Landlessness and Rural Poverty in Pakistan

Although reducing rural poverty has been the key agenda of economic reforms in Pakistan, the rural poverty continued to rise during the 1990s. The causes of rural poverty are complex and multidimensional. The rural poor are quite diverse both in the problems they face, and the possible solutions to these problems are also different. The paper uses the most recent household data set available—PIHS 2001-02—to examine the causes of rural poverty, as to what accounts for its persistence and what policy measures should be taken to alleviate it. Poverty estimates using official poverty line suggest the high prevalence of rural poverty ranging from 39 percent to 48 percent in all provinces. Rural poverty is found to be strongly correlated with lack of asset in rural areas. The unequal land ownership in the country is found to be one of the major causes of rural poverty, as poverty level was the highest among the landless households followed by non-agriculture households. The incidence of landlessness is common in rural areas. About 67 percent households own no land in the country. Unusually, just 0.3 percent households own 55 and above acres of land across the country, suggesting a highly skewed landownership pattern. Gini Coefficient of landholding suggests that Punjab has the most unequal landownership pattern, followed by the NWFP, Sindh, and Balochistan. The highly unequal land distribution seems to have resulted in tenancy arrangements such as sharecropping, resulting in high prevalence of absolute poverty particularly in Sindh. A broad-based land reform programme, including land redistribution and fair and enforceable tenancy contracts together with rural public works programmes and access to credit, is critical to reducing rural poverty in Pakistan.