In the last 1 year alone, more than 12.5 million Pakistanis have gone below the poverty line. World bank has given a shocking information that now nearly 40 percent of people in pakistan are struggling to meet their basic needs. Poverty in pakistan rose from 34.2 percent to 39.4 percent in one year, with about 12.5 million people living on less than $3.65 a day (about 303 indian rupees), the World bank said in a statement. About 95 million Pakistanis now live in poverty. pakistan has become the country with the lowest per capita income in South Asia and the highest number of out-of-school children in the world.
According to the World bank, Pakistan's average per capita growth rate between 2000 and 2020 was just 1.7 percent. And this is less than half the average per capita growth rate of South Asian countries. During the 1980s, pakistan had the highest per capita income in South Asia. But now it is very low in South Asian region. Tobias Huq, Economist for pakistan at the World bank said pakistan is facing a serious economic and human development crisis and major policy changes are needed at this juncture. He said Pakistan's economic model no longer reduces poverty, and people's living standards have fallen compared to their peers.
Najy Benhassine, acting director for pakistan at the World bank, said this could be the moment for a major policy shift for Pakistan. But these policy decisions are heavily influenced by some powerful issues, including military, political and business leaders, Najy Benhassine said in his book. He said that pakistan will face problems like inflation, electricity tariff hike, severe climate changes and growth. In its draft policy notes, prepared by the World bank with the help of all stakeholders, Pakistan's next government should pay close attention to agriculture and real estate and increase taxes on them ahead of the new election cycle.
The World bank recommends that pakistan immediately raise its tax-to-GDP ratio by 5 percent, while reducing spending by 2.7 percent of GDP. It is worth noting that these measures are aimed at restoring stability to the economy and steering it towards a responsible fiscal path. According to a Washington-based firm, their proposal to raise the revenue-to-GDP ratio by 5 percent includes eliminating tax breaks and increased tax burden on real estate and heavily subsidized agricultural sectors.
Currently, Pakistan's tax collection potential stands at 22 percent of GDP, but according to a World bank report, the actual rate lags significantly at 10.2 percent.
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