals that the poor in Sindh have relatively low access to safe

drinking water and sanitation facilities: they are less likely to use closed sources of drinking

water, have toilets in the household, and be connected to a drainage system. As expected, the

poor are also less likely to be connected to electricity and gas facilities. Availability of all these

amenities is also characterized by large rural-urban gaps.

The province of Sindh has been facing an acute fiscal crisis in recent years due to a combination

of past fiscal mis-management, changes made in the federal revenue transfers mechanism in the

1997 National Finance Commission (NFC) Award, the large and the continued shortfalls in

federal Government transfers. The fiscal crisis has crowded out resources for delivery of public

services and maintenance of provincial infrastructure. Sindh's fiscal problems were particularly

adversely affected by the 1997 NFC Award. Sindh, which generates the most revenue about 68%

for the federal government, on the other hand, was left to the instability of energy-related

"straight transfers" to meet its financial needs. The recurring shortfalls in federal tax collections

and the resultant reduction in Federal flows from the "divisible pool" added to the province's

fiscal problems. As a result, Sindh has been facing difficulties in meeting its expenditure

obligations and the development and non-salary O&M expenditures have been falling well below

the assessed needs, slowing down economic activity in the province and creating a huge backlog

of unmet repairs and maintenance and unpaid utility bills and SBP overdrafts. The NFC award’s

system of allocations from the divisible pool based on population alone is clearly biased against

the Province of Sindh which generates by far the highest revenue for the Federal Government as

compared to all the other Provinces, combined.

The synthesis of Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis from the

district level consultation meetings indicates various strengths of the province such as,

agriculture, fertile land, livestock, hardworking manpower, and handicraft industry. These

meetings pointed out that the province is facing several weaknesses. Among them, shortage of

irrigation and drinking water, increasing unemployment and lack of employment opportunities,

illiteracy, lack of health facilities, deteriorating law and order situation, lack of monitoring

mechanism for development activities, poor communication network, lack of access to justice,

corruption, feudal system are the most prominent. Moreover, various opportunities and threats

are also identified in these meetings. Various recommendations regarding income generating

activities, enhancing the security of the poor, and increasing empowerment through building the

human capital of the poor came up in these meetings.

xi

Declining fiscal space, increasing size of government sector in terms of civil servants,

deteriorating situation of law and order, poor governance appeared as the main issues in Sindh.

In order to address these issues, the GoS is implementing reforms with the overarching objective

of reducing poverty by promoting growth and accelerating human development. This PRSP

proposes five pillars: Fiscal and Financial Management Reforms; Improving Governance of

Civil Service and Public Service Delivery; Promoting Private Sector Development and

Economic Revival; Developing women and children; and Addressing Vulnerability to Shocks.

In order to address the issue of law and order in Sindh, Judicial and Police reforms are part of

civil service reforms in this strategy paper. The crucial issues of public service delivery in terms

of education, health, clean drinking water and sanitation, and urban services are also addressed

under the pillar 2 of PRSP (Page 46).

A large potential strength of the Sindh economy lies in developing its potential in value-added

agriculture. It provides the opportunity to build agro-based trade in processed high value-added

agriculture. This PRSP recognizes that accelerating growth is key to poverty reduction but also

that the private sector has to be the engine of this growth and that such growth should be based in

the rural sector where the majority of the poor reside and where the highest employment

multipliers are evidenced.

The Rural Development Strategy proposed here relies on the acceleration of growth in value-

added agriculture and overall agriculture development accompanied by the development of the

non-farm sector to bring about poverty reduction. In this respect the Government is envisaged to

play only a supporting role to promote the private sector through improved provision of

infrastructure and easy and timely availability of institutional credit and information and

technology. An important step in this regard would be the revitalization of the Agriculture

Extension and research Departments and the initiating of programs to enhance its technical

capacity to help farmers increase production and export. Other specific areas of focus include

assisting the development of the seed industry with public-private partnership; expanding the

vaccination coverage of livestock; reducing the role of the public sector and improving the

overall functioning of agriculture markets.

The largest poverty reduction comes from the development of the non-farm sector in rural areas.

This sector is generally extremely employment intensive and requires the lowest amounts of

capital per job created. The development of non-farm activities is therefore the ideal intervention

for poverty reduction in these resource constrained conditions. The Government will actively

promote off-farm employment opportunities by promoting agro-based industries and

employment through processing and other activities and services that rely on the linkages with

the farm sector The dairy and livestock sector offer enormous potential in this regard.

In addition to the rural development strategy covering both agriculture and trade the Province

needs to promote its enormous tourism potential and encourage both domestic and international

tourism. This requires infrastructure development and the development of facilities such as

resorts, hotels, motels, rest houses, restaurants and gift shops. The Government can facilitate this

process by providing access to and ensuring the beautification of local sites. The tourism sector

needs better access to credit for kiosks and food stalls and preparing and distribution of

advertisements, brochures, and seminars to attract tourists. The local Governments have a large

xii

role to play in this respect. The law and order situation is crucial for tourism development. In this

respect ensuring the maintenance of law and order is extremely important for all three aspects of

effective poverty reduction i.e. opportunity, empowerment and security.

The roads network in Sindh province is in a critical state of disrepair raising transport costs and

adversely affecting the growth of markets, incomes and employment, especially in the rural

areas. GoS's plans to improve its road management program through embarking on a road

rehabilitation program that prioritizes maintenance, setting up a Roads Fund with an Overseeing

Board that has stakeholder participation and involves private contracting. Revitalization/

improvement of feeder Railway network with the cooperation of Pakistan Railways, as to

provide economical access & mobility to rural population. The other main component of its

strategy is to implement the process of devolution and decentralization of the management of

district roads-which constitute the vast majority of the road network - to district Governments.

Finally, the GoS's Medium Term Frame Work Provincial (MTFRP) provides the fiscal space to

increase allocations for road rehabilitation in both the current and development budgets several

fold.

The PRSP strongly endorses the mainstreaming of gender in all growth promotion activities in

the Province as the most efficient means for poverty reduction. The provincial government will

implement numerous strategies in this regard, which include: promoting the participation of

women in decision making processes; policy change to facilitate female participation; capacity

building and skill development; partnership with community, NGO and private sector; gender

disparity reduction; ensuring access to gender disaggregated data; and provision of improved

access to social services for the female population.

It is now accepted worldwide that there can be no sustainable development without giving access

to rights. Rights of the children are of special significance in this regard. The government has

shown commitment by announcing plans to of adequately funding the Plan of Action for

Children. While detailed indicators are included in the PPA, three indicators on birth

registration, juvenile justice and education of worst forms of child labour are being included in

the PRSP for creating sharp focus and linkages between the policies of the government and its

implementation methodology. The Plan of Action for Children will provide the matrix for

implementing the commitments contained in the PRSP.

The Government of Sindh is currently preparing a MTBF for selected departments (namely

health, education and irrigation) which proposes to address “the existing procedures and

structural rigidities in the composition of expenditures (largely because of overstaffing) and in

the revenues (because of the high degree of dependence on federal transfers) which have made

provincial budget formulation a routine affair. Almost 90 percent of the recurrent budget is

classified as permanent expenditures and activities are mechanically accepted each year without

any comprehensive review or evaluation to phase out or reduce spending on non-priority areas,

resulting in the delinking of the budget preparation from policy” However, this MTBF has yet to

be approved by the Government of Sindh. This PRSP therefore uses the MTBF approved by the

Government of Sindh under its Fiscal Restructuring Program of FY2000/01 as a bench-mark.

Once the estimates from the ongoing exercise are approved these can be easily incorporated into

the overall framework.

xiii

The MTBF covering the period from FY 03 to FY 06 focuses on the creation of fiscal space for

poverty reducing current and development expenditures. The fiscal space is created from three

sources significantly higher non-tax revenues (from new oil and gas revenues from production in

three new fields in Sindh that are collected by the Federal Government and returned to the

province), higher donor assistance (from ADB, other donors, and the World Bank), and from

increases in provincial tax effort with revenues rising by 15% p.a.

The fiscal program aims to raise public savings for the province through (i) revenue measures;

(ii) increasing cost recovery; (iii) reducing undirected subsidies; (iv) through investment of all

G.P. (pension) funds current surpluses; (v) through an accelerated repayment of expensive debt

owed to the Federal Government, and (vi) reducing the wage bill through a separation package.

The poverty reducing expenditure targets on health, education, and drinking water will be

transferred, as needed, to the district and Tehsil Governments as tied grants (as it is already the

case with Rural Water Supply and Sanitation (RWSS) schemes. In addition to these items, the

GoS will also give high priority in allocating additional resources for the maintenance and

rehabilitation of rural infrastructure.

This PRSP proposes ambitious short term poverty reduction targets that can place the province

well on the way to achieving the rates of decline implicit in the Millennium Development Goals

(MDGs) to which Pakistan is a signatory and to the Federal PRSP targets. This strategy proposes

a decline in poverty from its overall estimated level at 36.7 percent in 2000/01 to 28 percent in

2006. Rural poverty is expected to decline from 52.2 percent estimated in 2000/01 to 44 percent

in 2006 and urban poverty from its estimated level of 14.9 percent to 10 percent by 2006. Gross

primary enrollment rate is planned to increase from 60 percent to 80 percent over the period

2003 to 2006 and the infant mortality rate is expected to decline from 95 to 60 during this period.

These short term rates are in line with the levels needed to meet the MDG targets by the year

2015 for the province. The achievement of these targets requires poverty reducing development

expenditures of Rupees 40,000 million over the three year period 2003/04 to 2005/06. And the

achievement of these goals requires the concerted efforts of not only the Government of Sindh

but also of the private sector, the civil society and all the people of the Province.

What is presented in the pages that follow the overall strategic framework of the Government of

Sindh in line with National IPRSP , draft PRSP and MDGs, to bring about the desired poverty

reduction in the Province. The next steps include the translation of this strategy into a poverty

alleviation action plan with detailed project proposals and budget estimates relating to projects in

the strategically identified areas.

1

CHAPTER 1: INTRODUCTION

Sindh is the second largest province of Pakistan in terms of population. It occupies 19 percent of

total Pakistan’s area and accommodates 23 percent of Pakistan’s population. It is the most

urbanized province of Pakistan. 49 percent of its population lives in urban areas. This province is

the producer of around 29% of national GDP. Sindh's economy is relatively industrialized with

industry accounting for 28% of the GPDP (with manufacturing accounting for 16%), followed by

agriculture (23% of the economy), commerce (17%), and transport and communications (12%).

The contribution of Sindh’s agricultural and manufacturing sector in GDP is significant. Sindh’s

capital is Karachi, which is the commercial hub and the gateway of Pakistan. This city handles

95% of Pakistan’s foreign trade; contributes 30 % in Pakistan’s manufacturing sector; accounts

for 68 % of the tax receipts; almost 90 % of the head offices of the banks, financial institutions

and multinational companies are in Karachi; country’s largest stock exchange is Karachi-based

making it the financial and commercial hub of the country; it also comprises about 40% of the

total banking and insurance sector of the country. Sindh’s contribution in country’s agriculture is

significant. This province produces 41 percent of total rice; 21 percent cotton; 31 percent

sugarcane; 14 percent of wheat; 71 percent of Banana; 42 percent of Dates; and 34 percent of

Mangoes. In addition, 68 percent of total fish is produced in Sindh.

In terms of human development, Sindh is far behind the other Provinces with the largest rural-

urban gaps in all the key indicators. One out of every ten children born dies before his or her first

birthday; one out of every nine children dies before reaching five years of age. Every twenty

minutes a woman dies from complications relating to pregnancy and childbirth and four out of

five women are anemic. Four out of seven children are mal-nourished at one point or the other

and three out of every seven children are chronically malnourished (stunted). Three out of every

five children aged five to nine are not in school and four children drop out of school every six

minutes. One in five persons in Sindh does not have access to safe drinking water and one out of

three persons do not have access to proper sanitation. This proportion is nearly one in every two

for Rural Sindh. Nearly forty eight percent of the population of Sindh is under nineteen years of

age and four out of six children under the age of five are not registered. The total population is

currently estimated at about 30 million with an annual growth rate of 2.8 percent. The province is

highly urbanized with nearly 15 million people living in cities and towns. The urban population

is growing at a faster rate than the overall population due in part to the rural to urban migration.

The urban rural gap can be seen not only in the human development indicators but also in

money-metric indicators of poverty (see chapter 2). This province because of Karachi exhibits

the highest per-capita incomes, but its human development indicators especially in the rural areas

were among the worst in Pakistan in FY 99 (see table 1.1). It also has the highest gender

disparities.

2

Table 1.1: Provincial and Urban Rural Differences in Selected Human Development Indicators

(1998-99)

Male

Literacy

Rate

Female

Literacy

Rate

Infant

Mortality

Rate (per

1000 live

births)

Incidence

of Diarrhea

(Children

of age 5

and below)

(%)

Pre-natal

Consultation

for women

(%)

Ever-use

Contraception

(Married

women of age

15-49) (%)

Rural areas

Punjab 50.1 20.0 101.7 13.9 24.6 18.0

Sindh 52.3 11.2 102.7 8.7 19.0 7.9

NWFP 51.5 11.4 58.7 15.6 19.6 13.9

Balochistan 47.2 6.8 75.1 9.9 14.9 5.7

Urban areas

Punjab 71.2 53.6 70.6 10.5 57.9 33.9

Sindh 77.5 54.9 67.1 11.7 70.4 36.4

NWFP 65.5 35.2 62.0 11.7 36.0 27.2

Balochistan 70.9 32.5 120.6 10.7 42.5 24.0

Source: Poverty in Pakistan in the 1990s: An Interim Assessment, South Asia Region, The World

Bank, 2001.

Rural Sindh is highly dependent on public services, whereas the private sector plays a major role

in urban Sindh. Thus, reforms to improve public service delivery, along with reforms to

stimulate rural growth-that can rise agricultural and non-agriculture wages-will be fundamental

for reducing poverty in rural Sindh.

One of the major causes of rising poverty in Sindh is the deteriorating situation of governance.

Poor governance has resulted not only in rise in poverty and worsening social indicators but also

in poor quality of public service delivery. In addition, fiscal and financial mismanagement

resulted in decreasing fiscal space for high priority expenditures. The number of civil servants

increased and support staff of grades 1 to 5, many of whom are illiterate, make up more than

43% of the civil service. The burden of poor law and order, complex regulations, and poor

governance made the investment climate hostile and manufacturing units migrated from Sindh or

closed down. Consequently the growth rates fell, especially in manufacturing sector, which

decelerated faster in Sindh than the national average. Although the agriculture sector exhibits a

higher growth rate than the national average, this growth has not been translated into social well-

being. This sector suffers from three major problems; an irrigation infrastructure that is

crumbling, excessive and increasing problem of water logging and salinity and water shortage or

not timely available. The irrigation infrastructure is disintegrating due to lack of repairs and

maintenance. Excessive salinity in the province is estimated to reduce cropping productivity of

its main crops-cotton, wheat, sugar cane and irri rice-by around 40%.

However, one encouraging trend has been the growing diversity through significant value-added

in fisheries and fruit farming.

3

The Federal Government in its Interim Poverty Reduction Strategy Paper of November 2001

stressed five main pillars:

1. Engendering growth

2. Governance reforms

3. Creating income generating opportunities

4. Improving human development

5. Reducing vulnerability to shocks

In addition to this the draft Federal PRSP (summarized version) of May 2003 also reinforces the

three areas found lacking in the IPRSP namely:

1. Gender

2. Environment

3. Rural development/Employment

The summarized PRSP document notes that for effective poverty reduction growth must

originate from sectors with the highest employment multipliers. It proposes targeted policy

interventions for quick relief through short-term employment opportunities, social safety nets

and financial assistance. It increases the emphasis on improved access to basic needs such as

primary/ elementary education, health care, population welfare services and in particular

improved public service delivery. There is an increased emphasis on monitoring and evaluation.

While the national PRSP provides the overall directions for poverty reduction a province specific

poverty reduction strategy had already been initiated in Sindh in 2000. This Sindh Reform

Program has three key elements:

1. Fiscal and financial management reforms

2. Improving governance of civil service and public service delivery

3. Promoting private sector development and economic revival

The extensive consultations undertaken as part of the process of building the current strategy

confirmed that the three pillars defined above were indeed the three essential elements for an

effective poverty reduction strategy. Based on these consultations two additional elements were

added to the main pillars for the PRSP for Sindh. These are:

4. Focusing on women and children

5. Addressing vulnerability to shocks (safety nets)

Removing gender disparities and focusing on women is a cross cutting issue. However, a special

highlight needs to be placed on developing women and children as a conscious choice because it

is the one strategic area where the payoff in terms of poverty reduction is the highest. Women of

child bearing age and children account for over seventy percent of the population of the

Province. They are also the most disadvantaged and vulnerable. The most effective poverty

reduction can come about simply by addressing this vulnerability. The long-term consequences

of doing this are also most significant. Addressing this vulnerability today provides the pre-

4

conditions for long-term poverty reduction. If due attention is not paid to this extremely

important segment of the population today the consequences for tomorrow are catastrophic.

Sindh like the other provinces is sitting on a poverty bomb that will explode in the coming years

with much more disastrous consequences than are being faced today.

And addressing vulnerability to shocks is extremely important to a province where the vagaries

of nature affect a significant proportion of the population through the effects of floods, drought

and sea intrusion.

5

CHAPTER 2: POVERTY IN SINDH

Trends in Money-metric Measure of Poverty

The available information on the headcount of poverty based on the Household Income and

Expenditure Surveys (HIES) data indicates that poverty in the Sindh declined marginally during

FY93-FY97 and then increased sharply (by 41%) in FY99. This increasing trend of poverty in

late 90s in terms of the money-metric measure is evidenced in both the urban as well as in the

rural areas. However, FBS (2001) explains that low poverty in 1996-97 is dubious because of a

very low average household size revealed by that survey which is in fact, not comparable with

other years but also appeared out of trend when compared with the 1998 population census and

1996-97 PIHS. There was no economic reason to expect the sharp decline in poverty in Sindh

that emerges from the data for FY97 especially since the estimates for the year prior and those

for subsequent years follow a trend.

Table 2.1: Poverty Trends in Pakistan by Province

Source: ADB (2002). Poverty in Pakistan: Issues, Causes and Institutional Responses

Estimates for FY01 based on another calculations for the FBS Household Income and Expenditure

Survey 2000-01

The rural urban gap in Sindh is the highest as compared to the other Provinces. The gap of over

18 percentage points in 1998-99 was the highest amongst all other provinces and had worsened

to over 36 percentage points according to the estimates for 2000-01. Poverty has worsened

significantly overall and the gap between urban and rural Sindh has widened. Based on the latest

year estimates more than one out of every two rural person is living below the poverty line. This

indicates the extent of the poverty problem in Sindh.

Province FY93 FY94 FY97 FY99 FY01

Urban Areas 20.7 16.3 16.1 22.4 21.5

Punjab 22.0 18.1 16.9 25.5 24.4

Sindh 17.3 11.8 12.0 16.1 14.9

NWFP 25.3 26.9 27.2 29.2 29.6

Balochistan 31.8 16.8 23.0 24.3 21.8

Rural Areas 28.9 34.7 30.7 36.3 45.6

Punjab 26.5 33.9 28.3 36.0 44.2

Sindh 29.5 31.8 19.6 34.7 52.2

NWFP 37.0 40.0 43.4 44.9 45.2

Balochistan 28.1 37.9 42.5 22.5 36.6

Overall 26.6 29.3 26.3 32.2 38.5

Punjab 25.2 29.5 25.0 33.0 38.6

Sindh 24.1 22.6 15.7 26.6 36.7

NWFP 35.5 38.1 41.2 42.6 42.9.

Balochistan 28.6 35.5 38.4 22.8 34.1

6

The comparison of poverty trends in Sindh with those of Pakistan seen in Figure 1 below shows

that the rate of decline in poverty was higher in Sindh as compared to whole Pakistan until 1996-

97. However, this changed radically with the sharp rise in poverty in Sindh in FY 99 and FY01.

However the overall money metric estimates of poverty in Sindh are seriously biased downwards

by the inclusion of Karachi which seriously distorts the overall picture. With urban estimates

including Karachi being low the overall poverty level for Sindh is brought down. However,

analysis conducted for this study on the HIES 2000/01 data shows that with the removal of data

for Karachi from the estimations poverty in overall Sindh is 48.4 percent while it is 36.7 percent

with it included. This means that nearly one in every two person is below the poverty line outside

of Karachi and this includes all the important towns such as Hyderabad and Sukkur.

Figure 1: Trends in Poverty Headcount (Pakistan and Sindh)

Rural-Urban disparity in Sindh

Rural-urban disparities are more pronounced in Sindh. This can be seen in both money metric

and non-income measures of poverty. In terms of money metric measures, this gap is not only

pronounced but also shows a persistent rise over time [see figure 2]. In terms of non-income

measures, this province exhibits largest rural-urban gaps in literacy rates, infant mortality rates,

and the incidence of diarrhea. Disaggregation of households between poor and non-poor, it has

been found that urban poor are better off than the rural non-poor in terms of literacy, enrolment,

and immunization. A comparison of urban and rural non-poor indicates large differences in terms

of all human development indicators, such as, literacy, enrolment, immunization, piped water,

drainage facility, electricity, toilet facility, etc.

26.629.3

26.3

32.2

22.619.6

52.248.4

38.5

36.7

24.1

15.7

34.731.829.5

26.6

0

10

20

30

40

50

60

FY93 FY94 FY97 FY99 FY01

% P

ov

erty

hea

dco

un

t

Pakistan Sindh Sindh rural Sindh without Karachi

7

Figure 2: Rural-urban disparities in Sindh in money metric measures of poverty

Other measures of poverty, namely poverty gap (P1) that estimates the depth of poverty, and

squared poverty gap that measures the severity of poverty (P2), indicate the similar picture, not

only in comparison with Pakistan and Sindh but also in urban and rural areas of Sindh. For

example, the severity of rural poverty is relatively higher, while that of urban poverty relatively

lower in Sindh as compared with Pakistan. Both these measures are considerably higher in rural

Sindh in comparison with urban Sindh.

Table 2.2: Poverty Gap and Severity of Poverty in Sindh

Poverty Gap (P1) Severity of Poverty (P2)

FY93 FY94 FY97 FY99 FY93 FY94 FY97 FY99

Urban areas

Pakistan 3.92 3.39 2.68 5.29 1.02 0.90 0.70 1.67

Sindh 2.91 1.93 1.65 2.95 0.75 0.44 0.35 0.79

Rural areas

Pakistan 4.66 6.79 5.03 7.87 1.20 2.00 1.35 2.52

Sindh 5.31 5.49 3.12 7.6 1.49 1.56 0.74 2.46

Overall

Pakistan 4.46 5.85 4.35 7.13 1.17 1.71 1.17 2.27

Sindh 4.25 3.85 2.37 5.59 1.17 1.04 0.54 1.73

Source: FBS (2001)

The final report of the Sindh Rural Development Project (SRDP) (2000) prepared by Agrodev

consultants for the Asian Development Bank undertook a detailed analysis of 56 villages in five

districts of lower Sindh1. The report establishes that by keeping the poverty line at Rs. 6,954 per

capita per annum, at least 73 percent of the rural population can be termed as poor. The report

finds that the proportion is expected to be even higher for isolated villages. Nearly 82 percent of

1 These districts are Thatta, Dadu, Badin, Mirpurkhas and Umerkot.

5

16

11

20

12

2019

37

1213

16 16

-4

21

-2

15

-10

-5

0

5

10

15

20

25

30

35

40

FY93 FY94 FY99 FY01

Punjab Sindh NWFP Balochistan

8

total population that comprised of 60 percent of total families live on less than a dollar per day in

these five districts.

Inequality

The decade of 1990 shows an increase in inequality with highest Gini coefficient in 1998-99.

Inequality in Sindh and Punjab was higher than NWP and Balochistan. Table 2.3 below presents

the available estimates of the Gini coefficient (expressed as a percent) of consumption

expenditures. In Punjab, inequality in urban areas is much higher than in rural area. The Gini

coefficient for urban Punjab is about 12 percent higher than the rural Punjab.

Table 2.3: Inequality (Gini): Mean per Equivalent Adult Expenditure—1998-99

Punjab Sindh NWFP Balochistan Pakistan

Urban 37.0 33.0 34.6 25.5 37.0

Rural 25.7 24.6 24.5 22.5 25.7

Overall 30.6 30.4 27.1 22.9 30.6

Source: World Bank (2002)

Table 2.4 presents the trends in Gini index in Sindh in comparison with country as a whole

during 1990s. This table shows an increasing trend in inequality in 1990s when comparing 1990

with 1999. A slightly higher Gini index than the estimates of Pakistan shows higher incidence of

inequality in Sindh as compared to Pakistan.

Table 2.4: Trends in Gini Index of Inequality for Sindh

FY93 FY94 FY97 FY99

Pakistan 26.85 27.09 25.85 30.19

Sindh 28.48 27.54 25.30 30.82

Source: FBS (2001)

The poor of Sindh can be categorized into five groups each with its own attendant and unique

problems. The rural poor overall who are cut off from access to essential public services and

reasonable means to generate sustainable incomes and are tied into traditional customs and

modes of production and livelihoods. Within this group is a sub group of ultra poor who live in

the Southern districts and have been the repeated victims of successive natural calamities such as

drought, followed by excessive rainfall and flooding, earthquakes, and of sea intrusion and loss

of valuable soil quality due to increasing soil salinity. Losses due to these catastrophes are

enormous, These catastrophes lead to loss of valuable incomes and assets and present the

province with enormous rehabilitation costs. Available estimates indicate that millions of people

and livestock are affected and losses run into several percentage points of the Provincial GDP in

addition to the enormous costs of the rehabilitation. The third group comprise the growing peri

urban communities of squatters who migrated from the rural areas either because of lack of

safety or of livelihood opportunities and are squatting around the towns of interior Sindh.

Without adequate employment this growing group adds to the burden on the already strained

public services in these towns and has little of no formal access to health, education and

sanitation. The fourth group represents the urban poor of Karachi. This is perhaps the fastest

growing group of poor. Its numbers are increased not only from the migration from interior

9

Sindh but also from all the other provinces of the country. This group more than the others is

cutoff from its natural support systems and traditional safety nets. Its growing weight adds not

only to an ever increasing load on public services but is also slowing down the productivity of

the region by choking up the social services, communications and infrastructure. The fifth and

largest group of poor cuts across the other four groups and represents more than 70 percent of the

population. This group comprises the large proportion of children under the age of 15 years and

women of child-bearing age. This group of the very vulnerable represents the special

requirements of the Sindh province in terms of poverty reduction.

There are several reasons behind these high and increasing levels of poverty in Sindh:

Land Resources

Nearly 52 percent population of Sindh lives in rural areas and derives its livelihood from

agriculture. Sindh contributes significantly in Pakistan’s agriculture. 41 percent of total rice, 21

percent cotton, 31 percent sugarcane and 14 percent of total wheat are produced in Sindh. In

addition, Sindh’s share in fruits production is also high; Banana accounts for 71 percent of total

Pakistan’s Banana production, Dates 42 percent and Mangoes 34 percent of total production.

Besides, 68 percent of total fish is produced in Sindh. However, poverty in Sindh is expected to

be strongly associated with lack of asset ownership, an important component of which is

agricultural land in rural areas. According to the Agricultural Census (1990), Sindh had 16

percent of total farms that occupy 18 percent of total farm area of Pakistan. Distribution within

Sindh shows that 33 percent farms can be classified as small farms (less than 2 hectares), 47

percent were medium farms (greater than 2 but less than 5 hectares), and 19 percent were large

farms (greater than 5 hectares) in 1990. This year 51 percent of total farms and 59 percent of

total farm area was owner operated; 8 percent farms and 12 percent area was operated by owner-

cum-tenants and 42 percent farms and 29 percent areas was operated by tenants in Sindh.

In order to examine the extent of rural poverty, it would be useful to look at the average

landholdings by poverty status. Table 2.5 shows that in Sindh, on average poor households own

0.6 hectares of land against the 2.8 hectares owned by non-poor households.

Table 2.5: Average Land Owned (Hectares) Per Household by Poverty Status (1998-99)

Pakistan Sindh

Poor 0.4 0.6

Non-poor 1.4 2.8

Total 1.1 2.1

Source: World Bank (2002). SAC

Poverty headcount and land ownership have an inverse relationship. Table 2.6 reveals that

poverty headcount was highest (43%) for landless and lowest (14%) for those who own more

than 4 hectares. This indicates that as the size of landholding increases, incidence of poverty

declines. Distribution of agricultural land is found to be even more skewed in rural Sindh than

for rural Pakistan as a whole - 70% of the rural population of Sindh is landless, compared to 61%

of the rural population of Pakistan (Table 2.6). Consistent with this observation, the difference in

average landholdings of the poor and non-poor households in rural Sindh is 2.2 hectares,

10

compared to 1 hectare for all rural areas of the country (Table 2.4). Among the number of factors

likely to be responsible for the more skewed pattern of landholdings in Sindh, one could be the

relatively low impact of land reforms, especially in comparison to Punjab.

Table 2.6: Rural Poverty by Household Land Ownership (1998-99)

Landholding

Category

Poverty headcount Percent population in category

Rural Pakistan Rural Sindh Rural Pakistan Rural Sindh

No Land

Owned

40.3 42.8 61.4 70.2

0 – 1 hectare 33.8 36.9 18.4 5.5

I – 2 hectare 29.5 28.9 5.9 4.8

2 – 4 hectare 22.4 27.6 7.0 7.0

4 hectare + 12.8 14.3 7.3 12.5

Source: World Bank (2002). SAC

Land ownership is a key factor in determining the access to formal credit. Unequal land tenure

patterns therefore have adverse impacts on agricultural productivity. The prevalence of an

unequal land distribution system is thus a major cause of poverty, skewed income distribution

and significantly enhances vulnerability.

This pattern was especially reaffirmed by the SRDP (2000) study. The land tenure pattern is

highly skewed in the project areas of the SRDP. Nearly 81 percent of the rural households do not

own any land. Of the 19% that own agricultural land, 13% own 59% of the total agricultural land

while the remaining 87% own the rest of the land. 40% of the total rural households comprise of

hari or sharecroppers. The skewed land distribution pattern has resulted in a Zamindar-Hari

system under which the haris provide input and labor while the Zamindars provides land and

seeds. The product is shared equally but only in theory. In reality the Haris are often unable to

provide their share of the inputs, which results in debt bondage and consequent further increase

in poverty [see SRDP (2000)].

Since a majority of poor is either landless or small farm holder, it would be interesting to

examine the dependence of poor and non-poor households on a single agricultural activity or on

both. SRDP (2000) reports that most poor households operate small farms which are

unproductive due to lack of irrigation water, and prevalent water logging and salinity. Moreover,

owner-operator households generally cultivate around 3 hectares on average while the cut-off

point for staying above the poverty line is the income that would come from cultivating 5

hectares. This indicates therefore the need to depend on sources of income other than crops even

for the average owner operators. Table 2.7 presents average acres per capita owned, dependence

on agriculture, and the average number of crops cultivated by households depending only on

crops. This table reveals a large and significant difference between poor and non-poor in the

amount of land per capita owned by the households. This table confirms the a priori expectation

that a majority of non-poor depends on crops and poor depends on livestock. The percentage of

households that depend on both, crops and livestock is substantially higher for the non-poor. This

clearly indicates that poor not only tend to be landless or small landholders but also have more

difficulty in managing risks, therefore unable to diversify their production. The last row of table

2.7 indicates the degree of diversification among those households that depend only on crops.

11

This data shows that poor households have less diversification than the non-poor. The average

number of crops cultivated by the poor is 2.01 against 2.36 for the non-poor. This difference is

statistically significant (FBS 2001)

Table 2.7: A Comparison of Poor and None-Poor Farm Households Sindh - 1998-99

Non-poor Poor

Per capita ownership of land (acres) 0.80 0.26

Households depending only on crops (%) 31.64 43.09

Households depending only on livestock (%) 3.77 2.40

Households depend on both crops and livestock (%) 8.92 5.78

Number of crops cultivated by households depending only on crops 2.36 2.01

Source: FBS (2001)

SRDP (2000) revealed that small farms in Lower Sindh concentrated on wheat and rice with less

emphasis on fodder crops. The poor farmers focus more on food crops, which they grow for

themselves. Large farmers generally grow cotton and sugarcane since these crops demand large

tracts of land to be feasible. Poor tenant farmers also grow cotton and sugarcane but only as and

when dictated by the landlords.

The distribution of State owned land to landless and/or small farmers can help in addressing the

issue of rural poverty. According to the report of Federal Land Commission (2002), as

reproduced in Table 2.8, the total land allotted between July 2001 and March 2002 was 43,405

acres; 29 percent in Punjab, 19 percent in Sindh, 40 percent in NWFP and 12 percent in

Balochistan. This report indicates that over 2.7 million acres are still available for distribution of

which 2 percent is in Punjab, 27 percent in Sindh, 19 percent in NWFP and 52 percent in

Balochistan.

Table 2.8: Distribution of State-Owned Land

Province Total Land Allotted

July 01 to March 02

(Acres)

Total

Beneficiaries

(#)

Available for Allotment

Mach 02

(Acres)

Punjab 12,663 958 55,609

Sindh 8,075 972 740,598

NWFP 17,578 NA 526,930

Balochistan 5,089 157 1,416,761

Total 43,405 2,087 2,739,898

Source: Federal Land Commission

The distribution of land to the landless, the provision of adequate infrastructure and the timely

availability of inputs including water and credit would help in reducing poverty in rural areas of

Sindh.

Water Logging and Salinity

Out of total land area of Sindh, nearly 39 percent is cultivable. About 9.9 percent is culturable

wastes and 4.8 per cent is under forestry. The remaining 44.2 percent is not available for

12

cultivation. 57 percent of the cultivated is current fallow. It has been estimated that 42 percent of

the current fallow is salt affected, which is highest in the country and reflects on the poor water

availability, mismanagement and ill practices of irrigation systems in the province. This situation

is very alarming. The extent of water logging and salinity is more pronounced in Sindh than

other provinces of Pakistan [see figure 3].

Figure 3: Extent of Water Logging (0 to 5 feet water table depth) - 2000

Source: Agricultural Statistics of Pakistan (2001-02)

The available data indicate that the extent of salinity may be higher in Punjab (43%) followed by

Sindh (34%) in 2000 but the Sindh situation is worst in that the most of the severely affected

salinity area is in Sindh. Nearly 39 percent of total saline land in Pakistan is classified as

severely saline. Of this severely affected area, 49 percent is in Sindh.

Calamities in Sindh

The province of Sindh has quite often been a victim of natural disasters such as drought,

cyclones, earthquakes and sea intrusion. These disasters and natural phenomenon have had both

short and long term effects on Sindh economy. The worst was that these affected relatively more

deprived districts the most. Economic activity in the affected districts has squeezed and. Though

there are no numbers available at this stage, but incidence of poverty has certainly increased in

these areas. These areas would, therefore, require a special focus and attention.

Drought

Recently, actual shortage of river and canal water has resulted in drop down of aquifers from 150

feet to 500 feet. This has resulted in a shortage of drinking water as well as a decline in areas

under major crops due to less water for irrigation. This has adversely affected livestock,

agriculture, and fishing. As a consequence of this natural disaster, people of this area became

more vulnerable. Persistent drought conditions in recent years have added to miseries of the

people. Table 2.9 gives an overall magnitude of the affected families and livestock in six districts

of Sindh which are entirely dependent on rains.

Sindh

88%

NWFP

2%Punjab

9%

Balochistan

1%

13

Table 2.9: Families and Livestock Affected by Drought in Districts Entirely Dependent on Rains

District Dehs Villages Population Families Livestock

# # (000' #) (000' #) (000' #)

Tharparker 159 1,895 900 138.2 3,000

Mirpurkhas 25 316 150 24.8 1,000

Sanghar 2 18 40 7.0 250

Dadu 65 453 260 18.8 1,150

Thatta 5 181 30 6.0 200

Ghotki 9 50 10 2.0 30

Total 265 2,913 1,390 196.8 5,630

Government of Sindh

The table shows that around 1.4 million people and more than 5.6 million livestock heads have

been adversely affected due to drought conditions. Tharparkar is the worst hit district, followed

by Dadu and Mirpurkhas.

Loss of crop income in these districts has resulted in an increase in the vulnerability of poor

households. In order to meet daily requirements they either take loans on high interest or sell

livestock at prices much lower than the market value. As a result of loss of livelihood, around 0.3

million persons have moved towards the barrage areas of Sindh. The impact of drought on

economic, social and environmental set up of affected area can be summarized as:

High cost of feed and unavailability of water for livestock

Reduced milk production

High livestock mortality rates

Scarcity of drinking water due to drying of wells and alarmingly low level of

underground water

Deterioration of general health of human beings, for example, increase in the incidence of

tuberculosis, night blindness and respiratory ailments

Loss of crop income due to less or no availability of irrigation water.

Increased unemployment due to limited diversification in sources of income resulted in

increase in unemployment.

Tharparkar is one of the most underdeveloped and vulnerable districts of the province. It is

highly dependent on rain water for sustenance and livelihood of the people. Drought has severely

affected this district. Figure 4 below gives a pattern of rainfall Tharparkar. It shows that there has

been a decline in rainfall over the past five years. Since 1998, both rainfall and its frequency

have shown a declining trend. Scarcity of rain has rendered most of the area barren with little or

no vegetation.

14

Figure 4: Rainfall Pattern in District Tharparkar

Lack of rains has resulted in a decline in the cultivable area of the region. During the last 7 years

the maximum cultivation took place during 1995-96. During 1999, there was no crop production

in Tharparkar and the situation has not improved since then. During 2002 monsoons, grass did

not last for more than two weeks, which resulted in scarcity of fodder for livestock and most of

the livestock owners migrated to greener pastures in adjoining districts.

Sea Intrusion

Apart from drought, the coastal areas of Sindh are also badly affected by sea intrusion. Thatta

and Badin district are among such areas. Between 2000 and 2002, the outflow of water released

downstream Kotri Barrage declined which resulted in massive sea intrusion in Coastal areas of

Thatta and Badin. This intrusion wreaked havoc not only on human and fish population but also

damaged agricultural land badly. Economic activity in the region has halted since fishing is a

major occupation of the population. Moreover, country is losing foreign sea food market every

year due to depletion of fish and shrimp population in the region. The following Table 2.10

provides details on the affected areas.

Table 2.10: Details of Affected Area by Sea Intrusion

Location Dehs

(#)

Talukas

(#)

Area affected

(acres)

Channels

Damaged (#)

Left Side of River 55 6 113,876 26

Right Side of River 32 3 51,957 21

Total 87 9 165,833 47 Source: Government of Sindh

Some of adverse effects of a reduction in freshwater flow to the Indus are listed below:

Decrease in the availability of potable water

Increased malnutrition and disease

Rainfall Pattern: District Tharparkar

0

50

100

150

200

250

1997 1998 1999 2000 2001 2002

Year

Rai

lfal

l

(Mil

lim

eter

s)

0

1

2

3

4

5

6

7

Freq

uenc

y (#

)

Rainfall Frequency

15

Reduction in fish population and mangroves

Increased salinity and destruction of agriculture

Increased poverty

Massive out migration from coastal Talukas of Shah Bunder, Khorachan, Keti Bunder,

Ghorabari, Jati and Mirpur Sakro

Destruction caused by sea intrusion can be combated by increasing the downstream flow into

Kotri Barrage to at least 10 MAF and constructing an embankment in the coastal areas.

Cyclone and Recent Rains

Apart from sea intrusion, coastal districts have also been adversely affected by heavy rainfall and

cyclones. The districts of Thatta and Badin are badly affected. Cyclone not only wiped out the

human settlements and resulted in the huge losses of human and animal lives, but also destroyed

and damaged fishing boats, therefore, badly affected the livelihood of majority of the residents of

this area. Recent rains of 2003 monsoon in Sindh have affected around 411,000 acres of crop

area while 18,500 kilometers of road infrastructure suffered huge losses. Roughly losses are

estimated around 45 billion rupees. This estimate includes crop damage, damage to health,

education and road infrastructure, damage to houses and destruction of irrigation facilities.

Lack of adequate Access and Mobility

Rural Communication have not been adequately connected with the socio-economic facilities.

Sindh has 2nd

largest coverage of all Provinces. Thus, rural population not appropriately

benefiting from, health, education & income generation facilities. The per sq km area having

0.171 km paved/ all weather road, which is below the national average 0.370 km, per sq km. The

economical mode of transport i.e. Rail, is hardly available. Sindh’s about 400 km feeder lines,

which connect Rural areas with town/ big cities have been out of service.

The 20 communities still lack basic motorable access. 37% of communities have paved access,

40% of communities with basic access still lack regular public transport. The unserved village

communities have to travel 4 km above on average to reach public transport.

16

Reduction in Development Expenditure

The data shows that poverty increased during the decade of nineties. Among the other the most

important factor; reduction in public sector development expenditure. Data reveals that

development expenditure in 1991 shared to 27% of total provincial budget, which dropped to

3.5% in year 2003 (Figure-5).

Likewise, annual Development Programme framed at Rs. 27 billion in 1991-92, which gone

down to Rs. 4.5 billion in year 2003 (Figure-6).

DECLINE OF ADP

0

1

2

3

4

5

6

7

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Rs

in B

illio

n

DECLINING DEVELOPMENT EXPENDITURE

0

5

10

15

20

25

30

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

%

17

The Characteristics of the Poor

Population Growth and Key Characteristics of Sindh

Population and its growth are the crucial determinants of overall welfare of the province.

According to 1998 population census, 23 percent of Pakistan’s population lives in Sindh.

Population of Sindh has increased rapidly (around 5-folds) since 1951. Population density of this

province was 216 in 1998. The rate of change in population density in this province is higher

than that of Punjab and NWFP. The population of this province has grown at an annual rate of

2.8 percent since 1981. If this growth rate remains the same then the population of this province

will double by 2023. Sindh is the most urbanized province of Pakistan. Nearly 49 percent of

Sindh’s population lives in urban areas. Karachi is the most populous district of Sindh and its 95

percent population lives in urban areas. Nearly 54 percent of total Sindh’s population lives in

four districts: Karachi (32%), Hyderabad (10%), Larkana (6%) and Dadu (6%).

Household Composition and Demographics

The data of Population Census (1998) shows that 42.8 percent of Sindh’s population was less

than 15 years of age, among them 2.12 percent were less than one year and 15 percent were less

than 5 years. The proportion of women between ages 15-49 years was 22.5 percent. Crude birth

rate was 33 per 1000 live births, total fertility rate was 4.7 per woman, contraceptive prevalence

rate was 27 percent and infant mortality rate was observed 97 per 1000 live births in Sindh.

Household composition and demographic indicators differ between poor and non-poor

households. Qureshi and Arif (2001) found that household size was positively associated with

the incidence of poverty. Large households were more likely to be poor than the small

households. They observed that the incidence of poverty for the largest households (more than 9

members) was three times more than the incidence for the smallest households (1-4 members).

Table 2.11 reports household size and its composition in Sindh during 1998-99 for the poor and

non-poor households.

This table observes that poor households are large in size. The average size of poor households

was 9.09 against 6.16 for the non-poor households. Looking at age composition, this table shows

that poor households have more children under 10 years of age. The relatively higher number of

children is reflected in higher dependency ratios among poor households. Women’s age at

marriage is significantly and negatively associated with the number of children. It has been

observed that women of the poor households get married at much younger age than the women

of non-poor households. Table 2.11 shows that 79 percent of women of poor households get

married between the ages 15-19 years in Sindh in 1998-99. This proportion was highest in Sindh

as than other provinces.

Table 2.11: Household Characteristics of Poor and Non-Poor in Sindh – 1998/99

Non-Poor Poor

Household Size 6.16 9.09

18

Age composition

Age < 10 1.75 3.41

Between 10 and 18 1.20 1.95

Between 18 and 60 2.87 3.38

Age > 60 0.34 0.34

Dependency ratio 78.60 115.68

Urban areas 67.58 104.62

Rural areas 89.63 126.74

Women’s age at marriage

15-19 years 66.81 78.96

20-24 years 27.30 18.49

25-29 years 5.21 2.39

30-49 years 0.68 0.17

Source: PIHS (1998-99)

The SRDP (2000) report estimated that 47.4% of the total population of the five districts of

lower Sindh were females. Life expectancy according to this study was 61 years for men and 60

for women. The proportion of girls is larger in the age group 0 to 4, however for the age 4 to 60

the proportion of girls declines sharply as compared to boys.

Performance of Social Indicators

Although the income and expenditure indicators of poverty exhibit poverty profiles to a certain

extent yet they fail to give the complete picture if not complimented by non-poverty measures.

Some of these measures are for instance are gross enrollment ratio, literacy level, access to safe

water, health services etc.

Education

The performance of the education sector remained unsatisfactory in Sindh. There are wide

gender and rural urban differences in education in Sindh. Table 2.12 reports the education

statistics of Sindh by poor and non-poor.

This table reports the literacy rates of poor and non-poor household heads. In poor households

the 36 percent heads were literate whereas this proportion was 61 percent in non-poor

households. The difference between poor and non-poor is much higher in urban areas. World

Bank (2002 SAC) reports that poverty headcount among those living in households with literate

heads is around 21% in Sindh, compared to 42% for households where the head is not literate. A

negative relationship between poverty headcount and educational attainment of head of the

household has been found. Low levels of literacy among the poor households can also be seen

through the difference in the proportion of population that has ever attended school. These

differences in both urban and rural areas for poor and non-poor households are substantial in

Sindh. Literacy rates and gross enrolment rates are also lower for the poor households in urban

as well as in rural areas. However difference between poor and non-poor is more pronounced in

urban areas.

19

Table 2.12: Education Statistics of Sindh--1998-99

Region Non-poor Poor Overall

Proportion of literate household heads

Urban Sindh 72.06 43.74 68.98

Rural Sindh 50.04 33.09 45.49

Overall Sindh 60.92 35.70 55.94

Population that has ever attended school

Urban Sindh 73.41 48.36 69.77

Rural Sindh 39.42 27.16 35.47

Literacy Rate

Uban Sindh 70.8 46.5 69.0

Rural Sindh 36.7 24.8 35.0

Gross enrollment rate at the primary level (excluding katchi)

Urban Sindh 99.84 61.13 91.72

Rural Sindh 56.09 31.25 45.79

Source: PIHS (1998-99)

Large disparities also exist across income (using expenditure as a proxy for income). Table 2.13

provides information on the proportion of population that has ever attended school disaggregated

by expenditure quintiles in 2001-02. This table also highlights the wide gender and rural-urban

disparities. Considerable gender differences can be seen across expenditure groups. This

disparity is higher in rural areas. The proportion of population ever attended school is higher and

gender difference is lower among the higher expenditure groups.

Table 2.13: Population that Ever Attended School by Expenditure Quintiles - 2001-02

Expenditure

quintile

Percentage of the population 10 years and older

Urban areas Rural areas

Male Female Both Male Female Both

Ist Quintile 62 36 49 41 7 25

2nd Quintile 60 39 50 54 14 35

3rd Quintile 69 50 60 57 17 38

4th Quintile 79 61 70 59 22 42

5th Quintile 89 73 81 71 24 50

Overall 77 59 68 54 16 36

Source: PIHS (2000-01)

Pakistan’s literacy rate in 2001-02 was 48 percent; 60 percent for males and 34 percent for

females. In Sindh this rate was 46%. Female literacy rate is extremely low in rural areas of Sindh

(14%) as compared to urban areas (54%). Table 2.14 shows literacy rates in Sindh by

expenditure groups. According to this table, literacy rate of lowest expenditure quintile is more

than half as compared to the highest expenditure group. Same trend can be observed for rural as

well as urban areas. A significantly higher gender difference can be noted from this table for

both urban and rural areas.

20

Table 2.14: Literacy Rate of Population Over 10 Years by Expenditure Quintiles

Expenditure

quintile

Urban areas Rural areas Overall

Male Female Both Male Female Both Male Female Both

1st Quintile 53 29 41 38 6 23 41 10 26

2nd

Quintile 56 35 46 50 13 32 52 19 36

3rd Quintile 64 46 55 53 15 34 57 26 42

4th Quintile 74 54 64 56 20 40 64 37 51

5th Quintile 87 72 80 69 20 46 81 55 69

Overall 74 54 64 51 14 33 60 31 46 Source: PIHS (2000-01)

[Note: literacy has been defined as the ability to read a newspaper and to write a simple letter.]

According to the SEMIS (2001), nearly 86 percent of Sindh schools were found functional, 13

percent closed and 1 percent were without the approval of SNE. Highest number of closed

schools was found in Mirpur Khas and lowest in Karachi city. In Karachi 3 percent schools were

without SNE approval. This report indicates that participation rate at primary and pre-primary

levels was 53 percent in Sindh. Gender differences are more pronounced in all districts except

Karachi district. Distrct Khairpur exhibits highest rate of participation and wide gender disparity

(total enrolment rate 67%; boys enrolment 83% and girls enrolment 44%).

Gross enrolment rates at primary, middle, and higher levels in Sindh are reported in Table 2.15.

Looking across expenditure quintiles, extremely wide disparities between lowest and highest

expenditure groups are found at higher level. It is interesting to note that female enrolment at

middle level in urban areas is higher than male enrolment across all expenditure groups. This

table shows an exceptionally low enrolment for girls at higher level in lowest expenditure

quintiles. For highest expenditure quintile, female enrolment at all levels is found higher in rural

areas also.

Table 2.15: Gross Enrolment Rates by Level and Expenditure Quintile

Expenditure Quintile

Urban areas Rural areas

Male Female Both Male Female Both

Primary Level .

1st Quintile 74 55 65 49 23 36

2nd Quintile 71 52 61 68 37 53

3rd

Quintile 85 72 78 72 42 58

4th

Quintile 98 94 96 87 44 64

5th

Quintile 110 96 103 105 68 88

Middle Level

1st Quintile 27 31 29 18 2 12

2nd Quintile 31 43 36 35 6 21

3rd

Quintile 38 57 46 35 11 23

4th

Quintile 67 64 65 34 7 23

5th

Quintile 85 89 86 51 26 40

Matric Level

1st Quintile 39 11 23 25 2 15

2nd Quintile 35 11 23 46 2 23

21

3rd

Quintile 57 41 49 25 13 19

4th

Quintile 61 59 61 58 24 44

5th

Quintile 104 106 105 74 27 53 Source: PIHS (2000-01)

[Note: Gross enrolment rate at primary level is calculated as (number of children attending primary level

(class 1 to 5) divided by number of children aged 5 to 9 years) multiplied by 100. This excludes Katchi

class. Gross enrolment at middle level is calculated as (number of children attending middle level (class 6

to 8) divided by number of children aged 10 to 12 years) multiplied by 100. Gross enrolment at matric

level is calculated as (number of children attending matric level (class 9 and 10) divided by number of

children aged 13 to 14 years) multiplied by 100.]

The PIHS (2001-02) reveals differences in girl’s enrolment at primary level across income

groups. Girl’s enrolment has been found positively associated with income not only in Sindh but

also in other provinces. However, girl’s enrolment was observed higher in Sindh than NWFP and

Balochistan and lower than Punjab in each income group.

Various studies note that the quality of education has positive impact on the cognitive achievements

and hence on the post school productivity. Private schools are considered to impart quality

education. These schools, however, charge higher fees. According to PIHS (2001-02), mean annual

expenditure in private schools at primary level is Rs. 3001 against Rs. 821 in public schools.

Therefore, only better off households can afford to send their children to private schools. Arif

(2000) found that 32 percent children belonging to non-poor households were enrolled in private

school against 11 percent of the poor households in Pakistan in 1998-99. In urban areas more than

half of the enrolled children belonging to non-poor households were in private schools.

Table 2.16 shows substantial difference in the proportion of enrolment in government schools

between 1st and 5

th quintile, especially in urban areas of Sindh. The difference between 4

th and 5

th

quintile is also pronounced in urban areas. This means that households prefer to send their children

to private schools as their income increases. A negligible proportion of children belonging to the

highest income group go to public schools in urban areas.

Table 2.16: Proportion of Government School Enrolment in Total Enrolment at Primary

Level by Income Group- Sindh (2001-02)

Urban areas Rural areas

Quintile Male Female Both Male Female Both

1st quintile 90 94 92 99 97 98

2nd

quintile 83 65 75 96 98 97

3rd

quintile 52 64 57 96 98 96

4th

quintile 52 49 51 96 97 96

5th

quintile 19 24 21 90 95 92

Source: PIHS (2001-02)

The Population Census (1998) provides district level information on literacy. According to this

data, Karachi is on the top (almost 70%) in terms of literacy, followed by Sukkur (47%),

Hyderabad (44%). In Sindh 6 out of 16 districts possess a literacy rate less than 30 percent.

Tharparker is on the bottom with only 18 percent literate population. This data however shows

gender differences in the levels of literacy in all the district of Sindh except Karachi.

22

Health

Like other provinces, health status in Sindh is not satisfactory. The estimated number of maternal

deaths in the province was estimated 344 per month in 1998. Immunization coverage based on

record was declined from 25 percent in 1995-96 to 15 % in 2001-02. This percentage was 45 on

the basis of record and recall and 98 percent on the basis of recall. Table 2.17 presents the

difference between poor and non-poor in relation to child immunization. The proportion of

children fully immunized in Sindh in 1998-99 was 45 percent; 51 percent of non-poor and 28

percent of poor households. This table shows a considerable difference in the immunization

coverage by poor and non-poor both in urban and rural areas.

Table 2.17: Percentage of Children Aged 1 to 5 years Fully Immunized- 1998-99

Region Non-poor Poor Overall

Urban areas 70.92 48.10 67.0

Rural areas 36.26 22.14 31.43

Overall 50.98 27.97 44.57

Source: PIHS (1998-99)

Infant mortality is an important demographic indicator. In Pakistan, a decline in this indicator has

been observed in overall Pakistan. A comparison of infant mortality rates in Pakistan and Sindh

is presented in Table 2.18. One can note from this table that this rate was higher in Sindh as

compared to overall Pakistan in 1998-99. The difference between rural and urban areas of Sindh

is more pronounced. An improvement in infant mortality for females and a deteriorating situation

for males can be seen in this table.

Table 2.18: Infant Mortality in Sindh (deaths per 1,000 live births)

1996-97 1998-99

Male Female Both Male Female Both

Pakistan 101 108 105 93 85 89

Sindh 93 105 99 97 93 95

Urban Pakistan 82 85 83 77 68 73

Urban Sindh 73 75 74 63 76 69

Rural Pakistan 108 117 112 99 91 95

Rural Sindh 107 124 116 122 106 114

Source: PIHS (1998-99)

The prevalence of malnutrition has not been improved in Pakistan over the last 20 years. The

estimated number of malnourished children was about 8 million in 1997-98. Nearly half of the

children under 5 years of age were found underweight. A high incidence of malnutrition has been

observed by Alderman and Garcia (1992) in four districts of rural Pakistan. They observed that by

the time a child reaches the age of 5, he/she has a 62 percent probability of being stunted, a 45

percent probability of being under-weight and a 12 percent probability of being wasted.

Surveying the same households after a gap of 10 years, World Bank (2002) observed complete

lack of improvement in those four districts. Indeed, they found higher incidence of malnutrition.

This study finds significant variations across provinces, Punjab being better than other provinces.

23

The incidence of low birth weight (LBW), despite being a very important determinant of child

survival, has not been seriously investigated in Pakistan. Data is mostly derived from

community-based studies in Pakistan. In order to find out more about maternal deaths and LBW,

the Aga Khan University, in collaboration with UNICEF, conducted research in rural and urban

Sindh. The urban sites were the adjacent areas of Landhi, Korangi and Bilal Colony while the

rural sites comprised of communities of Chundko and Kot Diji. Phase 1 of the project revealed

extremely low birth weights primarily due to malnutrition among mothers. Forty-five percent of

the women suffered from vitamin deficiency while almost 70 percent of expectant mothers had

anemia and iron deficiency.

Based on research conducted in Hala and Matiari Talukas of Hyderabad, Bhutta et.al (2003)

reported that the infant mortality rate was 81 per thousand births. Most of these deaths occur

within the first week of birth (55%) Some of the reasons suggested for lack of care seeking

behavior were cultural barriers, lack of knowledge about the severity of disease as well as non

availability of transport to reach the medical center in time and lack of attention by the medical

staff.

The PIHS (2001-02) observes that in Sindh, 98 percent women are aware about the contraceptive

methods whereas only 15 percent women are currently using any method. Nearly 19 percent

women have ever used any method. Table 2.19 reports the contraceptive awareness and

contraceptive prevalence rate across income groups in rural and urban areas of Sindh. This table

shows no significant difference in the contraceptive awareness rate in urban and rural areas

across income groups. However, the contraceptive prevalence rate shows a positive association

with income in urban areas. In rural areas, a very small proportion of currently married women

between ages 15-49 are found using any contraceptive method.

Table 2.19: Contraceptive Awareness and Contraceptive Prevalence Rates in Sindh

(Percent of Currently Married Women of Age 15 - 49)

Income

Group

Urban Sindh Rural Sindh

Awareness Rate Prevalence Rate Awareness Rate Prevalence Rate

1st quintile 99 20 94 4

2nd

quintile 99 28 93 7

3rd

quintile 99 38 93 7

4th

quintile 100 32 92 7

5th

quintile 99 42 94 8

Source: PIHS (1998-99)

Access to Education and Health Facilities

Among the number of factors that may be responsible for low indicators of education and health

in Sindh, especially in rural areas, access to facilities is potentially important. Rural Sindh suffers

from poor access to education and health facilities alike. For more than 74% of the population of

rural Sindh, the distance to the nearest primary school for girls is greater than 1 km, compared to

21% of the population of entire rural Pakistan. In terms of access to girls' primary schools, rural

Sindh ranks behind the rural region of every province, except for Balochistan. Given that Sindh

24

ranks on par with the rest of Pakistan on access to primary schools for boys, (with around 95% of

the rural population living within I km. distance from the nearest school) the gender gap in rural

access to schools is wider in Sindh than in the most parts of Pakistan, which may help explain

why gender gaps in enrollments in rural Sindh are wider than for rural Pakistan as a whole.

On access to rural health facilities, the same story prevails. By any definition of health facility,

rural Sindh ranks behind rural areas of every province except Balochistan. For example, around

63% of the rural population of Sindh live in villages that have at least one kind of medical

facility or health worker, compared to 69% of the population of entire rural Pakistan. Access to

family planning services also remains low in Sindh, which partly explains the relatively low rate

of use of contraception.

In addition to access, the problem of quality is rampant in Pakistan, including Sindh. It is

important to note that the measures that presented here do not account for the exclusion of

certain social groups, which are also likely to have high concentration of poverty, from services

and facilities. Both these problems can significantly reduce the effectiveness of services for the

poor and disadvantaged groups, thereby affecting their potential to develop skills and enhance

future economic opportunities.

Water and Sanitation

The poor households in Sindh suffer from lack of connectivity to a number of services, such as,

water, toilet, drainage, electricity, gas, etc. This has direct implications for their human

development. Available data reveals that the poor in Sindh have relatively low access to safe

drinking water and sanitation facilities: they are less likely to use closed sources of drinking

water, have toilets in the household, and be connected to a drainage system. As expected, the

poor are also less likely to be connected to electricity and gas facilities. Availability of all these

amenities is also characterized by large rural-urban gaps.

The source of drinking water used by a household is an important indicator of its well being.

Table 2.20 presents the percentage distribution of households by main sources of drinking water

in Sindh during the 1995-96 to 2001-02 period. This table shows that tap in house is the main

source of water for urban households and hand pumps appeared as an important source of water

for rural households of Sindh. It is very distressing to note that the number of households with

tap in house has declined over time. Whereas the number of hand pump users has increased. In

rural areas 10 percent households still derive water for drinking purposes from

rivers/canals/streams.

Table 2.20: Main Source of Drinking Water—Sindh [ Percentage ]

1995-96 1998-99 2001-02

Source Urban Rural Overall Urban Rural Overall Urban Rural Overall

Tap in house 71 9 39 58 6 29 59 3 26

Tap outside 6 1 4 6 1 3 8 1 4

Hand pump 11 53 33 17 50 25 14 66 44

Motor pump 3 5 4 9 4 6 11 4 7

Dug well 4 12 8 2 13 8 1 14 9

25

River, Canal, etc. 17 9 23 13 10 6

Other 5 2 3 9 3 5 8 1 4

Source: PIHS 2001-02

While there has been no overall improvement in terms of access to clean drinking water, the

availability of toilet facilities has shown some improvement during 1995-96 to 1998-99 and

deteriorating situation during 1998-99 to 2001-02. The type of toilet used by the household

indicates the living condition and is significantly related to health and hygiene of the household

members. The data at Table 2.21 shows that 30 percent households did not have any toilet

facility in Sindh in 2001-02; 49 percent in rural areas and 3 percent in urban areas. This

proportion was 24 percent in 1995-96.

Table 2.21: Nature of Toilet Facilities by Region—Sindh [ Percentage ]

1995-96 1998-99 2001-02

Source Urban Rural Overall Urban Rural Overall Urban Rural Overall

Flush 82 11 45 92 14 49 91 17 48

Non-flush 12 36 24 5 28 18 7 34 23

No toilet 3 42 24 2 58 33 3 49 30

Source: PIHS 2001-02

Large rural-urban differences can be seen in the type of household sanitation services used in

Sindh. For example, in urban areas, 69 percent houses are connected with underground drains

while in rural areas, 85 percent houses do not have any drainage system and 12 percent houses

have open drains. Table 2.22 shows the changing situation of sanitation in rural Sindh.

Table 2.22: Type of Sanitation System in Sindh [ Percentage ]

1995-96 1998-99 2001-02

Urban Rural Overall Urban Rural Overall Urban Rural Overall

Underground

Drains

60 2 30 65 1 30 69 2 30

Covered Drains - - - 6 0 3 2 0 1

Open Drains 33 23 28 22 12 16 19 12 15

No System 7 75 43 7 87 51 10 85 54

Source: PIHS (2001-02)

A similar situation can be seen in the garbage collection system in rural and urban areas of Sindh

at Table 2.23. In urban areas, 43 percent households do not have any system and 43 percent

households have a private system. In rural areas, 97 percent households do not have any garbage

collection system. Most depressing things is that role of municipality is absolutely insignificant

both in rural as well as in urban areas.

Table 2.23: Garbage Collection System in Sindh (2001-02) [Percentage ]

Urban Rural Overall

Municipality 14 0 6

Privately 43 2 19

No System 43 97 75

Source: PIHS (2001-02)

26

Household characteristics collected in the Population Census (1998) indicate that 57 percent

households have only one room house in Sindh. 37 percent households have access to piped

water, 70 percent have electricity and 34 percent do not have any latrine facility. Census data

reveals that Tharparker is the most deprived off district in Sindh. In this district 26 percent

population live in one room houses, 2 percent have piped water, 7 percent have electricity and

only 22 percent have latrine facility. In districts Badin, Jaccobabad, Thatta and Ghotki a

considerably higher proportion (more than 75%) lives in one room, a lesser proportion has piped

water (less than 19 percent) and electricity (less than 65 percent) and a considerably higher

proportion does not have any latrine facility (more than 50 percent).

Labour Force Participation and Employment

In Pakistan, two alternative methods are used to estimate the labour force participation rate; the

Crude Activity Rate (CAR), and the Refined Activity Rate (RAR). CAR is the percentage of

labour force in total population, and RAR is the percentage of labour force in population of

persons 10 years of age and above. Labour Force Surveys reveal that the share of employed

labour force in the population aged 10 years and above has fluctuated around 44 percent during

the period 1968-69 to 1978-79. Since then this share is continuously declining and reached a low

39.45 percent in 1999-00.Table 2.24 reports the CAR and RAR in Pakistan and Sindh by gender

and rural-urban areas. This table also reports females improved activity rate that includes their

involvement in fourteen specified agricultural and non-agricultural activities. This table shows

that labour force participation is lower in Sindh as compared to whole Pakistan, both for males

and females and both in rural and urban areas. However, looking across years, this table reveals

that both CAR and RAR in Pakistan and Sindh declined during 1997-98 and 1999-00. A

significant decline in females improved participation rate has been noticed. Labour force

participation rate in Sindh is lower than Punjab but higher than NWFP and Balochistan.

However, female labour force participation rate in this province is lower than Punjab as well as

NWFP. The main reason of low labour force participation is partly due to the fact that Pakistan is

an agricultural economy with about 51 per cent of the employed population working in this

sector. The estimation of labour force participation in the agriculture sector is always

problematic because of the seasonal nature of the work and the fact that the possibilities for self-

employment are much greater in the agriculture sector.

Table 2.24: Crude Activity (Participation) Rates By Sex, and Rural-Urban Areas (Pakistan

and Sindh)

1997-98 1999-00

Both Male Female Female

(New

Method)*

Both Male Female Female

(New

Method)*

Pakistan 29.4

(43.3)

48.0

(70.5)

9.4

(13.9)

27.5

(40.7)

29.0

(42.8)

47.6

(70.4)

9.3

(13.7)

26.5

(39.2)

Sindh 26.5

(39.8)

46.5

(68.8)

4.1

(6.2)

29.4

(44.7)

25.4

(39.1)

44.4

(67.0)

4.4

(6.9)

20.3

(31.9)

Pakistan Urban 27.0

(37.7)

47.1

(65.2)

5.3

(7.4)

10.7

(15.1)

27.1

(38.1)

46.5

(65.0)

6.3

(8.8)

9.5

(13.4)

27

Sindh Urban 24.7

(35.1)

44.1

(62.3)

3.2

(4.6)

12.3

(17.6)

23.8

(33.9)

43.0

(60.4)

2.7

(3.9)

5.0

(7.2)

Pakistan Rural 30.6

(46.4)

48.4

(73.4)

11.5

(17.4)

35.9

(54.6)

29.8

(45.1)

48.2

(73.1)

10.7

(16.1)

34.3

(51.7)

Sindh Rural 28.5

(45.4)

48.9

(76.5)

5.0

(8.2)

48.0

(78.4)

26.9

(44.5)

45.6

(73.9)

6.0

(10.2)

34.4

(58.4) Source: Labour Force Survey (1999-00)

[Note: Figures in parenthesis are Refined Activity Rates (RAR)

* According to the old methodology persons 10 years of age and above reporting housekeeping and other related

activities are considered out of labour force. However, as per improved methodology, they are identified as

employed if they have spent time on the specified fourteen agricultural and non-agricultural activities.]

The Labour Force Survey data reveals that 42.8 percent of the population is in the civilian labour

force; 36 percent males and 6.68 percent females (see Table 2.25). Employed labour force in

Sindh is less than that of Pakistan. However, proportion of employed males is higher in Sindh

than overall Pakistan. However, the situation of employment in rural Sindh seems better than that

of urban Sindh. A very high gender disparity can be seen from table 2.20; out of 38 percent

employed labour force, 35 percent are males and only 3 percent were females in Sindh in 1999-

00. The percentage of employed females is higher in rural Sindh than urban Sindh. This may be

due to the fact that a majority of rural females are engaged in agricultural or livestock related

activities in rural areas.

Table 2.25: Percentage Distribution of Civilian Labour Force by Gender, Pakistan and

Sindh (1999-00)

Civilian Labour Force Employed Unemployed

Total Male Female Total Male Female Total Male Female

Pakistan 42.80 36.12 6.68 39.45 33.93 5.52 3.35 2.19 1.16

Sindh 39.07 35.84 3.23 37.83 35.04 2.79 1.25 0.80 0.44

Urban Pakistan 38.14 33.91 4.23 34.35 31.38 2.98 3.78 2.53 1.25

Urban Sindh 33.94 32.11 1.83 32.58 31.10 1.46 1.36 1.00 0.37

Rural Pakistan 45.13 37.22 7.90 42.00 35.20 6.79 3.13 2.02 1.11

Rural Sindh 44.51 39.80 4.71 43.39 39.20 4.19 1.12 0.60 0.52 Source: Labour Force Survey (1999-00)

Unemployment rate also shows an increasing trend for Pakistan and Sindh. However, this rate is

lower in Sindh; 3.1 percent in 1999-00 against 7.8 percent for whole Pakistan. There are number

of reasons for high and increasing unemployment rates. For example, high rate of population

growth, increasing levels of capital intensity in production through inappropriate choice of

techniques, lack of technical education and training facilities, lack of education and the mismatch

of available jobs with the skills and education that the existing system is producing. Because of

the existence of underemployment, especially in agricultural sector, the unemployment rate may

not depict the true picture of the unemployment situation. According to the official classification,

persons working less than 35 hours per week are considered to be underemployed. According to

the Labour Force Survey (1999-00), underemployment rate for Sindh was 8.5 percent; 11.5

percent in rural areas and 4.7 percent in urban areas.

28

The Population Census (1998) observes an extremely low participation of females (3% only). It

is also found that nearly one-third of the population is engaged in agricultural activities. The

proportion of agricultural labour force is observed to be higher in Badin (80%), Jaccobabad

(71%), Shikarpur (80%) and Tharparkar (73%).

The available data shows a larger proportion of population is not economically active (nearly 57

percent of total population is not in civilian labour force). This inactive population mostly

consists of women and children under the age of 15 years. According to the data of HIES (1998-

99), among the employed persons, there are 42 percent can be classified as heads of the

households in Sindh (Table 2.26). This table shows that the proportion of female is 23 percent

among the employed persons who are not heads of the household and less than 1 percent where

female is head of the household. The share of income from heads of the households is higher

than those who are not head of the household. Female’s contribution is only 0.62 percent if she is

a head of the household and 10 percent if she is not head of the household. This table also shows

that in rural areas there is a little difference between average incomes earned either by head of

the household or any other member of the household. On the other hand, urban areas exhibit a

larger difference between these two. The share of female income is found higher in rural areas.

Table 2.26: Distribution of Employed Persons and Their Monthly Income

Sindh Rural Sindh Urban Sindh

Employed

Average

Income

Income

Share

Employ

ed

Average

Income

Income

Share

Employ

ed

Average

Income

Income

Share

Head of Household

Total 42.08 3,540 63.78 39.38 2,624 61.53 46.38 4,702 66.64

Male 41.64 3,516 63.17 39.27 2,620 61.36 45.42 4,651 65.45

Female 0.44 25 0.62 0.11 4 0.17 0.96 51 1.18

Other Than Head of Household

Total 57.92 2,499 36.22 60.62 2,203 38.47 53.62 2,874 33.36

Male 35.24 1,879 25.52 32.59 1,449 24.27 39.44 2,424 27.10

Female 22.68 620 10.70 28.02 753 14.20 14.18 450 6.26

Source: HIES (1998-99)

Occupational status of the household head is another important factor likely to be associated with

poverty. World Bank (2002) found that in urban Sindh, concentration of poor is higher than

average among households whose heads are self-employed, no doubt reflecting the fact that a

high proportion of such earners are engaged in elementary occupations in the large informal

sector typically found in urban areas. Poverty incidence is lower among households headed by

paid employees, who are likely to be engaged in skilled occupations in urban areas, and almost

non-existent for those headed by employers who own enterprises.

Table 2.27 shows the employment status of the employed persons in Sindh. It can be noted from

the table that a larger majority of employed persons in Sindh is working as employees (44%).

Second largest category is of unpaid family helpers (27%). However the proportion of employees

is higher in urban areas (68%) whereas in rural areas percentage of unpaid family helpers is

higher than any other category (39%). The proportion of employed females is only 15 percent in

urban areas and most of them are concentrated in the category employees. In rural area a large

29

number of female is working as unpaid family helpers. Nearly 16 percent of employed persons

are observed self-employed; 19 percent in urban areas and 13 percent in rural areas.

Table 2.27: Percentage Distribution Of Employed Persons By Employment Status By

Gender—Sindh 1998-99

Sindh Urban Sindh Rural Sindh

Both Male Female Both Male Female Both Male Female

Total 100 76.92 23.08 100 84.87 15.13 100 71.91 28.09

Employer 1.24 1.22 0.02 2.87 2.83 0.04 0.21 0.21 -

Self Employed 15.62 12.92 2.70 18.99 16.11 2.89 13.49 10.92 2.58

Unpaid Family

Helper 27.39 12.91 14.47 9.24 5.94 3.30 38.82 17.30 21.51

Employee 43.5 37.81 5.69 67.75 58.93 8.82 28.22 24.50 3.72

Owner Cultivator 4.58 4.39 0.19 0.65 0.61 0.04 7.06 6.78 0.28

Share Cropper 7.59 7.57 0.02 0.43 0.39 0.04 12.10 12.10 -

Contract Cultivator 0.09 0.09 - 0.07 0.07 - 0.11 0.11 - Source: HIES 1998-99

In rural Sindh, the concentration of poor is the highest among households where the head is an

unpaid family worker, sharecropper, or owner-cultivator owning less than 2 hectares of land.

Poverty incidence among households headed by owner cultivators declines rapidly as land

ownership increases; as in urban areas, the lowest incidence of poverty is among households

headed by employers who own enterprises. One thing to note is that households headed by paid

employees have a higher incidence of poverty in rural areas than in urban areas, mainly because

in rural areas, a large proportion of employees in this category are agricultural wageworkers.

Comparing rural Sindh with the rest of rural Pakistan, it turns out that incidence of poverty is

higher among sharecroppers and unpaid family workers (who are most likely to be found in

small, family run farms or non-farm enterprises) and lower among large landowning cultivators

and employers owning enterprises in rural Sindh than in the average for rural Pakistan. The

relatively larger gap in Sindh in poverty incidence between large cultivators on the one hand and

small farmers and the landless on the other, along with the more skewed land distribution in

Sindh compared to the country as a whole, suggests the important role of unequal ownership of

assets in determining rural poverty in Sindh, which happens to be among the highest in the

country (second only to NWFP).

Nearly 52 percent of Sindh’s population lives in rural areas, agriculture is the main source of

livelihood in this province. Table 2.28 shows that agriculture, manufacturing,

trade/hotel/restaurants are the major activities in which most of the employed persons are

involved in Sindh. In urban areas major proportion of employed persons is engaged in

community services (31%), followed by trade, hotels and restaurants (21%) and manufacturing

industries (26%). However in rural areas, 66 percent employed persons are working in

agriculture, 7 percent in manufacturing industries, and 10 percent in community services and 6

percent in construction. A majority of females is concentrated either in agriculture or in

community services.

30

Table 2.28: Percentage Distribution of Employed Persons, Sindh 1998-99

Overall Sindh Urban Sindh Rural Sindh

Both Male Female Both Male Female Both Male Female

Major occupation /

Industries (Total)

100 76.92 23.08 100 84.87 15.13 100 71.91 28.09

Agriculture, Fishing 42.16 27.78 14.37 4.10 3.05 1.04 66.13 43.36 22.77

Mining & Quarrying 0.52 0.50 0.01 0.09 0.09 - 0.79 0.77 0.02

Manufacturing 14.05 10.00 4.05 25.80 20.72 5.07 6.65 3.24 3.41

Electricity, Gas, Water 0.85 0.85 - 1.22 1.22 - 0.61 0.61 -

Construction 6.30 6.14 0.16 6.47 6.19 0.28 6.20 6.11 0.09

Trade,

Hotels/Restaurant

11.45 10.94 0.51 20.54 19.69 0.86 5.71 5.43 0.29

Transport & Storage 5.15 5.14 0.01 8.16 8.15 0.01 3.25 3.25 -

Finance, Real Estate etc. 1.17 1.16 0.01 2.57 2.54 0.03 0.28 0.28 -

Community Services

etc.

17.97 14.07 3.90 30.65 22.85 7.81 9.99 8.54 1.45

Activities not defined 0.40 0.34 0.05 0.41 0.38 0.03 0.39 0.32 0.07

Source: HIES 1998-99

The main source of employment observed by SRDP (2000) for lower Sindh was crop agriculture.

The coastal areas of Badin and Thatta were exceptions. Livestock was found to be more

important in the areas that were situated near the desert. Non-farm employment did not form a

significant portion of the occupation especially in remote villages. 72 percent of the households

engaged in agricultural labor or belonged to the hari (share cropper) category. 16 percent of the

households belonged to the owner operator category while less than 5 percent of the households

engaged in fishing. 4 percent of the households belonged to zamindars (landlords) while 4% had

shops.

Sources of Income and Expenditure

Table 2.29 shows that the share of income through self-employment is highest in rural areas

whereas in urban areas, wages and salaries appeared a main source of income. The proportion of

remittances is also higher in rural areas. FBS (2001) presents proportion of income shares by

poverty status for Pakistan. No significant difference has been noticed in relation to main income

sources. However, a higher dependence on gifts and assistance has been observed for the poor.

Table 2.29: Distribution of household income by source—Sindh 1998-99 [ % ]

Overall

Sindh

Rural Sindh Urban Sindh

Total 100 100 100

Wages & Salaries 41.82 27.04 52.52

Self Employment

Farming Crop Prod 16.66 37.61 1.49

Livestock Farming 1.24 2.39 0.42

Other Activities 16.47 12.60 19.27

31

Property (Owner occupied House

Excluded)

0.72 0.37 0.97

Owner Occupied Houses 12.66 7.14 16.66

Insurance Benefits (Including Pension) 4.37 5.63 3.46

Gifts and Assistance

Gift Assistance 1.31 1.72 1.01

Foreign Remittances 0.93 0.14 1.50

Domestic Remittances 0.09 0.33 -0.08

Other Sources 3.73 5.03 2.79

Source: HIES 1998-99

Pattern of expenditure indicates the well being of households. However, Table 2.30 shows that in

Sindh, over 48 percent of the expenditure goes on food and 17 percent on house rent, 5 percent

on fuel and lighting etc. This means that households are left with a little amount to spend on

health, education, etc. In rural areas the proportion on these subsistence categories is even higher.

In urban areas, households spend more on house rent as compared to their rural counterpart; rural

households spend more on food than urban households.

Table 2.30: Sources of Consumption expenditure—Sindh 1998-99

Sindh Rural Urban

Proportion (%): 100 100 100

Food, Beverage & Tobacco 48.01 57.16 41.34

Apparel, Textile & Footwear 6.59 7.82 5.69

Transport & Communication 4.36 2.76 5.53

Cleaning, Laundry & Personal Appearance 4.31 4.66 4.05

Recreation & Entertainment 0.34 0.07 0.54

Education 4.14 2.05 5.67

House Rent 16.57 8.70 22.31

Fuel & Lightning 5.01 5.28 4.81

Miscellaneous 10.66 11.49 10.06

Source: HIES 1998-99

The Multiple Indicator Cluster Survey (MICS)

Geographic targeting provides a method for improving the efficiency of resource use for poverty

reduction. Resources can be assigned on the basis of district ranking. In order to collect

information on key social and economic indicators at district level, the government of Sindh with

support from UNICEF is in the process of conducting a household survey (Multiple Indicators

Cluster Survey or MICS). This survey is the first attempt to get district-level representative

survey based estimates in the Sindh. This survey will collect data on a wide range of indicators

concerning children and women. These indicators comprise income, infant and under-five child

mortality, under nutrition, education, adult literacy, water and sanitation, ante-natal and birth

care, birth registration, feeding patterns, young child recent illness and cost of treatment, and use

of contraceptives and awareness of HIV/AIDS. The aims of this survey are:

32

To establish a credible baseline for monitoring socioeconomic status of districts at the

start of the new decade and devolution process

To develop ranking of districts to highlight the inter-district disparities in social and

economic indicators so as to be able to address these through appropriate district level

social Sector planning efforts by the provincial government.

To provide information on the situation of children and women, as well as child-focused

benchmarking for measuring progress in post devolution era and for reporting on the

World Summit Goals for Children.

Rectify data gaps in information systems from national surveys and sectoral databases;

and address gender disparities and lack of uniformity in resource distribution among

districts.

Building capacity of relevant government institutions, especially the provincial Bureau of

Statistics, through their active involvement in all the phases of the survey.

This data will be available early next year and will greatly facilitate not only planning for

poverty reduction but also its monitoring and evaluation.

District level deprivation ranking within the Sindh province and at the national level are

computed through secondary sources by the SPDC of Karachi. This ranking is presented in Table

2.31. There are two districts in the low deprivation category and six in the medium deprivation

category. According to this ranking, Tharparkar, Thatta, Badin and Jaccobabad are the most

deprived districts. In national ranking, these districts achieve a rank higher than 60. It is

interesting to note that the district with lowest rank in national ranking is in Sindh and four

districts achieve a national rank higher than 60. This indicates the disparity in districts of this

province.

Table 2.31: Deprivation Ranking – Sindh

Deprivation Level/

Districts

Provincial Rank

Order

National Rank

Order

Deprivation scale

1 = Least Deprived

16 = Most Deprived

1 = Least Deprived

100 = Most Deprived

[ 1 – 100]

Low

Karachi 1 1 1.0

Hyderabad 2 12 56.3

Medium

Sukkur 3 21 65.7

Larkana 4 27 69.5

Nausheroferoze 5 28 70.4

Nawabshah 6 29 70.5

Khairpur 7 38 74.7

Dadu 8 39 75.8

High

Shikarpur 9 44 77.9

Sanghar 10 47 78.8

Mirpurkhas 11 52 81.0

33

Ghotki 12 59 84.8

Jacobabad 13 63 85.7

Badin 14 76 92.4

Thatta 15 78 94.7

Tharparkar 16 84 100

Source: SPDC (2001)

Looking at district ranking in terms of employment, education, housing quality and housing

services, one can see in Table 2.32 that Karachi has the top rank based on all four indicators. In

terms of employment Thatta is at the bottom. In terms of education and housing services,

Tharparkar got the lowest rank. Ghotki achieved lowest rank in terms of housing quality. Thatta

appeared as the most deprived of districts in terms of employment, education, and housing

services. This district is better in housing quality and achieved a rank of 5.

Table 2.32: Component-wise Deprivation Ranking: [1=Least Deprived; 16=Most Deprived]

District Employment Education Housing

Quality

Housing

Services

Badin 13 14 14 14

Dadu 15 6 3 8

Ghotki 5 11 16 13

Hyderabad 3 3 2 2

Jacobabad 12 13 15 10

Karachi 1 1 1 1

Khairpur 9 5 10 9

Larkana 7 8 4 4

Mirpurkhas 6 10 13 12

Nausheroferoze 10 4 7 7

Nawabshah 4 7 11 5

Sanghar 8 9 12 11

Shikarpur 11 12 9 6

Sakkar 14 2 6 3

Tharparkar 2 16 8 16

Thatta 16 15 5 15

Source: SPDC (2001)

The poverty profile of Sindh concludes that:

The incidence of poverty in Sindh is high and increasing.

The incidence of poverty is significantly high especially in rural areas. More than 52 percent

of rural population is poor.

Rural poverty in Sindh is increasing at alarming rate.

Poor households have little assets or land.

Majority of the poor people work in the informal sector in the urban areas and as agriculture

wageworkers in the rural areas. Therefore they mostly depend on wage income.

Poor have a significantly large household size.

34

In rural Sindh, the concentration of poor is the highest among households where the head is

an unpaid family worker (60%), sharecropper (50%), or owner-cultivator owning less than 2

hectares of land (40%).

The poor in Sindh, especially in rural areas, suffer from low quality public services. They

have relatively low access to safe drinking water and sanitation facilities.

Participatory Poverty Assessment in Sindh

In order to include poor people’s views in poverty analysis and formulation of policies, a

participatory poverty assessment (PPA) was conducted in all the four provinces of Pakistan. The

PPA involves participatory discussions, activities and analysis in two contrasting sub-sites in

each of 54 urban and rural research sites throughout Pakistan: 15 in Punjab, 12 in Sindh, 9 in

NWFP and 9 in Balochistan. The selection process covers three levels: province, district and

union council levels. Each level covers the participation of major stakeholders and key

informants, including representatives at the district and union council levels, government

officials, local NGOs and citizens. In each province, districts reflecting the agro-ecological

diversity and ethnic composition were selected. Within each selected district, poorest union

councils were selected and from these union councils, a poorest and a better off sub-site were

selected. In each site, the views of local people, especially who are marginalized, were recorded.

The range of these people includes very poor people, women, children, minority ethnic groups

and very old people. In each sub-site, local poverty issues were analyzed by involving local

people and using Participatory Reflection and Action (PRA) methodologies.

The participatory analysis is based on three basic research questions:

Who are the poor and who are the better off?

What have been the principal changes affecting the area/group over different periods of

time, and what factors have influenced these processes?

What resources, socioeconomic and gender relationships, organizations and institutions

are relevant to the area/group?

The findings from these three questions were used to answer a fourth question

What scope is there for improvement in public policies, institutions and regulatory

frameworks, and what other changes would increase the opportunities open to poor

people?

The Sindh PPA focused on 12 union councils, which were selected according to the agro-

ecological and social conditions in the province. During the fieldwork the need to get the views

of a broad range of the local population was highlighted. Much is already known about the extent

of poverty in Sindh, however the PPA site reports provide a good basis for contemplating on the

current status of the issues faced by the poor in these areas and coming up with practical steps to

deal with these issues. The fieldwork explored both the language that poor people use while

referring to themselves or others as well as the extent to which they are aware of their own social

and economic rights. While poverty comes as a result of natural and economics shocks, it is also

associated with certain social categories.

35

Assets of the Poor

Poor households depend on unreliable sources of income. The livelihoods of the poor in Sindh

vary according to the nature of the area. In rural areas people engage in agriculture, livestock

rearing, shop keeping, labor etc while in urban areas they depend on construction, factory work

etc. They usually never enjoy secure and permanent access to income. They have limited assets,

which can be wiped out by natural calamities, health shocks or even the action of people more

powerful than themselves. Even small changes in the availability or quality of water, natural

vegetation and wildlife can help people survive in one place, thereby avoiding massive out-

migration. In urban areas where employment is the major source of income, the use of contract

system leads to low job security and denial of any rights to the employee. Availability of credit is

differential across districts. While credit is simply not available in some areas and there are

others where social exclusion limits the access to credit. Cultural barriers pose a major

bottleneck to the participation of women in the employed labor force in the urban areas.

The most pressing issue however is the isolation of poor people from the ownership of or access

to agricultural land and water. The extreme inequality of land tenure is a major hurdle in

overcoming extreme poverty in the region. More recently water too is becoming scarce and its

access is increasingly becoming limited to even the resourceful. Water is either scantily available

or unfit for drinking and washing purposes. Shortage of water has resulted in low agricultural

yields in many areas of the province.

The availability of basic infrastructure varies across the PPA sites. In certain districts, villages do

not have electricity, gas, metalled roads or sanitation while others lack a proper water supply

system.

The provision of health and education facilities varied widely between the sites yet there was a

persistent demand for proper staffing of these facilities rather than an extension. Civil society

intrusion is minimal in all areas and even traditional cushioning mechanisms such as wangar

(working for each other out of humanity) are slowly becoming out dated. Influential landlords

generally govern voting patterns.

Poverty Dynamics

The PPA also aimed to understand the nature of changes in poor communities since these can be

crucial to policy making. Generally, seasonal stress factors did not show a particular pattern

however, the vulnerability to short-term non-seasonal shocks such as illness or natural disasters

plunged the family into poverty. While policy makers are aware of the latter, the former needs to

be considered in a more detailed manner. There are certain long-term trends in Sindh that make

the short-term shocks more frequent and debilitating. Water problems causing a decline in

productivity, unfavorable price changes and many other long-term trends have negative impact

on already suffering poor households. The unequal access to public services blocks all possible

means for the poor to overcome the burden of poverty.

36

Socio-Economic and Gender Relationships

Inequitable social conditions and harsh natural conditions have dampened economic and social

progress in Sindh. Economic, social and political power is largely skewed, creating an unequal

and unfair environment. Organized violence have been reported to be there and numerous other

human rights violations in the region. Justice is dispensed at places through informal methods,

which leaves matters entirely into the hands of influential landlords. The prevalence of the hari-

zamindar culture has created highly uneven power structures in the rural areas that have resulted

in injustices against the poor. There is a strong need to provide legalized and swift justice to the

poor so that they would not have to turn to local institutions for justice. In urban areas the

contract system has led to an increase in the insecurity of the workers and a decline in their

bargaining power. The absence of state influence in such areas exacerbates the social conditions

and usually results in violence against women and poor men.

The project area showed a definite economic stratification, which was closely linked to social

stratification. The traditional leaders or elders of the tribe (Sardars/Wadera) dominated in

political and economic arena. The villages comprise of ‘Paras’ that are areas within the village

that are marked with a boundary and generally people belonging to a single tribe reside within

the same para. [see SRDP (2000)].

Institutional Problems

Equal access to public services can be the key to reducing inequality among members of

different social and/or ethnic backgrounds. Evidence showed that government departments are

generally thought to be corrupt and protective institutions such as the police are considered to be

more of a threat than refuge. Formal institutions are marginalized as compared to informal

institutions controlled by landlords. Government departments do not have much influence on the

livelihoods of the rural poor. Zakat and Bait-ul-mal mechanisms are not effectively available to

the poor and there are major misappropriations in their distribution.

Law and order problems of numerous kinds are the foremost worry of the poor. Powerful

families who have connections with the police can easily get away with crimes against the poor.

The poor consider the police force as a burden. The state institutions in collaboration with local

influential worsen any possibility of improvement in the conditions faced by the poor.

Policy Implications

In the light of these findings the following policy interventions were suggested

Policy thinking needs to give a high priority to the risk factors that face the poorest people in

the province, preventing them to make the best use of their resources

Risk reduction strategies and impact mitigation strategies need to be placed alongside

strategies to protect people coping with impacts of shocks under a broader definition of social

protection; one that encompasses assisting individuals, households and communities to better

manage risk as well as providing support to the incapacitated poor

37

A poverty reduction strategy must include real and effective policies for managing natural

resources and reducing the impact of natural disasters on the poor

A re-examination of the functioning of Zakat and Bait-ul-mal and Food support program

should be a priority

Consulting the poor as an on-going process to plan and monitor measures for poverty

reduction

Water management ought to be improved and greater equity and efficiency in the distribution

of water is an achievable objective

Land reforms need to be put back on the public agenda as a central issue for discussion,

including critical analysis of why it failed in the past

The ‘contract system’ under which, even in large factories, laborers are denied any

permanent employment rights, needs to be investigated with a view to regulation

There is a need to revisit past policies for improving social infrastructure, such as the Social

Action Program, and examine critically the reason for their widely recognized failure

Conditions of appalling degradation for women are quite widespread in the province. A start

needs to be made in tackling the quadruple victimization to which many poor rural women

are subjected. A good place to start would be putting the full weight of the government and

the courts behind the campaign against the culture and practice of honor killings, making

government services more women friendly and accessible, and increasing choices for women

Priority should be given to finding ways for mitigating the damaging consequences of

corruption in state institutions for development

Restoring the credibility of the police and paramilitary security services is a vital issue. These

services should be pinpointed as a central focus for reform, in the city as well as the country

side

38

CHAPTER 3. PRSP DIALOGUE

The Planning and Development Department of Sindh initiated the grassroots consultative process

in May 2003 in all districts. Guidance materials on how to conduct a SWOT (Strengths,

Weaknesses, Opportunities, and Threats) analysis through local level consultations along with a

template proforma for completion at the end of the consultations was sent to all Nazims and

DCOs of the districts of Sindh. The consultation coordinators were requested to list the most

significant strengths, weaknesses, opportunities and threats that came out of the consultations in

their respective districts. A second part of the proforma invited suggestions on key interventions

to enhance the access of the poor to (a) income generating activities, (b) security and (c)

empowerment.

In addition to this six districts were selected for intensive consultations. These were, Jacobabad,

Sukkur, Naushahro Feroze, Dadu, Badin, and Tharparkar. Two teams of consultants visited these

districts between June 1 to 6, 2003. The first team covered Jacobabad, Naushahro Feroze, and

Sukkur. A senior official of the Planning and Development Department was also part of this

team. An official of UNICEF Karachi also accompanied this team as an observer. The second

team worked in Dadu, Badin, and Tharparker. A senior official of the P&D Department was also

part of the second team.

The Consultative Methodology

The methodology followed at these consultations consisted of:

1) A brief overview of the rationale for the consultative process and an explanation of what

was to follow; including a clarification of the expected outputs from these meetings and

how these would fit into the overall poverty reduction strategy formulation process.

2) A formal presentation on the different dimensions of poverty in Sindh with a separate

section based on an assessment of the Poverty in the district. These presentations were

based on the available published statistics relating to Poverty in that district.

3) A broad ranging discussion that systematically elicited the views of the participants on

each aspect of the SWOT (Strengths, Weaknesses, Opportunities and Threats) for the

district. For this purpose cards were distributed and the audience was encouraged to

freely express their views both in writing and verbally.

4) The SWOT process lead to a discussion of the key interventions that the participants felt

would most effectively reduce poverty in their district.

In each case before the presentations and the start of the consultative process the local Nazim and

the DCO explained to the audience the main purpose of the meeting and requested the people to

express their views freely. The consultations were extremely successful. The people participated

39

freely and endured the soaring temperatures to put forward their perceptions of the key SWOTs

and their suggestions for the most effective interventions for poverty reduction.

Table 3.1 gives the extent of participation of various stakeholders in the consultative meetings.

Roughly one third of the participant were the government officials and the rest primarily

comprised of elected representative, NGOs, and community representatives. The number of

participants was actually higher than what is reported here as some of the participants opted to

not enlist themselves.

Table 3.1: Breakdown of District Participants by Categories

Category Dadu Badin Tharparkar Jacobabad Sukkur

Naushahro

Feroze Total

Community Reps 1 10 2 7 20

Elected Representatives 7 19 15 18 3 15 77

NGOs 1 9 17 6 5 28 66

Government Officials 16 8 14 15 21 26 100

Journalists 3

Observers (UNICEF) 1 1 1 3

Undetermined 1 4 11 3 18 37

Total 24 40 51 61 35 95 303

The information from these six district level SWOTs and the recommendations that came from

the consultations in each are summarized below:

Synthesis of SWOT Outcomes from Consultation Meetings

Strengths

Agriculture

Fertile land

Livestock

Hardworking manpower

Handicraft industry, especially Sindhi Topies, Rallis and Ajraks

Weaknesses

Shortage of irrigation water

Shortage of clean drinking water

Lack of employment opportunities

Illiteracy

Law and order situation

Lack of health facilities

Unemployment

40

Lack of monitoring mechanism for development activities

Poor communication network

Lack of access to justice

Corruption

Feudal system

Lack of industries

Opportunities

The Local Government System with elected persons and communities involved in the

development process and in the monitoring of implementation

Agro-based industry but incentives are needed for it to grow

Cold storage facilities for local agricultural produce

Livestock training for livestock rearing, diseases control and marketing of stock

Including women in the process of production and marketing

Handicraft industry should be promoted in the area

Small dams can help overcome the shortage of water

Brick lining of watercourses can help water shortages. Better water management to ensure

water availability at the tail ends

Sugar mills should participate in promotion of better sugarcane varieties and create job

opportunities for the local people

Threats

Law and order situation

Corruption and injustice

Feudal system.

Rapid growth of population

Drought

Spread of epidemic diseases

Shortage of clean drinking water leading to the spread of fatal diseases

Poverty

Recommendations

Income Generating Activities

Small dams, check dams, gabions and weir should be built to overcome the shortage of

water.

There are problems in water management. Tail ends do not get enough water; Brick

lining of watercourses are required. This will also address the problem of water-logging

There is a potential for agro-based industry but incentives are needed for it to grow.

Setting up of sugar mills would promote the sugarcane crop and create job opportunities

for the local people.

Elected people and communities should be involved in the development process and

monitoring of implementation.

41

Establishment of agri product and food processing unit should be facilitated.

Cold storage facilities for local agricultural produce and establishment of agro-export

processing zones.

Handicraft industry should be promoted in the area.

Develop suitable marketing channels for cottage industry to ensure proper return to the

women folk.

Livestock is the predominant economic activity of the area. Training should be provided

to people for livestock rearing, diseases control and marketing of stock.

Train women and provide credit for marketing of their products.

It was suggested to have Khushali Bank and other micro financing institution to open

branches in the district and provision of micro credit to unemployed persons should be

enhanced. Ensure easy access to micro credit.

Communication network should be improved to facilitate the local people.

Supply of clean drinking water should be ensured to control the spread of fatal diseases

Facilitate setting up of small-scale industries it would create more income generating and

job opportunities.

Explore marketing channels and promote export of local handicrafts.

Introduce modern technologies in agriculture sector and train farmers in this regard to

enhance the agricultural production.

Participatory development should be ensured; it would create sense of ownership among

the people.

Introduce improved tax collection mechanisms and ensure that taxes are spent in the area.

Create more job opportunities by encouraging income generating activities and small and

medium industrial activities in the rural areas.

Enhancing the Security of the Poor

Use Zakat for income generating activities; create endowment funds to recycle the funds

and ensure that access is based on need.

A survey should be carried out to identify needy person (mustahkeen) for grant of Zakat

and Ushr funds. A system of prioritization should also be evolved. The survey should be

conducted in all talukas.

Lack of justice is a major cause of poverty. Poverty reduction requires: Effective

decentralization; Provision of justice; and Good governance. Provide all three and the

poor will be empowered.

Law and order situation should be improved.

Police reforms have been introduced under the devolution programme. This has to be

fully implemented to eliminate excesses being reported on poor people are eliminated.

Instead of giving cash to the poor, efforts should be made to help people start some

business activity through grants in kind.

Provision of easy and timely justice should be ensured for all.

Special efforts are needed to eradicate corruption, which is hurting the poor the most.

Civil society monitoring mechanisms should be introduced to ensure the poor get access

to their fair share of district resources.

42

Empowerment

General Empowerment

Females should be empowered through better education, better employment opportunities

and better representation in the decision making process.

A main cause of poverty is the feudal system. This must be done away with as quickly as

possible if people are to be empowered.

Ensure participation of women in consultation process for all development activities.

Vocational training centers for females and provision of micro credit to utilize their skills

for income generation.

Vocational training centers for females and provision of micro credit to utilize their skills

for income generation.

The Local Government System should be strengthened and the poor should be given

representation in decision making..

CCBs should be promoted.

Empowerment through building the Human Capital of the Poor

Some of the schools are not functioning for one reason or the other. These should be

made functional.

Salary levels of teachers should be raised to attract more qualified teachers and to

improve quality of education.

The Population control programme should be made more effective and its coverage

should extend to the rural areas.

Kacha area needs water supply and sanitation schemes urgently.

Proper attention to be given to the infant mortality rate, which is very high in the area.

Medicines are often not available at health facilities. Improve procurement, supply and

management.

There is a need to introduce technical training courses in the schools.

Education should get a priority in the development process, especially to reduce the

gender disparity.

A detailed report on the consultation process has been prepared separately. However, the

translation of the recommendations from the consultations into implement able strategies

requires a process of intensive planning and should be integrated into the on going planning

work being undertaken by the P&DD.

43

CHAPTER 4. THE POVERTY REDUCTION SRATEGY (PRS)

The Poverty Reduction Strategy has been evolved in the UN in 2000, which has been reflected

with in the MDGs. MDGs targeted to reduce poverty by half by year 2015. The nine goals have

been chalked out mainly concerned to improvement in socio-economic indicators, good-

governance and creation of income generation opportunities. The same is annexed at Annexure-

‘A’. The Government of Pakistan being the signatory to such declaration working on national

targets, commensurating to global targets.

The Chapter 2 highlights the levels of poverty and its causes in the province of Sindh. Declining

fiscal space, increasing size of government sector in terms of civil servants, deteriorating

situation of law and order, poor governance appeared as the main issues in Sindh. In order to

address these issues, the GoS is implementing reforms with the overarching objective of

reducing poverty by promoting growth and accelerating human development keeping view the

same context. This program has three pillars:

1. Fiscal and Financial Management Reforms

2. Improving Governance Of Civil Service and Public Service Delivery

3. Promoting Private Sector Development and Economic Revival

The description of the Governments strategy in these three areas is described below. This

description is taken directly from the description and review of the Sindh reform program under

the Structural Adjustment Credit of the World Bank. In addition this strategy proposes two other

focus areas. These are

4. Developing women and children

5. Addressing Vulnerability to Shocks

Pillar One: Fiscal and Financial Management Reforms

Fiscal Management

The Government faces five major fiscal issues: (i) lack of fiscal space for poverty reducing

expenditures; (ii) a complex tax structure and weak tax administration; (iii) poor composition of

expenditures; (iv) designing and implementing fiscal decentralization; and (v) the absence of a

medium-term fiscal restructuring plan to address fiscal issues in a comprehensive manner.

The province is suffering from the severe lack of fiscal space for high priority expenditures due

to rigidities in revenues and expenditures. Narrow tax base, limited resources and inflexible

expenditures cause rigidities on the expenditure side. The lack of fiscal space is causing the

under-funding of vital human development and infrastructure expenditures and undermining

future growth and poverty reduction prospects. A complex and distortionary provincial tax

system with 23 major and minor taxes and a weak tax administration have long prevented the

province from reaching even its limited revenue potential (estimated to be roughly 2.7% of

GPDP). The composition of public expenditures has been poor. Sindh's expenditures on

44

development and operations and maintenance in FY 00 was only 15% of all expenditures, a

sharp fall from a 32% share, 10 years ago. Moreover, though development expenditures fell, the

number of projects proliferated, spreading resources thinly, delaying the completion of projects

and making the returns to investment fall. The backlog of road rehabilitation expenditures alone

is estimated to be around 0.8% of GPDP. Spending on education, and health, is oply around

1.7% of the GPDP - compared to 4.5% of GDP spent by Sri Lanka. Further, expenditures on

salaries dominate (94% of the current education budget, and 70% of the current health budget).

Budget management has been weak in the past. Poor budget preparation, monitoring and

implementation also adversely affect expenditure quality as budgets are de-linked from

outcomes, and complicated fund release procedures and shortfalls in Federal tax transfers have

typically lead to unreliable funding for the social sectors.

In addition to tackling the above issues, the GoS needs to implement a program of fiscal

decentralization to support the devolution plan of Pakistan. This will require the province to set

up an inter-governmental fiscal framework between the province and the newly formed district,

sub-district and union council governments. Some difficult fiscal issues are pending: uneven

distribution of tax bases with district Governments being relatively deprived and lower tier

municipal/Taluka governments faring better. On the other hand, currently, lower tier

governments are suffering from the delay in obtaining funds. Further, the roles of the District

Councils and the quasi-public Citizen Community Boards in using the development budget are

still not fully clarified.

Objectives of Reforms

To address the above issues, the GoS's fiscal reforms have the following objectives: (i) creating

more fiscal space by raising revenues and reducing future liabilities; (ii) increasing pro-poor

expenditures while improving financial management (dealt separately in 'the following section)

to make these expenditures more effective; (iii) implementing fiscal decentralization; and (iv)

implementing a medium-term fiscal restructuring plan (MTFRP), including administrative

reforms, that addresses these goals in a medium-term context.

Status of Implementation

Reforms by the GoS to increase fiscal space have included tax measures to raise revenues and

reducing liabilities. These include:

(i) simplifying taxes by reducing the number from 23 to 10;

(ii) introducing agriculture income tax in October 2001 for landowners with holdings

above 50 acres or with income above Rs. 80,000;

(iii) expanding the base of the Urban Immovable Property Tax (UIPT) by conducting a

survey of properties after 32 years, and adding 100,000 new properties to the base and

reducing rates; and

(iv) rationalizing the number and rates of stamp duties and converting these into

advalorem rates.

45

While significant structural reforms have taken place, the significant potential yield from the

AIT-a more than three time increase from its current levels to nearly Rs. 2.0 billion-will require

major administrative and legal changes. The GoS's reforms have changed the structure of AIT

from a crop- cum-land-based system to a tax, which is a combination of a farm and income tax.

While all farmers are to pay an annual farm tax at the rate of Rs. 200 and Rs. 100 per acre of

cultivated area for irrigated and un-irrigated land holdings respectively, all farmers with incomes

above Rs. 80,000 would pay an additional income tax in the same manner as applies to non-

agricultural income and regardless of land holdings. However, the exemption limit of this tax is

twice the level for the non-agricultural income.

Serious problems with tax administration in the Board of Revenue and, more fundamentally, in

title registration, however, need to be addressed before significant increase in revenue yields can

be obtained. The latter includes the notorious "benami" provision under which, land can be sub-

divided to fall below the threshold and then held under fictitious names. However, changes in the

"benami law" will require Federal Government intervention.

To improve the composition of public expenditures, the GoS has increased allocations for high

priority expenditures and increased the focus of development expenditures on implementation.

Nonsalary provision for the education sector was doubled in the FY 02 budget from last year

while for health it has increased by 16%. Around 75% of the FY 02 own-financed annual

development program budget was allocated for investment of on-going schemes focused on rural

infrastructure, drinking water, and the social sectors.

The GoS is improving budget implementation and fiscal transparency by posting quarterly fiscal

monitoring reports in the GoS's Finance Department website.

Medium Term Reforms

The GoS faces three major fiscal tasks in its medium term process:

1. The first task is be to implement fiscal decentralization as per plans approved under

provincial finance commission awards. The aim will be to increase capacity of districts to

raise revenues and prepare their own budgets, and implement a transparent formula

driven process to provide untied grants to the districts, but also include an adequate

system of incentives through conditional and matching grants to achieve national and

provincial social development targets, as has been initiated in the current fiscal year.

2. The second task is be to strengthen tax administration. Specifically, the GoS will take

measures to integrate the revenue collection responsibilities of the Board of Revenue

(responsible for land taxes, the agriculture income tax, abiana/irrigation charges, and

stamp duties) and the Excise and Taxation department into a modem, relatively

autonomous, revenue department/authority, reporting to the Finance Department. The

technical capacity of the revenue department will be strengthened through computerizing

of land and property records, using partial satellite imaging and providing greater

technical training and incentives for staff. The tasks of collection and assessment of the

major taxes will also be separated to avoid conflict of interest.

46

3. The third major task is to continue to implement the medium term fiscal restructuring

plan (MTFRP) covering the period from FY 03 to FY 06. The focus of this plan is to

create fiscal space for poverty reducing current and development expenditures. The fiscal

space is created from three sources significantly higher non-tax revenues (from new oil

and gas revenues from production in three new fields in Sindh that are collected by the

Federal Government and returned to the province), higher foreign aid (from ADB, other

donors, and the Bank), and from increases in provincial tax effort with revenues rising by

15% p.a.

Financial Management

Issues

Financial management failures, severe all across Pakistan, were probably the worst in Sindh in

the 1990s. Quality of public accounts is poor with large variations, in all four provinces, between

departmental accounts, accounts prepared by the Accountant General, and Bank records.

Accountability eroded as the Public Accounts Committee did not function between 1985 and

2001. Insufficient monitoring and information on budget implementation and the province's

financial position led to poor implementation and accumulation of arrears. Complicated

expenditure release procedures prevented timely release of funds for high priority social sector

expenditures. A generic problem for Pakistan's provinces is that responsibility for financial

management is diffused between the Department of Finance and the Accountant General, who

reports directly to the Controller General (Accounts) of the Federal Government, but acts as a

Controller for the provincial government. In the case of public procurement, while the GoS has

rightly decentralized it to administrative departments, government procurement, which

constitutes more than 20% of public expenditures, still suffers from lack of transparency and

inefficiency due to outdated rules, contributing to wastage and corruption.

Objectives and Strategy

The GoS's financial management reforms objectives are to improve the effectiveness of public

expenditures by strengthening transparency and accountability. Based on a preliminary

Provincial Financial Accountability Profile, GoS has adopted a Financial Management Reform

Program. The GoS is implementing reforms to improve; (i) the quality of provincial accounts;

(ii) public accountability systems; (iii) budget implementation; and (iv) debt, arrears and quasi-

fiscal management.

Status of Implementation

GoS has implemented the following measures:

(i) Improving public accounts markedly under the leadership of the Provincial Fiscal

Monitoring Committee (FMC).

(ii) Strengthening accountability through setting up an effective ad-hoc Public Accounts

Committee (PAC) after nearly a decade.

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(iii) Improving arrears, debt and quasi-fiscal management. In addition to paying off

arrears, GoS has taken steps to control arrears and other liabilities. It has agreed with

WAPDA, and discussing with KESC, arrangements to set up billing dispute

resolution mechanism; avoiding future arrears by metering all remaining government

sites; and cutting off power to agencies in the event of future arrears. To strengthen

quasi-fiscal management, the GoS will launch a review of all off-budget public

accounts and of public enterprises and autonomous bodies and identify information

gaps that need to be filled.

(iv) As part of the provincial Financial Management Reform Program, GoS has decided to

appoint a Provincial Financial Controller in the Department of Finance. The

controller's main task will be to implement financial management and public financial

accountability reforms. In addition, the Controller will also be responsible for

accounting and financial reporting, developing provincial capacity to handle

accounting and payroll, organization of finance and accounts function of the GoS,

staffing and training, internal controls and internal audit, financial policies and

procedures, and respond to audit observations and systemic issues.

Medium Term Reform Plans

(i) implementation of the Financial Management Reform Program, institutional and

personnel reforms to improve financial management capacity and internal controls in

provincial departments; and establishment of internal audit unit in each line

departments;

(ii) strengthening District Government Financial Management and upgrading the level of

District Accounts Officers (DAOs) to Grade 18/19 and post qualified personnel in

these posts;

(iii) computerization of all fiscal accounts up to the district level;

(iv) improvements in fiscal transparency by introducing the new Chart of Accounts and

New Accounting Model;

(v) review and reforms of financial rules to make these consistent with the new

accounting model;

(vi) improving the tracking of recommendations of the Auditor General and PACs and

publication of audit reports in the web page; and

(vii) improving in FY03 the legal and regulatory framework for public procurement by

revising the procurement rules, standardizing bidding documents, and establishing an

effective mechanism to redress complaints from suppliers. The aim is to simplify

procurement and ensure more transparency and efficiency. The GoS also plans to

enact a procurement law legislating good public procurement principles in FY04.

Pillar Two: Improving Governance of Civil Service and Public Service Delivery

This includes

Civil Service Reforms

Improving Public Service Delivery: Education

Improving Public Service Delivery: Health

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Improving Public Service Delivery: Rural Drinking Water and Sanitation

Improving Public Service Delivery: Urban Services

Civil Service Reforms

Issues

Improving the effectiveness of public expenditures and public service delivery depends

fundamentally on improving performance of Sindh's 459,000 civil servants whose salaries and

pension constituted 47% of total expenditures in FY00. Several factors have undermined civil

service performance. Politically motivated recruitment and excessive transfers, weak

enforcement of discipline, and poor salaries eroded merit and professionalism. Lack of

accountability to local governments, communities, and beneficiaries provide little incentives for

service. Poor human resource management has resulted in a pyramid like composition of the

civil service, where 43% of the civil service is in grades I to 5 (who are often functionally

illiterate). The absence of good data constrains right-sizing, redeployment, and pay reforms. Poor

performance by the judicial and police departments deprives the people of the province of basic

rights of security and access to justice.

Objectives and Strategy

GoS's civil service reforms aim to improve civil service performance through strengthening

accountability and management. The strategy has four components:

(i) promoting merit and professionalism;

(ii) strengthening accountability of civil servants to the newly formed local governments;

(iii) improving human resource management; and

(iv) rationalizing the civil service.

GoS has also started implementing judicial and police reforms.

Status of Implementation

GoS is promoting civil service merit and professionalism through two measures.

1. First, it has strengthened independent oversight of civil service recruitment by

promulgating the Sindh Public Service Commission Ordinance and the associated rules,

which provides the Commissioners with more autonomy and increases the scope of their

overview of recruitment in the civil service.

2. Second, it is reducing absenteeism through better monitoring and dismissals, and giving

local bodies, such as the School Management Committee, powers to report absenteeism

in schools and recommend transfers or dismissal of teachers. Existing laws, such as the

Sindh Civil Service Act (1973), the associated Government Rules of Business (1986),

and the new Removal from Service (Special Powers) Ordinance, 2000 have been used to

take actions against more than 600 senior officers. Given that virtually no actions have

been taken against senior officials in past years, these actions send a powerful signal.

49

To strengthen accountability of civil servants to local governments and communities, the GoS

has organized district governments headed by elected officials with some 270,000 staff now

transferred to these Governments. Provincial departments have been reorganized at both

provincial and district levels for this purpose. To increase accountability to communities, the

Education department has introduced school-specific contractual employment. The GoS is now

formalizing the introduction of contractual appointments for all technical positions within civil

service rules and bringing recruitment of contract staff within the PSC's mandate to ensure merit

in the recruitment process.

To improve human resource management and to right-size the government, the GoS has frozen

all recruitment below grade 14, i.e. in grades that are relatively unskilled and overstaffed, and

abolished over 12,000 vacant positions. The GoS has started an initial headcount of civil servants

that is expected to be completed by June 2002 and provide data on the order of magnitude of

errors in the existing payroll data. The number of provincial departments has been reduced from

28 to 23. Eight Ministers are in charge of these departments compared to cabinets as large as 60

Ministers in the past decade. Around a dozen provincial enterprises and autonomous bodies are

being closed down or merged.

Judicial and Police Reforms

As part of the nation wide program, the GoS has, with Asian Development Bank assistance, also

embarked on a judicial and police reform program with the aim of improving law and order and

improving access to justice. These reforms will include:

(i) separation of the judiciary from the executive and ensuring that the judiciary is

adequately funded;

(ii) expediting justice through introducing alternative dispute resolution;

(iii) legal empowerment of poor through civil society led legal literacy campaigns,

advocacy, and public interest litigation initiatives; and

(iv) improving judicial governance by introduction of professional management, and

greater transparency and accountability.

The implementation of police reforms are also proceeding through measures under which the

District Police Officer has been made accountable to the elected District government. At the

same time, public safety commissions have been formed to ensure that police officers have

recourse against unlawful or politically motivated orders.

Medium Term Reforms

Medium-term actions in civil service reforms will include implementing comprehensive civil

service reform program, with World Bank technical assistance, with the following elements:

(i) improving human resource management by building a comprehensive human

resource data base based on a census conducted over FY03;

50

(ii) using the census to rationalize the civil service by eliminating ghost workers,

redeployment, and introducing a voluntary separation schemes for low-skilled staff

(grade 1 to 5) starting from FY04;

(iii) further extending the autonomy of the Public Service Commission (FY04);

(iv) developing district civil service cadres to work under local Governments (FY03 and

FY04);

(v) preparing for the greater use of contract-based employment in all technical cadres

through legal changes to prevent regularization, ensuring robust establishment and

budget controls, and extending the overview provided by the PSC; and

(vi) implementing judicial and police reforms with ADB assistance.

Improving Public Service Delivery: Education

Issues

Decades of poor governance have left the Sindh education sector in a state of crisis. While an

investment of almost Rs 10 billion has gone to the primary education sector in the 1990s through

the Social Action Program, outcomes were disappointing. Factors responsible for poor outcomes

include: (i) poor access, as some 5,500 schools, i.e. 13% of the current number, are closed due to

lack of teachers or funds; (ii) sheer poverty preventing families from bearing any costs of

education; (iii) poor quality of education arising from absent or poorly trained teachers, lack of

adequate school supplies, and inadequate infrastructure (35% of elementary schools are

shelterless while another 47% schools have less then 2 rooms or less; and 55% of schools are

without water and sanitation facilities); (iv) lack of accountability of school management to

communities and service users; (v) weak monitoring and evaluation of performance; and (vi)

virtual absence of private sector in rural Sindh (only 5% of primary students are enrolled in

private schools).

Objectives of Reform

The Department of Education (DoE) is implementing a multi-pronged strategy to improve

outcomes that include providing adequate resources and improving their utilization,

strengthening governance and accountability, ensuring the participation of communities and

increasing the role of the private sector. The goal is to ensure that by 2010, 70% of Sindh’s

primary school age children complete primary school education and graduate with basic primary

skills of numeric and literacy. Other targets are given below:

Primary net enrolment will be increased from 68% to 80 % by 2005. The number of out of

school children will be reduced from 2.3 million to 1.1 million by 2005

All 5500 closed schools to be made functional by 2004 (1858 remaining that will be made

functional)

12000 currently untrained teachers to be trained by 2004

All schools will have functional school management committees by 2003

All primary school students (boys and girls) to be provided free text books in the 2003 school

year onwards

Free and compulsory primary education covering all 102 talukas by end fy04

51

3100 currently shelter less schools will be provided shelter and 8250 classrooms will have

been built.

20% of schools with missing basic facilities will be provided with missing facilities (toilets,

water, boundary walls) by 2006.

Status of Implementation

Implementation is proceeding in the following areas:

(i) Preparing a Strategy. The GoS is now implementing a comprehensive Education

Sector Reform strategy developed in the current fiscal year. The DoE has signed

memoranda of understanding to access additional funds to implement the National

Education Reform program and the President's School Rehabilitation Program. The

province in turn has disbursed these funds to district governments.

(ii) Improving access. GoS has launched primary school enrollment drives and expanded

incentive programs (free textbook program, incentives for female students). Around

3,796 closed schools have been made operational through redeploying and recruiting

teachers, with female teachers being given priority. The incentive programs include

distribution of free primary textbooks to girls in rural and urban slum areas, and

approximately 340,000 sets of books were distributed in the free textbook program in

FY01. Scholarships for deserving female students are being delivered and 10,000

such scholarships were provided in FY 01. There has been a 5% increase in primary

enrollment in FY 02, reversing the trend of the 1990s. A compulsory primary

education program is being implemented with 15 Talukas and 5 districts covered in

FY 02, with all 102 talukas to be covered by FY 04.

(iii) Improving quality and accountability. GoS has: (a) expanded the role of

parent/citizen community board member chaired School Management Committees to

monitor teacher attendance and school budgets; (b) appointed new teachers on

contracts, to specific schools; (c) made new teacher recruitments based on merit, with

private sector and community involvement; (d) started testing competency of teachers

and providing remedial training; and (e) launching a 5 year rolling budget to improve

school infrastructure.

(iv) Strengthening Monitoring & Evaluation Systems. For the first time, the 2001 School

Census includes comprehensive information on teachers and private/NGO education

facilities. The Research Monitoring & Evaluation Cell (R,M&E Cell) of the DoE has

been set up. It has initiated monitoring of schools through field visits using well-

developed tools and is now preparing, with World Bank assistance, to launch the first

of annual third party validation (TPV) survey to assess delivery of school level

services in districts. A comprehensive Provincial Education Assessment Program will

be introduced.

(v) Implementing Devolution. The DoE has been reorganized to work under district

Governments. It has prepared a manual which provide briefings to heads of district

Governments on the functions and responsibilities of the district education staff,

guidelines on accessing funds and carrying out monitoring responsibilities (district

nazims/naib nazims were involved in carrying out the last school census).

(vi) Enhancing Public-Private Partnerships. The GoS is implementing a policy to de-

nationalize educational institutions nationalized in 1972, sell or lease schools to the

52

private/NGO sector, and encourage the private and NGO sectors to contribute to and

participate in managing public schools under the well- known Adopt-a-School

Program of Sindh Education Foundation. GoS is finalizing a policy on private

education to promote private sector participation.

Medium Term Reforms

The medium-term reform plan will consist of annual implementation of the Education Sector

Strategy, which will include: teacher redeployment program, annual enrollment drives, teacher

training programs, annual TPV surveys, providing missing facilities to schools, and

strengthening monitoring and evaluation capacity. In addition, the medium-term will expand the

compulsory education program to all talukas by FY04; improving the secondary education

system in line with the provincial education sector strategy; completing the first provincial

student assessment to evaluate student learning achievement; training of SMCs and gradually

extending SMC powers to hire and fire teachers; and launching capacity building programs for

district, Tehsil and taluka officials.

Improving Public Service Delivery: Health

Issues

The health and fertility indicators of Sindh province lag behind those of many low income

countries. The infant mortality rate (IMR) is about 95/1000 live births and the total fertility rate

(TFR) around 5, whereas the corresponding current figures for India and Bangladesh are about

70/1000 for the IMR and about 3 for the TFR. An analysis of the Burden of Disease (BOD) in

Pakistan in 1996, generally applicable to Sindh also, suggested that priority should be given to

basic preventable and readily treatable diseases, which mainly affect young children and women

of reproductive age. Several issues constrain good health outcomes including:

(i) the lack of a clear outcomes focused health sector strategy especially with respect to

preventable diseases;

(ii) poor governance that encouraged absenteeism, excessive transfers and corruption in

procurement; and

(iii) inadequate use of private sector and NGO participation.

Objectives and Strategy

The GoS's reforms are based on a well-targeted medium-term health sector strategy (see bullets

below) that focuses on preventive and communicable diseases, improving governance, and

promoting private sector participation and strengthening district management capacity.

An increase in immunization coverage of children 12-23 months from 39% to 80% by 2005.

No case of polio reported after June 2002

An increase in immunization coverage of two doses of TT from 28% (1998) to 80% by 2005.

An increase in the percentage of population with access to TB Control using DOTS strategy

from 8% to 100% by 2004

53

Detect 70% of sputum positive TB cases and successfully treat 85% of them in areas covered

by DOTS strategy.

Adequate capacity of district health system specifically for management, planning and

financial management.

Status of Implementation

The Department, of Health (DoH)'s reforms are proceeding in six areas:

(i) Sindh is the first province to have adopted a Health sector strategy and

implementation plan-with well-defined targets -based on the new 2001 National

Health Policy.

(ii) Reinvigorating the immunization and tuberculosis (TB) programs. After stagnation in

the late 1990s, the coverage is increasing under a well-targeted program. A third party

assessment indicates that immunization coverage of children (12-23 months) and

pregnant women is 45% and 48% respectively, increasing from 38% and 40%

respectively (in 1998), though most rural districts still have coverage below 40%. The

numbers of confirmed Polio cases have decreased from 65 in 2000 to 23 (October) in

2001. In TB, good progress has been made in expanding DOTS strategy to ten

districts. The coverage has increased from 8% to 31% with case detection rate of 80%

and a cure rate of 75%. The program is on track to expand to 13 districts by end of

FY02. The GoS is undertaking supplementary TT campaign in high-risk areas and is

redeploying vaccinators to uncovered areas.

(iii) Improving Health sector governance. Vigilant monitoring by departmental

committees and army monitoring teams is reducing staff absenteeism. More than 350

doctors have been removed as a result. The scrutiny of departmental committees is

improving transparency in procurement. Transfers have been reduced and now take

place only annually. New management and organizational structures for provincial

and district levels have been developed for the health department and most posts have

been filled. A medium-term plan for strengthening district health management has

been prepared.

(iv) Enhancing Monitoring and Evaluation. The DoH has outlined a set of fifteen

indicators to measure performance, for self-monitoring and making itself accountable

to the community. The EPI Directorate has introduced quarterly monitoring and

reporting system using WHO-adapted instruments, with almost 100% reporting. The

DoH is now preparing a plan for carrying out third-party led annual district level TPV

surveys to validate departmental information.

(v) Promoting public-private partnerships by inviting NGOs and CBOs to take over non-

functional health facilities. The newly developed Trauma Center in Karachi is being

privatized through the Privatization Commission. The DoH has defined its strategies

to be implemented in the medium-term, including explicit policy guidelines for

private sector involvement.

54

Medium Term Measures

Medium-term measures will include:

(i) expanding the routine immunization program and TB DOTS programs with well-

identified targets and measures set out in the Health Sector strategy;

(ii) broadening public-private partnership under the newly issued strategy;

(iii) strengthening local government capacity by implementing detailed plans for capacity

development for district managers in management, planning, and financial

management; and

(iv) further strengthening monitoring and evaluation systems. This will include

strengthening the existing Monitoring and Evaluation unit at the provincial level,

improving health management information systems; and conducting district level

TPV surveys.

Improving Public Service Delivery: Rural Drinking Water and Sanitation

Issues

The proportion of households with access to clean drinking water actually declined in Sindh in

the 1990s and currently more than a third of rural households have no access to safe water. The

main issue is how to increase access to rural drinking water and sanitation (RWSS) on a

sustainable basis. GoS's past policy has relied on close consultation and participation by

communities in facility maintenance and by June 2001 out of a total of 1771 drinking water or

sanitation schemes, 997 had been transferred to the communities. Recently, however, as part of

the national Kushal Pakistan Program (KPP), the GoS has also sharply increased rural water

supply and sanitations schemes with community consultations, but without clear arrangements

for community based maintenance and cost sharing.

Objectives and Strategy

The GoS's strategy in this area is still evolving. It is envisaged that the GoS reforms will

include:

(i) emphasizing the policy of community participation, involvement and cost sharing as

the guiding principle for RWSS schemes even under KPP (the pro-poor public works

program);

(ii) improving governance through devolving the administration of RWSS schemes to a

lower sub-district tier of Government (the Taluka government) who are in closer

contact with beneficiaries;

(iii) providing funding for operations and maintenance of RWSS schemes that have been

recently constructed with community consultations to the Taluka governments; and

(iv) providing adequate funding for RWSS schemes in the Provincial development

programs. The GoS's five-year rolling plan for RWSS schemes doubles the allocation

by FY 04, which is considered feasible to implement.

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Strategies for rural water and sanitation

The following strategies are under consideration:

Policy shift focusing on low cost technology and sustainable models;

Capacity building of district and sub-district functionaries vis-à-vis their new roles and

responsibilities;

Replication of successful low cost interventions with community involvement.

The devolution has provided an opportunity to address key institutional constraints in this area.

Water and sanitation were historically considered to be urban sector issues only

Some practical measures to achieve the above include:

1. Improve the TMAs service delivery through:

Improve planning system

Water & Sanitation Information System.

Develop water supply coverage on map and database.

Establish database of WES facilities in primary schools

Improve monitoring system

Establish Community-TMA linkages

Form Neighborhood Councils (or village committees) and officially notify them;

Strengthen UC WES committees;

Provide forum for regular interaction (e.g. Quarterly clean village and best school

competitions)

TMA capacity building

Low cost water supply and sanitation technologies;

Sanitary surveillance to ensure water quality

Resource mobilization through improved revenues, decreasing non revenue water,

public private partnership, community cost sharing in O&M/M&R

Community mobilization/awareness raising for behavioral change (sanitation week

etc)

2. Establish and strengthen provincial forums/ networks (i.e. Water & Environmental Sanitation

Network, WESNET) for sector coordination, dialogue, intra TMA lateral learning and

advocacy for policy refinements, sector research and new initiatives

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Improving Public Service Delivery: Urban Services

Issues

Sindh is the most urbanized province with half the population living in urban areas and around

50% of its urban population living in slums. Hence, improving urban conditions is an important

priority for GoS. Several issues have constrained the improvement of urban services:

(i) weak urban local government institutions that have overlapping responsibilities with

provincial departments and City Development Authorities;

(ii) poor financial management resulting in inadequate investment in provision and

maintenance of urban services;

(iii) absence of strategic planning resulting in piecemeal actions and waste of public

resources; and

(iv) lack of enabling environment for private sector participation.

Objectives and Strategy

The GoS's goal is to improve urban life and especially slum conditions. Instruments to achieve

these goals will be setting up accountable and responsive city/town governments, improving

financial management, inviting greater private sector participation in the provision of services,

and strengthening the rights of slum dwellers.

Status of Implementation

GoS is improving urban services through the following measures:

(i) Setting up well-functioning city Governments under the devolution plan. One city

district government in Karachi (comprising of 18 towns), and 16 district governments

(comprising of 86 Talukas) have been set up. Overlaps in responsibilities have been

removed and all agencies but two have been closed or brought under city

Governments;

(ii) Upgrading slums and regularizing dweller rights: The SKAA has formally regularized

dweller's rights in 929 slums, completed regularization work in 623, and executed

development and improvement work in 486. Mainly based on the work of the SKAA,

the GoP has recently approved a National Policy on Katchi Abadis, Urban Renewal

and Slum Upgradation; and

(iii) Promoting participation by Karachi's substantial private sector in urban development.

The GoS has constituted the Economic Development Council (EDC) under the

chairmanship of the Governor and a 50% private sector representation to facilitate

implementation of the GoS's Program for Economic Revival of Karachi (PERK) by

cutting across bureaucratic layers and bottlenecks.

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Medium Term Measures

A substantial medium-term reform agenda exists in the urban sector in Sindh centering around:

(i) making city and municipal Governments well functioning by ensuring that urban

fiscal and financial management is strengthened to adequately support the provision

of services;

(ii) improving urban services through the preparation of long overdue master plans and

their implementation; and

(iii) continuing the work on the improvement of conditions of urban slums and urban poor

based on the recently approved National Policy on Urban Renewal and Slum Up-

gradation.

Pillar Three: Promoting Private Sector Development and Economic Revival

A large potential strength of the Sindh economy lies in developing its potential in value-added

agriculture. It provides the opportunity to build ago-based trade in processed high value-added

agriculture. This PRSP recognizes that accelerating growth is key to poverty reduction but also

that the private sector has to be the engine of this growth and that such growth should be based in

the rural sector where the majority of the poor reside and where the highest employment

multipliers are evidenced. The PRSP strongly endorses the mainstreaming of gender in all

growth promotion activities in the Province as the most efficient means for poverty reduction.

The Rural Development Strategy proposed here relies on the acceleration of growth in value-

added agriculture and overall agriculture development accompanied by the development of the

non-farm sector to bring about poverty reduction. In this respect the Government is envisaged to

play only a supporting role to promote the private sector through improved provision of

infrastructure and easy and timely availability of institutional credit and information and

technology.

Within agriculture development the Government should ensuring farmers’ easy access to

necessary technical information and inputs so that they can exploit the province’s comparative

advantage in terms of location to supply not only the large domestic markets but also the middle

east. An important step in this regard would be the revitalization of the Agriculture Extension

Department and the initiating of programs to enhance its technical capacity to help farmers

increase production and export. Other specific areas of focus include assisting the development

of the seed industry with public-private partnership; expanding the vaccination coverage of

livestock; reducing the role of the public sector and improving the overall functioning of

agriculture markets. The development of the livestock sector in particular offers good prospects

for poverty reduction in the province. This potential is still largely untapped. It provides not only

the prospects for growth but also for the gainful employment of women. An extremely important

aspect of the agricultural development will result from efforts to check soil degradation and find

ways to address the issues connected with the timely availability of water.

The largest poverty reduction comes from the development of the non-farm sector in rural areas.

This sector is generally extremely employment intensive and requires the lowest amounts of

58

capital per job created. The development of non-farm activities is therefore the ideal intervention

for poverty reduction in these resource constrained conditions. The Government will actively

promote off-farm employment opportunities by promoting agro-based, Small/ Medium and

cottage industries and employment through processing and other activities and services that rely

on the linkages with the farm sector The dairy and livestock sector offer enormous potential in

this regard.

In addition to the rural development strategy covering both agriculture, Industries and trade the

Province needs to promote its enormous tourism potential and encourage both domestic and

international tourism. This requires infrastructure development and the development of facilities

such as hotels, motels, rest houses, restaurants and gift shops. The Government can facilitate this

process by providing access to and ensuring the beautification of local sites. The tourism sector

needs better access to credit for kiosks and food stalls and preparing and distribution of

advertisements, brochures, and seminars to attract tourists. The local Governments have a large

role to play in this respect. The law and order situation is crucial for tourism development. In

this respect ensuring the maintenance of law and order is extremely important for all three

aspects of effective poverty reduction i.e. opportunity, empowerment and security.

Specific steps to improve the business environment, enhance productivity of agriculture, reduce

the role of the public sector in commercial and industrial activities, and promote public-private

partnerships are needed. Reforms to improve the efficiency of the province’s infrastructure,

including irrigation facilities, road/ rail communication and urban infrastructure and services,

and environmental protection would also support the growth process.

But given the large size of the urban sector and utilizing the locational advantages for trade and

commerce poverty reduction it is obvious that the impetus for poverty reduction will have to

come from private sector development.

Issues

A constraint to Sindh's private sector development has been the poor law and order condition, the

ethnic conflict that marked Karachi through most of the 1990s and made Sindh's investment

climate hostile to the private sector. In addition, macroeconomic instability, a large debt

overhang, an inefficient public enterprise sector, infrastructure problems, and discretionary (i.e. a

harassing) taxation policy all worked to raise business costs, discourage private sector activity

and lower economic growth in the 1990s. Many of the key policies to address growth issues-

federal taxation, power, telecommunications, banking, and labor regulations-are primarily the

concern of the Federal Government and are being addressed comprehensively at the Federal

level. Even so, the improvement of investment climate requires complementary measures at the

provincial level. In particular, there is a need to simplify the numerous and antiquated factory

inspections and labor laws and rules that have become a tool for harassing the private sector and

rent seeking behavior. Importantly, many of the policies affecting agriculture performance and

rural development are also under provincial management. The GoS is also responsible for

rehabilitating the poor infrastructure in roads and irrigation. Federal Govt. to Rehabilitate/

expand Railways that impede economic growth and the functioning of markets.

59

Objectives and Strategy

Reforms to improve law and order, critical for improving the investment climate, has been a key

priority for the GoS. In addition, GoS's economic revival plan has three components:

(i) regulatory reforms to lower business costs;

(ii) privatization to promote efficiency, private sector activity and investor confidence;

and

(iii) rehabilitating key infrastructure such as roads, Railways and irrigation that have

significant impact in promoting agriculture and rural development, manufacturing,

and trade.

Regulatory Reforms and Privatization

In the regulatory area, the GoS's focus has been on modernizing the antiquated factory

inspections system and the large number of labor laws that have traditionally harassed private

entrepreneurs. Thus the number of factory inspections has been reduced from 23 to 7 for

factories and to 4 for shops that will be undertaken in two days. Disciplinary actions have being

taken against staff charged with harassment and corruption. In conjunction with the Federal

Government, the GoS is now reviewing labor laws to consolidate these from over 27 laws,

regulations and ordinances to 6 laws.

Medium-term reforms will focus on further streamlining of regulations and building up the

institutional framework. First, once the impact of the current round of reforms has been

evaluated, there will be further streamlining of regulations-particularly to increase labor market

flexibility. The second major issue will be the deepening of institutional reforms to address

private sector development issues through developing more independent and professional

regulatory organizations, where the private sector and civil society are well represented. GoS has

already taken steps in this regard as discussed below.

GoS has been successful in involving Karachi's considerable private sector in public-private

partnerships to jointly work to improve the investment climate. Some of the key examples of

public-private partnership include:

(i) A powerful Provincial Committee on Investment (PCOI)- with 70% private sector

membership-has been notified and is meeting regularly to address ways to improve

the investment climate;

(ii) The Economic Development Council (EDC) has been set-up for the revival of

Karachi city. While it is chaired by the Governor, its vice chairman is from the

private sector;

(iii) The Sindh Privatization Commission is chaired by a private sector individual, and 10

of the 15 members are from the private sector; and

(iv) An Information Technology (IT) Board has been set up to promote an IT culture in

Sindh and boost software exports. Headed by the Governor, it has a 50% private

sector membership all actively involved in designing an IT strategy for the province.

60

Privatization reforms implemented include promulgating a strong privatization law, setting up a

well-constituted Sindh Privatization Commission (SPC), and identifying the list of assets and the

timetable for privatization. The Commission, headed by one of Pakistan's leading investment

bankers, is in place and properly funded. The GoS Cabinet has approved the list of assets to be

privatized, including some potentially large-scale transactions: coal mines (with federal

government approval), sugar mills, and water treatment plants of the Karachi Water and

Sewerage board. In the medium-term, the main task will be to carry out the privatization tasks as

per schedule. In the meanwhile, the SPC is building up implementation capacity through

appointing qualified consultants to undertake specific transactions and to carry out an inventory

of GoS owned assets and enterprises in order to confirm employment, financial position and

other pertinent data.

Rehabilitating Sindh 's Roads

Issues

The roads network in Sindh province is in a critical state of disrepair raising transport costs and

adversely affecting the growth of markets, incomes and employment, especially in the rural

areas. Close to 70% of the 20,642 kilometers are classified as in poor condition, with only 10%

being deemed to be in good condition. The road maintenance budget is less than one third of its

requirements and, there is a large backlog of road rehabilitation expenditures (around 0.8% of

GPDP). There has been a lack of sustainable funding mechanism for road maintenance. The road

management department is overstaffed and maintenance yardsticks are outdated.

Objectives and Strategy

GoS's plans to improve its road management program through embarking on a road rehabilitation

program that prioritizes maintenance, setting up a Roads Fund with an Oversight Board that has

stakeholder participation and involves private contracting. The other main component of its

strategy is to implement the process of devolution and decentralization of the management of

district roads-which constitute the vast majority of the road network - to district Governments.

Finally, the GoS's MTFRP provides the fiscal space to increase allocations for road rehabilitation

in both the current and development budgets several fold.

Implementation

First, in line with its strategy, the Communications and Works Department (CWD) has shifted its

focus to maintenance and rehabilitation of roads and sharply curtailed construction of new roads.

To this end, it has prepared a maintenance backlog estimate, a maintenance prioritization plan

(under which 70% of its maintenance budget is going to priority roads), updated its yardsticks

and has requested increased allocations for maintenance. Second, a public-private Oversight

Body has been created to manage the increased maintenance funding for roads and a non-

lapsable Roads Fund is being prepared to protect road maintenance funds. The ADB is

supporting the setting of the Road Fund. Further, starting this year, 100 % of all maintenance has

been contracted out to the private sector. Third, CWD has reorganized itself for devolution. It has

absorbed the provincial Education Works Directorate and the Housing and Town Planning

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department and has devolved its share of the intra-district road network (approximately 16,020

km) and half its staff (8,475) to the district governments. CWD has sent guidelines to district

governments on how to prioritize their share of the maintenance allocation and submit their

priorities to be incorporated in the medium-term rolling plan for provincial road expenditures

Medium-Term Reform Program

The medium-term reform program in the roads sector will focus on institutional reforns with

assistance from the ADB that will include:

(i) establishment of a Road Sector Development Directorate (RSDD), whose operations

will be guided by the newly created oversight body, and mandated to develop the

road master plan and a 5-year rolling plan and design standards and specifications and

environmental management manuals, implement the axle load control program and,

traffic capacity plans, and publish maintenance and investment program;

(ii) other related institutional reforms will include staff rationalization and private sector

participation in toll operations and road maintenance, especially through local level

maintenance contracts; and

(iii) augment resources for the non-lapsable road through fuel levies, cesses, revenues

from tolls and surcharges on heavy vehicles.

(iv) in addition to above efforts be made to improve Railway network especially feeder

lines, as to have economical access to Rural Population for economic activity.

Agriculture and Irrigation

Issues

Sindh province, with 26% of Pakistan's cultivated area, contributes 24% of national production

of major crops (44% in rice, 31% in sugarcane, 21% in cotton, and 15% in wheat). Though

Sindh's agriculture growth increased in the 1990s, it suffered from volatility that reduced its

poverty impact as there is a clustering of households around the poverty line. While crop yields

in Sindh are higher than national averages, they are lower than their potential. Several factors

have constrained Sindh's agriculture performance. Excessive water-logging and salinity due to

inefficient use of flood irrigation and the exhaustion of micronutrients by in-appropriate use of

mechanization, water, and fertilizer have reduced yield. Water logging and salinity cause as

much as 40-60 % reduction in the productivity of major crops in Sindh. In spite of huge public

investments, the problems of salinity and sodicity have become more acute in recent years, due

to poorly maintained drainage systems and increased tapping of brackish groundwater for

irrigation.

The deterioration of the irrigation network due to poor maintenance, low water rates and

inefficient system of assessment and collection that recover only a third of the recurrent cost of

irrigation have lead to enormous wastage of scarce water resources and reduced availability of

irrigation. Apart from seasonal water shortages in the canal systems due to highly seasonal river

flows and inadequate regulatory structures, Sindh's irrigation system is characterized by:

62

(i) low delivery efficiency (only about 35-40%);

(ii) distribution inequities (poor and/or untimely supply at the tail ends of the

distributaries and watercourses);

(iii) wasteful on-farm water uses (due to under pricing of water); and

(iv) illegal pumping by head-enders.

Figure: Water utilization against water accord allocations Sindh

Highly skewed land distribution and insecure tenancy rights provide poor incentives for

investment in land. Inferior services provided by the agricultural extension and the irrigation

departments have not helped farmers. Although fertilizer and pesticides business/sale has been

privatized the continued large public sector presence in key areas have lowered efficiency.

Strategy

Sindh is pursuing an agriculture strategy that emphasizes six policy areas:

(i) improving the operations and maintenance of the irrigation and drainage system.

(ii) reforming agricultural extension services;

(iii) increasing growth-enhancing public investments;

(iv) further liberalization of trade and markets,

(v) promoting private sector investment, and

developing efficient land markets. To address constraints to efficient operation and management

of the irrigation and drainage systems, GoS has adopted a new strategy. The key thrust of this

strategy is to foster an institutional, policy and operational framework that is conducive to

Water Utilization Against Water Accord Allocations

Sindh

0%

20%

40%

60%

80%

100%

120%

92 93 94 95 96 97 98 99 00 01 02 03 Fiscal Year

Percent

Kharif

Rabi

Total

63

efficient and self-sustaining operation and management of the irrigation and drainage systems.

The strategy is predicated upon:

(i) restructuring of the Provincial Irrigation Department into an autonomous Sindh

Irrigation and Drainage Authority (SIDA) at the province level, and commercially

oriented and autonomous Area Water Boards (AWB) at the canal command levels;

(ii) devolving O&M and cost recovery responsibilities to formally organized Farmer

Organizations (FOs) at the distributary/minor canal levels;

(iii) fostering beneficiary/community/private sector participation in all aspects of

operation and management of the irrigation and drainage systems; and

(iv) significantly increasing budgetary allocations for irrigation infrastructure

rehabilitation under the GoS's medium term fiscal restructuring plan.

Status of Implementation

GoS is fully committed to the implementation of the institutional and policy reforms initiated in

the irrigation and drainage sector under the National Drainage Program (NDP) project. The

reforms have high-level support. The SIDA Act was passed in 1997 to provide legal cover for

the reforms. SIDA has already been established with initial jurisdiction over three canal

commands. Its organizational structure, staffing, systems, rules and regulations are being

developed. Committed and efficient staff is being recruited from the market. The future vision is

that SIDA's jurisdiction would be gradually expanded to the whole of Sindh province, with

AWBs established on all the 14 canal commands by the end of 2003. Simultaneously, Irrigation

Department's jurisdiction and role would gradually diminish, and ultimately it would hold

regulatory responsibilities only. Over 40 FOs have already been established within the Nara

Canal Command. SIDA and the Nara Canal AWB have already turned over irrigation and

drainage management responsibility to over 20 FOs. More FOs are being established. Ultimately

over 1200 FOs would be established in the 14 canal commands/AWBs of Sindh. Initial reports

suggest that irrigation charges recovery have improved substantially in some of these areas. The

GoS's medium-term fiscal restructuring plan also includes an increase in allocations for the

rehabilitation of irrigation and increasing water charges to promote efficient use of this scarce

resource.

To increase the performance of extension services and irrigation maintenance, GoS's primary

initiative has been to try to involve farmers in both these activities. In the case of extension

workers, monthly salary has been made contingent upon at least five farmers (who are changed

every month) certifying their presence and contribution. In addition, GoS is also holding field

days and farmer days in villages to make a special effort to disseminate best practice. Finally, the

GoS is also continuing its program of land distribution with more than 103,000 acres of land

distributed to landless farmers in the last two years.

Medium Term Reforms

The GoS's medium-term plan focuses on rationalizing procurement services, reducing public

sector and increasing private sector presence, and rehabilitating infrastructure. As part of this, the

GoS plans to:

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(i) remove market barriers by lifting restrictions on the internal movement and imports

of agricultural commodities and products;

(ii) rationalize procurement prices by setting wheat and cotton prices at the export parity

price, while the procurement prices of all other crops will be capped by their market

prices;

(iii) reduce public sector presence by closing down Sindh Agriculture Supply

Organization, its Food Department and the Sindh Seed Corporation, with the staff of

these agencies to be assigned to the surplus pool or paid a severance package;

(iv) increase access to the private sector under which private seed companies will get

access to breeder seed developed by the provincial public sector research institutes

(who will get greater administrative and financial autonomy);

(v) continue its program of irrigation infrastructure rehabilitation with greater farmer

participation and public sector investments; and

(vi) improve tenancy and land rights through improving and computerizing land record

systems.

Pillar Four: Developing Women and Children

Women of child bearing age and children account for over seventy percent of the population of

the Province. They are also the most disadvantaged and vulnerable. The most effective poverty

reduction can come about simply by addressing this vulnerability. The long term consequences

of doing this are also most significant. Addressing this vulnerability today provides the pre-

conditions for long term poverty reduction. If due attention is not paid to this extremely

important segment of the population today the consequences for tomorrow are catastrophic.

Sindh like the other provinces is sitting on a poverty bomb that will explode in the coming years

with much more disastrous consequences than are being faced today.

Impoverished communities usually do not have access to basic social services. They need the

support of the government to be able to raise their children in a healthy and productive

environment. Today’s children are parents to the next generation, thus, if they are not properly

supported through social assets such as health facilities and primary schools, they become

transmitters of poverty. In a vicious cycle, malnourished girls grow up to become malnourished

mothers who give birth to underweight babies, parents lacking access to crucial information are

unable to optimally feed and care for their children; and illiterate parents cannot support children

in their learning process. Children are often hardest hit by poverty. It causes lifelong damage to

their minds and bodies. They are therefore likely to pass poverty on to their children,

perpetuation the poverty cycle.

The provincial government strategy with respect to social asset creation for the poor includes

support to establishment of primary schools, primary health facilities, safe water points,

communal latrines and capacity building of established entities that work with the communities,

such as the Lady Health Workers (LHW). Special attention will be given to the welfare and

access of poor children within this strategy. Nutritional needs of the population will be addressed

within this strategy. One of the major strategies of the government is to break this cycle of

65

poverty through creating social assets that is accessible to the poorest of the poor, the vulnerable

groups, women and children.

Investments in children today will help lay a solid foundation for sustained and equitable

economic growth in the future. Attainment of sustained rapid economic growth is not possible

with high levels of illiteracy, malnutrition and morbidity. Therefore social asset creation for the

poor, economic and social reform go hand in hand in to ensure a strategy that will alleviate

poverty for the population successfully and in a sustainable manner.

A major thrust of the Government’s reform effort is to improve the delivery of human

development services to turn around the current situation and have a lasting impact on

productivity, equity, poverty, and social support system. These efforts are in tandem and

complementary to the financial and governance reforms that would have a positive impact on

improved delivery of various government services, through increased resources, efficiency, and

responsiveness of the system.

Women Development

Progress in this area has been going on for many years. Women are increasingly receiving

education, participating in many professions and businesses, and playing an active role in

politics. However, as shown in chapter 2 there are extremely large gender disparities. The

Government realizes that it has to sharpen and strengthen its focus on this important

development issue to fully utilize this large part of human resources.

Girls and women constitute a large portion of the population in Sindh. A comparison of social

indicators shows that girls and women lag behind boys and men in terms of survival,

development, protection and participation. Contrary to international trends, there are fewer

females than males in Pakistan. Less girls than boys get enrolled in schools. Girls and women are

also more at risk of violence and exploitation. Families often take the decision of restricting

mobility of girls and women to protect them from external threats of violence and abuse, but thus

also deprive them of equal opportunities for development.

As a result of reduced opportunities, girls and women are unable to develop their full potential

thus limiting their ability to contribute fully to the development of the family and the community.

It also places a heavy responsibility on boys and men, who often have to support large families

of 8-10 persons on a single income. Translated at the provincial level, the inadequate human

development and protection of girls and women deprives the province of huge economic and

development potential. Without addressing the issues of gender-based biases and discriminations

against girls and women, poverty reduction strategies would not have the desired impact in the

province.

Government of Pakistan acceded to the Convention on Elimination of Discrimination Against

Women (CEDAW) in 1996, thus indicating its commitment to provide equal opportunities for

development and elimination of discriminations against girls and women at all levels, including

various government and social levels. The Government of Pakistan has also prepared a National

Plan of Action, which outlines plans for key areas of development for girls and women, which

66

include health, education, economic empowerment, political participation and protection from

violence and exploitation. The plans addresses the issues of development of girls and women in

different spheres of life. It proposes selected strategic interventions aimed at providing equal and

equitable human development opportunities and protection from violence and abuse for girls and

women.

Future Strategy

The provincial government will implement numerous strategies in this regard, which include:

promoting the participation of women in decision making processes; policy change to facilitate

female participation; capacity building and skill development; partnership with community,

NGO and private sector; gender disparity reduction; ensuring access to gender disaggregated

data; and provision of improved access to social services for the female population.

In line with this strategic approach, key interventions proposed include a focus on the following:

Review and bring about required changes in legislative framework and policies to end

discriminations and gender biases with a focus on education, health, finance, asset

ownership, labour and protection from violence;

Promote participation of women in decision making processes at all levels including in the

political processes;

Build the capacity of women in decision making positions to enable them to fulfill their

responsibilities;

Raise awareness on equal rights of girls and women for survival, development, protection

and participation from policy to household level, with a focus on boys and men;

Develop capacity of women for improved participation, financial and land management as

well as entrepreneurial skills;

Ensure equal access to services for girls and women including in the areas of health,

education, skills training and credit;

Ensuring that routine monitoring systems used for data generation, surveys and evaluations

will provide gender disaggregated quantitative and qualitative information;

Ensure that the planning process does utilize gender disaggregated data to ameliorate the

situation of the female population;

Develop capacity of service providers for ending gender-biases in planning and access to

services and gender-based violence and exploitation;

Remove barriers of age, domicile, female discrimination as an affirmative action to help

reduce the gender gap in employment;

Document, monitor and address gender-based biases and violence against women.

Specifically, in each of the sectoral reform areas, especially in the crucial education sector,

concerted efforts are being made to reduce gender disparity. Also access to maternal and family

planning services is being increased. The Department of Women Development has under

implementation several schemes, partly with support from the private sector and local

communities, to promote skill development among women and provide temporary shelter, a

crisis center, and free legal assistance for women in distress. The Government plans to expand

these activities through public-private partnership, community help, and NGOs’ assistance.

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A Provincial Steering Committee, including civil society members, would oversee these

activities, and provide a vehicle to raise people’s awareness of the needs and rights of women.

Children constitute majority of Pakistan’s population. The Government of Pakistan is committed

to welfare and development of this large cohort. Child rights are recognized through the

Convention on the Rights of the Child (CRC) to which Pakistan is a signatory. Recently, in the

UN Special Session on Children, 2002, Pakistan along with the rest of the world, agreed to make

policies and take actions for meeting goals and objectives set at the Special Session. These

commitments are contained in the outcome document entitled “A World fit for Children”. As a

follow up, Pakistan is preparing a National Plan of Action [NPA] for Children. Similar planning

initiatives are going on in provinces and Provincial Plans of Action [PPA] for Children are under

preparation. This document is set to lead action for child rights and child welfare in the next 10

to 15 years. It is recommended that the strategies under the Provincial Plan of Action (PPA)

under preparation be given priority in the overall poverty reduction strategy of the Sindh.

There are elaborate national and provincial plans to provide education and health to children.

However in crucial areas such protection from violence and child labour plans are still being

developed. Plan of Action for Children for Sindh would therefore serve to fill these crucial gaps

in the social sector policies relating to children in a holistic manner.

It is now accepted worldwide that there can be no sustainable development without giving access

to rights. Rights of the children are of special significance in this regard. The government has

shown commitment by announcing plans to of adequately funding the Plan of Action for

Children. While detailed indicators are included in the PPA, three indicators on birth

registration, juvenile justice and education of worst forms of child labour are being included in

the PRSP for creating sharp focus and linkages between the policies of the government and its

implementation methodology. The Plan of Action for Children will provide the matrix for

implementing the commitments contained in the PRSP.

Pillar Five: Addressing Vulnerability to Shocks

Most of the elements of addressing vulnerability to shocks are part of the national poverty

reduction strategy. These are reproduced below:

Targeting of Social Safety Nets

Narrowly targeted programmes are increasingly prescribed for reasons of efficiency and

flexibility: they claim to minimize leakage to the non-poor and offer rapid anti-poverty

intervention. Such programmes may take the form of scholarships and vouchers, waivers or

exemption of fees at health centres and schools, and direct cash transfers to eligible households

based on specific criteria. However, narrow targeting has important hidden costs that are often

overlooked. Five of these major costs are highlighted below.

First, because poverty is complex and difficult to quantify, it is virtually impossible to

identify those most affected, thereby augmenting the risk of mis-targeting.

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Second, the non-poor seldom ‘miss out’ on special programmes so that narrowly targeted

programmes often bypass the poorest.

Third, narrow targeting requires special eligibility criteria, which means that poor households

must incur costs (fees and bus fares) to document their eligibility. Also, the poor are

generally less informed about social safety nets but are well aware of the social stigma

associated with means testing. This combination easily leads to the exclusion of the poorest

of the poor.

Fourth, programmes that use narrow targeting are at least twice as expensive to administer

than untargeted programmes. And because they can create opportunities for mismanagement

and petty corruption – particularly in the context of pervasive and endemic poverty – extra

outlays for oversight and control add to their cost.

Last, but not least, the political commitment to sustain narrowly targeted programmes is

generally weak. Once the non-poor cease to have a stake in the quality and scope of targeted

programmes, the voice of the poor alone is usually too weak to maintain strong political

commitment. Proposals for multiple providers of basic social services such as education

should therefore be considered with caution because they can reinforce segmentation of

service delivery.

A discussion on the relative advantages of targeting must include the type of goods and services.

The merits of a targeted fertilizer subsidy or microcredit scheme, for instance, are very different

from those of a targeted subsidy for primary education. From a human rights perspective, the

principle of universality has to take priority over that of selectivity when it comes to public

goods such as basic social services. Evidence suggests that access for the poorest of the poor to

basic social services only becomes a reality when these services are universally available. This

strategy therefore proposes the availability of basic safety nets to all the vulnerable.

The interventions listed in the PRSP for Pakistan to address vulnerability to shocks are also

being implemented in the Sindh. These are:

Zakat Rehabilitation Grants

In the national IPRSP a key instrument for social rehabilitation and reducing vulnerability to

exogenous shocks is the revamped system of Zakat and Ushr. The Zakat and Ushr Ordinance

(1980) mandates that 2.5 per cent of the value of all declared, fixed financial assets (i.e. savings

accounts/certificates and financial assets for fixed term) for those possessing nisaab (the

specified limit) are to be automatically deducted at source at the beginning of the month of

Ramadan. The system of collection and disbursement of Zakat, overseen by respective Zakat

Committees, has been recently reorganized to improve their efficacy. While the institutional

framework for implementation, monitoring, and evaluation of this social intervention is being

strengthened, relief to beneficiaries in the form of subsistence grants were raised last year from a

monthly transfer of Rs. 300 to Rs. 500. Zakat has thus emerged as the government’s central

program or social safety instrument. However, its potential and scope in fighting poverty is yet to

69

be fully realized. Contrary to previous dedicated emphasis on grants and stipends, the revitalized

Zakat system will provide funds to Mustahiqeen (beneficiaries) not only to fulfill basic needs but

also to permanently rehabilitate them, by assisting them in the establishment of small-scale

commercial projects or other means of living suitable to their qualifications, skills profile, and

local conditions, thereby allowing them to achieve self reliance.

Rehabilitation schemes have been prepared which are aimed at about 1.5 million new

beneficiaries, who will be provided Rs. 10,000 to Rs. 50,000 each for starting up small

businesses/trades. The funds will be allocated with provincial, district, and local Zakat and Ushr

Committees determining the needs of Mustahiqeen in their respective areas as well as area-wise

priorities for allocation of funds, local councils will administer the rehabilitation packages. The

Mustahiq candidate must submit a written application, on the prescribed form, to the local zakat

committee, containing a proposal for grant utilization, as well as indicating need. Local

committees may sanction grants of up to Rs. 10,000; and must forward applications with their

own recommendations to District Committees, for approval of Rehabilitation grants greater than

Rs. 10,000 and up to Rs. 50,000. On approval of cases, the District Zakat and Ushr Committee

may release the grant to the concerned Local Zakat Committee for disbursement.

Mustahiq beneficiaries must provide written undertakings to the effect that funds received will

be utilized exclusively for the purposes for which they have been granted. A consolidated

monitoring and institutional framework is being developed for the rehabilitation scheme to

coordinate interaction between the Committees, and ensure accountability of beneficiaries. The

District Rehabilitation Monitoring Committees, and their tehsil and local counterparts, will be

responsible for the effective monitoring of the Schemes at their respective levels. Committees at

each level shall undertake field visits and report on the functioning of the Schemes, with

responsibility for reporting irregularities to District Committees.

Under the national IPRSP the Funds allocated by the Central Zakat Council for the

Rehabilitation Schemes are to be in addition to the usual 4 percent allocated under this category

in the previous system. Disbursement of the existing 4 percent will, therefore, continue in

accordance with the Zakat Disbursement Procedures. Funds approved by the Central Zakat

Council are to be disbursed by provincial quota, approved by the Council after which, Provincial

Councils will remit funds to the district level. Accounts for all transactions and flow of funds

under the Rehabilitation Scheme are to be maintained by the Local Zakat Committee and

Provincial Zakat Council and audited by the Auditor General of Pakistan.

The Food Support Program

The Food Support Program for the poorest sections of the population has also been revitalized

and funds for the program have been set aside. The program is designed to mitigate the impact of

increase in wheat prices. Its coverage extends to the poorest households with monthly income of

up to Rs. 2000. Cash support of Rs. 2000 is provided to them through biannual installments. The

program was implemented at the district level through the help of district officials. A system of

means testing at the local level has been adopted for identification of beneficiaries by linking the

program with the Zakat system where records of Mustahiqeen are developed through extensive

participation.

70

In addition to the food support program, Pakistan Bait-ul-Maal provided support to destitute

people for a number of purposes including medical support, fund for bonded labor, students’

stipends, community education and dialysis support.

The Khushal Pakistan Program - (Poverty Alleviation Program)

Due to the transitory nature of poverty the Khushal Pakistan Program is a social intervention

aimed at generating economic activity through public works. A sum of Rs.11.5 billion has been

released under the Khushal Pakistan Program (Poverty Alleviation Program) to the districts

through provincial governments; while the schemes under the program have been identified and

selected at the district level through active community participation. This program has created

numerous employment opportunities and is providing essential infrastructure in rural and low-

income urban areas. The program has focused on the construction of farm to market roads, water

supply schemes, irrigation spurs and repair and operationalization of schools. Under the IT

component of the program, rural based vocational training in computers is being promoted. The

Khushal Pakistan Program depends on the functioning of district governments under the

devolution program for further importance and local ownership.

The cost of the schemes selected under Khushal Pakistan Program has been kept between Rs

0.05 million to Rs 5.00 million per scheme, in rural areas and Rs 0.05 million and Rs 8.00

million in urban areas. The following criteria have been followed while identifying and

analyzing projects for the program:

The project should be capable of integration with earlier infrastructure, for instance trunk

sewers, roads etc.

The management and implementation of the projects will be in partnership with the

communities. In case of rural roads local councils will take over the projects on

completion.

In each district the local District Coordination Officers (DCOs) will select 25 per cent of

the projects in marginalized areas. He will identify areas, in consultation with local

NGOs and civil society, where there is a lack of sufficient basic infrastructure and

majority of inhabitants belong to low-income groups.

In cases where existing schemes require major expenditures for rehabilitation, work may

be undertaken under the program, provided that the total cost of such rehabilitation work

will not be more than 25 per cent of the allocation for a district.

The projects will not be of a cost of less than Rs 1 million to prevent a thin spread of

funds except in the case of rehabilitation of drinking water supply.

Khushal Pakistan program will be utilized for productive purposes and will not be

provided for administrative expenditures. Communities will continue to identify projects

and implement them under a participatory approach in the Khushal Pakistan Programme.

Enhanced Role for NGOs and Civil Society

NGOs can play an important role in social service delivery, advocacy, and empowerment.

71

In recent years, the NGO sector has risen to meet the growing demand for social services.

Interventions have included empowerment through participatory development at the grassroots

level towards raising consciousness about rights and responsibilities, capacity building, and

poverty reduction. At the provincial and national level, NGO’s are also contributors to policy

formulation, planning, and research. NGOs feature strongly in the Government’s policy to

provide social development and assistance to the vulnerable. The Government provides

institutionalized support to NGOs through a range of government ministries including the

Ministry of Women Development, Social Welfare and Special Education that is the focal point

for NGOs. It also provides financial support through the National Council for Social Welfare and

the National Zakat Foundation and similar bodies in Provincial Governments.

The NGO sector is constrained by limited resources, especially financial resources

commensurate with their commitments. To address issues relating to capacity and acceptance of

NGOs, a successful strategy adopted for the involvement of NGOs in alleviating poverty would

involve:

Developing a consortia or forum of NGOs working on a particular issue.

Pooling resources and using umbrella NGOs to help build capacity of the smaller NGOs

Ensuring better coordination and exchange of ideas, information and expertise (e.g., the

UNICEF sponsored WESNET)

Sindh Rural Support Organization ( SRSO ) established by the government of Sindh ,as to

Extend micro credit and assist in human resource development . Initially , its activities have

been launched in five districts – Jaconabad , Shikarpur , Sukkur , Ghotki and Khairpur.

Other Social Protection Mechanisms

Pakistan’s social security system bypasses a large section of the population, especially in terms

of provision of pensions and/or old-age benefits. Although, government employees and their

dependents are entitled to pension and medical support only a small fraction of private employers

provide such support through Employees Old-age Benefits Institution (EOBI) and associated

Provincial Social Security Institutions. The federal government regulates and administers EOBI,

which along with provincial institutions provides invalidity support, pensions, and medical care.

Informal Safety Nets

Besides programmes already in progress such as the Khushal Pakistan Progaramme, Zakat and

Ushr, the Zakat rehabilitation grant, the pension plan and the workers welfare fund, this strategy

proposes a Sindh specific informal safety net. This strategy proposes the setting up Poverty

Reduction Associations of concerned well to do citizens with logistical support from the District

Governments to evolve and implement schemes to improve the opportunity, security and

empowerment of the vulnerable at the grassroots level. These associations should also be

charged with ensuring that all such schemes are environmentally sustainable and biodiversity

conserving and provide adequate opportunities to the vulnerable especially women. In addition

these associations can serve as the focal mechanism for the supervision and distribution of basic

cooked food (dal and roti at designated tanoors) to the destitute in each locality through informal

collections from philanthropists in and around the area.

72

The province of Sindh has an established and quite extensive system of private philanthropy.

This system needs to be further strengthened and tracked for coordination purposes so that the

resources are spent most effectively.

73

CHAPTER 5. THE MEDIUM TERM BUDGET FRAMEWORK

Under the Sindh Reform Program the GoS agreed to implement a medium term budgetary

framework. This is described below. The description and review are reproduced from the loan

document under which the conditionalities of the reform were agreed upon. The province of

Sindh has been facing an acute fiscal crisis in recent years due to a combination of past fiscal

mis-management, changes made in the federal revenue transfers mechanism in the 1997 National

Finance Commission (NFC) Award, the large and the continued shortfalls in federal Government

transfers. These aspects are described in detail in Khero (1997). The fiscal crisis has crowded out

resources for delivery of public services and maintenance of provincial infrastructure. Sindh's

fiscal problems were particularly adversely affected by the 1997 NFC Award. Sindh, which

generates the most revenue for the federal government, on the other hand, was left to the

instability of energy-related' "straight transfers" to meet its financial needs. The recurring

shortfalls in federal tax collections and the resultant reduction in Federal flows from the

"divisible pool" added to the province's fiscal problems. The NFC award’s system of allocation

based on the population of the Province alone is clearly biased against the Sindh which

contributes by far the highest amount of any province to the federal exchequer. As a result, Sindh

had been facing difficulties in meeting its expenditure obligations and the development and non-

salary O&M expenditures have been falling well below the assessed needs, slowing down

economic activity in the province and creating a huge backlog of unmet repairs and maintenance

and unpaid utility bills and SBP overdrafts. Operation and maintenance and development

expenditures have dropped drastically, while that of interest payments on the increasing

provincial debt and wages and pensions have been increasing rapidly.

A concerted effort has been launched by the current GoS to strengthen province's fiscal position

and improve sustainability of its finances. These efforts were formulated in a comprehensive

reform program to increase revenues and prioritize expenditures. The provincial government's

resolve to implement this reform program is reflected in the FY 01 and FY 02 budgets which

contained a number of tax measures, discharged large provincial deferred liabilities (mainly

provincial utility bills, State Bank overdrafts, subsidy payments) and prioritized expenditures

with a special emphasis on increasing non-salary budgets of the education, health and roads

sectors.

The Government's Medium-Term Fiscal Reform Program

The Government of Sindh is preparing a Medium Term Budgetary Framework for three

departments namely health, education and irrigation. Existing procedures and structural rigidities

in the composition of expenditures (largely because of overstaffing) and in the revenues (because

of the high degree of dependence on federal transfers) have made provincial budget formulation

a routine affair. Almost 90 percent of the recurrent budget is classified as permanent

expenditures and activities are mechanically accepted each year without any comprehensive

review or evaluation to phase out or reduce spending on non-priority areas, resulting in the de-

linking of the budget preparation from policy [Kardar (2003)]. The MTBF being propose by

Kardar (2003) needs to be approved by the Government of Sindh. The present study therefore

uses the MTBF approved by the Government of Sindh under its Fiscal Restructuring Program of

74

FY2000/01 as a bench-mark. Once the estimates from the ongoing exercise are approved these

can be easily incorporated into the overall framework.

The government embarked on a fiscal restructuring program since FY 2000/01 to restructure

provincial finances and put it on a more sustainable basis. The program is designed to increase

fiscal space through revenue measures, retiring liabilities and debt, and increase expenditures in

the social sectors, operations and maintenance, infrastructure rehabilitation and development

(Tables 5.1 through 5.5 present the main targets of this plan). The GoS's new fiscal restructuring

plan is extending this program to cover the period from FY2002/03 to FY 2005/06. This note,

based on full agreement with the GoS, presents the main targets of this restructuring plan,

provincial tax measures that have been and will be taken and the restructuring of provincial

expenditures and finances to increase allocations for human development, operations and

maintenance. Under certain, generally conservative, assumptions, most importantly on Federal

revenue transfers, this note quantifies the financial impact of fiscal restructuring plan, assesses

their overall impact, and determines the need for additional financing that will help to implement

these measures.

Table 5.1: Summary Fiscal Accounts of the Government of Sindh (Rs. Million)

1999-00 2000-01 2001-02 2002-03 Projections

Actual Actual P.E. P.E. 2003-04 2004-05 2005-06

Total Revenues and Grants 55,416 61,576 72,859 80,727 89,831 100,115 111,958

Federal Transfers 35,921 40,479 47,599 53,011 55,810 62,807 70,954

Provincial Revenues 12,794 15,621 18,043 20,735 26,015 28,802 31,947

Tax Revenues 5,335 7,147 8,163 9,710 10,913 12,543 14,37

6

Non-Tax Revenues 7,459 8,474 9,880 11,025 15,103 16,260 17,57

1

O/w Abina 576 633 631 668 906 1,042 1,251

Federal grants 6,700 5,476 7,217 6,981 8,006 8,506 9,057

of which, KPP Grants1 949 3,080 2,800 - - -

OZT Grants1 6,700 4,528 4,137 2,559 5,006 5,506 6,057

Total Expenditures 55,000 59,559 73,892 81,709 95,462 105,530 112,614

Current Expenditures 51,055 54,153 64,830 70,454 74,046 83,725 92,545

Wages2 22,006 23,327 30,568 33,862 38,133 39,953 41,85

5

Pension 3,452 3,970 4,600 5,155 5,898 6,644 7,565

O&M 4,669 5,676 6,896 7,974 8,833 13,160 17,70

4

Interest payments 11,595 10,440 11,409 10,962 12,377 12,490 12,61

1

Subsidies 399 3,729 4,692 7,233 692 496 353

Grants to LG and Investment 8,934 7,010 6,665 5,267 8,113 10,982 12,457

Development Expenditures 3,945 5,407 9,062 11,255 14,416 14,806 17,069

ADP 2,178 2,685 3,800 4,510 5,472 6,566 8,208

Rehabilitation 1,800 2,100 2,400

Foreign Project Assistance 1,178 1,519 1,500 1,721 5,844 6,140 6,461

75

Federal: Incl. DERA & ESR 589 365 600 529 1,300 - -

Civil works from KPP grants 0 838 3,162 2,800 1,0004 - -

Fiscal Balance 416 2,016 -1,033 -983 -5,630 -5,415 -656

Public Savings 4,361 7,423 8,029 10,272 15,786 16,391 19,413

Primary Fiscal Balance 12,010 12,457 10,375 9,979 6,747 7,075 11,955

Total Expend. incl. Severance 55,000 59,559 73,892 81,709 98,462 108,530 112,614

Net Financing -416 -2,016 -1,033 -1,772 5,630 5,415 656

Memorandum Item3

Provident Fund (net) 2,103 2,172 2,389 2,507 - - -

Receipts 3,742 3,348 3,683 3,532 4,060 4,263 4,476

Payments 1,639 1,176 1,294 1,025 1,565 1,722 1,894

Changes in stock of payment

arrears

- -5,519 -6,608 - - - -

Total Cash Balance -667 5,441 6,401 10,793 - - -

Project IDA Adjustment

Financing

- - - - 6,438 6,631 -

Source: SAC-Sindh (2002)

1/ Starting FY03, these grants may be discontinued by instituting other revenue transfers.

2/ Wages for FY04 through FY 06 include adjustment for savings from separation

3/ Provident Fund Net Receipts are reinvested and not used for budget financing.

4/ This is from Provincial Budget.

Preparing and implementation of a medium term fiscal restructuring plan (MTFRP) covering the

period from FY 03 to FY 06 was accepted as a major task by the GOS.

The focus of this plan is to create fiscal space for poverty reducing current and development

expenditures. The fiscal space is created from three sources significantly higher non-tax revenues

(from new oil and gas revenues from production in three new fields in Sindh that are collected by

the Federal Government and returned to the province), higher foreign aid (from ADB, other

donors, and the World Bank), and from increases in provincial tax effort with revenues rising by

15% p.a. The salient features of the MTFRP is discussed below and presented in Tables 2 and 3.

Table 5.2: Sindh - Public Finances, 1999/00-2005/06 (Percent of provincial GDP )

99/00

Actual

00/01

Actual

2001/02

P.E.

2002/03

P.E.

Projections

03/04 04/05 05/06

Revenues and Grants 6.2 6.2 6.8 7.0 7.0 7.2 7.4

Federal Tax Transfers 4.0 4.1 4.4 4.3 4.4 4.5 4.7

Provincial Revenues 1.4 1.6 1.7 2.0 2.0 2.1 2.1

Federal Grants 0.7 0.6 0.7 0.6 0.6 0.6 0.6

Total Expenditures 6.1 6.0 6.9 7.3 7.5 7.6 7.4

Development

Expenditures

0.4 0.5 0.8 1.3 1.4 1.3 1.3

Fiscal Balance with

Severance Payments

0.0 0.2 -0.1 -0.3 -0.4 -0.4 0.0

Primary Fiscal Balance 1.3 1.3 1.0 0.7 0.5 0.5 0.8

Public Savings 0.5 0.8 0.7 0.9 1.2 1.2 1.3

76

Table 5.3: Composition of Expenditures, 99/00 - 05/06 (Percent of Provincial Expenditures)

99/00 00/01 01/02 02/03 Projections

Actual Actual P.E. P.E. 03/04 04/05 05/06

Total Expenditures 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Current Expenditures 92.8 90.9 87.7 82.6 77.6 79.3 82.2

Wages and Pension 46.3 45.8 47.6 48.4 46.1 44.2 43.9

O&M 8.5 9.5 9.3 10.2 9.3 12.5 15.7

Interest Payments 21.1 17.5 15.4 14.2 13.0 11.8 11.2

Subsidies 0.7 6.3 6.4 1.2 0.7 0.5 0.3

Grants to LG & Invst. 16.2 11.8 9.0 8.8 8.5 10.4 11.1

Provision for Severence 3.1 2.8

Development Exp. 7.2 9.1 12.3 17.4 19.3 17.8 17.8

Health and Education 28.2 28.3 33.5 36.7 38.3 37.7 39.0

O&M in Health & Edu. 8.9 10.7 11.8 17.7 19.6 22.5 27.3

Source: Department of Finance and Bank Staff Estimates

The first year of the MTFRP was reflected in the GoS's budgets for FY 2002/03 and FY 2003/04

with the following targets:

(i) provincial tax revenues collections;

(ii) AIT/land taxes, Abiana, and property taxes;

(iii) aggregate expenditures ceilings;

(iv) wage and establishment costs ceilings;

(v) total current and non-salary expenditures in primary education, health, and drinking

water; and

(vi) operation and maintenance expenditures.

The poverty reducing expenditure targets on health, education, and drinking water will be

transferred, as needed, to the district and Taluka Municipal Administration ( TMA ) as tied grant

( as it is already the case with RWSS schemes). In addition to these items, the GoS will also give

high priority in allocating additional resources for the maintenance and rehabilitation of rural

infrastructure. The implementation of overall revenue and expenditure targets, as well as high

priority expenditure targets are reported in the quarterly fiscal monitoring report.

The fiscal program aims to raise public savings for the province through (i) revenue measures;

(ii) increasing cost recovery; (iii) reducing undirected subsidies; (iv) through investment of all

G.P. (pension) funds current surpluses; (v) through an accelerated repayment of expensive debt

owed to the Federal Government, and (vi) reducing the wage bill through a separation package.

Revenues collected by the provinces are expected to increase by 15% per annum and their share

in provincial GDP (GPDP) goes up from 1.7% to 2.1%. The program contains a number of tax

policy and administrative measures especially relating to the collection of agriculture income tax

(using satellite imaging, having independent assessment done by the SIDA/irrigation

departments), and water charge collections (abiana, through adjusting water rates to account for

scarcity and increasing coverage through the efforts of SIDA and the Area Water Boards). Much

77

of the increase comes from non-tax revenue sources due to higher royalties from production in

Sindh's three new gas fields.

Under the assumptions of the MTBF as the composition of expenditures improves: (i) the wage

bill is contained after increasing in FY02 and FY03, due to a pay reform introduced by the

Federal Government; (ii) the share of development increases from 12% to 18%; (iii) the share of

operations and maintenance expenditure goes up from 9% to 16% by FY06; (iv) share of

expenditures on subsidies falls from about 6.3% in FYO1 to less than 0.3% of all expenditures in

FY06; (vi) the plan provides for severance packages for close to 25,000 civil servants.

Debt and liabilities are reduced: (i) arrears and overdrafts of Rs. 21 Billion around 2.1% of Gross

Provincial Domestic Product (GPDP) are being retired; (ii) retirement of expensive CDL loans

by Rs. 6.8 billion (0.7% of GPDP); and (iii) pension funds/G.P. Funds are capitalized by Rs. 13.3

billion 1.3% of current GPDP - both through capitalization and through transferring all pension

funds current surpluses (that currently finance provincial expenditures) to the General Provident

Fund. The capitalization, if directed to the G.P. Fund only, will go a long way to meet the Rs. 16

billion liabilities (previous employee contributions) in the Provident fund.

The proposed fiscal program generates transitory fiscal deficits (of around - 0.3% to -0.4% of

GPDP) over the medium term (FY 03 to FY 05). As agreed with GoP and the LMF, these

deficits, to be financed by the World Bank’s Sindh Structural Adjustment Credit (SSAC) will be

part of the Pakistan's consolidated fiscal targets and deficit financing agreed to under the PRGF

program. Public savings will increase from 0.7% of GPDP in FY00 to 1.3% of GPDP. The

MTFRP is expected to have a financing gap of around $100 million p.a. from FY03 to FY05 that

is expected to be filled by annual disbursements of the future World Bank Structural adjustment

Credit, if implementation of agreed benchmarks are satisfactory.

While the additional fiscal resources will finance permanent increases in poverty reduction

expenditure, some of the transitory increase in deficits will finance once-off expenditures with

long tern returns by: (i) capitalizing G.P./pension funds; (ii) accelerated repayment of debt (iii)

financing the large backlog of rehabilitation (not recurrent maintenance) of roads and irrigation

infrastructure in poor conditions; and (iv) funding severance payments for civil servants. At the

end of the program period these expenditures will have created significant fiscal space for the

Government and their curtailment will not affect normal current expenditures.

Federal Tax Revenue Transfer Projections

Under the fiscal framework agreed under PRGF program, Federal CBR taxes are projected to

grow at 10.5% p.a. during FY02-FY06, with direct taxes projected to increase by 9.4% p.a.,

central excise duties by 11% p.a., and sales taxes by 17% p.a: Revenue from custom duties is

expected to remain more or less unchanged. Based on these figures and the assumption that the

new NFC Award would not alter the revenue sharing formula between the federal and provincial

government on the aggregate, federal divisible pool tax transfers to Sindh are projected to

increase by 11.2% p.a. during FYO2-FY06.

78

Provincial Revenue Measures

Revenue measures will be a key part of the Medium-Term Fiscal Restructuring Plan. In general,

tax measures will be taken covering all the major taxes including property, MVT, registration,

professional taxes, AIT, stamp duties and abiana collections. The revenue targets under the

MTFRP are presented in Table 4, next page.

The Agriculture Income Taxes (AMI)/land revenues and the abiana collection are two major

sources of untapped revenue potential in Sindh. In the case of the Agriculture Income Tax and

Land tax, the Government of Sindh has adopted the recommendations of the a task force to

implement the following measures i) removing the land threshold for agricultural income taxes

and instead making it income based (i.e. applicable on all incomes over Rs. 80,000); (ii)

computerization of revenue records, collection systems and the crop assessment system starting

from the four major districts to cover all districts by FY 04; (iii) timely issuance of bills of

assessment by the Tapedars to the Khatedars; (iv) using partial satellite imaging to make

independent assessment of agricultural income tax/land tax potential; and (v) using independent

assessments of by the Irrigation Department to supplement this assessment. These

recommendations are expected to go a long way in checking corruption, in making the system of

abiana and AIT assessment more transparent and in mobilizing additional resources. It will also

represent a major shift from the traditional, outmoded revenue assessment and collection system

in the rural sector towards the institution of one that is modem and scientifically based.

In the case of Abiana, or irrigation rate collections, the GoS is gradually extending the authority

of the Sindh Irrigation Development Authority (SIDA) and Area Water Boards and Farmer

Organizations under it to increase cost recovery, which is currently only a third of operations and

maintenance costs. Farmers Organizations are encouraged to set water rates, make assessments

and retain cost recovery proceeds. The GoS aims to increase of water charge collections by 20%

p.a. through a combination of improved collection and expansion of base and through rate

increases as needed. The improvement in collections and coverage is expected to occur though

the efforts of the newly set up Sindh Irrigation Development Authority and the farmer based

Area Water Boards and Farmer Organizations who have been given the incentive of retaining a

share of the proceeds for the maintenance of their infrastructure. The GoS recognizes that

although path-breaking work has been carried out in the area of property tax resulting in a large

increase in forecasted property tax revenues in FY 02 considerable room exists for improvement.

Some of the proposals under discussion are to give incentives for compliance while imposing

penalties for delays in payment, a review of the exemptions and equity of the newly installed tax

system in not fully capturing the element of "pugree" (goodwill) of commercial properties etc.

To simplify tax collection, plug leakages and make the motor vehicle tax more elastic and

buoyant the provincial government desires to change its mode of collection from the present flat

rate tax per vehicle to a levy on fuel consumption. The present mode of collection other than

being inelastic is ridden with innumerable administrative complications and inefficiencies,

including a cumbersome tax collection method involving regular vehicle inspection with high

incidence of leakage. The change in the mode of collection would also make the tax more

equitable by creating a direct linkage with road usage. This institutional arrangement will also

eliminate existing distortions whereby vehicles get registered and pay tax in one province while

79

essentially plying in another. However, if the MVT is not replaced with a fuel consumption tax,

then the existing flat rates will be indexed.

From FY 2003 the Registration rates applicable to different categories of vehicles have been

raised. Moreover, it is being proposed that penalties be levied for delayed payments of the annual

road tax at graduated rates, with a minimum of 25% of the prescribed rate for arrears of one year

and a maximum of four times the rate for periods exceeding three years.

The existing provincial professional tax is based on an inelastic, flat rate based, antiquated

structure riddled with anomalies in respect of assessee categories and applicable rates. The

Government of Sindh recognizes the need, and is determined, to completely overhaul both the

structure and system of collection. To this end, the present professional tax payable by all

Income Tax assesses will be replaced by a tax to be collected with the MWT. This change is

expected to result in the quadrupling of the revenue from this source over the program period.

Furthermore, a proposal that recommends its linkage to sales/turnover in the case of commercial

enterprises is under discussion with the Federal Government. To replace it with a professional ad

valorem tax on turn over, the GoS is examining the following options: a) its collection through

the CBR's Collectorate for GST; b) for commercial establishments like shops, retails outlets not

currently assessed for GST, the collection could be on the basis of turn over accepted in the most

recent income tax assessment order of the related enterprise, again collected by the Sales Tax

Collectorate; and c) enterprises presently exempted from GST, such as Banks, Schools, and

Private Hospitals, to become liable for the professional tax/businesses licensing fees on per

branch basis.

Table 5.4: Sindh - Revenue Receipts, 1995/96 - 2005/06

(Rs. Million)

1999-00 2000-01 2001-02 2002-03 Projections Growth

Actual Actual P.E. P.E. 2003-04 2004-05 2005-06 02 - 06

Current Receipts 55,416 61,575 72,859 80,726 89,831 100,115 111,958 11.3

Tax Receipts 41,257 47,626 55,761 62,719 66,723 75,350 85,330 11.2

Fed. Tax Transfer 35,921 40,479 47,599 53,011 55,810 62,807 70,954 10.5

Direct Taxes 8,949 10,048 11,914 13,269 12,895 14,829 17,054 9.4

Sales Tax 9,623 12,932 15,651 18,763 21,870 25,150 28,923 16.6

Customs 5,174 5,272 5,772 6,004 4,954 5,325 5,725 -0.2

E.D.on Nat. Gas 1,762 2,014 2,288 2,547 2,644 2,908 3,199 8.7

Surcharges 5,977 6,384 7,600 8,277 7,955 8,552 9,407 5.5

Other Fed. E.D.s 4,436 3,828 4,373 4,149 5,493 6,043 6,647 11

Federal Grants 6,700 5,476 7,217 6,981 8,006 8,506 9,057 5.8

Fed. Non-Dev

Grant

6,700 4,528 4,137 2,559 5,006 5,506 6,057 10

Fed. Dev Grants 948 3,080 3,000 3,000 3,000 -0.7

Provincial revenue 12,794 15,621 18,043 20,735 26,015 28,802 31,947 15.4

Provincial taxes 5,335 7,147 8,163 9,710 10,913 12,543 14,376 15.2

Direct taxes 802 1,525 1,972 2,603 2,749 3,159 3,632 16.5

80

Urban IPT 201 421 987 1,322 1,339 1,513 1,710 14.7

AIT & Land Tax 117 547 540 824 821 969 1,144 20.6

Registration fee 197 257 290 341 383 441 507 15

Land revenue

(tax)

146 158 0 -45 0 0 0 -

Taxes on profess,

trades, callings

142 143 155 160 205 236 271 15

Indirect taxes 4,533 5,622 6,190 7,105 8,164 9,384 10,745 14.8

Motor vehicle tax 637 929 981 1,193 1,241 1,365 1,502 11.2

GST on Services - - 494 - 803 1,003 1,254 26.2

Stamp duties 1,772 1,814 1,841 1,878 2,456 2,873 3,304 15.7

Entertainment tax 67 60 42 31 49 53 57 7.5

Electricity duties 202 333 315 396 364 391 421 7.5

Hotel tax 91 97 57 48 65 70 76 7.5

Provincial excises 755 691 600 527 726 799 879 10

Other (mainly

infrastructure cess)

1,009 1,697 1,860 2,373 2,459 2,828 3,253 15

Provincial non-tax

revenue

7,459 8,474 9,880 11,025 15,103 16,260 17,571 15.5

Interest 381 73 15 -210 16 17 18 5

Dividends 3 3 6 7 7 8 9 10

Royalty on Gas& Oil 3,689 5,287 6,571 8,064 10,068 10,840 11,673 15.4

Civil Administration

Receipts

403 192 506 470 618 683 755 10.5

General Admn. 53 60 59 63 72 80 88 10.5

Law and Order 350 132 447 407 545 603 667 10.5

User Charges 1,189 1,224 1,268 1,306 1,668 1,865 2,139 14

Community services 99 68 100 90 116 124 134 7.5

Works 42 57 28 28 32 34 37 7.5

Public Health 57 11 72 62 84 90 97 7.5

Social Services 350 314 367 361 424 456 490 7.5

Education 264 213 198 159 229 246 265 7.5

Health 81 94 162 193 187 201 216 7.5

Others 5 8 7 9 8 9 10 7.5

Economic Services 727 842 801 864 1,113 1,269 1,501 17

Irrigation 576 633 631 668 906 1,042 1,251 18.7

Others 151 209 171 197 206 227 250 10

E.D. on minerals 13 - 0 13 15 15 15 -

Foreign Grants 19 20 13 11 1,000 1,000 1,000 195.2

Others (land lease,

sugarcane cess)

1,775 1,674 1,502 1,377 1,727 1,848 1,977 7.1

Source: SAC-Sindh (2002)

81

Urban boundary limits are being extended to include all peri-urban areas to enable land/property

earlier classified as agricultural/rural in nature but had acquired urban characteristics to be

treated as urban property for purposes of stamp duty levied on property transfers; this measure

will bring large residential and commercial areas into the tax net and assist generation of sizeable

additional revenues.

To prevent shifting of potential tax bases discussions have also been initiated with the other

provincial governments to institute uniform rates of stamp duties on financial documents and

also incorporate penalty provisions in the legislation.

Since imposition of stamp duties and registration of documents are closely linked activities and

assignments the offices of Stamps and Registration are being integrated by re-designating the

Inspector General Stamps as Inspector General Stamps & Registration under Member

Registration and Stamps in the Board of Revenue. Moreover, to plug revenue leakages the GoS

is planning to appoint qualified personnel as additional stamp inspectors (presently only 3) and

upgrading their posts.

To plug revenue leakages from excise duty on liquor the GoS plans to coordinate with the other

provincial governments to harmonize the taxation system by installing a uniform rate structure

for all provinces. As an additional measure to check evasion the GoS will also examine the

possibility of replacing the existing structure with a presumptive tax regime.

Other medium-term reform measures include: a) Renegotiations of rates of land leased out to

private businesses. This change is expected to generate a one time additional revenues in excess

of Rs. 1 billion along with faster growth in revenue collection; b) Speedy automation of the

collection systems for Professional and Property taxes and for the Infrastructure Development

Fee; c) Strengthening of the administrative and technical capability to levy and secure taxes by

hiving off the revenue collection functions of the Board of Revenue to an essentially autonomous

authority/department in which the revenue raising responsibilities of the Excise and Taxation

Department will be merged. This new institution will function under the authority of the Finance

Department. The upgrading of skills, the creation of appropriate incentive structures and the

computerization of the land and property tax records will help enhance the tax administration

capabilities of this agency; d) Launching of resource mobilization studies to develop additional

proposals for consideration as resource augmentation measures.

Financing

The financing projections for the MTFRP is also presented below in Table 5 below. The key

features of financing are the following: (i) there is a significant increase in projected foreign

financing (shown under foreign debt), which have been identified in detail but then have been

discounted by 25%; (ii) there is an accelerated repayment of Federal CDL loan repayments. In

addition to the projection of Rs. 1.4 billion repayment per year, another Rs. 6.7 billion in

accelerated debt repayment have been added; (iii) financing from general provident funds

receipts or various public accounts and cash balances are stopped, in the latter case from FY 04.

This reflects GoS's aim to carry out a full reconciliation of the assets and liabilities of these funds

over the next year.

82

Table 5.5: Sindh - Available Financing (Rs. Million)

99-00

Actual

00-01

Actual

01-02

P.E.

Projections

02-03 03-04 04-05 05-06 Total

Fiscal Balance 416 2,016 -1,033 -3,833 -5,630 -5,415 -656 -15,534

Available Financing

(net)

-416 -2,016 -1,033 3,833 5,630 5,415 656 15,534

Public Debt (net) -1,852 -4,110 -3,215 -2,483 -807 -1,216 656 -3,850

Receipts 6,317 4,022 3,316 3,749 6,034 6,348 6,690 22,821

Repayments 8,168 8,132 6,531 6,232 6,841 7,564 6,034 26,671

Domestic Debt (net) -1,854 -2,400 -2,944 - - - - -

Receipts - - - - - - - -

Repayments 1,854 2,400 2,944 - - - - -

Federal Debt 3 -1,315 -1367 -3,555 -3,621 -3,689 -1,368 -12,233

Receipts Payments 2,645 - - - - - - -

Repayments 2,642 1,315 1,367 3,555 3,621 3,689 1,368 12,233

Floating Debt 0 0 0 0 0 0 0 0

Receipts 3,672 2,685 150 173 190 209 230 802

Repayments 3,672 2,685 150 173 190 209 230 802

Foreign debt - -395 1,096 1,072 2,814 2,473 2,024 8,383

Receipts - 1,337 3,166 3,577 5,844 6,140 6,461 22,022

Repayments - 1,732 2,070 2,504 3,030 3,667 4,437 13,638

State Bank

Provident Fund (net) 2,103 2,172 2,389 0 0 0 0 0

Receipts 3,742 3,348 3,683 3,867 4,060 4,263 4,476 16,666

Payments 1,639 1,176 1,294 1,423 1,565 1,722 1,894 6,604

Changes in stock of

payment arrears

- -5,519 -6,608 -2,500 - - - -2,500

Total Cash Balance -667 5,441 6,401 2,566 2,566

Net Capital Receipts 1,897 -324 -350 - - - - -

Net Receipts from

Deposits & Adv.

1,159 3,847 3,500 - - - - -

Net Receipts from

Remittances

105 99 200 1,300 - - - 1,300

Net Receipts from

Department Acts.

3 -2 - - - - -

Net Receipts from

Govt. Accounts

-58 18 - - - -

Cash Balance

Utilization

-3,772 1,802 3,053 1,266 - - - 1,266

Projected IDA

Adjustment

Financing

6,438 6,631

83

CHAPTER 6. MONITORING AND EVALUATION MECHANISMS

The I-PRSP for Pakistan provides an elaborate framework for monitoring poverty outlining the

various data and technical issues surrounding the choice of indicators to track progress on

poverty alleviation as well as the output indicators that would provide continuous feedback to

policy makers in the progress being made to realize the strategic goals. The latter is especially

useful to identify bottlenecks, set priorities and reorient strategies to reach the target goals.

The implementation of the national monitoring efforts is underway and few key issues are being

actively addressed. These include:

Setting baselines and targets for long term poverty indicators: While Pakistan has a good

household survey that can provide the basis for tracking long term indicators associated with

poverty in some cases like education where there is more than one data base there is need to

reconcile baseline information. This will be crucial for tracking progress in a consistent manner.

Setting an Official Poverty Line: Pakistan is one of very few countries in South Asia with no

official poverty line, which is an essential issue to resolve. A regional workshop sponsored by

World Bank and Pakistan institute for Development Economics has helped in building

consensus, which should result in the selection of an official poverty line.

Setting Provincial targets and goals: Given the inter-provincial disparities in poverty and its

associated indicators the exercise of setting credible targets for individual provinces is an

outstanding challenge. This can only evolve as the process of devolution gets fully implemented.

Monitoring output indicators: Tracking progress over shorter spans of time is crucial especially

for service delivery and targeted poverty programs. Triangulation with the expenditure tracking

exercise will provide a quick and reflective diagnostic of progress in these areas; World Bank

and DFID are working with the Government to launch the effort.

The Federal PRSP Coordinators office is constantly attempting to ensure consistency across the

provinces in terms of the monitoring and evaluation framework. They have issued a set of

standard and detailed M&E indicators for health and education that are presented below as

Tables 6.1 and Table 6.2.

The key matrix defining the key poverty targets and the data sources and responsibility of

different organizations are set out in Table 6.3 below:

84

Table 6.1: HEALTH INDICATORS Indicator Recommended Source of

information

Frequency of Data

Collection

Availability of Baseline

information

Utilization Rates of First

Level Care Facilities

(Curative & Preventive)

BHUs and RHCs

HMS/EPI Register

Crosscheck with CWIQ

Disaggregated by province

district and gender/MICS.

Initially biannual

subsequently quarterly

Available

Proportion of the population

covered by Lady Health

Workers

DOH records to determine

no of LHWs multiplied by

813 Crosscheck with CWIQ/

occasional survey

Disaggregated by province

and district/ MICS.

Initially biannual

subsequently quarterly

Needs calculation from

available data M/S to

provide data to HMIS Cell/

MICS.

Immunization coverage of

children completed courses

of all six vaccinations (DPT

1-3, measles, BCG, polio)

SPI, MIS/CWIQ Cross

check with PIHS occasional

surveys Disaggregated by

province, district and gender

Initially biannual

subsequently quarterly

EPI MIS available but

limited reliability, PIHS is

biennial / MICS.

Percentage of births attended

by skilled birth attendants–

doctors, LHVs, nurses &

midwives

CWIQ cross-checked by

PIHS Disaggregated by

province and district/ MICS.

Annual PIHS provides biennial data/

MICS.

Number of skilled female

birth attendants doctors,

LHVs nurses and midwives

but not TBAs

Initially DOH, later HMIS

Disaggregated by province

and district

Annual Data can be completed from

DoH record

Number of skilled female

health workers lady doctors,

LHWs, LHVs and nurses

DoH, LHW MIS, HMIS Annual Will need to be compiled

Number of FLCFs meeting

staffing norms Doctors &

LHVs are the key staff to

monitor

District Health Office/

HMIS/ BOS

Bi-Annual To be re-framed.

Availability of all four

contraceptive supplied from

FLCFs

Prov. Health Department/

District Health Office/ BOS

Bi-Annual To be re-framed.

85

Table 6.2: EDUCATION INDICATORS Indicators Recommended Source of

information

Frequency of Data

Collection

Availability of Baseline

information

Number of functional

schools (primary and

middle schools separately)

it has a teacher and

students and teaching is

taking place.

Should include all primary

------- and high schools as

well

NEMIS and EMIS

Disaggregated by province

and district

Annual Information on

functioning schools is

collected but the EMIS

only reports on total

schools. This information

is available at the

provincial level from each

EMIS Centre.

Percent of trained teacher

(primary and middle

schools separately)

A teacher with a minimum

--- primary Teacher

Certificate or Matric for

primary level and teacher

with a minimum

qualification of CT or an

F.A. or F. Sc for the

middle level.

An additional indicators

for service training will

also be developed

NEMIS

Disaggregated by province

and district

Annual Available

Lack of Teacher Province

(primary and middle

schools) No teacher

present on a particular day.

CWIQ Survey

Disaggregated by province

and district/ MICS

Periodic No data available in

NEMIS and PIHS will

need to be added to new

CWIQ survey

Percentage of sanctioned

staff strength filled

(primary and middle

schools) i.e. strength of

each schools as indicated

in the SNE and the number

of teacher actually

working the information

on staff should include

only teaching staff and not

administrative or support

staff

NEMIS

Education Department

Disaggregated by province

and district

Annual Data Available

Percentage of schools with

sanitary facilities, water

supply, electricity, and

boundary – (primary and

middle schools)

NEMIS

Disaggregated by province

and district

Annual Data Available

86

Table 6.3: Monitoring Indicators Under GoS Reform Program (* = Corresponding to National PRSP Targets)

Indicators Targets (Targets are from latest year to

FY 06) Institutional Assessment for

Monitoring

Growth*

Poverty (Basic Needs)*

3.3% to 5.2% per annum

Overall from 36.7 percent in 2000/01 to

28 percent in 2006

Rural from 52.2 percent to 44 percent

and Urban from 14.9 percent to 10

percent over this period.

Overall Monitoring Responsibility:

Planning and Development

Department

Source for Poverty Data: PIHS Survey

every two years.

Public Finance:

Provincial Tax Revenue Growth

15.2% annual growth of revenue

AIT and irrigation charges collection

growth by 20% p.a.

Quarterly Fiscal Monitoring Reports,

Annual Budget Statements of

Department of Finance, and Annual

Budgets, Produced by the Department

of Finance

Share of education and health in current

expenditures*

From 28% of expenditures in FY 01 to

39% in FY 06

-

Operations and Maintenance From 9% (FY 01) to 16% of all

expenditures

Quarterly Fiscal Monitoring Reports

of the Department of Finance

Development Expenditures From 9% (FY 01) to 18% of all

expenditures

Planning & Development

Department’s Annual Report

Timely, comprehensive, reconciled fiscal data

eventually using modern chart of public

accounts

Civil Accounts Reconciliation from

80% to 95%.

Department of Finance/Accountant

General’s Office. Quarterly Fiscal

Monitoring Report.

87

Education and Health:

Gross primary enrollment rate*

Gross Female Primary enrollment rate*

From 60% to 80% (FY 05)

From 41% to 60%

Annual SEMIS, Reports of the R, M,

and E cell of the Education

Department. PIHS

Number of Schools Made*

Functional Teacher Competency Testing and

Training*

88% to 100%

101,000 teachers tested and 12,000

trained

SEMIS

Infant Mortality Rate*

12 to 23 month Immunization*

TB Control Access

Births Attended by Trained Personnel*

95 to 60

49% to 80%

8% to 100%

28% to 40%

PIHS Surveys

Annual Reports of Immunization

Directorates

Third Party District Annual

Assessments

Population with Access to Safe Drinking

Water*

61% to 80% Third Party Validation Surveys

Notified Katchi Abadis (Urban Slums)

Regularized*

80% to 90% Annual Sindh Katchi Abadi Authority

Reports

Infrastructure

Proportion of Roads Classified in Poor

Conditions

Kilometers of All Weather Farm to Market

Roads*

Rehabilitation of Irrigation Infrastructure*

Temporary Employment* Generated through

KPP civil works.

50% to 70%

1400 km to 15,200 km by FY 05

1500 km channels by FY 06

From 0.25 million to 0.4 million FY 06

Annual Reports of CWD, Roads

Oversight Body, Independent Surveys

Annual Reports of CIDA/Irrigation

Department

Department of Local Government

88

Programme Management Unit

The Sindh PRSP will be coordinated through a Programme Management Unit.

Rationale

The Poverty Reduction Strategy of the Government is multi-faceted (fiscal reforms and financial

management, governance and civil service reforms, regulatory reforms, public sector delivery

systems, gender and rural urban disparities, aspect of vulnerability, etc.), multi-sectoral

(infrastructure, rehabilitation, human development, water and sanitation, support programmes,

etc) and many agencies would be involved in its implementation. Its implementation would

involve federal, provincial, and local governments. Within provincial and local governments

various departments and agencies will be implementing it. This would require coordination

between various entities and monitoring of progress of implementation and achievements of

targets. To do this, a dedicated Programme Management Unit (PMU) at a central point is

required.

Terms of Reference

The overall objective of this Unit is to ensure successful implementation of the Poverty

Reduction Strategy (PRS) by providing support to all implementing agencies in the form of

guidance, coordination, facilitation, monitoring, development of MISs, surveys and analyses, and

providing fora for resolving issues and problems. With this primary objective in view, this Unit

will:

be the focal government office for all aspects of the PRS;

coordinate with all relevant government offices and agencies that will implement

initiative under that Strategy, to ensure:

o dissemination of the PRS, policy and management decisions, and implementation

progress to stakeholders

o development of schemes and projects for achievement of the targets,

o allocations and timely releases of funds

o monitoring of the progress, and

o remedial actions in problem areas;

facilitate inter and intra government processes for timely and efficient decision making so

that:

o schemes are approved on schedule,

o timely allocations and releases are made,

o queries pertaining to PRS are addressed, and

o problems and conflicts are resolved;

monitor progress of implementation and achievement of targets;

develop and maintain MISs necessary for monitoring and generating analyses and

information for management and policy decisions;

carry out surveys for setting up benchmarks and their fine tuning, quantitative and

qualitative assessment of progress, evaluation of the PRS activities; measurement of

89

impact of the PRS activities, and to assess any extra ordinary situation (e.g. drought and

other extraneous events that may impact on poverty levels);

carry out (in-house) or arrange (out-source) research in areas relating to poverty and its

alleviation;

identify areas of slackness, bottlenecks, and procedural problems and recommend

corrective actions to appropriate authorities;

as and when required, arrange seminars, workshops, conferences, symposia on matters

and issues of poverty and strategies for its alleviation;

seek short and long term technical assistance from competent consultants to deal with

issues and initiatives in cases where there is inadequate in-house capacity, staff is

preoccupied in other activities; and/or an independent assessment or view or third party

validation is needed; and

act on any other directive relating to PRS from the competent authority.

Institutional Position

This Unit will be created within the Planning and Development Department of Government of

Sindh. It will be adequately staffed to carry out its mandate. For the first three years a major part

of its cost will be financed by a donor or multiple donors. This would require development and

approval of a PC-1 or a PC-II. Also, depending on convenience and ease of operation, a Public

Ledger Account (PLA) or a rupee imprest account to facilitate operational expenditure. On

completion of its three year tenure under the PC-I, it would become an integral part of the P&D

under its recurrent budget.

A Management and Review Committee will be constituted to provide guidance to Unit and to

periodically review its performance and activities. This committee will be chaired by the

Additional Chief Secretary (ACS) and its membership will include:

Senior level Officials from Departments of Finance, Education, Health, Irrigation, Rural

Development, Agriculture, Industries and Local Government, Civil Works

Donor representative(s)

Three District Coordination Officers (DCO) on rotational basis for period of one year

A representative of NGOs of repute

Director of the PMU

The Director of the PMU will serve as the Member/Secretary of the Committee.

The Unit will consist of a Director, two Deputy Directors, four Assistant Directors and support

staff headed by Senior Chief / Secretary Poverty Alleviation Affairs, Planning & Development

Department, Government of Sindh. The Unit will be equipped with all necessary furniture,

fixtures and equipment (computers, printer, photocopiers, fax machines, scanners, etc).

90

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