Poverty Reduction Strategy Paper On Sindh

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 Expenditure1998-99 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 WaterSindh 23
Table 2.21 Nature of toilet facilities by regionSindh 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 sourceSindh 1998-99 29
Table 2.30 Sources of Consumption expenditureSindh 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 Sindhs 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 countrys electricity is
generated in Sindh. Of the 3.16 million tons of coal production, Sindhs 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 awards
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 Pakistans area and accommodates 23 percent of Pakistans 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 Sindhs agricultural and manufacturing sector in GDP is significant. Sindhs
capital is Karachi, which is the commercial hub and the gateway of Pakistan. This city handles
95% of Pakistans foreign trade; contributes 30 % in Pakistans 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; countrys 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. Sindhs contribution in countrys 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.

26.6
29.3
26.3
32.2
22.6
19.6
52.2
48.4
38.5
36.7
24.1
15.7
34.7
31.8
29.5
26.6
0
10
20
30
40
50
60
FY93 FY94 FY97 FY99 FY01
%

P
o
v
e
r
t
y

h
e
a
d
c
o
u
n
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 Sindh
1
. 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
20
19
37
12
13
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 Expenditure1998-99
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 Pakistans agriculture. 41 percent of total rice, 21
percent cotton, 31 percent sugarcane and 14 percent of total wheat are produced in Sindh. In
addition, Sindhs share in fruits production is also high; Banana accounts for 71 percent of total
Pakistans 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
R
a
i
l
f
a
l
l

(
M
i
l
l
i
m
e
t
e
r
s
)
0
1
2
3
4
5
6
7
F
r
e
q
u
e
n
c
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 2
nd
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. Sindhs 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
R
s

i
n

B
i
l
l
i
o
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 Pakistans 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
Sindhs 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 Sindhs 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 Sindhs 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. Womens 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
Womens 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

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

Pakistans 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
2
nd
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
[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
Primary Level .
1
st
Quintile 74 55 65 49 23 36
2nd Quintile 71 52 61 68 37 53
3
rd
Quintile 85 72 78 72 42 58
4
th
Quintile 98 94 96 87 44 64
5
th
Quintile 110 96 103 105 68 88
Middle Level
1
st
Quintile 27 31 29 18 2 12
2nd Quintile 31 43 36 35 6 21
3
rd
Quintile 38 57 46 35 11 23
4
th
Quintile 67 64 65 34 7 23
5
th
Quintile 85 89 86 51 26 40
Matric Level
1
st
Quintile 39 11 23 25 2 15
2nd Quintile 35 11 23 46 2 23

21
3
rd
Quintile 57 41 49 25 13 19
4
th
Quintile 61 59 61 58 24 44
5
th
Quintile 104 106 105 74 27 53
[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 girls enrolment at primary level across income
groups. Girls enrolment has been found positively associated with income not only in Sindh but
also in other provinces. However, girls 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 1
st
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)
Quintile Male Female Both Male Female Both
1
st
quintile 90 94 92 99 97 98
2
nd
quintile 83 65 75 96 98 97
3
rd
quintile 52 64 57 96 98 96
4
th
quintile 52 49 51 96 97 96
5
th
quintile 19 24 21 90 95 92

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

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
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

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
1
st
quintile 99 20 94 4
2
nd
quintile 99 28 93 7
3
rd
quintile 99 38 93 7
4
th
quintile 100 32 92 7
5
th
quintile 99 42 94 8

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 WaterSindh [ 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 RegionSindh [ 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

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

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. Females 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
GenderSindh 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 Sindhs 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

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 sourceSindh 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

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 expenditureSindh 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

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 peoples 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.


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.

47
(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

48
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.


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.


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 Sindhs
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.

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.


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.


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.


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.

55
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--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

56

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.


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.


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.

57
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 provinces 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 provinces 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

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.


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

61
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 I rrigation

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.


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:

64

(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. Todays 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 Governments 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.

67

A Provincial Steering Committee, including civil society members, would oversee these
activities, and provide a vehicle to raise peoples awareness of the needs and rights of women.

Children constitute majority of Pakistans 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.

68

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 governments 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, NGOs are also contributors to policy
formulation, planning, and research. NGOs feature strongly in the Governments 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

Pakistans 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 awards 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 Grants
1
949 3,080 2,800 - - -
OZT Grants
1
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
Wages
2
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 1,000
4
- -
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 Item
3

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 Banks 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
and district/ MICS.
Initially biannual
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
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
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
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

and district
Annual Available
Lack of Teacher Province
(primary and middle
schools) No teacher
present on a particular day.
CWIQ Survey
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

and district
Annual Data Available
Percentage of schools with
sanitary facilities, water
supply, electricity, and
boundary (primary and
middle schools)
NEMIS

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
Departments 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
Generals 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
References

ADB (2000). Sindh Rural Development Program Feasibility Study. Asian Development Bank

ADB (2002). Poverty in Pakistan: Issues, Causes and Institutional Responses. Asian
Development Bank, Islamabad.

Alderman, H. and M. Garcia (1992). Food Security or Health Security? Explaining the Levels of
Nutrition in Pakistan. Washington D.C: World Bank Working Paper Series.

Arif, G. M. (2000). Recent rise in poverty and its implications for poor households in Pakistan,
The Pakistan Development Review, 39:4, pp. 1153-1170

Bhutta, Zulfiqar A., Zahid Ali Memon, Shujaat Zaidi, Farrukh Raza and Adnan Hyder (2003). A
verbal autopsy survey of perinatal mortality in rural Pakistan. A project funded by CHNRI
(Global forum for health research)

Bhutta, Zulfiqar Ahmed (2002). Sindh Maternal Nutrition and LBW Project (Phase 1-3). Project
of The Aga Khan University in collaboration with UNICEF

Kardar, Shahid H (2003) A Medium Term Budgetary Framework for Selected Departments in
Sindh. A Report for the Government of Sindh. Systems Limited Lahore

Khero, Ghulam Sarwar (1997) National Finance Commission: The Sindhs Perspective
Pakistan Administrative Staff College Lahore. Unpublished.

Pakistan Participatory Poverty Assessment, Sindh Province Report (2002). Draft report,
Government of Sindh, Planning and Development Department.

Pakistan, Government of (1990). Census of Agriculture. Agricultural Census Organization,
Ministry of Food, Agriculture and Livestock, Islamabad.

Pakistan, Government of (1998). Census of Population. Population Census Organization,
Ministry of Population Welfare, Islamabad.

Pakistan, Government of (2001). Household Integrated Economic Survey 1998-99. Federal
Bureau of Statistics, Islamabad.

Pakistan, Government of (2001). Labor Force Survey 1999-2000. Statistics Division: Federal

Pakistan, Government of (2001). Poverty in the 1990s. Draft Pakistan Integrated Household
Survey. Federal Bureau of Statistics, Islamabad

Pakistan, Government of (various issues). Pakistan Integrated Household Survey . Federal

91

Qureshi, S.K. and G.M.Arif (2001). Profile of Poverty in Pakistan 1998-99. MIMAP Technical
Papers Series No. 5. PIDE, Islamabad.

Sindh, Government of (2001) Sindh Education Profile: Schools and Colleges. Sindh Education
Management System.

Sindh, Government of (2002). Structural Adjustment Credit Program, Sindh, Finance Division

Social Policy Development Center (2001). Social Development in Pakistan, Towards Poverty
Reduction, Annual Review 2000. Oxford University Press.

United Nations (2002). UN Special Session on Children, 8-10 May 2002, New York.

World Bank (2001). Poverty in Pakistan in the 1990s: An Interim Assessment, South Asia
Region, The World Bank.

World Bank (2002). Pakistan Poverty Assessment: Poverty in Pakistan: Vulnerabilities, Social
Gaps, and Rural Dynamics. The World Bank. Washington D.C.

Poverty Reduction Strategy Paper On Sindh

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Poverty Reduction Strategy Paper On Sindh

Uploaded by

Copyright:

Available Formats

POVERTY REDUCTION STRATEGY PAPER

You might also like