SOCIAL

DEVELOPMENT
IN PAKISTAN

ANNUAL REVIEW 2009-10

SOCIAL POLICY AND

DEVELOPMENT CENTRE
KARACHI
 © 2010 by Social Policy and Development Centre (SPDC)
Karachi, Pakistan

All rights reserved. No part of this publication may be reproduced,

stored in a retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording,
or otherwise without prior permission of SPDC.

Photographs: Majid Hussain

Published by Social Policy and Development Centre

Printed in Karachi by Times Press (Pvt.) Ltd.
ISBN 978-969-8407-10-0
 FOREWORD
FOREWORD
he South Asia region in general and Pakistan in particular are confronted with

T the daunting task of addressing the issues of terrorism, extremism and

violence. Pakistan, undoubtedly, has been most adversely affected by the
response of the policies initiated by the United States following attacks on the twin
towers of World Trade Centre. The international political behavior not only created an
urgency to redefine the security framework amid fears of transnational threats but
have had its affect on the global economic development. Today, seemingly the
international relations and domestic policy have become increasingly similar and
intermingled.
Though the regional political developments are blamed for the internal political
developments in Pakistan, the failure of the respective governments in addressing
the socio-economic disparity (visibly disturbing) cannot be overlooked, neither can its
role in breeding violence and extremism be undermined. The Annual Review of
Social Development 2009-10 deals with the various facets of the existing security
related problems confronted by the government and society and its consequences for
the socio-economic development.
Chapter 1 examines the nexus that exists between the regional and the internal
developments and its consequential repercussion that caused a change in the ways
societies either see or interpret themselves. The chapter also discusses the systemic
failure of the respective governments that have caused despondency, violence and
lawlessness besides creating space for the emergence of militant groups. Chapter 2
quantifies the cost of the war on the economy of Pakistan. Characterising the crises
as multidimensional, the chapter also examines the dislocation of economic activity,
high losses of life and property and its impact on the investment climate besides the
higher expenditure incurred on defence and police. Chapter 3 look into its impact on
the budgetary priorities of federal and provincial governments. It focuses on the
government's security related spending and provides a careful province-wise
disaggregated examination of budgetary priorities.
Chapter 4 highlights that the higher public spending on security has reduced
spending on social services and have caused a slowdown in the pace of social
development. It also discusses in detail the progress made in meeting the MDG
targets. Whereas, Chapter 5 looks at the consequential repercussions of the conflict

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
on the lives and livelihoods, and provision of normal public services to the local
population. The chapter also looks at the direct and indirect cost of the war on the
provincial economy. Chapter 6 is based on the findings of a household survey in the
selected districts of Khyber Pukhtunkhwa province. The chapter also discuss the
impact of conflict on socio-economic status of the household in the affected areas
besides looking at its impact on poverty and unemployment, household economic
status, child education and labor force participation and mental health of the affected.
Chapter 7 helps in bringing forward the difficulties encountered by the civil society
due to the changed security environment and their responses to the challenges
caused by the on-going conflict and terrorism and its impact on social development.
The chapter also helps understanding the civil society perspective on the increasing
violence, intolerance and terrorism. The concluding chapter stresses the need for a
consensus based nations strategy for addressing the issue in totality. We earnestly
hope that the analyses presented in the report would benefit both the government
and society.

Khalida Ghaus
Managing Director

III
 TEAM FOR THE PREPARATION OF THE REPORT
TEAM FOR THE
PREPARATION OF
THE REPORT

SPDC Research Team Khalida Ghaus

Muhammad Asif Iqbal
Haroon Jamal
Rafia Ghaus
Muhammad Sabir
Iffat Ara
Nadeem Ahmed
Nikhat Sattar
Meher Marker Noshirwani
Naveed Aamir
Tabinda Areeb
Rafea Anis
Naeema Kazmi
Rabia Sidat
Mehak Ejaz

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
Zia-ul-Haq Khan
Bilal Ahmed
Samar Zuberi

Peer Reviewer Hafiz A. Pasha

Consultant Aisha Ghaus-Pasha

Design and Layout Rizwanullah Khan

V
 SOCIAL POLICY AND DEVELOPMENT CENTRE
SOCIAL POLICY AND
DEVELOPMENT CENTRE

stablished in 1995, SPDC is a private sector research organization

E that serves as a focal point for policy-relevant research on social

sector development. Using a multidisciplinary approach, the Centre
assists both public and private sector institutions including non-
governmental organizations (NGOs) to plan, design, finance, execute
and manage social sector programmes in a cost-effective manner. The
results of its research are made available to policy makers, interested
groups and general public to promote informed discussion and action on
vital social sector issues.
SPDC being an independent and non-partisan organization
cooperates and collaborates with organizations/institutions working on
issues of common concerns (both) within Pakistan and abroad. Being an
autonomous and independent organization, the center identifies its own
research agenda and parameters remaining within the mandate and
objectives identified. Key activities include research and policy analysis in
the areas of governance, poverty, public finance and macro economy,
and gender; social sector government database support; pilot project
monitoring and evaluation; training of personnel in government, private
sector and non-governmental organizations; and information
dissemination through publications, conferences, seminars and
workshops.
In addition to the core funding from International Development
Research Centre (IDRC - Canada) and the Royal Norwegian Embassy’s
Support to the Gender Research Program, SPDC generates its alternate
funding through contract research.
The Board of Directors consists of eminent personalities selected for

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
their commitment to social sector development and their belief in the use
of analytical tools in developing public policy to ensure sustainable social
sector development. The Board members are:

Moeen Qureshi - Patron

Sartaj Aziz - Chairman
Hafiz A. Pasha - Vice Chairman
Javed Jabbar
Manzoor Ahmad
Rafiq A. Akhund
Saeed A. Qureshi
Zeba A. Sathar
Khalida Ghaus - Managing Director

Social Policy and Development Centre

15-Maqbool Co-operative Housing Society
Block 7 & 8, Karachi 75350, Pakistan
Tel: (92-21) 111-113-113
Fax: (92-21) 4534285
Website: http://www.spdc.org.pk
E-mail: [email protected]
VII
 CONTENTS
CONTENTS

Foreword III
Team for the Preparation of the Report V
Social Policy and Development Centre VII
List of Acronyms XIV
Executive Summary XVII
Views of a Leading Social Sector Personality XXVII

Chapter 1 1
Contextualising The Relevant Theories 3
Security Situation of
Pakistan Regional Developments 5
The Making of the Problem 8
Systemic Failure in Pakistan 9
Conclusions 13

Chapter 2 15
Impact of the War on Governance Indicators 17
Terror on The
Economy State of the Economy 18
Economic Cost of War on Terror 20

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
Chapter 3 25
Fiscal Impact of the Security Related Expenditures 26
Security Crisis
Public Expenditure Priorities 29
Pro Poor (PRSP) Spending 35
Future Outlook of Social Development 39

Chapter 4 47
Social Development Key Fiscal Developments 48
During Security Crisis
Reduction of Extreme Poverty 49
Basic Education and Youth Literacy 50
Progress in Health Related MDGs 52
Access to Drinking Water 54
Conclusions 54 IX
 CONTENTS
Chapter 5 57
The Provincial The Structure and Trend of Economic
Economy of Khyber Growth in KPK 59
Pakhtunkhwa
Tax Collection 71
The Pattern of Employment in
Khyber Pakhtunkhwa 72
Impact on Crisis on the Social Sector of
Khyber Pakhtunkhwa 74
Future Outlook 77

Chapter 6 81
Impact of Conflict on Empirical Findings 85
Household Welfare
Poverty and Employment 86

Summary and Conclusions 100

Chapter 7 103
Response of Civil Society in Pakistan - An Overview 104
the Civil Society
Causes and Spread of Terrorism - A Civil
Society Perspective 107

Impacts of Terrorism on Civil Society 111

Responses to Terrorism 115

Conclusions 122

Chapter 8 125
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In Search
of a Solution

Appendices 131
A.1 SPDC Publications 132
A.2 Annual Reviews of Social Development in Pakistan 142

Selected Social Development Indicators 147

X
 CONTENTS
Boxes
Box 6.1 Important Channels Through which Armed Conflict
Impacts Households 83
Box 6.2 Empirics from Conflict Exposed Areas 84
Box 6.3 Sample Size and Survey Methodology 85
Box 6.4 Declining Standard of Living: Anecdotal Evidence
from the Field 91

Box 6.5 Education in a Fearful Environment 92

Box 6.6 Costly Mistakes 94
Box 6.7 A Forgotten Populace 96
Box 7.1 Voices from IDPs of Swat 112
Box 7.2 Response of Donors 116

Box 7.3 Response of NGOs to Contribute to Lasting Peace 117

Tables
Table 1.1 Incidence of Terrorism in Pakistan 2
Table 1.2 Incidence of Terrorist Attacks/Clashes in Pakistan 3
Table 2.1 Governance Indicators of Pakistan: 2009 17
Table 2.2 Major Macroeconomic Indicators of Pakistan 19
Table 2.3 Official Estimates of Loss to Economy 20
Table 2.4 Security Related Public Expenditure 21
Table 2.5 Direct Cost of War on Terror 21
Table 2.6 Indirect Cost of War on Terror 23

Table 2.7 Total Cost of War on Terror 23

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Table 3.1 Trend in Security Related Expenditures 27

Table 3.2 Composition of Federal Current Expenditures 31

Table 3.3 Composition of Provincial Current Expenditures 32

Table 3.4 MTDF Development Priorities 2005-10 33

Table 3.5: MTDF Expenditure Targets and PSDP Allocations 34

Table 3.6 Federal Development Priorities 2005-10: PSDP and MTDF 35
Table 3.7 PRSP Expenditure 36
Table 3.8 Category wise PRSP Expenditures as a Percentage of GDP 37
Table 3.9 Trend in Expenditure on Education 38
Table 3.10 Trend in Expenditure on Health 39

Table 3.11 Financial Implications of the 7th NFC Award on

Provinces as per Budget 2010-2011 41
Table 3.12 Provincial Expenditures Before and After the 7th NFC XI
Award as per Budget 2010-2011 42
 CONTENTS
Table 3.13 Provincial Current Revenue Expenditures Before and
After the 7th NFC Award as per Budget 2010-11 43
Table 3.14 Provincial Development Expenditures Before and After
the 7th NFC Award as per the Budget 2010-11 45
Table 4.1 Trend in Incidence of Poverty in Pakistan 50
Table 4.2 Trend in MDG Indicators for Goal 2 - Education 51
Table 4.3 Trend in Gender Parity Index 51
Table 4.4 Trend in Indicators of Child Health 52
Table 4.5 Trend in Indicators of Maternal Health 53
Table 4.6 Trend in Source of Drinking Water 54
Table 5.1 Composition of GDP Khyber Pakhtunkhwa 59
Table 5.2 Trend in Growth of GDP Khyber Pakhtunkhwa and Pakistan 60
Table 5.3 Composition of Agriculture Sector KPK and Pakistan 61
Table 5.4 Distribution of Crop Areas by Crops in Khyber Pakhtunkhwa 61
Table 5.5 Trend in Growth of Major Crops in KPK 62
Table 5.6 Crops by Major Districts in KPK 63
Table 5.7 Livestock Population in Khyber Pakhtunkhwa
and Pakistan 64
Table 5.8 Composition of Industrial Sector: Khyber Pakhtunkhwa
and Pakistan 65
Table 5.9 Large Scale Manufacturing in Khyber Pakhtunkhwa 66
Table 5.10 Performance of Selected Large-scale Manufacturing
items in KPK 67
Table 5.11 Location of Large Scale Industries by Districts in KPK 68
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Table 5.12 Composition of Services Sector: Khyber Pakhtunkwa

and Pakistan 70
Table 5.13 Trend in Collection of Taxes in Khyber Pakhtunkwa 72
Table 5.14aEmployment Size and Trend: Khyber Pakhtunkwa
and Pakistan 73

Table 5.14bEmployment Size and Trend KPK and Pakistan 73

Table 5.15 Youth Employment Rate 74

Table 5.16 Summary of Damaged Schools 75
Table 5.17 Summary of Damaged Health Facilities 75
Table 5.18 Summary of Damage to Houses 76
Table 5.19 Summary of Damage to Water Supply Schemes 76
Table 5.20 Damage to Sanitation Facilities in Malakand 77
Table 6.1 Household Current Poverty Status - Percentage of
XII Households Below the Official Poverty Line 86
 CONTENTS
Table 6.2 Household Employment Characteristics 88
Table 6.3 Impact on Household Earnings 88
Table 6.4 Reasons for Negative Impact on Household Income
(Compared with Year 2008) 89
Table 6.5 Sources of Household Income 89
Table 6.6 Reasons for Loss of Household Assets 90
Table 6.7 Child Enrollment and Labour Force Participation 92
Table 6.8 Reasons for Not Sending Children to School 93
Table 6.9 Causes of Death (Deaths after 2005) 94
Table 6.10 Mental Health Status 95
Table 6.11 Respondents Open Remarks on the Current Situation 97
Table 6.12 Reasons for Outmigration after 2008 98

Table 6.13 Causes of Worse Standard of Living after 2005 98

Table 6.14 IDP Related Problems in the Community 99

Table 6.15 Copying Strategy to Tackle Economic Shocks During

the Conflict 99
Table 6.16 Open Remarks about the Current Conflict 99

Charts
Chart 1.1 Militancy-related Causalities in Afghanistan
(2008 - Sept 2010) 8
Chart 2.1 The Vicious Cycle of Economic Crisis, Political
Instability, Security Breakdown and Governance Failure 16
Chart 2.2 Governance Indicators of Pakistan Comparison
between 2000 and 2009 18

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Chart 2.3 Growth in Investment 22
Chart 3.1 Composition of Security Related Expenditures in
2001-02 and 2010-11 29

Chart 3.2 Composition of Public Expenditure 30

Chart 5.1 Incidents of Terrorist Attacks 58
Chart 5.2 Share of Major KPK Crops in Total Production of Pakistan 62
Chart 5.3 Trend in Labour Force Participation and
Unemployment Rate 73

Chart 6.1 Location of Sample Districts 86

Chart 6.2 Poverty Headcount Rate: Khyber Pakhtunkhwa vs Pakistan 87
Chart 6.3 Comparative Household Poverty Status - 2010 vs 2005 87

XIII
 LIST OF ACRONYMS
LIST OF ACRONYMS
ACGR Average Cumulative Annual Growth Rate
ADB Asian Development Bank
ADP Annual Development Programs
AHQ Agency Headquarter Hospital
AJK Azad Jammu and Kashmir
APMMPIEA All Pakistan Marble Mining, Processing, Industry and
Exporters Association
ARO Aid for Refugees and Orphans
BISP Benazir Income Support Program
BOP Balance-of-Power
CBO Community Based Organization
CH Community Health
CMI Census Manufacturing Industries
CPI Consumer Price Index
CSF Coalition Support Fund
DFI Direct Foreign Investment
DHQ District Headquarter Hospital
DNA Damage Needs Assessment
FATA Federally Administered Tribal Areas
FBR Federal Board of Revenue
FCD FATA Contiguous Districts
FCR Frontier Crimes Regulation
FED Federal Excise Duty
GDP Gross Domestic Product
GDS Gas Development Surcharge
GoP Government of Pakistan
GPI Gender Parity Index
GRP Gross Regional Product
GST General Sales Tax
HIES Household Income and Expenditure Survey
IDB Islamic Development Bank
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

IDMC Internal Displacement Monitoring Centre

IDPs Internally Displaced Persons
IMF International Monetary Fund
IMR Infant Mortality Rate
INGO International Non Governmental Organizations
IPP Institute of Public Policy
ISAF International Security Assistance Force
JCDS Jobs Creating Development Society
KIBOR Karachi Interbank Offered Rate
KOICA Korea International Cooperation Agency
KPK Khyber Pakhtunkhwa
KSE Karachi Stock Exchange
LFS Labour Force Survey
LTTE Liberation Tigers of Tamil Eelam
MCH Maternal Community Health
MDGs Millennium Development Goals
MMR Maternal Mortality Rate
MoH Ministry of Health
XIV MTDF Medium Term Development Framework
 CONTENTS
NATO North Atlantic Treaty Organization
NER Net Enrollment Rate
NFC National Finance Commission
NGOs Non-governmental Organizations
NWFP North West Frontier Province
PaRRSA Provincial Reconstruction Rehabilitation and Settlement Authority
PATA Provincially administered Tribal Areas
PDHS Pakistan Demographic and Health Survey
PHP Project for Horticultural Promotion
PIHS Pakistan Integrated Household Survey
PIPS Pakistan Institute of Peace Studies
POL Pakistan Oilfields Limited
PRGF Poverty Reduction and Growth Facility
PRSP Poverty Reduction Strategy Paper
PSDP Public Sector Development Program
PSLM Pakistan Social and Living Standards Measurement
PSU Primary Sampling Unit
PTDC Pakistan Tourism Development Corporation
SIP Strategic Implementation Plan
SMEs Small and Medium Enterprises
SPDC Social Policy and Development Centre
THQ Tehsil Headquarter Hospital
TTP Tehrik-e-Taliban of Pakistan
UFLA United Liberation Front of Assam
UNDP United Nations Development Programme
USAID United States Agency for International Development
WB World Bank
WGI Worldwide Governance Indicators

NON ENGLISH TERMS:

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Bajra Pearl millet
Illaq-e-Ghair area of strangers (FATA)
Imam Islamic cleric
Jowar Sorghum
Kharif Summer crop
Khwendo Kor "a home for sisters"
Madarsah Institution of Islamic religious learning
Mujahid One who fights in the name of Islam
Operation Rah-e-Nijaat Path to Salvation
Operation Rah-e-Rast Path to Righteousness
Pashtun Ethnic identity
Quran Islam's Holy Scripture
Rabi Winter crop
Rupee/Rs. Pakistani Monetary Unit
Shariah Islamic law
Tehsil Administrative division
XV
 EXECUTIVE SUMMARY

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0 Executive Summary

XVII
 Executive Summary
EXECUTIVE SUMMARY

he regional political developments have caused a change in the

T internal political and security dynamics of Pakistan. The Annual

Review of Social Development in Pakistan 2009-10 takes a
comprehensive review of the various dimensions of the security situation
and its implications for the social and economic development.

Chapter 1: Contextualising the Security Situation of Pakistan

Chapter one discusses the regional political dynamics and its impact on
the internal security developments in Pakistan, alongwith the increasing
role played by the United States and the other coalition partner states in
the elimination of terrorism. Tracing the acceleration of violence and its
cumulative effects on Pakistan, the chapter discusses the multiple nature
of the threat confronted by the government and the people of Pakistan.
The chapter discusses the nexus that exists between mutual distrust
and mutual misunderstanding between states, along with the 'fear' that
continues to predominantly overshadow the discourse on security. The
causality factors create a situation that forces the smaller and the weaker
states to make asymmetrical concessions and opt for a less parsimonious
sub-ordinate role as seen in the case of the on-going war on terror. In
spite of the global coalition's use of the "surge strategy", the factors that
continue to prevent return to peace are the emergence of the sub-
national actors (such as terrorist/militant groups) and the different
perceptions that exist on the core and fundamental question of what
constitutes a threat.
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

The growing bilateralism between Pakistan and the United States is

viewed as a compulsion largely drawing its rationale from the urgency to
take the war on terror to its logical culmination. The US crafted Af-Pak
policy along with the conditionalities placed by the Kerry Lugar - Berman bill
are largely viewed as intrusive in its characteristic and a desire to
micromanage Pakistan affairs. Irrational international political behavior
seen in the post 9/11 period has not only brought emphasis on the need to
redefine the security framework amid fears of terrorism but have changed
the global development dynamics. The element of aggression along with
the use of the Anticipatory Right of Self Defense have caused a change in
the way societies either see or interpret themselves, and others.
The changing trend seen in the emergence of militancy, extremism,
violence and intolerance also have its roots imbedded in the systemic
failure both of institutions and social development policies initiated by
respective governments. For example, failure of the respective
governments in strengthening institutions, creating employment,
strengthening industrialization, addressing socio-economic disparity
mainly by controlling inflation, poverty and food insecurity, and ensuring
quality education and health-care, guaranteeing rule of law, have all
created despondency, violence and lawlessness. Some other factors
XVIII impeding socio-economic development are population explosion,
 Executive Summary
sluggish economic development process, low human development and
inequality in resource distribution. Population growth is the prime factor
that not only slowed down pace of economic development but also
caused food insecurity in the country. In spite of the decrease seen in
population growth food insecurity is intense, where almost half of the
population does not have access to sufficient food. No efforts have been
made to utilize the population dividend in the country by providing
adequate skill and training to the youth.
Looking at the internal dynamics of the problem, the chapter
discusses the emergence of the transnational threats that have added
complexities to the inter and intra state conflicts and have made crisis
management more daunting. Militant groups have been described as a
force multiplier. In Pakistan, the onset of the present challenge to the
socio-political structures to many is a foreign policy crisis characterized
by threat, which have generated fear and polarization particularly at
society level. Where on the one hand the United States is viewed as a
partner (at the governmental level) and an adversary (at the people's
level), on the other hand the Tehreek-e-Taliban continues to use violence
and terror to force the government to comply with its demands.

Chapter 2: Impact of the War on Terror on the Economy

Chapter 2 quantifies the cost of the war on the economy of Pakistan along
with discussing the extent of governance failure and the resulting
performance of the economy. Characterizing the crisis as
multidimensional, the chapter discusses the vicious cycle built by the
political-security- development nexus where each factor feeds into the
other and the failure on one front raises the probability of failure on all
fronts. The challenge before policy makers, therefore, is how to break the
vicious cycle. The chapter also briefly discusses the extent of governance
failure and the resulting performance of Pakistan's economy.
Lack of good governance is believed to be among the root causes of
the growing crisis in Pakistan. According to Worldwide Governance

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
Indicators, Pakistan does not compare favorably amongst the other
countries of the region. Not only is Pakistan ranked below the average in
2009, a trend analysis over time suggests that the situation of many
governance indicators has worsened since 2000. For instance, the
ranking in political stability declined from 15.9 in 2000 to 0.5 in 2009.
Similarly, the ranking came down from 24.3 to 19.3 in rule of law while it
declined from 24.3 to 13.3 in control of corruption during the same period.
However, there has been some improvement in the indicators of voice
and accountability and regulatory quality.
Pakistan's economy is faced with many challenges such as
slowdown of economic growth, decline in investment, high inflation and
higher levels of fiscal and current account deficits. The costs of
participation in the war on terror have risen exponentially with the
dislocation of economic activity, high losses of life and property and
impact on the investment climate during the decade.
Indentifying the higher expenditure on defence and police as a major
economic cost of terrorism borne by the government, an econometric
analysis shows that these expenditures would have been significantly
lower in the absence of the war on terror. Based on this analysis, the
estimated additional cost of defence and police services together was Rs XIX
 Executive Summary
290 billion in 2009-10. The total direct costs (including cost of damage to
property, higher cost of private security, etc.) increased from Rs 150
billion in 2007-08 to Rs 320 billion in 2009-10 (an increase of 115
percent). Indirect costs, which include cost to local economies and cost
of higher risk perceptions, increased from Rs 230 billion in 2007-08 to Rs
520 billion in 2009-10.
In US dollars, the total costs have increased from $6 billion in 2007-
08 to $10 billion in 2009-10. It is important to note that bilateral military
and economic assistance from the US to Pakistan has been considerably
lower than the costs of terrorism borne by the country. As such the costs
are over three times greater than the bilateral assistance forthcoming
especially from the United States.

Chapter 3: Fiscal Impact of the Security Crisis

Chapter 3 analyzes the impact of the war on terror on the budgetary
priorities of both federal and provincial governments. It focuses on the
government's security related spending, and provides a careful province-
wise disaggregated examination of budgetary magnitudes. It also
examines the impact of the security crisis on expenditure priorities and
social sector expenditures, and presents the future outlook based on the
implications of the 7th NFC Award on the provincial expenditure priorities.
One of the major negative implications of the ongoing war on the public
finances of the country is the 'ballooning' of security related expenditures
including both expenditures on public order and safety (police) and
military. According to the budget estimates, combined federal and
provincial expenditures on security reached Rs 800 billion or almost 5
percent of GDP in 2010-11. Military spending grew with an average
annual growth rate of more than 16 percent (a four-and-a-half fold
increase) during 2000-01 to 2010-11. A closer look at the statistics reveals
that the pace of military expenditures actually picked up momentum in
2007-08 as indicated by a substantially high growth of over 22 percent,
which is largely due to the intensified military operations in Khyber
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

Pakhtunkhwa.
The trends in federal and provincial expenditures show an
extraordinary growth on public order and safety affairs (police) during
2000-01 to 2010-11. The increase is largely caused by higher incidence
of terrorist attacks and target killings. At the federal level, a five-fold
increase in expenditures on public order and safety affairs (at current
prices) is observed, whereas, there has been a six-fold increase in these
expenditure at provincial level. Due to this high growth the share of
security related expenditures on public order and safety affairs increased
from 15 percent in 2001-02 to almost 24 percent in 2010-11.
Being recurring in nature, the high growth in security related
expenditure negatively impacted the share of development expenditure,
which declined from 26 percent in 2005-06 to 21 percent of total public
spending in 2009-10. The comparison of MTDF expenditure targets and
national public sector development programs (PSDP) shows that during
the period 2005-06 to 2007-08 development expenditures were higher
than targets. However, due to high growth in security related expenditures
after 2007-08, PSDP allocations have been less than the MTDF targeted
expenditures during 2008-09 and 2009-10. The sector-wise analysis of
XX federal development expenditures shows that government allocated
 Executive Summary
lesser on economic sector like water and power, and social sector like
education and health than what was anticipated in the MTDF. In contrast,
sectors, areas and programs, which have linkages with war on terror,
received greater allocations. For instance, the share of development
transfers to special areas (like FATA, Gilgit Baltistan and Azad Kashmir)
is 8 percentage points higher in federal PSDP than in the MTDF.
An interesting development in public finances of the country is
increase in poverty related expenditures from 3.6 percent of GDP in
2001-02 to 6.3 percent of GDP in 2007-08 and its decline to 5.9 percent
in 2009-10. The category-wise analysis indicates that the high increase in
2007-08 is largely due to about Rs 400 billion subsidies on POL products
to insulate the population against the record peaks of world oil prices.
Among the pro-poor expenditures, spending on education increased
during 2002-09, and later declined by 7 percent in 2009-10. Moreover,
during this period priorities in education have largely shifted from primary
and secondary education to tertiary/higher education. In absolute terms,
health sector spending increased substantially during the same period;
however, as percentage of GDP these expenditures continue to be less
than one percent of the GDP. Among the health expenditures,
unfortunately, spending on mother and child health care received less
than 1 percent of the total health spending.
Despite slowdown in pace of social development during the later part
of 2000s, the future outlook for social development has been improved by
the 7th NFC Award, finalized during 2009-10. This Award transfers
greater resources to provincial governments, which are largely
responsible for provision of social services as per the 1973 Constitution
of Pakistan (amended). The 7th NFC could lead to a return to social
development due to higher transfer to provincial governments but this will
depend on the optimistic revenue projections being realized in 2010-11.

Chapter 4: Social Development during Security Crisis

The chapter looks into the issues of social development in the present-

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
day security crisis and links it to fiscal development and budgetary
priorities. The fiscal developments since 2000, having both the positive
and negative impact on the pace of social developments include:
stagnation in the tax-to-GDP ratio at about 10 percent only; reduction in
debt servicing liabilities in the early 2000s; substantial increase in security
related expenditures; the Presidential Distribution order, 2006-07; and
higher subsidies in 2007-08.
As far as the eradication of extreme poverty (Goal 1 of the MDGs) is
concerned, different poverty estimates provide different magnitudes that
indicated an overall decline in incidence of poverty during 2001-02 to
2004-05. Beyond 2004-05, no official estimate of poverty incidence was
made public, whereas, the SPDC and World Bank estimates reveal
contradictory trends. The World Bank estimates show a decline of 7
percentage points from 2004-05 to 2007-08 while SPDC estimates reveal
that incidence of poverty increased by 8 percentage points.
The chapter looking at the progress in achievement of Universal
Primary Education noticed an increase of ten percentage point in the Net
Enrolment Rate (NER) in just three years (2001-02 to 2004-05). However,
later the pace of improvement slowed down and during 2004-05 to 2008-
09; the NER increased only by 5 percentage points. Similarly, literacy rate XXI
 Executive Summary
also increased by 8 percentage points during 2001-02 to 2004-05, which,
declined by 4 percentage points during 2005-09. The trend in gender
equality in education indicates that education of girls has
disproportionately borne the burden of the war on terror.
Similar to education, relevant health indicators show significant
progress during the first half of the 2000s with the pace of improvement
slowing down in the following years. For instance, the proportion of fully
immunized children increased by 24 percentage points between 2002-05.
Thereafter it increased by only one percentage point. Similarly, the
proportion of births attended by skilled birth attendants increased by 8
percentage points during 2002-05, and declined by 7 percentage points
afterwards. Similar to education and health indicators, access to drinking
water indicates an increase of 9 percentage points in access to tap water
connections during 2002-05, and later showed an increase of only 1
percentage point.
Trends in social development indicators clearly highlight that public
spending on social sectors played an important role in determining the
pace of social development during the early 2000s. Higher spending on
security during the war on terror has reduced public spending on social
services and caused a slowdown in the pace of social development. It
appears that Pakistan is unlikely to meet most of the targets of the MDGs
by 2015.

Chapter 5: The Provincial Economy of Khyber Pakhtunkhwa

The chapter looks at the economy of Khyber Pakhtunkhwa and traces the
impact of security crisis. The escalation of the armed conflicts that spread
and affected Swat, Buner, Lower and upper Dir, Shangla, Malakand
Division, Peshawar, Mardan, Nowshera, Charsadda, D.I. Khan and Tank
has had consequential repercussions on the lives and livelihoods of, and
provision of normal public services to the local population of Khyber
Pakhtunkhwa. The ensuing fighting between the military and the militants
has imposed a high cost on the local economy since large numbers of
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

people were compelled to leave their homes and livelihoods. It has

caused considerable damage to physical and social infrastructure, loss of
lives, injuries, and damage to private and public property. Houses,
standing crops, livestock, schools, health facilities, water supply/irrigation
schemes, public office buildings, roads, electricity/gas networks, shops,
hotels, businesses, have all suffered damages to varying degrees.
The economy of the province of Khyber Pakhtunkhwa contributes
about 11 percent to the GDP of Pakistan. The agriculture sector accounts
for 20.5 percent, industrial sector 24.8 percent and the services sector
54.7 percent of the total gross regional product of the province. The
agriculture sector in the province largely constitutes of livestock sub-
sector (61 percent) followed by crop sub-sector (31 percent). During
2001-02 to 2004-05, the agriculture sector depicted considerable growth
both in the crop and livestock sub-sectors. In 2005-06, unfortunately the
province faced huge devastation because of the earthquake. From 2006-
07 onwards, the entire agriculture activity in the province declined
sharply. This can be partially attributed to the increase in militancy and the
military operations carried out in Khyber Pakhtunkhwa. The direct
damages identified include: the abandonment of animals and standing
XXII crops (ready for harvest) as a consequence of forced displacement;
 Executive Summary
losses incurred due to lost production since farmers could not return to
plant the next crop; and physical damage to buildings, roads and public
utilities including irrigation facilities, government offices, veterinary
hospitals, offices and research facilities which were looted and
vandalized. A decline is observed in maize and sugarcane crops while
the pace of growth slowed down for wheat and tobacco crops. A massive
reduction also occurred in the livestock population. Large animals
(buffalo, cows, sheep, and goat), small animals (donkeys) and heads of
poultry were destroyed or subjected to be sold at prices that were half the
prevailing market prices.
The industrial sector of the Khyber Pakhtunkhwa economy
constitutes 64 percent of manufacturing activity, 15 percent construction
and 21 percent electricity and gas distribution. The sector registered
considerable growth during 2001-02 to 2004-05 but portrayed a decline
in activity from 2006-07 onwards. Manufacturing production, which is very
small compared to the Punjab and Sindh, either declined or slowed down.
Growth in the production of sugar and cotton cloth declined massively
while for cooking oil and ghee, cotton yarn and for non-metallic products
it slowed down from 2006-07 onwards.
The collection of taxes declined notably since 2006-07. The
collection of excise duty and income tax declined in terms of magnitude
while the collection of sales tax and customs duty declined in terms of its
share in total tax collection in the country. The growth and pattern of
employment have also been adversely affected.

Chapter 6: Impact of Conflict on Houehold Welfare

The chapter is based on a household survey conducted in four districts
(Peshawar, Hangu, Bannu, and Tank) located at the border of FATA, and
district Swat. It attempts to evaluate the impact of the conflict on the
socio-economic status of households in term of poverty and
unemployment, household economic status, child education and labor
force participation.

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A comparative analysis of poverty incidence in the sample areas
before and after the security crises clearly shows an increase in the
poverty incidence. The incidence in district Swat has risen from 30
percent to 60 percent, while in the FATA Contiguous Districts (FCDs),
poverty rose from 25 to 54 percent. Overall, per capita expenditures of
about 56 percent households are below the poverty cut-off point in
sample conflict affected areas. The estimated incidence for Swat is 5
percentage point high when compared to other affected areas, mainly
due to the relatively high incidence of rural poverty.
The overall unemployment rate is estimated at 5 percent, while 8
percent youth aged 15 to 25 years have reported to be unemployed, while
7 percent children aged 10 to 15 years are working for pay. This
percentage is relatively high in FATA bordering districts.
The FCDs show an increase of about 9 percent in nominal income
from 2008 to 2010. Keeping double-digit inflation during this period in
mind, it may be inferred that real income has dropped and poverty
incidence has increased in the FCDs. Nonetheless, in the district of Swat
even the nominal income has declined by about 15 percent. Some of the
main causes of decline in nominal income include decrease in sales
volume due to the war/conflict, and decline in purchasing power and loss XXIII
 Executive Summary
of agriculture land due to war. While, 13 percent households reported loss
of assets, 19 percent of households in the FCDs have migrated because
of war, violence or armed conflict.
About 50 percent of households in the sample areas depend on
wages/salary from a job. This percentage, however, is low in the case of
Swat where only 29 percent households declared this as their source of
livelihood. Whereas 13 percent of boys aged 10-17 are currently working
for pay, about 4 percent among them entered the labor market after 2008.
Overall, 85 percent boys aged 5-15 years are attending school, while the
comparative percentage for girls is 59. However, enrolment of girls in
Swat is relatively high as compared with the FCDs.
Economic difficulties and insecurity are two main reasons given by
respondents for not sending children to schools. 9 percent of deaths
since 2005 were reported as a result of injuries due to armed conflict.
Overall 67 percent heads of households are psychologically distressed.
About 53 percent of other adult male earners are also under such stress.
The majority were anxious with the critical economic condition and
continuously declining employment and business opportunities. About 27
percent heads of households were of the opinion that government and
Taliban both are responsible for this situation. In contrast, about 4 percent
of respondents were of the opinion that foreign elements, not Taliban are
involved in this disaster. Interestingly, only 11 percent respondents
admired the role of the Pakistan Army in fighting against the militant.
Roughly 14 percent community leaders believe that Talibanization is the
major cause for the worse standard of living after 2005. The comparative
percentage is high in case of district Swat. However, the majority
understand that economic crises or inflation is the most important reason
for the worsening standard of living. Community leaders identified various
strategies they have used to cope with the situation, which include
friend/family help, temporary out-migration and expenditure
management. Some also indicated support of NGOs. Sale of household
asset was indicated by few community leaders. About 15 percent of the
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

community leaders believe that this is the international conspiracy against

Pakistan. This percentage is relatively higher in district Swat. Declining
employment and business opportunities were affirmed by about 20
percent respondents. Talibanization as a root cause of the current conflict
was declared by 8 percent. About 7 percent community leaders were
afraid of youth joining Taliban due to economic as well as religious
reasons.

Chapter 7: Response of the Civil Society

Chapter 7 looks at a broad section of civil society in general, namely
those institutions and groups which are outside the government, to
understand the issues they confront each day in this changed security
environment and its response to the impact of on-going conflict and
terrorism.
NGOs and media professionals argue that had the country been
governed by effective democratic institutions, and had the state fulfilled its
responsibilities in ensuring protection of life and property, and people's
needs, Pakistan would not be crippled by the internal terrorism and
conflict it faces now. But terrorism, if defined by manifestation of violence
XXIV against civilians is not confined to FATA and KPK, and is not practiced
 Executive Summary
only by the group termed as the Taliban. It is a far more pervasive
phenomenon in the country, and is active in major, mainly urban areas of
Sindh, Punjab and Balochistan, spilling into AJK and the Gilgit Baltistan
province also. The Taliban are no longer the militants who had gathered
and regrouped after the defeat of the Soviets in Afghanistan. They are
now almost indistinguishable from criminals, land grabbers, drug mafias,
sectarian and ethnic groups, tribal clans, political and ideologically based
parties, disaffected youth and individuals with vested interests. The TTP
( Tehrik-e-Taliban of Pakistan) is still flourishing, but its aims have been
bolstered by these diverse groups with whom it has developed working
relationships.
The chapter argues that while terrorism is now a much wider term
and is no longer restricted to acts of violence by religious extremists, the
seeds of violence, intolerance and extremism lie within the highly
divisive, inequitable and discriminatory system of governance practiced in
Pakistan. Civil society believes that feudalism, poverty, lack of investment
in human development and lack of attention to civic facilities for the poor
and less privileged are main factors for widespread despair and
dissatisfaction in the country.
Prior to 9/11, funds to FATA came primarily for Afghan refugees, and
very little was invested for development of the region, or even for
provision of basic social services for the people living there. NGOs started
work in 1999, and this continued until 2004, when the Taliban factor
became serious enough for almost all NGOs to migrate from FATA to
Islamabad, Peshawar or other cities. The non-governmental
organizations working on issues related to FATA believe that many of the
issues in FATA are due to the low level of development, and the Frontier
Crimes Regulation (FCR) which controls FATA. Though the regional
political developments have made transnational threats a reality for the
South Asia, the impact of terrorism on civil society has been much more
severe and challenging particularly since a segment of the militants
themselves have been drawn from the same society they are targeting.

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
Impacts on civil society have been varied, and severe. Organisations
and people have migrated to safer places, close to 3.5 million of Internally
Displaced Persons have had to flee their homes from FATA and KPK;
women and children have been particularly impacted and incidence of
psychological impacts have increased.
The single most prominent difference between the response of the
state and that of NGOs at a broader level, is in their approach and
strategy. While the state is relying on short term offensives against
militants, civil society is more involved with providing social development
services and supporting peace and harmony. Some civil society groups
have proposed a four pronged strategy based on political, economic,
cultural and administrative changes, and many in FATA are asking for a
major restructuring of the relationship between FATA administration, the
federal government and the people of FATA.
Media have played an important role in communicating information
on the war on terror to the larger society. IN turn, they have been also at
the receiving end. Journalists have been targeted, kidnapped and killed.
Civil society discourse is increasingly focusing on the nexus that exists
between social development, democracy, peace and good governance.
While there is no single and collective strategy, the civil society, by and XXV
 Executive Summary
large, has demonstrated a commitment to continuing its work even in
severly affected areas. It is important for the state and society to come
together, recognise the issues, accept each other's roles and
responsibilities and come to a shared vision of what needs to be done to
get out of the quagmire of terror. Although public opinion has changed to
some extent, civil society remains divided over the justification of the
army operations, and the war on terror. This is partly due to anti west
sentiments amongst Pakistanis and partly due to the silence maintained
by, and lack of condemnation of terrorist attacks from any of the religious
parties or clerics. Opinions are divided on the justification of the US drone
attacks in spite of the collateral damage caused. For any anti terror
strategy to succeed, the actions taken by the state needs to be seen to
be just and in the interests of the public whereas, the civil society needs
to come forward and play a greater role in building an environment
conducive to the making of a just and inclusive society.

Chapter 8: In Search of a Solution

The concluding chapter stresses the need for adopting a consensus
based national strategy aiming both at preventing terrorism and
minimizing its effects on social development. It is extremely important for
the government to create a balance between the military and the civilian
surge strategy. There is a need that state and society address all the
various forms and manifestations of extremism and violence and do not
equate them with religious extremism alone.
The chapter recommends that government needs to take people on
board on the issue of drone attacks, which is believed to have contributed
to the proliferation of militancy. For any anti terror strategy to succeed, the
actions taken by the government need to be seen to be transparent, just
and in the interests of the public. The chapter also recommends that the
national goal of poverty reduction should be considered an essential
element of the strategy to eliminate terrorism. It is essential to invest more
on social development, and not cut resource allocations for the social
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

sector to provide for increased expenditure on security and police. A one

dimensional army operations centred approach is not likely to eliminate
terror. It can only provide short term relief, but not long lasting peace in
the country.

XXVI
 Views of a Leading

VIEWS OF A LEADING SOCIAL SECTOR PERSONALITY

Social Sector Personality

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

Women need initial

encouragement and space
in an environment where
lack of exposure and self
confidence prevents them
from any sort of self
development.
− Maryam Bibi XXVII
 VIEWS OF A LEADING SOCIAL SECTOR PERSONALITY

VIEWS OF A LEADING
SOCIAL SECTOR PERSONALITY

aryam Bibi is the founder and Chief Executive of Khwendo Kor,

M an NGO which focuses on the development and empowerment of

women and children in the province of Khyber Pakhtunkhwa and
the Federally Administered Tribal Areas (FATA) of Pakistan. Today,
Maryam's organization employs over 450 people, of whom over 60
percent are women, with offices in 7 districts of the province and
affiliations throughout Pakistan and abroad. In 2009, Maryam was invited
to speak to a selection of parliamentarians. She spoke about the impact
of social policies in Pakistan, including the influence of the US and other
countries. She argued that "present policies are not improving the life of
people, in fact they are deteriorating the lives of common men."
Before establishing Khwendo Kor, Maryam held several positions
with projects being implemented by German Development Cooperation
(GTZ), the international development enterprise of the German
government. She was involved in introducing energy efficient stoves in
rural areas of Khyber Pakhtunkhwa; implementing community-based
training programs; and designing educational materials for Afghan
refugees.
Alongside her work with Khwendo Kor, Maryam serves on the governing
boards of several NGOs including The Pakistan Society for the Protection of
the Rights of the Child and the Elementary Education Foundation. She also
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

contributes to the work of the Social Welfare Department of the Government

of Khyber Pakhtunkhwa; the Women's Study Centre at the University of
Peshawar; the NWFP Women's Writers' Forum; and the Asian South Pacific
Bureau of Adult Education based in India.
She completed her graduation from the Jinnah College for Women,
University of Peshawar and her Masters in Social Policy from the University
of York in the United Kingdom, supported by the Annemarie Schimmel
scholarship. She transferred her Masters research into M.Phil, entitled
"How can female education and empowerment be introduced in FATA by a
women's NGO?" Recognising the value of her thesis, the University of York
will be awarding her an honorary degree of PhD in July 2011.
Maryam Bibi is a native of a small, underdeveloped and remote
village of Mali-Khail located in the area of Jani-Khail of North Waziristan,
Frontier Region Bannu (FR-Bannu). She belongs to a family of the well
respected Wazir tribe. Her grandfather and uncle were among the elders
of the tribe and held the title of Khan Bahadur bestowed on them by the
British government. This village, like many others in this area, has high
poverty and low levels of literacy, bordering on zero for women.
Maryam Bibi's life and her own education have been greatly
influenced by her father, Guldad Khan, who was the youngest among six
XXVIII sons, and who educated himself by reading the books of his elder step
 VIEWS OF A LEADING SOCIAL SECTOR PERSONALITY
nephews who were highly educated. Guldad Khan was a devout Muslim
and proud of his tribe and his identity and was also cognizant of the
benefits of education. He sent all his children to school including his 6
daughters, despite facing criticism and even ostracisation. Luckily, the
family moved to Bannu where the education could continue far more
easily. Maryam's mother was more conservative but equally influential in
shaping Maryam's values of truth, integrity and honesty through Islamic
teachings.
Maryam's early life was spent in purdah, even after her marriage to
her cousin, and she remained confined to her house, then in Peshawar,
looking after her brothers in law, husband and 4 children. As a woman,
she was expected to ensure that everyone was well fed and clothed,
while having no needs of her own. Her husband was mentally ill and
Maryam found herself financially constrained, with lack of sufficient
income to run the house properly. After several unsuccessful attempts to
raise income from home, she started to teach children of neighbours. She
had to give this up because her family objected to a woman working. Over
time, as she grew older, the resistance to her working weakened and she
joined the All Pakistan Women's Association (APWA) in 1987.
"Though I was nervous and completely blank in the interview for my
first job at APWA ,I was given a chance to work for a period of three
months on the recommendation of my neighbour who also worked there
at a senior position and knew me very well. Thereafter, I progressed on
merit alone." Maryam believes that if this recommendation had not been
made, she could not have moved forward as a female. "Women need
initial encouragement and space in an environment where lack of
exposure and self confidence prevents them from any sort of self
development", she says.
Maryam then moved to GTZ where she was selected on merit for the
position of social organizer. Within one year she was made the director of
the Environment, Energy and Education Department. Not wanting to lose
her, and recognising her potential, when the project came to an end in

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
1992, the First Economic Secretary of the German Embassy proposed 3
options to her: 1) an 18-month contract with GTZ to work as a training
coordinator, 2) join a forestry project funded by the Dutch government in
Malakand and 3) set up an NGO with 50 percent of the startup funds to
be provided by GTZ. Maryam decided to go for the third option so that
she could continue to employ the women who had been working with her
for 3 years. Thus started the beginning of Khwendo Kor, a Pashto word ,
which means "a home for sisters".
The organization started from a garage of the GTZ office in a small
village in Peshawar. At that time there were only 4 women (including
Maryam Bibi) working part time for the NGO. It is now a well known
national organization with an annual budget of around Rs 150m, with many
funding partners. Its head office is in Peshawar while regional offices are in
Upper and Lower Dir, Mansehra, Bannu, Karak and a resource centre in
the Khyber Agency. Khwendo Kor's main thematic areas of work are
community led social services including village based female education,
primary health care; sustainable livelihoods including provision of
microcredit and gender based farm forestry; relief and rehabilitation
including responding to both natural and human disasters and good
governance including policy, advocacy and awareness on human rights. XXIX
 VIEWS OF A LEADING SOCIAL SECTOR PERSONALITY
Maryam's efforts for women and children's development have been
recognized nationally and internationally. In 2005, she was one of "1000
Women" nominated for the Nobel Peace Prize; in 2001, she received the
Human Rights Award from the International Labor Organization; and in
2000, she was recognized by the UN with the Recognition of Services
Award. The Government of Pakistan honored her in 2003 with a Fatima
Jinnah Medal for outstanding women in the social sector, and in 2001 with
the Star of Excellence National Civil Award. In 2010 she was given the
Benazir Award for Human Rights by the President of Pakistan,
Talking of the root causes for terrorism in that region, Maryam
believes that the twin causes are support to the war in Afghanistan
against the Soviets, building up large numbers of fighter groups with a
strong indoctrination in killing in the name of religion, the spread of
madarsahs also operating as militancy training camps, combined with
lack of any social development which could have provided education,
gainful employment and improved quality of life . Civil society, too, has
been weak in offering much resistance. Parents have had to send their
children to madarsahs where they could receive food, shelter and
clothing. A whole army of youth with the mindset of fighting and militancy
has been produced. One of the main issues was when FATA was not
integrated within Pakistan, and was called Illaqa-e-Ghair (area of
strangers). No laws existed and free dealing and use of arms was
common.
One of the most important factors is the ignorance of women about
the happenings in their surroundings. Islam has been interpreted to them
in a manner where women do not have any say. They were easily
influenced and gave their children for religious cause to become a
Mujahid. Women must learn, interpret Quran and Islam taking into
account their own realities which are known only to them and contribute
to its enrichment rather than be totally dependent upon what others who
are mainly men, say.
Maryam's own work and her safety is at risk due to the rise in
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

militancy and terrorism. "When I go to my village children there say, ‘you

are a chicken that lays golden eggs’ meaning that they can kidnap me for
ransom." She now has to take special care when traveling to these areas.
In 2001, seven schools run by Khwendo Kor in Dir had to be closed due
to threats.
Despite the current situation which she describes as terrible,
Maryam remains hopeful and optimistic. She has no hopes of the ruling
elite, who, in her view, are not keen for any positive change. The reason
for hope is among the poor and deprived, whose suffering has reached
phenomenal dimensions and who continue to be exploited. If the people
are mobilized, offered possibilities of change and provided with ideas,
they can play a major role.
While Maryam does not object to the army operations completely,
she does not believe that the solution to reduce militancy and
Talibanisation lies in bombing them out of existence with high collateral
damage. She believes in establishing rule of the law and bringing
militants to the table and engaging them in dialogue and discourse. The
condition to any meaningful dialogue is that those on the other side
should not have a hidden agenda of their own. For a counter terrorism
XXX strategy, the civil society, and women in particular are very important
 VIEWS OF A LEADING SOCIAL SECTOR PERSONALITY
players. While the state should provide services, the civil society should
build opinions, encourage debate and identify issues which can help the
government make appropriate laws. Unfortunately, the government is
either unable or unwilling to play its role to provide basic services and this
huge gap is being filled by NGOs. This gap has also allowed extremist
and one sided views and vested interest groups to take over the space.
In Maryam's view, women can play a major role to change society,
provided they are educated and mobilized, and have an enabling
environment to speak and act in. Having a 33 percent representation of
women in the parliament is not enough. Many women parliamentarians
are educated and articulate, but there is a big gap between them and
those they are supposed to represent. Women at grass root level have
literally no say and no links to those in power. Education and participation
are prerequisites for women to bring any change. According to her, the
model of development needs to be looked at. There are huge
contradictions with advancement, technology and riches on one side, and
extreme poverty, unemployment and lack of education and health
services on the other side. Progress is said to be achieved only when at
least 80 percent of the population can meet their basic needs. Pakistan
is a long way away from progressing nations.

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

XXXI
 CONTEXTUALISING

CHAPTER 1
THE SECURITY SITUATION
OF PAKISTAN 1

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

Militancy, extremism, violence

and intolerance clearly have
their roots imbedded in the
systemic failure both of
institutions and social
development policies. 1
 CHAPTER 1
CONTEXTUALISING
THE SECURITY SITUATION
OF PAKISTAN

he present socio-political discourse globally and locally is

T predominantly surrounded by the issues of state and societal

securities, and of the social transformation of societies. Post
September 11, 2001, the phenomenon of terrorism has abruptly changed
the geo-political and socio-economic situation of the world. However, the
"war on terror" has caused more suffering, deaths and destruction to the
people of Pakistan than of any other country. Soon after 9/111, Pakistan
allied itself with the United States and the international community in the
war against terror. The US-led invasion against the government of Taliban
in Afghanistan has now assumed the shape of an insurgency and an
armed struggle not only in Afghanistan but also in Pakistan's province of
Khyber Pakhtunkhwa (formerly NWFP) and adjoining Federally
Administered Tribal Areas (FATA). Hundreds and thousands of Pakistan’s
military, para military and police forces are involved in the armed conflict
in Khyber Pakhtunkhwa province and FATA. Modes of conflict ranges
from limited search and clean up operations to full scale military assaults
against the militants.
The rate of acceleration of violence in the area is an indicator of the
enveloping loss of control. According to an estimate by Institute for
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

Conflict Management, in year 2003, when Pakistan was already being

viewed as a place of instability and widespread strife - total fatalities in
terrorism-related violence amounted to just 189. By 2006, this number
had risen to 1471, but mounted dramatically thereafter to the
unprecedented number of 11,704 killed in 2009. There were 7 suicide
attacks in 2006 as against 78 in year 2009. Similarly, around 500 bomb
blasts were reported in the year 2009 as against 35 in 2002. Detailed
year-wise fatalities and incidences of suicide attacks and bomb blasts are
provided in Table 1.1. Altogether, over 9,000 civilians have been killed
since 2003.

Table 1.1 Incidence of Terrorism in Pakistan

Fatalities in Terrotist Violence Number of
Civilians Security Force Terrorists/ Total Suicide Bomb
Personnel Insurgents Attacks Blasts
2002 2 35
2003 140 24 25 189 2 41
2004 435 184 244 863 7 137
2005 430 81 137 648 4 245
2006 608 325 538 1471 7 299
2007 1522 597 1479 3598 56 678
2008 2155 654 3906 6715 59 485
2009 2324 991 8389 11704 78 499
2010 1796 469 5170 7435 67 193
Total 9410 3325 19888 32623 282 2612
Source: Estimated by South Asia Terrorism, Institute of Conflict Management.
2 http://www.satp.org/satporgtp/countries/pakistan/database/index.html
 CHAPTER 1
Table 1.2 Incidence of Terrorist Attacks/Clashes in Pakistan
Terrorist Operational Clashes Border Political Inter-tribal Drone
Attacks1 Attacks2 militants3 clashe Violence4 clashes attacks
Number of attacks
2008 2,148 95 55 88 191 32
2009 2,586 596 209 78 130 217 51
2010 2,113 260 369 69 233 214 135
Number of persons killed
2008 2,267 3,182 655 395 162 1,336 216
2009 3,021 6,329 1,163 700 210 1,209 667
2010 2,913 2,631 2,007 65 660 766 961
1. Including insurgent and sectarian incidents.
2. Operations conducted by security forces against militants.
3. Ethno-political and sectarian.
4. Clashes between security forces and militants.
Source: Pakistan Institute of Peace Studies (PIPS), Pakistan Security Reports 2006, 2007, 2008, 2009, and 2010.
Note: The figures may not tally with Table 1.1 as they are taken from difference sources.

Moreover, the ethno-political and inter-tribal clashes have further

aggravated the situation. As shown in Table 1.2, number of incidents of
ethno-political and sectarian violence increased from 88 to 233 between
2008-10 claiming deaths of 162 and 660 persons, respectively. Similarly,
over 3,000 people have been killed in inter-tribal clashes during the last
three years.
Besides fatalities, civil war destroys infrastructure, services and
household assets; displaces populations; breaks social cohesion,
institutions and norms and creates fear and distrust. Pakistan Economic
Survey (2009-10) categorically reports that "Beyond statistics of human

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
casualties, the cumulative effects of the campaign of terror unleashed in
Pakistan and the country's fight against militancy have been enormous.
Lives, homes and incomes have been uprooted, while educational
attainment for virtually a whole generation of school going children in the
affected areas of Khyber Pakhtunkhwa and FATA has been jeopardized,
or severely undermined. In terms of the economic impact, the fall out on
Pakistan has also been immense. As a front line state in the global "war
on terror", it is officially estimated that Pakistan has been impacted to the
extent of over US$ 43 billion between 2001 and 2010".
This chapter focuses on the types of internalized and externalized
threats causing continuous regional political instability and socio-political
polarization including the emergence of militant non-state groups within
Pakistan. The threats being multiple, (both) home grown and cross border,
have consequential repercussions on the national and regional security
developments. The parameters identified include the changing nature of
inter-state relations and global power structures, and the nexus, that exists
between the national and regional dynamics of security related issues.

Relevant Theories
heories of security dilemma and balance-of-power continue to play an
T important role in international politics today. These include:
Oppenheim: Equilibrium2 between various powers forms the family
of nations… its existence is essential to the very existence of international
law.... it is a power to hold each other in check. If the system fails, nothing 3
 CHAPTER 1
prevents any state sufficiently powerful from ignoring the law and acting
solely according to its own convenience and interests. Just equilibrium
thus expresses the doctrine which prevents any one nation from
becoming sufficiently strong.
Grotius: the theory of Balance-of-Power3 was formulated as a
fundamental principle of diplomacy. The theory was also accompanied by
the Balance-of-Terror/ and Balance-of-Deterrence that ensured that
balance be maintained. The theory also brought with it the concept of
Bandwagoning.
Kenneth Waltz: Arguing the pros and cons of Balance-of-Power
theory he outlined the neo-realism or Structural Realism Theory (1979) -
by arguing in favor of a systemic approach. In his theory he largely
focuses on the constraints of the behavior of the state due to the
international structure (definded by its ordering principle according to the
change in the distribution of capabilities). According to this theory, states
are primarily concerned with their own security and not power. Security
that may be defined by threat factors largely characterized by overall
capability, proximity, offensive/defensive capabilities, and perceived
intentions.
Stephen Walt placed the BOP theory on a new basis by calling it
Balance-of-Threat theory (1988). It says that states do not react to threat
alone but to 'credible threat'. Moreover, he describes bandwagoning as
being coerced. He argues that the timings when states form alliances and
their choice of allies are major factors to be considered. He addresses the
rationale for such an alliance by looking at whether states tend to balance
against strong or threatening powers by allying against them, or are
states more likely to bandwagon by allying with the 'most powerful' or
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

'most threatening' states. In the case of the bandwagon approach, threat

and intimidation is more likely to work.
Presently, it is the nexus that exists between mutual distrust and
mutual misunderstanding along with the 'fear' that continues to
predominantly overshadow the discourse on security. A situation that
forces the smaller and the weaker states to make asymmetrical

4
 CHAPTER 1
concessions and opt for a less parsimonious sub-ordinate role as seen in
the case of the on-going war on terror. In spite of the global coalition's use
of surge strategy, the factors that continue to prevent return to peace are
the emergence of the sub-national actors (such as terrorist/militant
groups) and the different perceptions that exists on the core and
fundamental question of what constitutes a threat. The two together have
undoubtedly changed the security paradigm that have been traditionally
in vogue during the last six decades.

Regional Developments
enerally all major South Asian countries are confronted with
G democracy and security related challenges. While the discourse on
democracy is predominantly dominated by concerns on liberal/ illiberal
democratic practices, the debate regarding security is largely over-
shadowed by the consequences of the hierarchy of 'low politics' and 'high
politics' that failed to hold swing and contributed to the surge of violence
(militancy), war-lordism, tribalism and extremism/ fundamentalism in all
its various forms and manifestations.
The approaches identified by Pakistan, India, Sri-Lanka and Nepal
vary distinctly. For example, Sri Lanka - a country recognized for
multiculturalism and for successful use of the principle of peaceful co-
existence among its various religious communities - is recovering from a
long internal ethnic strife that set into motion intense violence employed
by the LTTE. The 6th amendment of the Sri Lankan constitution was later
accompanied by the use of force to end the insurgency. The end of the
conflict, however, is yet to replace the ultra-nationalist Sinhalese mind set

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
with the Sri Lankan nationalism. Whereas, unlike Sri Lanka, the Maoist
party of Nepal successfully converged into a social movement. The
Common Minimum Program envisaged immediate relief to the people
besides a number of initiatives to ensure the much needed political
reforms that would help integrate the politically marginalised into the
mainstream social structures of Nepal. Equally important is it for Nepal to
re-emerge amicably from the current political deadlock. How consensual
politics would be ensured would largely depend on the conflict/ political
behavior and conflict management of all the democratic forces.
The tension-ridden Pakistan-India relations along with the unending
political instability in Afghanistan during the last three decades have been
the main source of the twin4 conflict (internalized/ externalized threats)
confronted by the three states. The two types continue to be used by the
states to retain the characteristics of the national security state- the most
visible being the role taken upon by the military to either ensure the state
against all internal and external enemies, or in the case of India to ensure
the oneness of the state. All three states continue to justify their military
actions largely through 'pleas of high value targets'. These include the
Armed Forces Special Powers Act (1958) of India, presence of the
ISAF/NATO forces in Afghanistan, or the operation Rah-e-Rast and Rah-
e-Nijaat undertaken in Pakistan.
Somewhat similar to the impact of the cold war on global conflicts,
the Bush doctrine based on the premise of 'good and evil' further created
a division between the states and societies. President Bush while
addressing the joint session of the US Congress (2001) said “our 5
 CHAPTER 1
response involves far more than instant retaliation and isolated strikes.
America should not expect one battle, but a lengthy campaign. We will
starve the terrorists of funding, turn them against one another, and drive
them from place to place, until there is no refuge or rest". He emphasized
on the need to pursue nations that provide aid or safe heavens to
terrorists. The consequence of this new state of war accompanied by
coercive diplomacy, according to Hardt and Negri5 is that international
relations and domestic policy became increasingly similar and
intermingled-where civil liberties are often violated in the name of
homeland security. Whereas, Prime Minister Mahatir of Malaysia during
his speech in Davos (2003)6 emphasizing on the importance of identifying
the reasons behind the prevailing security threats said that terrorizing the
terrorist will not work and that the causes of such threats need to be
addressed. This was a voice that was representative of a large number of
muslims throughout the world.
The AF-Pak policy announced by Obama in 2009 in the name of
regional political stability and emphasizing on the "surge strategy" is
viewed as a policy for protecting American security. The American policy
aims for regional stability remain blurred, whereas, its first review laid a
greater focus on the Strategic Implementation Plan (SIP) having nine
broad objectives equally divided for Pakistan and Afghanistan. The
objectives of evaluating progress in the two countries calls for disrupting
terrorist networks especially in Pakistan to degrade the ability to plan and
launch attacks; limit militants' involvement in civilian government;
strengthening civilian government in Pakistan; and demonstrable action
against corruption in Afghanistan. The Overseas Contingency Operations
thus aiming to eliminate the top leadership and sanctuaries of extremist
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

organizations brought in a greater focus on the use of special forces,

drone attacks and other smart technologies along with a focus on
gathering local and indigenous forces wherever possible and building
consensus with international and regional players.
The latest review which examines closely the July 2011 deadline of
initiating the phased withdrawal of US forces from Afghanistan is more of
a reflection on both the military and civilian surge strategies. Contrary to
Obama's optimism, the US National Intelligence Estimate report on
Pakistan hinted at limited chances of success accusing Pakistan of failing
to shut down militant sanctuaries in its tribal areas.The US aid money
provided to Pakistan since the beginning of the decade can be divided
broadly into the Coalition Support Fund (covering the cost of Pakistan
military fight against terrorism); security assistance (for military equipment
to fight terrorism); cash transfers (to the government); and development
and humanitarian assistance.
The Kerry-Lugar-Berman Bill accompanied by the Joint Explanatory
Statement consists of three main Sections:
z Democratic, Economic and Development Assistance

z Security Assistance
z Strengthening institutions of democratic governance and promote
control (section 302 (15)) of military institutions by the
democratically elected civilian government.
The bill consisting of an entire section on accountability and
6 monitoring generated reservations across all sections of society including
 CHAPTER 1
the military establishment. Section 2 on findings (8) and section 4 on
statement of policy (6) described '---FATA, parts of NWFP and
Baluchistan as a haven and a base from which to organize terrorist
actions in Pakistan and globally ---.' The latter stated '---to prevent any
Pakistani territory from being used as a base or conduit for terrorist
attack in Pakistan, Afghanistan, India or elsewhere in the world'. Further,
the Pakistan reimbursement claim process for Coalition Support Fund
(CSF) requires increased oversight and accountability. While section 302

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
requires the Secretary of State to submit an annual report to the
congressional committee to justify the continuation of security and military
assistance to Pakistan. This is in spite of the fact, that security assistance
being provided is specific to its fight against terrorists.
The Enhanced Partnership with Pakistan Act is largely viewed
impinging on the sovereignty of Pakistan by several groups within the
country. The conditionalities laid are intrusive in characteristic and imply
both desire and means to micromanage Pakistan affairs. Nonetheless,
the development in the bilateral relationship between the two countries is
indicative of a desire for a comprehensive and long-term relationship
between the two countries.
The Pak-US Strategic Dialogue initiated in 2008 held all of its three
rounds of meeting in the year 2010. Aiming to broaden and consolidate
bilateralism, thirteen Working Groups have been constituted in the areas
of energy, agriculture, education, health, water resources,
communications, counter terrorism, security issues, economy, trade,
science and technology, public diplomacy, and women empowerment.
Despite the politics of envoys sustainable peace and stability is
nowhere in sight. Military-related causalities continue to be high, although
reduced numbers are evident from Chart 1.1. This raises serious
concerns regarding the capacity of the Afghanistan government once the
coalition forces start pulling-out. Neither have the visits of envoys helped
in addressing the distrust which exists at the governmental and societal
levels. At the governmental level, both the civilian government and
7
military establishment has been accused of misuse. For some in the
 CHAPTER 1
Chart 1.1 Militancy-related casualties in Afghanistan (2008 - Sept 2010)
12000

10000

8000

6000 Killed
9664 Injured
8547
4000
6513 6656 Total Casualties
5512
4311
2000 3035
3008
2202

0
2008 2009 2010
Source:

United States, the aid is not being used to further US foreign policy
objectives. Seemingly, the assistance being provided is largely
dependent on Pakistan's behavior.
The irrational international political behavior seen in the post 9/11
period has not only brought emphasis on the need to redefine the security
framework amid fears of terrorism but have changed the global
development dynamics. The element of aggression along with the use of
the Anticipatory Right of Self Defense have caused a change in the ways
societies either see or interpret themselves7. For many8, the US has
been following a policy of 3 I's i.e. intervention, intrusiveness, and
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

influence (involved in the social engineering particularly of muslim

societies such as, Pakistan, Afghanistan, and Iraq).

The Making of the Problem

he literature produced on fundamentalism, terrorism (Islamic) and
T extremism mainly focuses on the issues of political identities,
assimilation and integration within societies. Unfortunately, the
understanding of the Pakistani society reflected in the writings totally
ignores the tribal and the feudal social characteristics prevalent in the
country. Thomas (2005) also argues the importance of understanding the
role of culture and religion more seriously in international affairs. The neo-
conservatives, arguing in favour of the need to win the war on terrorism
questions conventional9 thinking on religion, terrorism, fundamentalism
often associated with Islam alone, that ignores the phenomena of the IRA
and Protestant Evangelicals, or for that matter the authoritative structure
of Roman catholic church. Thomas places the concerns in a wider
context of social theory, (including cosmopolitanism) modernity, post
modernity, and secularization. Thus relying on Mac Intyre's social theory
he argues for deeper pluralism that is necessary for the social
understanding of religion. Moreover, his arguments suggest new forms of
cultural/ public diplomacy that takes religious convictions of people
seriously in understanding their application in their public life.
The traditional concepts of sovereignty have somewhat been
8 revised and changed. After the demise of the cold war the emphasis
 CHAPTER 1
shifted from state-centric security to human security with greater
emphasis on democracy, liberalism, human rights, human development
and good governance. The post 9/11 period has seen renewed calls for
redefining the security framework amid fears of failing democracies, soft
state issues, terrorism, extremism and threat perceptions including the
so-called 'Islamic threat'. The policies that followed the 9/11 incident have
changed the global development dynamics. As mentioned earlier it has
changed the way societies interpret or see themselves or the world.
It is not only the anarchic nature of international politics caused by
some of the lingering political and territorial disputes but also the distorted
perceptions and understanding of the issues of soft states such as
ineffective institutions, terrorism, fundamentalism and religious extremism
that largely constitute the present-day security concerns. The very
concept of the 'common security concerns' as an alternative approach for
maintenance of peace today is viewed as 'enforced' by many. For
example, many countries, particularly developing muslim countries, such
as Pakistan, joined the coalition after the 9/11 incident because of the
changed international political environment, which was confronted with
unilateralism, coercive diplomacy and fear and not because they faced
the common enemy at the time.

Systemic Failure in Pakistan

ilitancy, extremism, violence and intolerance clearly have their roots
M imbedded in the systemic failure both of institutions and social
development policies initiated by respective governments.
The systemic failure of the respective government in strengthening

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
institutions, creating employment, strengthening industrialization,
regulating the informal/ non-formal sectors, addressing socio-economic
disparity, ensuring quality education and health-care, guaranteeing rule of
law, controlling inflation, poverty and food insecurity and eliminating
terrorism have all caused despondency, violence and lawlessness.
Historically, the failure of the judicial system in strengthening the 'rule
of law' in the country and its politicization such as political appointments
of judges in the high courts and supreme courts caused a culture of
power-confinement. As a result, the judicial system of Pakistan was
unable to protect a large number of vulnerable and disenfranchised
people. Unfortunately, the cumbersome procedures and the failure of
access to justice further aggravated the situation.
Other factors impeding development are population explosion,
sluggish economic development process, low human development and
inequity and inequality in resource distribution. Population growth is the
prime factor that not only slowed down pace of economic development
but also caused food insecurity in the country. In spite of the decrease
seen in population growth (2.1 percent in 2009)10 food insecurity is
intense, where almost half (48.6 percent) of the population does not have
access to sufficient food11. No efforts have been made to utilize the
population dividend in the country by providing adequate skill and training
to the youth. Instead, the education budget has been slashed from 2.6
percent of GDP in 1990 to 2.1 percent of GDP in 2009-10.12 The weak
economic base along with low level of investment in the country has
created a situation of job bankruptcy. In the absence of institutional 9
 CHAPTER 1
mechanisms and lack of job opportunities a pool of surplus unproductive
labour exists that could have been utilized productively otherwise.
Poverty is another manifestation of institutional failure in the country.
Currently more than 60 percent of the population continues to live on less
than US$ 2 a day. Though Pakistan witnessed a decent economic growth
in the 1980s and 1990s, the inappropriate resource distribution paved the
way to poverty in the country. Poor economic governance caused
macroeconomic imbalance that resulted in the increase in poverty and
inequality. The effects of high real GDP growth in 1980s could not benefit
the poor and vulnerable and unfortunately, the gap between the rich and
poor kept increasing. Poverty head count estimate was 46 percent in
1984-85 which declined substantially due to sustained economic growth
to 37.4 percent in three years (1987-88)13. The decade of the 1990s can
be termed as an era for combating poverty in which the primary aim of
economic and social policy was to reduce poverty. From a poverty
incidence of 24.0 percent in 1996-9714 it rose to 34.5 percent in 2000-
0115 and 38 percent in 2007-200816.
With the high food inflation and continuous economic decline in
Pakistan, poverty incidence is likely to increase in coming years
(discussed in Chapter 4). The poverty reduction strategy of the
government could not reach its potential primarily because, of inefficient
and ineffective social service delivery particularly in the areas of
education, health and hygiene and water supply and sanitation. In totality,
there seems to be a failure of the state functionaries that have caused
retro gradation. Continuous failure of the government might cause a
complete failure of the existing system.
Terrorism confronted by Pakistan has cross-border dynamics - it
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

clearly does not occur in a vacuum. The more extreme a catalyst, the more
intense the violence, and the longer its duration, the less formal the
outcome of the crisis. Similarly the longer the crisis the more far reaching
its affects. Foremost among the concerns are the security issues largely
surrounded by the threat perceptions. In this new political environment,
multiculturalism is challenged and issues of assimilation and integration
have assumed greater importance. The issue of extremism being related to
violence and terrorism now poses new challenges to the society. The
challenges confronted by multiculturalism perhaps urgently need the
rationalization and homogenization of culture, particularly in an era where
transition to modernity is viewed as enforced due to global pressures and
not indigenous or a consequence of self realization, and where society
sees the legitimacy of the government as coming from abroad. The type
and the nature of the pressures have intensified tensions and conflict not
only between states but across societies and religions also. The
complexities, therefore, have compounded the nature of violence being
faced by both the government and society.
The changing nature of conflict and a renewed focus on state-
centric security has intensified conflict not only between states but
between and within societies and religion. Conflict between people of
different socio-cultural backgrounds poses a new and a serious challenge
to peace that is inextricably linked to harmony and democracy. We do
hear complaints of “irrational and aggressive behavior" of society, while,
for many living in Muslim societies the US policies are being viewed as a
10 ploy of the west for domination that aims for successful 'social
 CHAPTER 1
engineering' of their societies in the name of democracy.
The ongoing debate on pluralism, violence and extremism including
intolerance is complex and consists of a number of variegated elements.
Muslims have been described by Huntington as 'indigestible' or 'brutal'
and 'uncivilized', whereas, Fukugama in his earlier writings suggested
bombing and reconstruction of Muslim societies. The ongoing concerns
on conflict and security therefore do have strong religious undertones and
can be traced to political, ideological, cultural intolerance or biases.
The controversies largely woven around democracy, societal
security and religious extremism requires a new paradigm to ensure a
socio-cultural understanding- which involves dialogical reasoning to build
bridges along with a paradigm of religious understanding which would
perhaps encourage a rational development of democracy and civil society
institutions. However, equally important is to change the authoritative
coercive mind set. Most current dialogues are bilateral
monologues.There also exists a need to formulate a multipronged
strategy, particularly for those who not only pose a challenge to
democracy but also to the state and societal security.
The reference is mainly to the emergence and strengthening of the
non state groups that poses a challenge to the national security. The
reference is not to those that work within the constitutional framework and
make a demand for a social change or a constitutional change. The latter
category is apriori legitimate and is reflective of such practices that exist
in a liberal democracy. The development of an alarmingly large number
of such groups in several countries has resulted in the 'Cobweb
Paradigm' in international politics - where armed groups operate without
any state control and are involved in trans-border conflict. For example,

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
the Indian claim of the United Liberation Front of Assam (UFLA) being
based in Bangladesh; a faction of the National Socialist council of
Nagaland leadership being based in Europe, Thailand and Burma; the
Indian claim of Lashkar-e-Taiba operating from Pakistan and several
other similar groups based in South Asian countries.
The presence of such groups have undoubtedly added complexities
to the inter and intra state conflicts and definitely has made crisis
management more daunting. Militant groups have been described as a
force multiplier. In Pakistan, the onset of the present challenge to the
socio-political structures to many is a foreign policy crisis characterized by
threat, giving rise to threat perceptions which have generated fear and
polarization particularly at society level. Where on the one hand the United
States is viewed as a partner (at the governmental level) and an adversary
(at the people's level), while, on the other hand the Tehreek-e-Taliban
continues to use violence/ terror to force the government to comply with its
demands. The two phenomena have caused the 'Spiral Process'- which,
have strengthened the 'enemy syndrome' and seemingly is now the
guiding principle of all actions and responses from the two sides.
In order to understand the transformation of the conflict from a low
level threat to a high level threat, it is important to understand the various
attributes17 of the conflicts being confronted by Pakistan. The three
important being: system attributes; crises attributes; and actors attributes.
The system attributes reveal the conditions in which a crisis unfolds. The
three important relevant characteristics in the case of Pakistan are the
conflict environment (unstable Afghanistan and the war on terrorism); 11
 CHAPTER 1
conflict eventually transforming into protracted conflict (multiplication of
the types and nature of the conflict and increase in the number of actors
involved in the conflict); and conflict being heavily based on the issues of
identities (largely based on the socio-religious identities).
Whereas, a deeper look at the crisis attributes indicates the
following crucial component of the crisis particularly relevant to conflict (s)
posing serious challenges for Pakistan. Triggered by multiple factors such
as, the Bush doctrine; political and economic instabilities; non-integration
of the population living in the federally and provincially administered
areas of Pakistan; issues of identities and assimilation.
Similarly, the number of actors and their roles have contributed in the
aggravation of the conflict-situation. For example, regional political
instability (where Afghan Taliban succeeded in exporting their doctrine to
Pakistan); and the consequential repercussions of the war on terror (the
coercive diplomacy); resurgence of transnational threats (emergence of
militant non-state groups); and drone attacks have largely caused anger
and fear at the societal level in Pakistan. The internal dynamics of the crises
attributes also clearly consists of extremism (religious) and ideological
indoctrination The actors18 attributes is also indicative of the non-existence
of the capability gap in Pakistan (having same or substantively similar
technology); and overt/ covert foreign support (mainly financial).
The conflict behavior19 of the warring parties is visibly reflective of
the ‘causal link’ of three attributes discussed above.
Terrorism in the case of some countries (Pakistan included) is also a
consequence of a conflict between the concept and its understanding.
Equally important it is to understand the anatomy of the internal conflict
which continues to exist, and the anatomy of intolerance and religious
C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N

extremism. The threats confronted by the Pakistan democracy and

security undoubtedly are inter-linked having cross-border dynamics. The
new security challenges therefore demand a radically different approach.
Addressing religious extremism (caused by the existing socio-religious
paradigm); militancy (bred partially by poverty and socio-economic
disparities); and terrorism (more a consequence of regional political
environment). Equally true is the fact that the traditional security
framework is inadequate in addressing the issues of human well-being or
building the capacity of the government institutions.
The usage of principle of peaceful co-existence between nation-
states and people belonging to different socio-religious groups remains to
be a desire yet to be fulfilled. Unfortunately the nature of the conflict
having religious undertones can be traced to the political, ideological,
cultural and religious biases, particularly those guided by religious power
groups continue to be most intractable. Increase in violence is due to the
on-going conflict in the region, repressive policies and a dysfunctional
democracy where an obvious disconnect exists between the state and
government. The issues of societal security of Pakistan, similarly, is
largely reflective of the failure of the society to persist in its essential
character under changing conditions including real and perceived threats.
Post 9/11 the issues of societal security both in Europe and the Muslim
world are largely the outcome of the cultural identity threatening social
and communal cohesion and integration among people of different socio-
cultural backgrounds.
12
 CHAPTER 1
Conclusions
he Pakistani society along with external pressures and intrusiveness
T is often seen self flagrating itself which in turn, has created
hopelessness and despondency at the level of society .Looking at the
social behavior of the society today, it would not be an exaggeration to
say that unknowingly an egoistic morality has replaced the altruistic
morality.
A development that seemingly is guiding the socio-political discourse
or modus operandi identified for the nation state poses heavy reliance on
the concept of a 'just society' or 'Islamic Society'. Though it is important
to protect the social nuances of any society, this predominant fixation with
the two concepts have kept both the government and society from
addressing the issues that have caused the economic backwardness,
besides taking attention away from the development of social behavior -
as a society.
The present-day narratives on the reasons for 'dysfunctional
democracies' or soft state crisis is predominantly dominated by the
systemic failure of societies. Will such an approach help? How do we
address the qualitative change that has occurred in societies.- what are
the other new modalities needed? And what is meant by civilizing the
society; Islamizing the society or democratizing the society. It is important
to understand the mind-set that seeks justification of a particular group
having an exclusive right to the truth. Such a mind set continues to
prevent any real dialogue and has caused the brutal divisions that have
become so strong within society. It is extremely important to identify a
strategy that helps cope with the diversity of moral values both within

C O N T E X T U A L I S I N G T H E S E C U R I T Y S I T U AT I O N O F PA K I S TA N
societies and between cultures. Though the nature of the conflict having
religious undertones can be traced to the political, ideological, cultural
and religious biases, it is crucial to manage and control such negative
tendencies, renounce rhetoric and be tolerant of rational disagreement-
which is the only way to a civilized society.

NOTES:
1 The term '9/11' refers to the terrorist attacks in New York City and Washington D.C. on September 11, 2001.
2 England is considered to have first used it to maintain equilibrium between Spain and France.
3 In the post-medieval Europe, Duke of Milan Francesco Sforza was the first to actively follow such a policy.
4 Reference is made to the internalized and externalized threat perceptions. The former has caused issues of identities
(including state identities) where harmony among people have become increasingly difficult. The second category of
threat refers mainly to the transnational threat perceptions.
5 Hardt, M. Negri, Empire, London: Havard University Press, 2000.
6 World Economic Forum meeting held in Davas in 2003.
7 James Rosenau and Czempiel, Governance without Government: Order and change in world politics, 1992
8 General and popular perception that exists at the people's level.
9 For intensive discussion see Scott M. Thomas 'The Global Resurgences of Religion and the Transformation of
International Relations, Palgrave-Mc Millan, 2005.
10 The World Bank, World Development Indicators, http://www.google.com/publicdata?ds=wb-
wdi&met=sp_pop_grow&idim=country:PAK&dl=en&hl=en&q=population+growth
11 Food Insecurity in Pakistan 2009, Sustainable Development Policy Institute (SDPI), Islamabad.
12 Pakistan Economic Survey 2002-03.
13 Poverty in Pakistan in 1990s: An Interim Assessment, World Bank 2002
14 ibid
15 Pakistan Economic Survey 2008-09, Ministry of Finance, Government of Pakistan.
16 See chapter 2.
17 For an in depth understanding of the types and nature of conflict see Brecher, Michael and Wilkenfeld, Jonathan, Crisis,
Conflict and Instability Pergamon Press, 1989.
18 The two categories of actors being referred to are: militants (NSG) and the various government institutions of law-
enforcement. 13
19 The Roots of Behavior In war-A Survey of Literature, ICRS, 2004.
 IMPACT OF THE

CHAPTER 2
WAR ON TERROR
ON THE ECONOMY 2

The costs of S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

participation in the war

on terror are rising
exponentially in terms
of dislocation of
economic activity, high
losses of life and
property and impact on
the investment climate. 15
 CHAPTER 2
IMPACT OF
THE WAR ON TERROR
ON THE ECONOMY

n the backdrop of the war on terror, Pakistan is confronting one of the

I most dire and unprecedented crisis of its history which has severe
implications for its social as well as economic development. The crisis
is multidimensional and can be characterized by a political-security-
development nexus where each factor feeds into the other and the failure
on one front raises the probability of failure on all fronts. The challenge
before policy makers, therefore, is how to break the vicious cycle that has
brought the country to the verge of a major crisis.
As shown in Chart 2.1, the main elements of this vicious cycle are
economic crisis, political instability, governance failure and security
breakdown. The slowdown of the economy leads to a decline in the real
income of the people, particularly of the poor segments of the population,
which may result in increased social restiveness and higher incidence of
crime and rising militancy among the unemployed youth. The economic
downturn also leads to loss of effectiveness of economic management
and radicalization of politics, contributing to an environment of political
confrontation and instability. Political instability and governance failure
feeds into the economic crisis primarily because of its negative impact on
the investment climate and dislocation of economic activity. Similarly, the
security breakdown increases probability of governance failure;
destabilizes the government; poses challenges to government writ
I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y

Chart 2.1 The Vicious Cycle of Economic Crisis,

Political Instability, Security Breakdown and
Governance Failure

Diversio High
n of re er trans
Economic
Crisis Loss of sou ac
life, p rces fr tion c
rope o o
rty a m pro st
Risin Hig nd du
gm he i n ves ctive
ilitan r incid tm
nt

cy a enc en u
me

Economic dislocation due to agitation

mon e t
se

g un of crim
effe dicalization of politic nage

emp e
Negative investment climate
a

loye
s
nss of economic m

d yo
uth
Security
nt
me Breakdown
o vern nt
tg me
ben vern y/
ctive

cum of go dibilit
Re

in
of writ cre ding
tion to vt’s an
iliza lenge of go nal st
f

b
o

sta Chal oss natio

ss

De L ter ss
o

en e y
L

in
ff ectiv curit
e se
Political ne in ity to
Decli rior
Instability and er p
Low
Governance
Failure
16 Source: IPP, 2009
 CHAPTER 2
besides eroding government credibility. It also exacerbates economic
stress further by spreading fear among investors. The consequent
increased need for security expenditure also leads to diversion of
resources from "productive" uses, thereby impacting on the process of
economic and social development (IPP, 2009).
The situation of security breakdown as manifested by increasing
acts of terrorism was highlighted in the previous chapter. This chapter
focuses on the extent of governance failure, the economic cost of
terrorism to Pakistan and the resulting performance of the economy of
Pakistan.

Governance Indicators
ack of good governance is believed to be among the root causes of
L the growing crises in Pakistan. Though problems of governance have
always existed, the situation has deteriorated rapidly over the past 10
years. A general perception is that political institutions have not been able
to develop a system that promotes accountability and transparency,
allows a voice to people, and ensures social and economic justice.
The Worldwide Governance Indicators (WGI), a project of the World
Bank reports aggregate and individual governance indicators for 213
countries. The indicators for various dimensions of governance include
voice and accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law, and control of
corruption. As shown in Table 2.1, Pakistan does not compare favorably
amongst the other countries of the region. The percentile ranking of
Pakistan is below the average of South Asian countries in all governance
indicators except for regulatory quality. For example, in political stability,
the percentile rank of Pakistan is 0.5 as compared to the regional average
of 18.7. Similarly, in control of corruption, Pakistan's percentile rank is

I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y
13.3 as against regional average of 31.6. A similar situation exists for
indicators of accountability and rule of law.

Table 2.1 Governance Indicators of Pakistan: 2009

Percentile Regional Governance Standard
Rank Average, Score Error
(0-100) Percentile (-2.5 to +2.5)
Voice and Accountability 20.9 32.8 -1.00 0.12
Political Stability 0.5 18.7 -2.76 0.22
Government Effectiveness 19.0 33.5 -0.93 0.18
Regulatory Quality 33.3 27.7 -0.50 0.16
Rule of Law 19.3 35.8 -0.93 0.14
Control of Corruption 13.3 31.6 -1.10 0.17
Source: The World Bank Group, http://info.worldbank.org/governance/wgi/index.asp

Pakistan is not only ranked below the average in 2009, a trend

analysis over time suggests that the situation of many governance
indicators has worsened since 2000 as reflected in percentile ranking
(Chart 2.2). For instance, the ranking in political stability declined from 15.9
in 2000 to 0.5 in 2009. Similarly, the ranking in ensuring rule of law came
down from 24.3 to 19.3 while, in the category of controlling corruption it 17
 CHAPTER 2
Chart 2.2 Governance Indicators of Pakistan
Comparison between 2000 and 2009

13.3
Control of Corruption
24.3

19.3
Rule of Law
24.3

33.3
Regulatory Quality
22.0

19.0
Government Effectiveness
29.6

0.5
Political Stability
15.9

20.9
Voice and Accountability
10.6

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

2009 2000

Source: The World Bank Group, http://info.worldbank.org/governance/wgi/index.asp

again shows a downward trend i.e. from 24.3 to 13.3 during the same
period. However, there has been some improvement in the indicators of
voice and accountability and regulatory quality.
I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y

State of the Economy

akistan's economy is faced with many challenges such as slowdown
P of economic growth, decline in investment, high inflation and higher
levels of fiscal and current account deficits.
The growth of GDP has shown a pyramidal trend over the past ten
years (Table 2.2). From a low 2 percent in 2000-01, the growth rate
reached a peak of 9 percent in 2004-05. Subsequently, the GDP growth
rate declined, to only 1.2 percent in 2008-09. A modest improvement,
however, was observed in 2009-10. Investment has followed a similar
trend. Investment as a percent of GDP was 15.8 in 2000-01, reached
20.9 in 2006-07 and then declined to 15 in 2009-10. Exports have also
declined from 13 percent of GDP in 2005-06 to 9.2 percent in 2009-10.
Similarly, the current account deficit reached an alarming level of 8.5
percent of GDP in 2007-08, which led Pakistan to seek emergency
assistance from the IMF to avoid a total melt-down of the foreign
exchange position and a major disruption in economic activity.
The economic situation worsened as the rate of inflation continued
to rise and growth of CPI reached a peak level of 20.8 percent in 2008-
09. In particular, the continuous increase in food prices severely impacted
the livelihood of poor segments of the society, leading to substantial
increase in poverty. According to SPDC estimates, the incidence of
18 poverty increased from 30 percent in 2004-05 to 38 percent in 2007-08,
 CHAPTER 2
Table 2.2 Major Macroeconomic Indicators of Pakistan
[as % of GDP]
GDP Investment Exports Current Fiscal Growth Unemployment
Growth Account Deficit in CPI Rate
(%) Deficit (%) (%)
2000-01 2.0 15.8 12.4 -0.7 -4.3 4.4 6.0
2001-02 3.1 15.5 12.6 1.9 -4.3 3.5 7.8
2002-03 4.7 15.3 13.1 3.8 -3.7 3.1 7.8
2003-04 7.5 15.0 12.7 1.3 -2.4 4.6 8.3
2004-05 9.0 17.5 13.2 -1.6 -3.3 9.3 7.7
2005-06 5.8 20.5 13.0 -4.4 -4.3 7.9 7.6
2006-07 6.8 20.9 11.9 -5.1 -4.3 7.8 6.2
2007-08 3.7 20.5 12.5 -8.5 -7.6 12.0 5.2
2008-09 1.2 17.4 11.8 -5.7 -5.2 20.8 5.2
2009-10 4.1 15.0 9.2 -1.7 -6.3 11.5 5.5
Source: EconomicSurvey, GoP

GDP Growth (%) Investment as % of GDP

10.0 21
8.0 19
6.0
17
4.0
2.0 15
0.0 13
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

Exports as % of GDP Fiscal Deficit as % of GDP

14.0
13.0 8.0
12.0 6.0

I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y
11.0
4.0
10.0
9.0 2.0
8.0 0.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

Growth in CPI (%) Unemployment Rate (%)

25.0 9.0
20.0 8.0
15.0 7.0
10.0 6.0
5.0 5.0
0.0 4.0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

which implies that more than 15 million people have been added to the
population living below the poverty line1.

1 Details of poverty estimates are provided in Chapter 4. 19

 CHAPTER 2
Economic Cost of War on Terror
ince 2001, terrorism has taken a heavy toll on Pakistan's economy.
S The costs of participation in the war on terror are rising exponentially
in terms of dislocation of economic activity, high losses of life and
property and impact on the investment climate. The war on terror is
believed to have made a major contribution in the above mentioned
slowdown of economic activity.
The Ministry of Finance, Government of Pakistan has estimated the
economic cost of the war on terror for Pakistan over the past decade.
Official estimates show that 'Pakistan has been impacted to the extent of
over US$ 43 billion between 2001 and 2010 (GoP, 2010).' As shown in
Table 2.3, the total loss to the economy due to the war on terror has
increased exponentially from US$ 4.4 billion in 2004-05 to US$ 11.5
billion in 2009-10. As a percent of GDP, the loss has increased from 4.0
to 6.6 during this period. Particularly, the annual estimated loss doubled
during the last three years.

Table 2.3 Official Estimates of Loss to Economy

Rs. Billion Total in
Years Direct Costs Indirect Costs Total US$ billion
2004-05 67 192 259 4.4
2005-06 78 223 301 5.0
2006-07 83 278 361 6.0
2007-08 109 376 484 7.7
2008-09 114 564 678 8.6
2009-10* 262 707 969 11.5
Cumulative 2005-10 712 2340 3052 43.0
*July - April
Source: Economic Survey, 2009-10, GoP
I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y

The Institute of Public Policy (IPP) estimated the economic costs of

the war to be at Rs 380 billion in 2007-08 (IPP, 2009). Following the same
methodological framework, SPDC has updated these estimates for the
year 2009-10. For analysis purpose, the costs of terrorism have been
categorized into direct and indirect costs.
Direct costs include compensation to victims, damage to property
and infrastructure, higher expenditure on defence, higher expenditure on
police, and higher costs of private security. The value of lives lost is part
of direct costs, but difficult to quantify. The cost of damage to property and
infrastructure is estimated on the basis of number of terrorist attacks [see
IPP, 2009 for details].
Higher expenditure on defence and police is a major economic cost
of terrorism borne by the government. There has been massive growth in
security related government expenditures (on defence and police) during
the last few years. As shown in Table 2.4, these expenditures grew at an
annual average of 14.6 percent from 2000-01 to 2007-08. However, since
2007-08, security expenditures have increased more rapidly at the rate of
20.5 percent per annum.
The rapid growth in expenditure in the latter period is mainly due to
the fact that the military operation in Swat was in full swing after 2007-08
20 and a 100 percent increase in the salaries of employees of defence
 CHAPTER 2
Table 2.4 Security Related Public Expenditure
(Rs in Billion)
Defence Affiars Public Order and Safety Affiars
and Services Federal Provincial Total ACRG (%)
2000-01 146 10 21 177
2007-08 363 26 71 460 14.6
2010-11 617 51 137 805 20.5
ACGR = Average Cumulative Annual Growth Rate
Note: Expenditures on defence include pensions of employees of defence services. It also includes
non-tax receipts of defence, which has been included as a proxy of expenditures on military
operations.
Source: SPDC Estimates based on Federal Budget in Brief (various issues), Explanatory Memorandum
on Federal Receipts (various issues) and Province-wise Annual Budget Statements (various
issues).

services has recently been granted. Initially, the salary increase was
given only to defence forces fighting in the Northern part of the country.
Subsequently, the benefit was extended to all employees. Similarly,
provincial governments had to increase the salaries of their police force,
which brought more burden on their budgets. A time series econometric
analysis of security related expenditures (from 1993-94 to 2009-10)
conducted by SPDC shows that these expenditures would have been
significantly lower in the absence of the war on terror. Based on this
analysis, the estimated additional cost of defence and police services
together is Rs 290 billion in 2009-10.
Another aspect of enhanced security expenditures is the
development of private security arrangements in the country. There has,
in fact, been a mushroom growth in this service sector in recent years.
According to an informal survey carried out by the newspaper, Daily
Times, the number of men employed by private security companies is
more than the number of policemen stationed in the country. IPP (2009)

I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y
estimated that there were over 200,000 private security guards in the
country in 2007-08 and the estimated cost of private security attributable
to the war on terror was Rs 8 billion. The estimates for 2009-10 are
indexed to the size of GDP.
In summary, the total direct costs of terrorism (Table 2.5) have
increased from Rs 150 billion in 2007-08 to Rs 320 billion in 2009-10 (an
increase of 115 percent).

Table 2.5 Direct Cost of War on Terror

(Rs in Billion)

2007-08 2009-10 Increase (%)

(Potential) cost compensation to victimsa 3 6 100
Cost of damage to property and infrastructure b 8 13 63
Higher cost of defence 109 247 127
Higher cost of police 21 43 105
Higher cost of private securityc 8 11 38
Total direct cost 149 320 115
~ 150
~ 320
a Based on the number of deaths
b Based on the number of attacks
c Indexed to size of GDP
21
 CHAPTER 2
Major growth is evident in the cost of defence and police. The
estimated additional cost of defence has risen from Rs 109 billion to Rs
247 billion (registering an increase of 127 percent) from 2007-08 to 2009-
10 while the cost of police more than doubled during the same period.
Indirect costs mainly include costs to local economies (loss of
economic growth in Khyber Pakhtuhkwa and FATA) and costs of higher
risk perceptions such as fall in private investment and fall in stock market
capitalization. Other indirect costs include decline in tourism and rise in
insurance costs.
The local economies adversely affected are Khyber Pakhtunkhwa
and FATA, where the bulk of the terrorist attacks and military operations
(including the drone attacks) are concentrated. The shares of these two
in the national population, according to the 1998 Census, are 13.4
percent and 2.4 percent respectively. Estimates of the Gross Regional
Product of Khyber Pakhtunkhwa have been made by the World Bank
(2006) up to 2004-05. No such estimates are available for FATA. IPP
(2009) has shown that in 2004-05, the differential in the growth rates of
Pakistan as a whole and Khyber Pakhtunkhwa was over 2 percentage
points. We assume that the same differential prevails at present.
Accordingly, it is estimated that loss to the provincial economy has
increased from Rs 40 billion in 2007-08 to Rs 130 billion in 2009-10.
There has also been a sharp and continuous decline in the level and
growth of private investment in the country since 2005-06 (Chart 2.3).
The growth in private investment was 8.6 percent in 2000-01, reached
40.5 percent in 2005-06 and started declining afterwards; a negative
growth of 3.5 percent was recorded in 2009-10. Similarly, private
investment as percent of GDP was 10.2 percent in 2000-01, exceeded 15
percent in 2005-06 and has since declined to 10.7 percent in 2009-10.

Chart 2.3 Growth in Investment

I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y

Growth in Investment (%) Investment as Percent of GDP

21.0
40.5
15.9 15.7
15.0
36.1
10.2 10.7

7.2

8.6 0.7

-3.5
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10

FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10

Total Investment Private Investment

Source: EconomicSurvey, GoP

A number of factors which explain this decline include: (i)

deterioration in the investment 'climate' due to the emergence of large
macroeconomic imbalances; (ii) high incidence of power load shedding
and other supply bottlenecks which have substantially raised the cost of
doing business in Pakistan; and (iii) loss of investors' confidence due to
rise of terrorism. We assume that the contribution of the three factors is,
more or less, similar to the fall of private investment of 5 percent of the
22 GDP from the peak level attained in 2005-06. As such, the enhanced
perception of risk and uncertainty due to terrorism in Pakistan is
 CHAPTER 2
Table 2.6 Indirect Cost of War on Terror
(Rs in Billion)
2007-08 2009-10 Increase (%)
Costs to local economies 42 130 210
Loss of economic growth in Khyber Pakhtunkhwa 40 130 225
Cost of IDPs 2 n.a. n.a.
Costs of higher risk perceptions 189 391 107
Fall in private investment 52 244 369
Fall in stock market capitalizationa 120 123 2
Othersb 17 44 41
Total indirect cost 231 521 126
~ 230 520
a As of 2008-09
b Increased by the size of GDP

responsible for a fall in private investment of 1.7 percent of the GDP in

2009-10, equivalent to Rs 244 billion.
The impact on stock market capitalization is calculated by comparing
the growth in KSE Index with S&P 500 Index for emerging economies.
KSE Index fell by 48 percent from 2004-05 to 2008-09 while S&P Index
declined by 39 percent during the same period. Though a number of
economic and non-economic factors contributed to this decline it is
assumed that one third of the decline was due to terrorism. The impact of
terrorism on the stock market is Rs 123 billion. Other indirect costs are
updated on the basis of increase in the size of GDP, which amounts to Rs
24 billion in 2009-10.
Table 2.6 presents the summary of the indirect costs of terrorism.
According to the estimates, the total indirect cost of terrorism increased
from Rs 230 billion in 2007-08 to Rs 520 billion in 2009-10. Major
contribution being the decrease in private investment followed by loss of

I M PA C T O F T H E WA R O N T E R R O R O N T H E E C O N O M Y
economic growth.
The total costs of terrorism are summarized in Table 2.7 It is evident
that the costs of terrorism have increased tremendously (more than
doubled) from Rs 380 billion in 2007-08 to Rs 840 billion in 2009-10.
In US dollars, these costs have increased from $6 billion to $10
billion. It is important to note that bilateral military and economic
assistance from the US to Pakistan of around $8 billion, has been
considerably lower, than the costs of terrorism borne by the country. As
such the costs are over three times greater than the bilateral assistance
forthcoming especially from the United States.

Table 2.7 Total Cost of War on Terror

(Rs in Billion)
2007-08 2009-10
Direct costs 150 320
Indirect costs 230 520
Total Costs 380 840
Total costs (US$ billion) 6 10
US bilateral assistance (US$ billion)a 2 3.6
Ratio of costs to US bilateral assistance 3 2.8
23
a Source: Federation of American Scientists,
www.fas.org/sgp/crs/row/pakaid.pdf (visited on December 21, 2010)
 FISCAL IMPACT OF

CHAPTER 3
THE SECURITY CRISIS
3

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

The war on terror

has shifted
expenditure priorities
away from the social
sectors 25
 CHAPTER 3
FISCAL IMPACT
OF THE SECURITY CRISIS

ecurity crises generally have significant fiscal implications.

S Theoretically, they can affect both tax revenues and composition of

public spending. On the revenue side, as tax receipts vary with the
health of the economy, a slowdown in economic activity due to security
crisis can lead to a decline in tax revenues. Beyond their effects on real
activity, security crises can destroy part of the tax base through the
destruction of businesses (Gupta et al. (2002)).
On the expenditure side, a security breakdown leads to increased
government expenditures on defense, and law and order mainly due to
increase in the salaries of law enforcement personnels, purchase
equipments for surveillance and combat, and to strengthen and
implement the strategy designed to capture the terrorists and destroy
their assets. Higher spending on security can also affect the composition
of public spending by decreasing outlays on education, health, and other
productive investments that can enhance both human and physical
capital. Moreover, the destruction of physical infrastructure by terrorists
adversely affects the fiscal position by adding the cost of relief measures
along with reconstruction costs (Gupta et al. (2002) and Gaibulloev and
Sandler (2008).
Chapter 2 quantified the cost of the war on terror on the economy of
Pakistan. While, chapter 5 brings forward the disproportionate burden of
the on-going security crisis on the regional economy of KPK. This chapter
attempts to analyze the impact of the war on terror on the budgetary
priorities of federal and provincial governments. It focuses on the
government's security related spending, and provides a careful province-
wise disaggregated examination of budgetary magnitudes. It also
examines the impact of the security crisis on expenditure priorities and
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

social sector expenditures. Finally, the chapter discusses some of the

future outlook based on the implications of the 7th NFC Award by
comparing the provincial expenditure priorities documented in the budget
documents before and after the award. It is important to note that these
budgetary priorities, based on pre-flood budget estimates, are likely to
have been changed by the floods. Nevertheless, they provide some
insights about the thinking of provincial policy makers as and when
increased resources become available.

Security Related Expenditures

s expected, the first decade of the millennium witnessed a significant
A increase in security related expenditure in Pakistan. These
expenditures grew faster than other public expenditure and were largely
correlated with the intensity of terrorist attacks and the war on terror . In
contrast to war with neighboring countries, which usually affects military
26 expenditures only, Pakistan's security crisis has affected expenditures
 CHAPTER 3
Table 3.1 Trend in Security Related Expenditures
Defence Affairs Total As a %age of
Year & Services Federal Provincial Security of GDP
2000-01 145.9 10.1 21.4 177.3 4.2
2001-02 190.9 10.3 23.8 225.0 5.1
2002-03 230.5 11.7 28.5 270.6 5.6
2003-04 239.9 14.0 35.7 289.7 5.1
2004-05 294.7 17.5 39.7 351.9 5.4
2005-06 332.9 20.4 51.7 405.0 5.3
2006-07 351.1 22.9 62.0 436.0 5.0
2007-08 344.5 26.1 70.5 441.1 4.3
2008-09 422.2 27.3 89.4 539.0 4.2
2009-10 533.7 37.4 119.1 690.2 4.7
2010-11 611.9 51.3 136.5 799.7 4.7

Average Growth Rate (%)

FY01 to FY11 15.9 18.2 20.6 16.6 1.6
FY01 to FY08 13.6 14.8 18.8 14.2 0.9
FY08 to FY11 21.2 26.2 24.9 22.0 3.2
Source: SPDC Estimates based on Federal Budget in Brief (various issues), Explanatory Memorandum
on Federal Receipts (various issues), Province-wise Annual Budget Statements (various
issues) and Pakistan Economic Survey (various issues)

both on public order and safety (police) and military. As per budget
estimates, the combined federal and provincial expenditures on security
reached Rs800 billion or 4.7 percent of GDP in 2010-11 compared to
Rs177 billion or 4.2 percent of GDP in 2000-01 indicating an average
cumulative growth of 17 percent per annum. While the growth rate in
security related expenditure remained in double digits during the entire
period, it grew at a much faster rate of 22 percent per annum in the latter
part of the 2000s (see Table 3.1).

F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

27
 CHAPTER 3
Defence Affairs and Services
One of the most challenging tasks has been the computation of actual
expenditure on Defence Affairs and Services. In order to compute the
actual defence budget, the following three components were added: (1)
current revenue expenditure on defence, (2) cost of military operations in
KPK and FATA as reflected by the Coalition Support Fund
reimbursements shown under non-tax receipts of defence services, and
(3) pensions of armed forces shown in the civilian budget. While (1) and
(2) are published in federal budget documents, pensions of armed forces
are not separately available in these documents. In the absence of data
on the actual amount, 40 percent of total pensions are assumed to be the
pension of armed forces. Table 1 shows the resulting estimates of
defence expenditures.
In line with the general perceptions, one of the negative implications
of the ongoing war on terror on public finances of the country is the
ballooning of military expenditures during the last decade. As per budget
estimates, the government of Pakistan has allocated more than Rs612
billion for defence affairs and services in 2010-11 as compared to Rs146
billion in 2000-01. This shows a four-and-a-half fold increase in defence
spending with an average annual growth rate of more than 16 percent
during 2000-01 to 2010-11 (see Table 3.1). A closer look at the statistics
reveals that the pace of these expenditures actually picked up momentum
in 2007-08 under the present democratic regime and the intensified
military operations in KPK. It can be seen that while the average growth
rate of defence expenditures during 2000-01 to 2006-07 was almost 14
percent, it increased substantially to over 21 percent thereafter.

Public Order and safety Affairs

The trend in federal and provincial expenditures on public order and
safety affairs show extraordinary growth during 2000-01 to 2010-11. The
increase is largely caused by higher incidence of terrorist attacks and
target killings. At the federal level, expenditures on public order and
safety affairs (at current prices) represent a five-fold increase, i.e. from
Rs10 billion in 2000-01 to over Rs51 billion in 2010-11. Though the
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

average growth rate remained at almost 18 percent per annum during the
entire period, was more than 26 percent during 2007-08 to 2010-11
compared to almost 15 percent growth during 2000-01 to 2006-07.
At the provincial level, growth in expenditure on public order and
safety affairs has been higher than the growth at the federal level. In
nominal terms, it increased more than six-fold i.e. from Rs21 billion in
2000-01 to Rs136 billion in 2010-11 with an average growth rate of over
20 percent per annum during the entire period. Similar to defence
expenditure, it grew at a faster rate during the late 2000s compared to the
early and mid 2000s.

Composition of Security Expenditures

An interesting fact about the composition of security related expenditures
that merits closer attention is a shift of focus from purely military
expenditures towards public order and safety. In recent years, a relatively
greater proportion of expenditures were allocated towards public order
28 and safety affairs (see Chart 3.1).
 CHAPTER 3
Chart 3.1 Composition of Security related Expenditures
in 2001-02 and 2010-11

Public Public
order and order and
Safety Affairs Safety Affairs
15.1% 23.5%

Defence Affairs Defence Affairs

and Services and Services
84.9% 76.5%

Source: SPDC estimates based on Table-3.1.

For instance, in 2001-02, the share of security related expenditures

on defence affairs was 85 percent and the remaining 15 percent was on
public order and safety affairs. Over the years, increase in the share of
expenditure on the latter has risen to almost 24 percent.

Public Expenditure Priorities

he shift in public expenditure priorities towards security expenditure
T has consequently impacted the distribution between, and the
composition of, current and development expenditure both at federal and
provincial levels.

Current versus development expenditure

Current expenditure refers to the recurring operational costs involved in
providing and maintaining a range of government services.
Developmental expenditure represent outlays in new physical and social
infrastructure. In a broader sense, this distinction of current and

F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

29
 CHAPTER 3
Chart 3.2 Composition of Public Expenditure

100
90 15 14 17 19
21 24 20 21
26
80
70

Percentage
60
50
40 85 85 83 80
79 76 80 79
74
30
20
10
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Current Expenditure Development Expenditure

Source: SPDC estimates based on Pakistan Economic Survey (various issues)

development expenditures can be referred as consumption and

investment respectively. Consequently, a higher share of development
expenditure may generate higher employment opportunities and provide
greater scope for economic growth.
Chart 3.2 indicates that a large portion of expenditure, 85 percent,
was incurred on current expenditure while, the remainder 15 percent was
spent on development expenditure in 2001-02. However, in the latter
years, the trend changed whereby a greater proportion of total
expenditure was incurred on development. It reached a peak of 26
percent by 2005-06. In the absence of growth in security related
expenditures, it was expected that this ratio would either be maintained
or improved further. However, due to expansion as well as increase in the
intensity of war on terror, the share of development expenditure was
decreased to 21 percent by 2009-10. Twenty one percent share consisted
of a large component of expenditure, which is current in character, such
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

as the outlays on social safety nets, especially the Benazir Income

Support Program (BISP). These changes might jeopardize future growth
prospects of the country since the lower level of development expenditure
(public investment) can hamper the long term improvement in the
productive capacity of the economy.

Priorities in Current Expenditure

The following sections show the composition of current expenditure for
both tiers (federal and provincial) of the governments from 2000-01 to
2009-10. Estimated expenditure shares are based on the revised
estimates taken from budget documents of federal and provincial
governments respectively.

Priorities in Federal Current Expenditures

In the 2000s, together with the war on terror there are a number of other
factors that have affected the composition of federal and provincial
30 current expenditure. At the federal level, decline in debt servicing in the
early to mid 2000s and the oil price shock during 2007-08 are largely
 CHAPTER 3
Table 3.2 Composition of Federal Current Expenditures
(percent)
Genderal Defence Public Economic Education Health Other Total
Public Affairs & Order & Affairs Affairs Affairs & Current
Services Services Safety and and Expenditures
Years Affairs Services Services
2000-01 65.7 25.2 1.7 4.4 1.1 0.4 1.6 100
2001-02 61.5 29.4 1.6 4.5 1.0 0.3 1.7 100
2002-03 52.8 34.2 1.7 8.0 1.1 0.4 1.8 100
2003-04 54.5 33.6 2.0 7.7 1.4 0.4 0.5 100
2004-05 49.8 37.6 2.2 7.9 1.6 0.4 0.5 100
2005-06 51.4 36.2 2.2 7.4 1.8 0.5 0.5 100
2006-07 51.9 34 2.2 8.8 2.1 0.5 0.5 100
2007-08 53.7 22.7 1.7 19.4 1.6 0.3 0.5 100
2008-09 61.9 25.6 1.7 8.3 1.5 0.3 0.7 100
2009-10 58.8 31.4 2.0 5.0 1.9 0.4 0.6 100
Source: SPDC Estimates based on Federal Budget in Brief (various issues)

responsible for changing current expenditure priorities. For instance,

decline in debt servicing obligations, contributed to a fall in the share of
general public services in the total current expenditure from 66 percent in
2000-01 to 50 percent in 2004-05 (See Table 3.2).
While the decline in general public services caused a slight increase
in the share of economic affairs, security related expenditure experienced
an increase of 12.4 percentage points during the same period.
Unfortunately, the decline in share of general public services did not
increase the share of social services such as education and health,
continues to receive the lowest share in federal current expenditure.
The oil price shock caused a sharp increase of roughly 10
percentage points in the share of economic services in 2007-08 due to
the government's decision to subsidize petroleum products. This decision
together with an upward movement in the interest rate caused an
immediate increase of more than 8 percentage points in the share of
general public services in 2008-09 compared to 2007-08.
As stated earlier, there have been a consistent rise in the share of
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
defence expenditure till 2004-05. A comparison of 2000-01 with 2009-10
reveals that only the share of defence expenditure has gone up
substantially (more than 6 percentage points) compared to other
expenditures, which shows that current expenditure priorities have largely
tilted towards defence. As a result of this, even less is left to be spent on
education and health, a norm that has not changed much in the whole
decade.

Priorities in Provincial Current Expenditures

At the provincial level, terrorist attacks, target killings, and the process of
devolution are three among major factors that affected the composition of
current expenditure during the past decade. At an aggregate level, terrorist
attacks and target killings have caused a massive increase of more than 7
percentage points in the share of public order and safety affairs, which
increased from 10 percent in 2000-01 to 17 percent in 2009-10 (see Table
3.3). Devolution and other reforms in the education sector positively
affected the share of education expenditure, which increased slightly from
24.8 percent in 2000-01 to 26.4 percent in 2009-10.
31
 CHAPTER 3
Table 3.3 Composition of Provincial Current Expenditures
(percent)
General Public Economic Education Health Other Total
Public Order & Affairs Affairs Affairs & Current
Services Safety and and Expenditures
Years Affairs Services Services
Four Provinces Combined
2000-01 37.7 9.8 16.1 24.8 7.7 3.9 100
2001-02 37.6 10.2 15.1 25.0 8.3 3.8 100
2002-03 44.1 10.9 13.2 23.2 6.5 2.1 100
2003-04 42.3 12.5 11.1 25.2 6.8 2.1 100
2004-05 40.5 12.8 10.5 26.6 6.9 2.7 100
2005-06 37.9 13.7 10.5 26.4 6.4 5.2 100
2006-07 42.2 14.3 9.2 24.8 7.7 1.9 100
2007-08 40.5 14.2 8.9 26.6 7.8 2.0 100
2008-09 33.4 15.2 11.1 29.1 8.8 2.4 100
2009-10 38.7 16.9 10.1 26.4 5.5 2.4 100
Punjab
2000-01 36.4 9.9 14.1 28.0 7.6 4.0 100
2001-02 36.3 10.6 12.5 27.8 8.8 4.1 100
2002-03 41.9 11.6 9.8 27.0 7.9 1.8 100
2003-04 37.5 14.4 8.8 29.1 8.3 1.8 100
2004-05 35.2 14.1 8.2 32.0 8.4 2.1 100
2005-06 32.7 15.4 9.3 32.6 8.1 2.0 100
2006-07 32.8 16.1 8.8 31.4 9.3 1.6 100
2007-08 34.3 15.6 7.8 30.9 9.1 2.3 100
2008-09 23.7 17.1 13.1 34.1 10.5 1.5 100
2009-10 27.6 18.7 12.5 32.8 7.0 1.4 100
Sindh
2000-01 43.3 10.5 16.0 21.0 6.1 3.2 100
2001-02 41.2 10.4 17.1 21.7 6.9 2.8 100
2002-03 48.7 10.7 16.9 17.6 4.2 1.9 100
2003-04 50.8 11.1 13.0 19.2 4.0 1.9 100
2004-05 49.5 12.4 11.9 19.0 4.5 2.7 100
2005-06 48.1 13.9 11.8 20.0 4.7 1.4 100
2006-07 56.8 13.5 9.3 13.9 5.0 1.5 100
2007-08 50.9 13.2 9.4 19.1 6.2 1.2 100
2008-09 47.8 13.2 8.5 21.6 6.5 2.3 100
2009-10 52.0 14.6 8.2 19.3 4.0 1.9 100
Khyber Pakhtunkhwa
2000-01 34.8 7.4 20.4 24.7 9.6 3.1 100
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

2001-02 38.4 7.7 16.4 25.7 9.3 2.5 100

2002-03 41.0 8.8 11.9 28.7 7.8 1.8 100
2003-04 37.6 9.0 11.7 30.6 9.0 2.1 100
2004-05 35.7 9.9 10.7 32.6 8.1 3.1 100
2005-06 28.0 9.3 7.2 27.2 5.7 22.6 100
2006-07 37.6 11.4 5.9 32.4 9.5 3.2 100
2007-08 32.3 13.3 8.0 35.9 8.7 1.9 100
2008-09 28.9 14.7 8.6 35.1 9.4 3.3 100
2009-10 37.9 19.2 6.5 26.4 4.8 5.1 100
Balochistan
2000-01 29.7 10.7 19.0 22.2 10.4 8.0 100
2001-02 29.2 11.0 18.2 23.0 10.3 8.3 100
2002-03 41.9 11.5 19.0 17.4 6.2 4.0 100
2003-04 42.5 12.5 15.2 18.7 6.3 4.7 100
2004-05 40.2 12.0 17.1 19.1 6.8 4.9 100
2005-06 42.6 12.5 17.8 18.2 6.0 2.8 100
2006-07 42.7 11.7 17.1 19.4 6.4 2.8 100
2007-08 47.2 11.1 14.4 17.7 5.6 4.1 100
2008-09 42.5 12.0 13.1 19.0 6.5 6.9 100
2009-10 50.7 11.1 11.3 18.0 4.2 4.7 100
32 Source: SPDC Estimates based on Federal Budget in Brief (various issues)
 CHAPTER 3
The cost of higher security related expenditures was largely at the
expense of lower allocations by economic and health affairs. The share
of the former has declined from 16 percent in 2000-01 to 10 percent in
2009-10, a fall of 6 percentage points. The share of health expenditures
has fallen from 8 percent in 2000-01 to 5 percent in 2009-10.
In the case of Punjab the proportion of spending on public safety
almost doubled in 2009-10 compared to 2000-01. A positive development
has been a rise of 5 percentage point in the share of education
expenditures during the same period. Similar to Punjab, in Khyber
Pakhtunkhwa the share of expenditure on public order and safety affairs
increased substantially from 7 percent in 2000-01 to 19 percent in 2009-
10. Among provinces, this increase was the highest.

Development Priorities
Medium term development priorities of the Government of Pakistan are
reflected in the Five Year Plans. In its more than 60 years of history,
Pakistan has had seven five-year plans, a non-plan period and a
Medium Term Development Framework (MTDF). While the five year
plans are medium term planning instruments, they are implemented
through the development budgets of the federal and provincial
governments which are either called Public Sector Development
Programs (PSDPs) or Annual Development Programs (ADPs). MTDF is
the latest available development framework covering a five-year period
from 2005 to 2010.
Table 3.4 shows the national, federal and provincial development
priorities as reflected in the MTDF. The MTDF priorities indicate that up-
gradation of physical infrastructure (48.6 percent) is the top priority at

Table 3.4 MTDF Development Priorities 2005-10

(Percentage Share)
National Federal Provincial
Upgrading physical infrastructure 48.6 55.9 29.0
Power 19.6 26.8 0.2
Water Resources 13.5 14.6 10.6
Transport and Communications 14.9 13.7 18.2
Others 0.6 0.8 0.0 F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
Achieving Millennium Development Goals 33.4 29.2 50.4
Education and Vocational Training 10.8 8.2 17.7
Physical Planning and Housing 4.6 3.0 9.1
Health and Nutrition 4.3 3.8 5.8
Science and Technology 2.6 3.5 0.0
Rural Development 2.5 0.5 8.2
Others 8.6 10.2 4.0
Balanced development 13.2 11.7 17.4
Special Areas 5.3 7.3 0.0
Special Programmes 4.1 4.4 3.3
Others 3.8 0.0 14.1
Accelerating output growth 3.2 3.2 3.2
Agriculture/Livestock 2.5 2.6 2.0
Industry 0.5 0.5 0.4
Minerals 0.3 0.1 0.8
Others 1.5 0.0 5.6
Total 100.0 100.0 100.0
Source: SPDC estimates based on Medium Term Development Framework 2005-10
33
 CHAPTER 3
national level followed by the Millennium Development Goals (33.4
percent), balanced development (13.2 percent) and accelerating output
growth (3.2 percent). Within the physical infrastructure sector, energy has
been given the highest priority with 19.8 percent share of total allocations
followed by transport and communications (14.9 percent) and water
resources (13.5 percent). Within the Millennium Development Goals,
education and vocational training including higher education would
receive the highest priority with 10.8 percent share followed by physical
planning and housing (4.6 percent), health and nutrition (4.3 percent) and
science and technology (2.6 percent).
In line with national development priorities energy has been given
the highest priority (26.8 percent) at the federal level, followed by water
resources (14.6 percent), transport and communications (13.7 percent),
others in achieving MDGs (10.2 percent), and education and vocational
training (8.2 percent). At the provincial level transport and
communications (18.2 percent), and education and vocational training
(17.7 percent) are the top priorities. Water resources (10.6 percent),
physical planning and housing (9.1 percent), rural development (8.2
percent) and health and nutrition (5.8 percent) are among the leading
development priorities.

MTDF Targets and Development Allocations

Table 3.5 presents a comparative picture of development expenditures as
envisaged in MTDF and allocated through PSDP at constant prices of
2004-05. This comparison shows that during 2005-06 to 2007-08, the
government spent a comparatively high amount on national public sector
development programs compared to MTDF targets. However, in recent
years the trend of high development spending changed due to high
growth in security related expenditures. As a result, PSDP allocations
were less than the MTDF targeted expenditures during 2008-09 and
2009-10.
Table 3.6 presents the sector-wise share of federal development
expenditures during the MTDF period. It also shows the comparative
sector wise average annual shares in federal PSDP and MTDF during
2005-10. Given the prevailing energy crisis in the country the MTDF
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

places power as a top priority with an average share of roughly 27

percent per annum whereas, the actual federal PSDP allocated only 10
percent per annum to power. Similarly, in case of education, physical
planning, health, science and technology, and rural development PSDP
allocations are less than what was anticipated in the MTDF.

Table 3.5 MTDF Expenditure Targets and PSDP Allocations

At Constant prices of 2004-05
(Rs Billion)
Years MTDF Targets PSDP Allocations* Difference
2005-06 251.9 338.3 86.5
2006-07 274.5 372.9 98.4
2007-08 304.1 346.9 42.8
2008-09 354.7 305.3 -49.4
2009-10 417.0 344.8 -72.3
Total 1,602.1 1,708.1 106.0
34 *Budget estimates for 2009-10
Source: SPDC estimates based on Medium Term Development Framework 2005-10 and Pakistan Economic Survey 2009-10
 CHAPTER 3
Table 3.6 Federal Development Priorities 2005-10: PSDP and MTDF
(% Share)
Federal PSDP MTDF
2005-06 2006-07 2007-08 2008-09 2009-10 2005-10 2005-10 Difference
A. Physical Infrastructure 45.2 37.2 43.9 41.1 40.2 41.5 55.9 -14.4
Power 10.7 10.2 7.2 10.7 13.1 10.4 26.8 -16.4
Water Resources 17.5 14.9 21.5 12.7 9.5 15.2 14.6 0.6
Transport and Communications 16.8 11.8 15.0 17.5 17.3 15.7 13.7 2.0
Others 0.2 0.3 0.2 0.1 0.3 0.2 0.8 -0.6
B. Millennium Development Goals 34.6 27.2 26.5 30.6 34.3 30.7 29.2 1.5
Education and Vocational Training 8.0 7.1 6.9 8.4 8.0 7.7 8.2 -0.5
Physical Planning and Housing 0.8 0.4 0.8 1.2 1.3 0.9 3.0 -2.1
Health and Nutrition 4.6 3.4 4.5 5.7 6.2 4.9 3.8 1.1
Science and Technology 1.5 1.4 1.1 0.6 0.5 1.0 3.5 -2.5
Rural Development 0.0 0.2 0.0 0.0 0.1 0.1 0.5 -0.4
Others 19.8 14.7 13.3 14.8 18.3 16.2 10.2 6.0
C. Balanced development 15.4 31.7 22.5 21.4 19.6 22.1 11.7 10.4
Special Areas 8.7 26.4 15.7 11.4 11.7 14.8 7.3 7.5
Special Programmes 6.7 5.3 6.8 10.0 7.9 7.3 4.4 2.9
D. Accelerating output growth 4.8 3.9 7.1 6.9 5.9 5.7 3.2 2.5
Agriculture/Livestock 4.5 3.7 5.0 5.9 4.5 4.7 2.6 2.1
Industry 0.3 0.2 2.1 1.0 1.4 1.0 0.5 0.5
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 0.0

Source: SPDC Estimates based on Federal Budget in Brief (various issues)

In contrast, sectors, areas and programs

which have linkages with the war on terror,
received greater allocations in the PSDPs. For
instance, the share of development transfers to
special areas (such as FATA, Gilgit Baltistan
and Azad Kashmir) is 8 percentage points
higher in the federal PSDP than in the MTDF.
Similarly "others" under the heading of
Millennium Development Goals contain
development expenditure of law and order, and F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
defence. Its average annual share in PSDP
allocation is 6 percentage points higher than
that in MTDF. Moreover, the average share of
infrastructure development for transport and
communication in PSDP is 2 percentage points
higher compared to that in MTDF.

Pro-Poor (PRSP) Spending

he poverty reduction process in Pakistan
T was promoted through the Interim Poverty
Reduction Strategy in 2001 backed by the
Poverty Reduction and Growth Facility (PRGF).
Later, this poverty reduction strategy was
finalized into the Poverty Reduction Strategy
Paper (PRSP I) in 2003. These strategy papers 35
marked 15 broad expenditure categories as
 CHAPTER 3
poverty related expenditures. These 15 expenditure categories are also
mentioned in the "Fiscal Responsibility and Debt Limitation Act, 2005"
with the condition that expenditure under these categories would not be
less than 4.5 percent of GDP. In 2009, PRSP II extended the categories
of pro-poor expenditure from 15 to 17. The trend of these expenditures is
regularly monitored through the PRSP quarterly and annual progress
reports.
Table 3.7 presents the trend in total nominal PRSP expenditure
excluding and including subsidies. In absolute terms PRSP expenditure
increased from Rs166 billion in 2001-02 to 1096 billion in 2009-10.
Interestingly these expenditures were raised from Rs427 billion in 2006-07
to Rs1042 billion in 2007-08; a massive increase of Rs615 billion in just
one year. Similarly, the amount of subsidies also increased from a meager
Rs5.5 billion to Rs399 billion during the same period. The reasons
attributed to increase are: subsidies mentioned in PRSP documents prior
to 2007-08 were only on food, which were substituted with subsidies on all
items from 2007-08 onwards. Second, there was an oil price shock in
2007-08. The oil subsidy caused a massive increase in total subsidies
which rose to Rs399 billion in 2007-08.
Though insulating the population against the record peaks of world oil
prices appears to be a pro-poor policy, the problem is that it is a
generalized subsidy that everyone can avail, regardless of socio-
economic standing. In general, the usage of POL products is higher
among the upper and middle income groups compared to the poor
population. Therefore, a more targeted subsidy will have a greater impact
on easing the economic strain on the poorer sections of the society than
what the given subsidy achieves. Moreover, financing of the subsidy
through bank borrowing caused inflationary pressures subsequently.
A new series of PRSP expenditures was generated by adjusting the
figures for PRSP after excluding the subsidies (see Table 3.7). The adjusted
PRSP series yield a different picture of the trend in poverty reduction
expenditures. It is important to note that the adjusted PRSP expenditures
except in the initial two years of 2001-02 and 2002-03, are more than 4.5
percent of GDP, indicating achievement of "Fiscal Responsibility and Debt
Limitation Act, 2005" target. Comparatively, these expenditures have been
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

higher after 2007-08 due to higher outlays on law and order.

Table 3.7 PRSP Expenditure

(Rs Billion)
Total PRSP Subsidies PRS Expenditures PRSP Expenditures
Expenditures excluding Subsidies excluding Subsidies
as % of GDP
2001-02 166.0 4.3 161.7 3.6
2002-03 208.9 10.9 198.0 4.1
2003-04 261.1 8.5 252.6 4.5
2004-05 316.3 5.4 310.9 4.8
2005-06 375.9 6.0 369.9 4.9
2006-07 426.7 5.5 421.2 4.9
2007-08 1042.0 398.5 643.5 6.3
2008-09 977.1 220.6 756.5 5.9
2009-10 1095.6 234.9 860.7 5.9
36 Source: SPDC Estimates based on Federal Budget in Brief (various issues)
 CHAPTER 3
Table 3.8 Category wise PRSP Expenditures as a percentage of GDP
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
I. Market Access and
Community Services 0.2 0.3 0.5 0.6 0.8 0.9 1.0 1.0 0.8
Roads, Highways,
and Bridges 0.1 0.3 0.4 0.5 0.7 0.7 0.8 0.8 0.6
Water Supply & Sanitation 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2
II. Human Development 1.9 2.1 2.3 2.4 2.5 2.6 2.5 2.6 2.3
Education 1.5 1.6 1.7 1.8 1.9 1.9 1.8 1.9 1.5
Health 0.4 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.7
Population Planning 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0
III. Rural Development 0.5 0.7 0.8 0.9 1.0 1.2 1.5 1.1 1.3
Agriculture 0.2 0.3 0.4 0.6 0.8 0.9 1.2 0.7 0.7
Land Reclamation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Rural Development 0.3 0.3 0.3 0.2 0.2 0.3 0.2 0.1 0.4
Peoples Works
Programme-II 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.2 0.2
IV. Safety Nets 0.2 0.1 0.1 0.1 0.4 0.2 0.4 0.4 0.5
Social Security & Welfare 0.1 0.0 0.1 0.0 0.1 0.1 0.2 0.2 0.4
Food Support Programme 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0
Peoples Works
Programme-I 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Natural Calamities 0.0 0.0 0.0 0.0 0.3 0.1 0.1 0.1 0.1
Low Cost Housing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
V. Governance 0.7 0.8 0.7 0.8 0.1 0.1 0.9 0.9 1.1
Law and Order 0.7 0.8 0.7 0.7 0.0 0.0 0.9 0.8 1.0
Justice Administration 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1
Adjusted PRSP Expenditures 3.6 4.1 4.5 4.8 4.9 4.9 6.3 5.9 5.9

Source: SPDC estimates based on Pakistan Economic Survey (2009-10)

Priorities in Pro-Poor (PRSP) Spending

Table 3.8 summarizes the trend in poverty related expenditures as
percentage of GDP from 2001-02 to 2009-10 after excluding subsidies.
These expenditure increased from 3.6 percent of GDP to 6.3 percent
of GDP in 2007-08 and declined to 5.9 percent in subsequent years. F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
These categories of pro-poor expenditures are generally clubbed
under five broad groups i.e. Market Access and Community Services;
Human Development; Rural Development; Safety Nets; and
Governance.
Market access and community services consist of expenditures on
infrastructure such as roads and bridges, and water supply and
sanitation. As a percentage of GDP these expenditures were 0.2 percent
of GDP in 2001-02, which, gradually increased to 1 percent of GDP in
2007-08 and 2008-09 before declining to 0.8 percent of GDP in 2009-10.
Expenditures on human development consist of education, health
and population planning. Expenditures on these three categories were
1.9 percent of GDP in 2001-02 which, later touched its peak of 2.6
percent of GDP in 2006-07 and 2008-09. In 2009-10, however, these
expenditures declined to 2.3 percent of the GDP.
Rural development, safety nets and governance also increased from 0.5
percent of GDP, 0.2 percent of GDP and 0.7 percent of GDP to 1.3 percent 37
 CHAPTER 3
of GDP, 0.5 percent of GDP and 1.1 percent of GDP respectively over the
three years. While expenditure on market access and community services,
and human development declined as a percentage of GDP in 2009-10, the
expenditures on three categories namely rural development, safety nets and
governance increased.

Education
Table 3.9 shows the expenditures on the education sector. According to
these statistics, the spending on education increased from Rs56.5 billion
in 2000-01 to Rs224.2 billion in 2009-10, indicating a fourfold increase. As
a percentage of the GDP, these expenditures continuously increased
from 1.3 percent in 2000-01 to 1.9 percent in 2008-09. However, it
declined to 1.5 percent of GDP in 2009-10. In absolute terms, spending
on education actually declined by 7 percent in 2009-10 compared to
2008-09. Allocations to primary and secondary education were drastically
slashed by 12 and 10 percent respectively in 2009-10.
It is also evident from the trend in composition of education spending
that priorities in education have shifted from primary and secondary
education to tertiary/higher education. For instance, in 2000-01 the share
of primary and secondary education in total education spending was 48
percent and 28 percent respectively which declined to 30 percent and 24
percent subsequently. In contrast, the share of spending on general
universities, colleges and institutes increased from 11 percent of total
education spending in 2000-01 to 20 percent in 2009-10, a massive
increase of roughly 9 percentage points.

Table 3.9 Trend in Expenditure on Education

(Rs billions)
Primary Secondary General Professional Teacher & Others Total As %
Years Education Education Universities Universities Vocational of GDP
Training
2000-01 27.0 16.0 6.4 2.8 1.4 2.9 56.5 1.3
2001-02 31.3 16.7 8.1 3.8 3.0 3.5 66.3 1.5
2002-03 33.3 20.3 12.7 4.0 1.7 6.5 78.4 1.6
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

2003-04 43.3 23.4 14.9 4.7 1.8 9.4 97.7 1.7

2004-05 49.3 27.4 14.4 12.9 2.3 10.6 116.9 1.8
2005-06 53.8 33.9 29.2 8.3 2.3 14.2 141.7 1.9
2006-07 52.7 34.4 36.2 7.4 3.2 28.2 162.1 1.9
2007-08 66.9 45.5 36.7 10.8 2.9 24.9 187.7 1.8
2008-09 77.9 59.3 46.4 12.3 3.7 40.8 240.4 1.9
2009-10 68.4 53.7 44.9 13.5 5.6 38.0 224.2 1.5
Composition of Education Expenditures (%)
2000-01 47.80 28.30 11.30 5.00 2.40 5.20 100
2001-02 47.20 25.20 12.10 5.70 4.50 5.20 100
2002-03 42.40 25.80 16.20 5.10 2.20 8.30 100
2003-04 44.30 24.00 15.30 4.90 1.90 9.70 100
2004-05 42.20 23.50 12.30 11.00 2.00 9.10 100
2005-06 38.00 23.90 20.60 5.80 1.60 10.00 100
2006-07 32.50 21.20 22.30 4.50 2.00 17.40 100
2007-08 35.60 24.20 19.60 5.80 1.50 13.30 100
2008-09 32.40 24.70 19.30 5.10 1.50 17.00 100
2009-10 30.50 23.90 20.00 6.00 2.50 17.00 100
38 Source: SPDC Estimates based on Federal Budget in Brief (various issues)
 CHAPTER 3
Table 3.10 Trend in Expenditure on Health
(Rs billions)
General Hospitals Mother & Health Facilities & Others Total As %
Years & Clinics Child Health Preventive Measures of GDP
2000-01 13.1 0.1 2.6 1.7 17.5 0.4
2001-02 14.1 0.1 2.6 2.5 19.2 0.4
2002-03 16.1 0.1 3.4 2.8 22.4 0.5
2003-04 19.5 0.1 4.0 3.5 27.0 0.5
2004-05 21.9 0.1 5.5 4.0 31.4 0.5
2005-06 27.6 0.2 7.2 4.2 39.2 0.5
2006-07 37.2 1.4 8.7 5.9 53.2 0.6
2007-08 44.5 0.2 11.1 6.7 62.4 0.6
2008-09 61.5 0.2 12.9 9.1 83.7 0.7
2009-10 60.2 0.4 18.4 23.8 102.8 0.7
Composition of Health Expenditures (%)
2000-01 75.0 0.3 14.7 10.0 100
2001-02 73.3 0.3 13.6 12.8 100
2002-03 72.1 0.3 15.0 12.6 100
2003-04 72.3 0.2 14.7 12.8 100
2004-05 69.6 0.2 17.6 12.6 100
2005-06 70.3 0.6 18.4 10.8 100
2006-07 70.0 2.6 16.4 11.0 100
2007-08 71.2 0.3 17.7 10.8 100
2008-09 73.5 0.3 15.4 10.8 100
2009-10 58.6 0.3 17.9 23.2 100
Source: SPDC Estimates based on Federal Budget in Brief (various issues)

Health
The expenditure on the health sector indicates that the situation in health
is different to that in education. Table 3.10 shows that over the last
decade health sector spending increased substantially from as low as
Rs17.5 billion in 2000-01 to a high of Rs102.8 billion in 2009-10.
However, as a percentage of GDP these expenditures are still less than
one percent of the GDP.
Nearly three quarters of health spending was on general hospitals

F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
and clinics. Given the high infant and maternal mortality rates, it is
astonishing that mother and child health care received less than 1
percent of the total health spending. On the whole, however, the share of
spending for various categories within the health sector remained largely
unchanged up to 2008-09. However, in 2009-10, there was a major shift
in the pattern of health expenditure, whereby the share of expenditure on
general hospitals and clinics declined by roughly 15 percentage points
while share of other expenditures increased sharply by more than 12
percentage points.

Future Outlook of Social Development

espite a slowdown in the pace of social development during the later
D part of 2000s, the future outlook for social development has been
improved by the 7th NFC Award, finalized during 2009-10. The award
transfers greater resources to provincial governments, which are largely
responsible for provision of social services as per the 1973 Constitution
of Pakistan (amended). The subsequent sections present an overview of 39
 CHAPTER 3
the financial implications of 7th NFC Awards by undertaking a pre and
post NFC award comparison of the budget priorities of provincial
governments.

Financial Implications of the 7th NFC Award on Provinces

One of the major achievement of the present government is the successful
conclusion of the 7th National Finance Commission (NFC) Award, which
has brought a change in the resource distribution formula. Given the past
experience of several inconclusive NFC Awards, a consensus based NFC
Award after 1974, 1991 and 1997 is itself a big achievement. It is for the
first time that the distribution of resources among provinces is based not
only on population but also on other criteria such as low development,
inverse population density and revenue collection/generation. The 7th
NFC Award also helped resolve other issues such as Gas Development
Surcharge (GDS) and Hydroelectricity Profit.
The financial implications of the award for federal and provincial
governments are huge with a substantial increase in transfers from the
federal government to provinces due to a number of factors. First, the
collection charges have been decreased from 5 percent to 1 percent;
thereby, enlarging the overall size of the divisible pool. Second, the
federal government and all the four provinces recognized the role of
Khyber-Pakhtunkhwa as a frontline province against the war on terror.
One percent of net proceedings of the divisible pool have, therefore,
been earmarked for Khyber Pakhtunkhwa during the award period. In
2010-11, Khyber Pakhtunkhwa will receive an additional amount of Rs15
billion. Third, the remaining proceeds of the provincial share of the
divisible pool have been increased from 46.25 percent (excluding
grants) to 56 percent in 2010-11 and 57.5 percent for rest of the award
period. This means that the share of federal government in the net
divisible pool will be 44 percent during 2010-11 and 42.5 percent in rest
of the award period. Finally, GST on Services collected in the CE mode
has also been transferred to provincial governments under the straight
transfers mode -- implying that revenues collected from a province would
be transferred to the province on the basis of collection. Additionally, the
NFC also allowed GDS arrears retroactively to be paid to Balochistan on
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

the basis of the new formula and for payment of the long held up hydel
profits to Khyber-Pakhtunkhwa.
Based on the estimate of gross revenue receipts (tax and non tax
revenues collected by the federal government), an increase of Rs359
billion is projected for 2010-11 compared to 2009-10, which shows a
growth rate of 17.5 percent. However, net revenue receipts of the federal
government are shown to decline by Rs19 billion or 14 percent in 2010-
11 compared to 2009-10. This decline is an outcome of greater revenue
transfers from the federal government to provincial governments due to
7th NFC Award.
Table 3.11 presents the estimates of this increase based on budget
documents under two heads, namely divisible pool transfers, and straight
transfers, grants and arrears. On an aggregate basis, divisible pool
transfers are likely to increase from Rs574 billion in 2009-10 to Rs865
billion in 2010-11, indicating an increase of more than 50 percent in just
one year. Similarly, due to the increase in the rate of excise duty on
40 natural gas, arrears on gas development surcharge and net hydel profits
 CHAPTER 3
Table 3.11 Financial Implications of 7th NFC Award on Provinces
as per Budget 2010-11
(Rs billions)
2009-10 2010-11 Increase
Revised Budget Absolute (%)
Divisible Pool Transfers including 1% war on terror
Punjab 323.1 436.8 113.8 35
Sindh 145.5 207.3 61.7 42
Khyber Pakhtunkhwa 76.0 138.7 62.6 82
Balochistan 29.4 83.0 53.6 182
Total (A) 574.1 865.8 291.7 51
Straight Transfers, Grants and Arrears
Punjab 26.3 62.6 36.3 138
Sindh 62.9 78.4 15.5 25
Khyber Pakhtunkhwa 38.5 52.7 14.2 37
Balochistan 26.0 28.4 2.4 9
Total (B) 153.7 222.0 68.4 44
Total transfers
Punjab 349.4 499.4 150.1 43
Sindh 208.4 285.6 77.2 37
Khyber Pakhtunkhwa 114.5 191.4 76.8 67
Balochistan 55.4 111.4 56.0 101
Total (A+ B) 727.7 1,087.8 360.1 49
Source: SPDC Estimates based on Explanatory Memorandum on Federal Receipts (2010-11)

and straight transfers to provincial governments will also increase

sharply. While there is a decline in grant in aid to provinces in the 7th NFC
Award compared to the Presidential Order 2006, the aggregate of straight
transfers, grants and arrears are expected to grow by 44 percent, from
Rs154 billion in 2009-10 to Rs222 billion in 2010-11.
In absolute terms, Punjab is the biggest beneficiary of the 7th NFC
Award, as it is likely to receive Rs150 billion additional revenues in 2010-
11 compared to 2009-10. In percentage terms, however, Balochistan is
the major beneficiary, with an increase of 101 percent, followed by
Khyber-Pakhtunkhwa with 67 percent. In percentage terms, the 7th NFC
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
Award is more beneficial for the relatively backward provinces. Sindh
gains the least - an increase of just 37 percent - as the expected gain
from GST on Services has not been reflected in the budget of 2010-11.

Impact of the 7th NFC Award on Provincial Expenditures

Given the challenges of security, law and order, and general socio-
economic development, it is important to analyze how provincial
governments would deal with an almost 50 percent increase in transfer
largely due to the 7th NFC Award. Table 3.12 presents a province-wise
comparative picture of both non-development and development
expenditure before and after the 7th NFC Award.
Balochistan's non-development expenditures can rise by a record
level of Rs30.6 billion in 2010-11 compared to 2009-10, indicating an
enormous growth of 58 percent in just one year. In the other three
provinces, the growth in non-development expenditures ranges from 17
percent to 19 percent. Given the 50 percent increase in salaries and high
level of inflation these growth rates seem quite reasonable.
41
 CHAPTER 3
Table 3.12 Provincial Expenditures Before and After of the 7th NFC Award
as per Budget 2010-11
(Rs billions)
2009-10 2010-11 Increase
Revised Budget Absolute (%)
Non Development Revenue Expenditure
Punjab 318.2 386.8 68.5 22
Sindh 224.8 268.3 43.4 19
Khyber Pakhtunkhwa 109.0 128.0 19.0 17
Balochistan 52.8 83.4 30.6 58
Total (A) 704.9 866.5 161.6 23
Development Expenditure
Punjab 149.5 207.5 58.1 39
Sindh 80.0 115.0 35.0 44
Khyber Pakhtunkhwa 46.3 69.3 23.0 50
Balochistan 27.2 26.3 -0.9 -3
Total (B) 303.1 418.2 115.1 38
Total Expenditures
Punjab 467.7 594.3 126.6 27
Sindh 304.9 383.3 78.4 26
Khyber Pakhtunkhwa 155.3 197.2 41.9 27
Balochistan 80.0 109.8 29.7 37
Total (A+ B) 1,007.9 1,284.6 276.7 27
Source: SPDC Estimates based on Province-wise Annual Budget Statements (2010-11)

As per budget estimates, development expenditures show a

massive growth of 50 percent in Khyber Paktunkhwa, followed by 44
percent and 39 percent growth in Sindh and Punjab respectively. In
contrast to rest of the three provinces, Balochistan's budget documents
show a negative growth of 3 percent in development expenditures.

Priorities in Non-development Expenditure

Table 3.13 presents the broad categories of current revenue
expenditures, revised estimates for 2009-10 and budget estimates for
2010-11 for each province. Punjab's current revenue expenditure
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

increase from Rs318 billion in 2009-10 to Rs387 billion in 2010-11

indicates an absolute increase of more than Rs68 billion or growth of 21
percent. Given the 50 percent increase in salaries, the bulk of this
increase would be consumed by general public services and transfers to
devolved departments. Provincial expenditure on education also shows a
substantial increase of Rs7.4 billion in 2010-11 compared to 2009-10.
The already high expenditure on public order and safety affairs increased
by Rs3.5 billion.
Current revenue expenditures of Government of Sindh will increase
from Rs225 billion in 2009-10 to Rs268 billion in 2010-11 indicating an
absolute increase of more than Rs43 billion or growth of 19 percent.
Similar to Punjab, the bulk of this increase will be absorbed by general
public services and transfers to devolved departments due to 50 percent
increase in salaries. Provincial expenditure on education also shows a
substantial increase of Rs6.7 billion in 2010-11 compared to 2009-10.
Public order and safety affairs and provincial health expenditure also
42 show an increase of Rs.3.4 billion and Rs1.7 billion respectively.
 CHAPTER 3
Table 3.13 Provincial Current Revenue Expenditures Before and
After the 7th NFC Award as per Budget 2010-11
(Rs billions)
2009-10 2010-11 Increase
Revised Budget Absolute (%)
PUNJAB
General Public Services 6.3 70.1 23.8 51.4
Transfers 24.5 152.1 27.6 22.2
Public Order and safety Affairs 59.5 63.0 3.5 5.9
Economics Affairs 39.7 44.9 5.2 13.1
Education 21.5 28.9 7.4 34.3
Health 22.3 22.0 -0.3 -1.1
Other Current Expenditures 4.6 5.9 1.3 28.5
Total 318.2 386.8 68.5 21.5
SINDH
General Public Services 44.0 59.2 15.2 34.5
Transfers 104.3 121.1 16.9 16.2
Public Order and safety Affairs 32.8 36.3 3.4 10.4
Economics Affairs 18.4 18.6 0.2 1.1
Education 12.0 18.7 6.7 56.1
Health 9.0 10.8 1.7 19.3
Other Current Expenditures 4.3 3.6 -0.7 -16.3
Total 224.8 268.3 43.4 19.3
KHYBER PAKHTUNKHWA
General Public Services 16.3 24.5 8.2 50.3
Transfers 50.9 57.8 6.9 13.5
Public Order and safety Affairs 21.0 24.8 3.8 18.2
Economics Affairs 7.1 9.1 2.0 28.0
Education 4.4 6.2 1.8 40.7
Health 3.7 4.2 0.6 15.4
Other Current Expenditures 5.6 1.3 -4.3 -76.6
Total 109.0 128.0 19.0 17.4
BALOCHISTAN
General Public Services 11.8 23.0 11.2 94.9
Transfers 20.9 4.0 -16.9 -80.8
Public Order and safety Affairs 5.8 12.5 6.7 114.5
Economics Affairs 4.0 7.1 3.1 79.6

F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
Education 2.7 17.3 14.6 542.1
Health 1.6 7.4 5.8 363.6
Other Current Expenditures 6.1 12.1 6.0 99.3
Total 52.8 83.4 30.6 58.0
Source: SPDC Estimates based on Province-wise Annual Budget Statements (2010-11)

As per budget documents, the current revenue expenditure of

Khyber Pakhtunkhwa will increase from Rs109 billion in 2009-10 to
Rs128 billion in 2010-11 indicating an absolute increase of more than
Rs19 billion or growth of 17 percent. The bulk of this increase will be
taken up by general public services and transfers to devolved
departments. Public order and safety affairs, and economic affairs also
show an increase of more than 18 percent and 28 percent respectively.
Provincial expenditure on education and health indicates a growth of
more than 40 percent and 15 percent respectively.
Compared to the rest of the provinces, current revenue expenditures
show a massive growth of 58 percent in Balochistan. As highlighted
earlier, expenditure on general public services is likely to double in just 43
 CHAPTER 3
one year. In addition, a massive decline in transfers to devolved
departments show that expenditure of these departments have already
been merged in provincial expenditure. Consequently, education and
health expenditures indicate more than five-fold and three-fold increase
respectively in just one year. Simultaneously, expenditures on public
order and safety affairs substantially increased from Rs5.8 billion in 2009-
10 to Rs12.5 billion in 2010-11.

Priorities in development Expenditures

Table 3.14 presents the broad categories of development expenditures,
revised and budget estimates for 2009-10 and 2010-11 respectively for
each province. Punjab's development expenditure is expected to
increase from Rs149 billion in 2009-10 to Rs207 billion in 2010-11
indicating an absolute increase of more than Rs58 billion or growth of 39
percent. More than 50 percent of this amount is allocated for economic
services. The other two categories, which show sizeable increase in their
development expenditures, are education and health. This indicates that
economic services, education and health are the top development
priorities of the province for 2010-11.
Development expenditures of Sindh will increase from Rs80 billion in
2009-10 to Rs115 billion in 2010-11 indicating an absolute increase of
more than Rs35 billion or growth of 44 percent. Sindh's development
expenditures on social protection show a massive increase of roughly
Rs36 billion, which is more than the total increase in development
expenditures. As a result, all the remaining categories indicate a decline
or negligible increase. A detailed scrutiny of development expenditures on
social protection reveals that these expenditures contain expenditures on
special projects and matching allocations.
Development expenditure of Khyber Pakhtunkhwa is expected to
increase from Rs46 billion in 2009-10 to Rs69 billion in 2010-11 indicating
an absolute increase of more than Rs23 billion or growth of 50 percent.
Bulk of this increase is allocated for economic services, general public
services, education and environment protection.
In contrast to the other provinces, development expenditure of
F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S

Balochistan shows a decline in development expenditure of almost Rs0.9

billion. Similar to 2009-10, more than 50 percent of development
expenditures are allocated for economic services in 2010-11, indicating
that the economic infrastructure is top development priority of
Balochistan. Education and environment protection are other noticeable
categories, which have more than 5 percent share in development
allocation in 2010-11.
In conclusion, the above analysis clearly demonstrates that the war
on terror has shifted expenditure priorities away from the social sectors
especially after 2004-05. The 7th NFC could lead to a return to social
development due to higher transfer to provincial governments but this
will depend on the realisation of the optimistic revenue projections in
2010-11.

44
 CHAPTER 3
Table 3.14 Provincial Development Expenditures Before and
After the 7th NFC Award as per Budget 2010-11
(Rs billions)
2009-10 2010-11 Increase
Revised Budget Absolute (%)
PUNJAB
General Public Service 37.1 32.0 -5.1 -14
Public Order & Safety Affairs 2.4 3.4 1.0 43
Economic Affairs 67.9 109.5 41.7 61
Environment Protection 0.4 0.3 -0.1 -21
Housing & Community Amenities 26.3 23.4 -3.0 -11
Health 6.0 15.3 9.3 156
Recreation, Culture And Religion 0.4 1.6 1.2 285
Education Affairs & Services 6.9 20.7 13.7 198
Social Protection 2.1 1.4 -0.7 -34
Total 149.5 207.5 58.1 39
SINDH
General Public Service 0.0 0.7 0.7
Public Order & Safety Affairs 0.0 0.0 0.0
Economic Affairs 29.1 27.3 -1.8 -6
Environment Protection 2.3 1.4 -0.9 -39
Housing & Community Amenities 2.6 1.3 -1.3 -49
Health 1.5 3.5 2.0 139
Recreation, Culture And Religion 0.6 0.5 -0.1 -17
Education Affairs & Services 6.5 6.9 0.4 7
Social Protection 37.4 73.3 35.9 96
Total 80.0 115.0 35.0 44
KHYBER PAKHTUNKHWA
General Public Service 2.0 6.0 3.9 194
Public Order & Safety Affairs 1.1 0.0 -1.0 -96
Economic Affairs 16.0 26.6 10.5 66
Environment Protection 1.7 4.3 2.6 157
Housing & Community Amenities 10.5 11.7 1.2 11
Health 4.5 5.9 1.4 32
Recreation, Culture And Religion 0.3 0.7 0.4 157
Education Affairs & Services 10.1 13.8 3.7 37
Social Protection 0.2 0.4 0.1 50
Total 46.3 69.3 23.0 50 F I S C A L I M PA C T O F T H E S E C U R I T Y C R I S I S
BALOCHISTAN
General Public Service 2.7 5.8 3.0 111
Public Order & Safety Affairs 1.6 0.1 -1.5 -93
Economic Affairs 14.9 13.7 -1.2 -8
Environment Protection 1.9 1.5 -0.5 -25
Housing & Community Amenities 3.0 1.2 -1.8 -60
Health 0.6 0.9 0.3 41
Recreation, Culture And Religion 0.1 0.2 0.1 196
Education Affairs & Services 1.8 2.3 0.5 28
Social Protection 0.6 0.7 0.1 16
Total 27.2 26.3 -0.9 -3
Source: SPDC Estimates based on Province-wise Annual Budget Statements (2010-11)

45
SOCIAL DEVELOPMENT

CHAPTER 4
DURING
SECURITY CRISIS 4

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

Higher spending on
security during the war
on terror has caused a
slowdown in the pace
of social development. 47
 CHAPTER 4
SOCIAL DEVELOPMENT
DURING
SECURITY CRISIS

ne of the consistent challenges faced by policy makers in

O Pakistan since independence is the improvement of the

socioeconomic status in the country. While the country's
performance in terms of economic indicators depicts a number of high
growth periods, it has failed to make significant progress in terms of social
development. One of the main reasons for this poor performance in social
development is the low priority given to development budgets by
successive governments, who have allocated a comparatively small
share of public resources towards social sectors.
Pakistan, along with other 190 countries, signed the Millennium
Declaration in 2000 to foster social development through achievement of
the Millenium Development Goals (MDGs). As such, it was expected that
more public resources would be allocated towards achieving these goals.
The ongoing security crisis has crowded out resources from social
sectors towards expenditures related to the war on terror. However, the
7th NFC award by transferring greater share of revenues to the provinces
has raised hopes that priority for delivery of social services will rise
sharply. Unfortunately, with the discussion of the funds for relief and
rehabilitation of the 20 million people affected by the biggest floods in
Pakistan's history has at least temporarily frustrated these hopes.
The chapter examines the development of social sector particularly in
lieu of the deterioration of security situation. Since 2000, Pakistan's social
development strategy has been guided by the Millennium Development
Goals (MDGs) emanating from the Millenniums Declaration. Almost all
SOCIAL DEVELOPMENT DURING SECURITY CRISIS

overarching policy documents including the MTDF and Poverty Reduction

Strategy Paper (PRSP) II reflects government's commitment towards
achieving the MDGs. The Government of Pakistan has recently published
a report on the progress made in the achievement of MDGs titled
"Pakistan Millennium Development Goals Report 2010: Development
amidst Crisis." The report provides detailed progress related to each
indicator and assesses the feasibility of achieving the various targets. This
chapter focuses on progress Pakistan has made in key goals including
poverty reduction, education, health and water supply.

Key Fiscal Developments

n general, progress in social development is based on many factors
I including GDP growth, inflation, external and internal shocks, law and
order, and political stability. However, almost all these factors directly or
indirectly depend on fiscal choices made by the federal and provincial
governments. For instance, the response to external oil price shocks to
subsidize the prices of petroleum products through money printing caused
high inflation in subsequent years. Therefore, it is believed that budgetary
priorities and fiscal choices have significantly impacted social development.
48 Nevertheless, before commenting on the pace of social development it is
important to look at the key fiscal development since 2000.
 CHAPTER 4
z Stagnation in the tax-to-GDP ratio at about 10 percent only.
z Reduction in debt servicing liabilities in the early 2000s due to
write-offs and rescheduling of external debt after 9/11.
z Substantial increase in security related expenditures on account
of war on terror since 2002, which further aggravated in the late
2000s.
z The Intermediate Presidential distribution order, 2006-07, for
distribution of revenues which increased the share of provinces
in the divisible pool from 37.5 percent to 41.5 percent in 2006-
07 and then gradually to 45 percent in 2009-10.
z Higher subsidies in 2007-08 and onwards to cushion external
price shocks including unprecedented increase in international
oil and large subsidies to other sectors, especially power.

These fiscal developments have had both positive and negative

impacts on the pace of social development. For instance, availability of
fiscal space and additional resources in the early 2000s and higher
provincial share in the Distribution Order 2006-07 provided a window of
opportunity to increase spending on social services. Simultaneously,
higher expenditures on security related services and subsidies pre-
empted resources of both tiers of the government which in turn negatively
affected the outlays on social services as described in the previous
chapter and consequently negatively impacted on the pace of social
development.

Reduction of Extreme Poverty

eduction of extreme poverty to half by 2015 is the first goal of the
R Millenium Declaration. There is disagreement over definition and
estimation methodology of the poverty line. Poverty estimates by

SOCIAL DEVELOPMENT DURING SECURITY CRISIS

different agencies not only provide different magnitudes but sometime
also give a contradictory trend. Table 1 displays the trend in the official,
SPDC and World Bank estimates of incidence of poverty. All estimates
indicate a fall in the incidence of poverty up to 2004-05, albeit by
different magnitudes.

49
 CHAPTER 4
Table 4.1 Trend in Incidence of Poverty in Pakistan
(percent)
MDG Target
Base Line 2001-02 2004-05 2007-08 2015
Official Estimates 26 35 24 - 13
Increase (+)/ Decrease (-) -11
SPDC Estimates 30 33 30 38 15
Increase (+)/ Decrease (-) -3 +8
World Bank Estimates 31 35 24 17 16
Increase (+)/ Decrease (-) -11 -7
Source: Forthcoming SPDC Research Report "Poverty and Inequality: Estimates from Household
Survey 2007-08" and Pakistan Millennium Development Goals Report 2010: Development amidst Crisis

Beyond 2004-05, there is no official estimate of poverty incidence

whereas the SPDC and World Bank estimates reveal contradictory trends.
SPDC estimates show that between 2004-05 and 2007-08 the incidence
of poverty in Pakistan increased by 8 percentage points, while the World
Bank estimates show a decline of 7 percentage points. Although, the
World Bank (2010) did not report the estimated poverty line, it appears to
be less than Rs 1000 per capita per month. This can be deduced from
quintile ranges of per capita consumption expenditure given in Table 4.1,
Appendix - A of HIES Report, 2007-08. For 17 percent poverty incidence,
the poverty line should be much less than1 Rs. 1067, which is the
maximum value per capita income of the first quintile. Interestingly, the
Pakistan Economic Survey (2007-08) reports the official poverty line for
2005-06 as Rs944 per adult equivalent unit which is approximately equal
to Rs1111 in terms of per capita. Adjusting with CPI, the poverty line for
the year 2007-08 would be Rs1300 per capita per month. Therefore, the
World Bank appears to have significantly understated the poverty line for
2007-08 which has implied a lower level of poverty.
If the WB report is to be accepted, apart from the technical aspect of
SOCIAL DEVELOPMENT DURING SECURITY CRISIS

the magnitude of the poverty cut-off point, reduction in poverty is contrary

to the worsening trends in macroeconomic indicators. During the later
part of 2000s, there was relatively less availability of public resources for
socio-economic development due to higher spending on security related
expenditures and subsidies, and a sharp decline in overall and sector-
wise growth rate of GDP, especially in the commodity producing sectors.
Moreover there was a high incidence of inflation, particularly in food
prices. Given this scenario, SPDC's conclusions of an increase in the
incidence of poverty in 2007-08 is consistent with an inverse relationship
between poverty reduction and economic growth and appears more
plausible. The SPDC estimates show the incidence of poverty to be 38
percent in 2007-08. This may have crossed 40 percent by end 2010.

Basic Education and Youth Literacy

asic education is considered as a critical determinant of economic
B productivity, which contains several positive externalities. The MDG 2
(achieve universal primary education) and MDG 3 (promote gender
equality and women's empowerment) relate specifically to the need for
greater access to primary education and to gender equality. This section
50 highlights progress in indicators of these MDGs during the on-going
security crisis.
 CHAPTER 4
Table 4.2 Trend in MDG Indicators for Goal 2 - Education
(percent)
MDG Target
2001-02 2004-05 2005-06 2006-07 2007-08 2008-09 2015
Net Primary
Enrollment Rate 42 52 53 56 55 57 100
Increase (+)/Decrease (-) 10 1 3 -1 2
Primary Completion Rate 57 67 72 55 52 55 100
Increase (+)/Decrease (-) 10 5 -17 -2 2
Literacy rate 45 53 54 55 56 57 88
Increase (+)/Decrease (-) 8 1 1 1 1
Source: Pakistan Millennium Development Goals Report 2010: Development amidst Crisis

Achievenement of Universal Primary Education

The Goal 2 of MDGs states that children everywhere, boys and girls
alike, will be able to complete a full course of primary schooling by 2015.
Table 4.2 presents the trend in primary net enrollment rate (NER),
(number of children aged 5-9 years enrolled in primary level classes to
the total number of children of the same age group. The trend in NER
shows that Pakistan made significant progress during the first half of the
2000s, when it increased from a low of 42 percent in 2001-02 to 52
percent in 2004-05, indicating a ten percentage point increase in just
three years. However, afterwards the pace of improvement slowed down
and during 2004-05 to 2008-09, the NER increased by only 5 percentage
points. Similarly, literacy rate also increased by 8 percentage points
during 2001-02 to 2004-05, but by 4 percentage points only from 2004-
05 to 2008-09.

Promotion of Gender Equality in Education

Table 4.3 provides the trend in Gender Parity Index (GPI) (proportion of
enrolment of girls at different level of education in comparison with boys).

SOCIAL DEVELOPMENT DURING SECURITY CRISIS

In primary education gender parity improved from 82 percent in 2001-02
to 85 percent in 2004-05. However, during 2004-05 to 2008-09 it declined
by one percentage point. Similarly, an improvement of 8 percentage
points in gender parity during 2001-02 to 2004-05 and a worsening of 3
percentage points during 2004-05 to 2008-09 has been observed. These
trends indicate that education of girls has disproportionately borne the
burden of the war on terror.

Table 4.3 Trend in Gender Parity Index

(percent)
MDG Target
2001-02 2004-05 2005-06 2006-07 2007-08 2008-09 2015
Primary Education 82 85 85 81 85 84 100
Increase (+)/Decrease (-) 3 0 -4 4 -1
Secondar Education 75 83 84 80 80 80 94
Increase (+)/Decrease (-) 8 1 -4 0 0
Youth Literacy rate 64 68 74 75 78 78 100
Increase (+)/Decrease (-) 4 6 1 3 0

Source:
51
 CHAPTER 4
Progress in Health Related MDGs
imilar to education, health is considered a critical determinant of
S economic productivity, which also contains several positive
externalities and implies improvement in the quality of life. MDG 4
(reduce child mortality), MDG 5 (improve maternal health) and MDG 6
(combat HIV/AIDS, malaria, and other diseases) relate specifically to the
need for better health care. In order to avoid discrepancies reliance is
placed on the MDG Report 2010 recently published by Planning
Commission, Government of Pakistan.

Reduction in Child Mortality

The Goal 4 of MDGs states that the under-five mortality rate should be
reduced by two thirds, between 1990 and 2015. Table 4.4 displays the
trend in indicators of child health including infant mortality rate (IMR)
(ratio of number of deaths of children under five years of age per
thousand live births). The trend in IMR shows that Pakistan has hardly
made any progress in this indicator. The IMR was 77 per 1000 live births
in 2001-02, marginally declining to 75 in 2006-07. In contrast to IMR, the
trend in other indicators of child health show that Pakistan made
significant achievement during the first half of the 2000s, and thereafter
the improvement has been very limited. For example, the proportion of
fully immunized children increased from a meager 53 percent to 77
percent between 2001-02 and 2004-05, but by only one more percentage
point thereafter.

Improvement in Maternal Health

The MDG report 2010 presents MMR from two different sources: from
2001-02 to 2005-06 it is based on estimates provided by the Ministry of
Health (MoH) and for 2006-07, it is based on the Pakistan Demographic
and Health Survey (PDHS) of 2006-07. While the MoH estimates show a
SOCIAL DEVELOPMENT DURING SECURITY CRISIS

Table 4.4 Trend in Indicators of Child Health

MDG
Targets
2001-02 2004-05 2005-06 2006-07 2007-08 2008-09 2015*

Infant Mortality Rate1 77 77 76 75 - - 52

Increase (+)/ Decrease (-) 0 -1 -1 - -
Fully immunization2 53 77 71 76 73 78 >90
Increase (+)/ Decrease (-) 24 -6 5 -3 5
Immunization against measles3 57 78 76 77 76 79 >90
Increase (+)/ Decrease (-) 21 -2 1 -1 3
Incidence of diarrhea4 12 14 12 11 10 10 <10
Increase (+)/ Decrease (-) 2 -2 -1 -1 0
LHV coverage5 38 66 72 76 76 83 100
Increase (+)/ Decrease (-) 28 6 4 0 7
1 per thousand live births
2 Proportion of fully immunized children 12-23 months (%)
3 Proportion of under 1 year children immunized against measles (%)
4 Proportion of children under five who suffered from diarrhea in the last 30 days (%)
5 Lady Health Workers' coverage of target population (%)
52 Source: Pakistan Millennium Development Goals Report 2010: Development amidst Crisis
 CHAPTER 4
deterioration in the MMR from 2001-02 to 2004-05, those from the PDHS
show significant improvement (see Table 5). It is difficult to isolate
whether this decline is due to government efforts to put resources to
reduce MMR, or whether it is due to the different and perhaps the
estimation methodology.
The other indicators of maternal health show improvement up to

SOCIAL DEVELOPMENT DURING SECURITY CRISIS

2004-05 and slow down thereafter. For example, the proportion of births
attended by skilled birth attendants increased from 40 percent in 2001-02
to 48 percent in 2004-05 indicating a 8 percentage points increase in
three years. During 2004-05 to 2008-09, this proportion decreased to 41
percent indicating a decline of 7 percentage points.

Table 4.5 Trend in Indicators of Maternal Health

MDG
Targets
2001-02 2004-05 2005-06 2006-07 2007-08 2008-09 2015*

Maternal Mortality Ratio1 350 400 380 276 - - 140

Increase (+)/ Decrease (-) 50 -20 -104 - -
Skilled births attendance2 40 48 35 37 40 41 >90
Increase (+)/ Decrease (-) 8 -13 2 3 1
Antenatal care3 35 50 52 53 56 58 100
Increase (+)/ Decrease (-) 15 2 1 3 2
1 100,000 live births
2 Proportion of births attended by skilled birth attendants (%)
3 Proportion of women 15-49 years who had given birth during last 3 years and made at least one
antenatal care Consultation
Source: Pakistan Millennium Development Goals Report 2010: Development amidst Crisis
53
 CHAPTER 4

Access to Drinking Water

nother very important social sector indicator is the availability of clean
A drinking water. PIHS 2001-02 and PSLMS 2004-05, 2006-07 and
2008-09 provide information about the sources of drinking water. For our
analysis we used access to of tap connections as a proxy for improved
services. Table 4.6 indicates that the share of tap connections in sources
of drinking water increased from 25 percent in 2001-02 to 34 percent in
2004-05 indicating an increase of 9 percentage points. During 2004-05 to
2008-09, however, it showed an increase of only 1 percentage point.

Table 4.6 Trend in Source of Drinking Water

SOCIAL DEVELOPMENT DURING SECURITY CRISIS

(percent)
2001-02 2004-05 2006-07 2008-09
Tap Water 25 34 36 35
Increase (+)/ Decrease (-) 9 2 -1
Hand pump 44 33 30 30
Increase (+)/ Decrease (-) -11 -3 0
Motor pump 17 19 21 24
Increase (+)/ Decrease (-) 2 2 3
Dug well 7 5 4 4
Increase (+)/ Decrease (-) -2 -1 0
Other 7 8 8 8
Increase (+)/ Decrease (-) 1 0 0
Source: Pakistan Integrated Household Survey (PIHS) 2001-02, and Pakistan
Social and Living Standards Measurement Survey (PSLMS) various issues

Conclusions
imilar to the trend in social sector expenditures discussed in the
S previous chapter, most of the indicators of social development show
relatively high growth up to 2004-05 and a decline thereafter. It can
therefore be inferred from the trend analysis during the last decade that
54 public spending on the social sector played an important role in
 CHAPTER 4
determining the pace of social development. Higher spending on security
during the war on terror has undoubtedly reduced public spending on
social services and caused a slowdown in the pace of social
development. Pakistan consequently is unlikely to meet most of the
targets of the MDGs by 2015.

NOTE:
1 A simulation exercise on the unit record data reveals that for 17.2 percent poverty
incidence, the poverty cut-off point should be Rs. 930 per capita per month.

SOCIAL DEVELOPMENT DURING SECURITY CRISIS

55
 THE PROVINCIAL

CHAPTER 5
ECONOMY OF
KHYBER PAKHTUNKHWA 5

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

The ensuing fighting

between the military
and the militants has
imposed a high cost
on the local economy. 57
 CHAPTER 5
THE PROVINCIAL ECONOMY OF
KHYBER PAKHTUNKHWA

he war on terror that started in Afghanistan and spread to Khyber

T Pakhtunkhwa (KPK) has led to a number of fallouts. According to

PIPS (2010), terrorist, insurgent and sectarian related incidents of
terrorism reported across the country increased from 2,148 in 2008 to
2,586 in 2009. The highest number of attacks in both the years was
reported from KPK, with 1,009 attacks in 2008 and 1,137 attacks in 2009
(see Chart 5.1). These years witnessed a sharp rise in terrorist activities
compared to 2006 and 2007 when the number of terrorist attacks was 60
and 460 respectively.
In order to curb the rise in militancy and terrorist activities, the
Pakistan security forces launched military operations in major conflict
areas of KPK and FATA. The first military operation was launched in Dir
and then in Buner in April 2009. The second operation, Rah-e-Rast, was
launched in Swat and other districts of Malakand Division in May 2009.1
The affected areas include Swat, Buner, Lower and Upper Dir, Shangla,
Malakand, Peshawar, Mardan, Nowshera, Charsadda, DI Khan and
Tank.
These armed conflicts in Malakand Division have disrupted the lives
and livelihoods of, and provision of normal public services to the local
populations. The ensuing fighting between the military and the militants
has imposed a high cost on the local economy as a large number of
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

people have been compelled to leave their homes and livelihoods. The
current estimated number of internally displaced persons (IDPs) is
between 2.7 and 3.5 million. Consequently, this has disrupted the process
of steady development throughout the province. It has caused
considerable damage to physical and social infrastructure, loss of lives,

Chart 5.1 Incidents of Terrorist Attacks

1137
Khyber Pakhtunkhwa
1009

792
Balochistan
682

559
FATA
385

Punjab 46
35

30 2009 2008
Sindh
25

12
Islamabad
7

0 200 400 600 800 1000 1200

Number of Attacks
58 Source: PIPS, Pakistan Security Reports, various issues
 CHAPTER 5
injuries, and damage to private and public property. Houses, standing
crops, livestock, schools, health facilities, water supply/irrigation
schemes, public office buildings, roads, electricity/gas networks, shops,
hotels and businesses; all have suffered damages to varying degrees.
This chapter looks at the structure of the economy of KPK and
analyses the growth/decline following the war on terror and later the
commencement of military operations in the province. Information from a
range of sources has been collected to conduct this analysis. The World
Bank (2005) Economic Report on KPK provides the sector-wise GRP of
the province for the period 1991-92 to 2004-05. From 2005-06 onwards
data has been obtained from Development Statistics of the province,
Federal Board of Revenue (FBR) Yearbook, Labour Force Survey (LFS),
and Household Income and Expenditure Survey (HIES).
The period of 1991-92 to 2008-09 is divided into four sub-periods:
the first covers the period up to 11 September 2001 i.e. 1991-92 to 1996-
97 and 1996-97 to 2001-02; the second, covers 2001-02 to 2005-06,
which was the initial period of the war on terror and finally, 2005-06
onwards, with the commencement of military operations in conflict zones
of KPK. The year 2005-06 has been replaced with 2004-05 at some
places depending on the availability of data.
Section 1 discusses the structure of the KPK economy and trends
in production of different sectors; Section 2 looks at the trends in tax
collection in KPK as a proxy for growth in relevant tax bases; Section
3 explains the pattern of employment in KPK; Section 4 describes the
impact of the security crisis on social sectors and Section 5 presents
the future outlook, noting the initiatives undertaken by the government
of Pakistan and the role of international donor community to
compensate the province for the deteriorating socio-economic

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
conditions.

The Structure and Trend of Economic Growth in KPK

onstituting 10 percent of Pakistan's landmass and 13 percent of
C national population, the economy of KPK contributes about 11
percent to the GDP of Pakistan. Table 5.1 gives the composition of the
KPK economy in comparison with the national economy. It shows that in
the Gross Regional
Product (GRP) of KPK, Table 5.1 Composition of GDP
Khyber Pakhtunkhwa (%)
agriculture sector on
1991-92 1996-97 2001-02
average accounted for
to to to
20.5 percent, industrial 1996-97 2001-02 2004-05
sector 24.8 percent, and Khyber Pakhtunkwa
the services sector 54.7 Agriculture 22.7 23.4 20.5
percent from 2001-02 to Industry 25.9 24.9 24.8
2004-05. The share of Services 51.5 51.7 54.7
agriculture and industrial GRP 100.0 100.0 100.0
sector in the GRP has Pakistan
Agriculture 25.6 25.8 23.1
declined while that of
Industry 24.5 23.7 25.1
services sector has
Services 49.9 50.4 51.8
increased from 1991-92 GDP 100.0 100.0 100.0
to 2004-05. Accordingly,
the contribution of Source: World Bank (2005), North West Frontier Province
Economic Report
59
 CHAPTER 5
services sector in the Table 5.2 Trend in Growth of GDP
GRP of KPK is higher (55 Khyber Pakhtunkhwa and Pakistan (%)
percent) compared to 1991-92 1996-97 2001-02
that in the GDP of to to to
Pakistan (52 percent). 1996-97 2001-02 2004-05
Table 5.2 gives a Khyber Pakhtunkwa
comparison of the trend Agriculture 3.4 2.4 3.1
Industry 4.4 2.1 9.3
in growth of the provincial
Services 5.1 4.0 6.4
and national economies.
GRP 4.4 3.2 6.4
The economy of KPK
Pakistan
grew at an average rate
Agriculture 3.5 1.9 4.3
of 4.4 percent per annum Industry 3.0 3.8 10.8
during 1991-92 to 1996- Services 4.4 3.6 6.5
97, 3.2 percent during GDP 3.8 3.2 7.0
1996-97 to 2000-01 and Source: World Bank (2005), North West Frontier Province
6.4 percent during 2001- Economic Report
02 to 2004-05. While the
growth in the GRP of KPK was higher by 0.6 percentage points than
that of GDP of Pakistan during 1991-92 to 1996-97 and the same during
1996-97 to 2000-01, it was lower by 0.6 percentage points during 2001-
02 to 2004-05.
A sector-wise comparison of growth in KPK and that at the national
level shows that growth in all three sectors (agriculture, industry and
services) remained lower in KPK than that at the national level during
2000-01 to 2004-05. Within KPK, the trend indicates that in all the
sectors, the pattern of growth is similar to that of overall GRP growth of
KPK. In all the sectors, growth was higher in the first period, declined in
the second period and then bounced back in the third period. In
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

particular, the growth in industrial sector registered a big increase from

2.1 percent to over 9.3 percent (an average of 7.2 percentage points) in
the period of 2001-02 to 2004-05 compared to the period of 1996-97 to
2000-01. This is followed by an increase in growth from 4 percent to 6.4
percent in the services sector. It can be said that in the immediate
aftermath of the war on terrorism, the services sector of the KPK
economy, revealed greater buoyancy as a consequence of the 'war
multiplier' of an enhanced military presence.

60
 CHAPTER 5
The Agriculture Sector Table 5.3 Composition of Agriculture Sector
Of the overall contribution Khyber Pakhtunkhwa and Pakistan (%)
of agriculture to the 1991-92 1996-97 2001-02
provincial GRP during to to to
2000-01 to 2004-05, the 1996-97 2001-02 2004-05
share of the crop sub- Khyber Pakhtunkwa
sector was on average 31 Crops 48.3 37.8 31.3
Livestock 45.0 56.4 60.8
percent, livestock sector
Forestry 6.8 5.9 8.0
61 percent and forestry 8
Total 100.0 100.0 100.0
percent (Table 5.3). Pakistan
Comparison of the KPK Crops 57.5 51.5 47.3
and national economies Livestock 38.9 45.1 48.7
indicates that contribution Fishing 2.7 1.9 1.3
of livestock and forestry Forestry 0.8 1.4 2.6
to agriculture output is Total 100.0 100.0 100.0
much higher in KPK than Source: World Bank (2005), North West Frontier Province
that in national economy. Economic Report
Further, in KPK the contribution of the crop sub-sector in agriculture has
depicted a decline while that of livestock and forestry sub-sectors an
increase since 1991-92.
Farming is practiced at both subsistence and commercial level in
many districts in KPK. Availability of cultivable land is a major constraint
in the province as only 30 percent of the land is cultivable. Landholdings
are small and fragmented and the majority of farming population has no
access to irrigation.
Table 5.4 gives the share of major crops in total cropped acreage in
KPK. In the Rabi season (winter), the cultivation of wheat occupies the

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
Table 5.4 Distribution of Crop Areas by Crops in Khyber Pakhtunkhwa
Cropped Area Distribution of Crop Acreage (%)
(000 Hectares) Wheat Tobacco Mustard Gram Barley
Rabi Crops
2000-01 782 84.7 3.4 1.7 7.4 2.7
2001-02 763 83.9 3.9 1.8 7.9 2.5
2002-03 705 89.1 0.0 2.0 6.4 2.5
2003-04 716 88.7 0.0 2.0 6.8 2.4
2004-05 749 85.0 4.3 2.0 6.6 2.2
2005-06 677 89.9 0.0 1.9 5.6 2.5
2006-07 746 85.6 4.1 1.9 6.2 2.2
2007-08 728 86.7 4.5 1.7 4.8 2.3
2008-09 763 86.9 4.3 1.7 5.1 2.0
Cropped Area Distribution of Crop Acreage (%)
(000 Hectares) Sugarcane Maize Rice Others
Kharif Crops
2000-01 665 16.0 73.7 8.2 2.1
2001-02 659 15.0 74.9 7.4 2.7
2002-03 626 16.4 73.5 7.9 2.2
2003-04 627 16.4 73.2 8.0 2.4
2004-05 618 16.9 72.9 7.8 2.4
2005-06 602 16.1 73.8 7.9 2.1
2006-07 629 15.9 74.6 7.8 1.7
2007-08 625 16.5 73.9 8.1 1.6
2008-09 616 15.7 74.5 8.2 1.6
Source: NWFP Development Statistics, Planning and Development Department, Govt. of KPK
61
 CHAPTER 5
bulk of the total cropped area. In 2005-06, 90 percent of the cropped area
was cultivated by wheat, declining to 87 percent in 2008-09. Other Rabi
crops include tobacco, mustard, gram and barley. In Kharif season
(summer), maize is cultivated on almost three quarters of the cropped
area. Sugarcane and rice are also two major crops cultivated in this
season. Minor crops of Kharif season include bajra, cotton, jowar and
sesamum. The share of gram in the total cultivated area shows a decline
over the period and that of sugarcane in 2006-07 and 2008-09.
Chart 5.2 gives the share of major crops produced in KPK in the total
production of Pakistan and Table 5.5 reports the trend in growth of these
crops. KPK is the largest producer of tobacco in the country. Its share in
the total tobacco production stood at 74 percent per annum during 2000-
01 to 2004-05. Maize, that occupies the bulk of the cropped acreage in
Kharif season, constituted 42 percent of the total maize crop produced in
Pakistan during 2000-01 to 2004-05. Since 2000-01, the production of the
maize crop has been continuously declining in KPK: during 2000-01 to
2004-05 it declined on average by one percent per annum and during
2004-05 to 2008-09 by 8 percent per annum. KPK's share in the wheat
production of Pakistan is less than 5 percent and it imports wheat from
Punjab.

Chart 5.2 Share of Major KPK Crops in Total Production of Pakistan (%)
73.9
Tobacco
77.3
41.5
Maize
21.7
19.0
Barley
19.2
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

9.6
Sugarcane
8.6
4.8
Wheat
4.4

3.3
Gram
2.0

2.4
Rice
1.4

0 10 20 30 40 50 60 70 80
2004-05 to 2008-09 2000-01 to 2004-05

Source: NWFP Development Statistics, Planning and Development Department, Government of KPK

Table 5.5 Trend in Growth of Major Crops in KPK (%)

Wheat Maize Sugarcane Barley Tobacco Rice Gram
Khyber Pakhtunkhwa
2000-01 to 2004-05 8.4 -1.1 0.4 -2.0 6.8 -1.3 37.5
2004-05 to 2008-09 3.3 -8.1 -2.0 -4.6 1.1 3.0 1.9
Rest of Pakistan
2000-01 to 2004-05 3.2 28.7 2.7 -1.7 0.1 2.1 27.5
2004-05 to 2008-09 3.1 12.0 3.6 -2.1 4.4 13.9 6.5
62 Source: NWFP Development Statistics, Planning and Development Department, Government of KPK
 CHAPTER 5
Table 5.6 Crops by Major Districts in KPK
Crop Districts
Tobacco Swabi, Mardan, Charsadda, Buner
Wheat Mardan, Swat, Mansehra, Peshawar, Swabi, Charsadda, DI.Khan,
Haripur, Buner
Maize Mansehra, Swabi , Swat, Buner, Mardan, Charsadda, Haripur,
Kohistan, Shangla
Barley Chitral, Mardan, Upper Dir, Lower Dir, Swabi, Nowshera
Sugarcane Charsadda, Mardan, Peshawar, DI.Khan, Malakand, Nowshera
Rice D.I. Khan, Upper Dir, Lower Dir, Swat, Malakand
Gram D.I.Khan, Lakki, Karak
Jowar Mardan, D.I.Khan, Swabi, Haripur
Rapeseed &
Mustard Mardan, D.I.Khan, Swabi, Buner, Lower Dir, Malakand
Bajra Karak, Kohat
Cotton D.I.Khan
Source: NWFP Development Statistics, various issues

Table 5.6 gives the crops produced in KPK by district. The main
districts where most agricultural activity takes place include Mardan, D.I.
Khan, Swabi, Charsadda, Swat, and Buner. Besides major crops like
maize, wheat, tobacco, sugarcane, minor crops like jowar, bajra, mustard
and rapeseed are also cultivated in these districts. A large part of the
tobacco harvest comes from Swabi, Mardan and Charsadda and both
crop acreage and yield have increased in these districts. The maximum
output of maize crop comes from Mansehra, Swabi, Swat and Buner. The
decline in maize crop could be due to the reason that it is largely
produced in those areas which have been affected by militancy and
military operations.

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
The main areas with the highest production of wheat are Mardan,
Swat, Manshera, Peshawar and Swabi. Sugarcane is grown mainly in
Charsadda, Mardan, Peshawar and DI.Khan. Its acreage and production
in these districts has declined since 2004-05. Gram is primarily cultivated
in D. I. Khan; rice in D.I. Khan, Upper Dir, Lower Dir, Swat and Malakand
and barley in Chitral, Mardan, Lower Dir and Upper Dir.
Vegetables are grown throughout the year and are an important
source of both nutrition and income for household members. Commercial
production of fruit and vegetable, particularly for the main urban markets
has increased rapidly, largely due to support in research, extension and
marketing provided by the Swiss-funded Project for Horticultural Promotion
(PHP) that worked primarily in the Swat Valley (ADB and WB, 2009).
Livestock production has been increasing in KPK due to the rise in
demand from urban consumers. The sale of dairy products and live
animals to urban households provide an important flow of cash income to
rural areas. Livestock includes cattle, goats, sheep, donkeys and poultry.
Households involved in sheep, goat and cattle rearing roughly constitute
three-quarters of farm households. Generally, a family keeps up to three
cows or buffalos, 5-8 sheep or goats, and 6-10 poultry. Buffaloes that are
mainly brought from the Punjab remain an important source for dairy
production. Commercial production has taken over from small-scale
poultry farming, particularly in the central irrigated plains and Hazara
(Mansehra, Abbottabad and Haripur) which have good access to markets
(World Bank, 2005).
63
 CHAPTER 5
Table 5.7 shows the Table 5.7 Livestock Population
size and growth of in Khyber Pakhtunkhwa and Pakistan
livestock in KPK and Share in
Pakistan. Comparison of Size (Million) Growth Pakistan
the two latest censuses 1996 2006 (%) (%)
(1996 and 2006) Khyber Pakhtunkhwa
indicates that the size of Cattle 3.3 6.0 6.1 20.2
Buffaloes 1.3 1.9 4.0 7.1
total livestock increased
Sheep 1.5 3.4 8.4 12.7
from 10.7 million to 20.9
Goats 4.6 9.6 7.6 17.8
million (an average Total 10.7 20.9 6.9 15.2
annual growth of 7
percent) in KPK whereas Rest of Pakistan
Cattle 17.1 23.6 3.3 79.8
it increased from 94.7
Buffaloes 19.0 25.4 2.9 92.9
million to 116.3 million Sheep 22.0 23.1 0.5 87.3
(an average annual Goats 36.6 44.2 1.9 82.2
growth of 2 percent) in Total 94.7 116.3 2.1 84.8
the rest of Pakistan.
Source: NWFP Development Statistics 2005 and 2009
Further, growth in all Note: 1996 and 2006 are years of Agriculture Census.
categories of livestock
was higher in KPK compared to that in the rest of Pakistan during the
period of 1996 and 2006 censuses. However, given the security crisis, it
is likely that the population of livestock in KPK would have fallen and its
share in Pakistan would have declined.
Overall, from 2001-02 to 2004-05, the agriculture sector of KPK
showed dynamism both in the crop and livestock sub-sectors. In 2005-
06 unfortunately the province faced huge devastation because of a
massive earthquake. From 2006-07 and onwards agriculture activity in
the province has declined sharply. This could be at least partially
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

attributed to the increase in militancy and the military operations carried

out in KPK.

Impact on Agriculture Sector2

According to the ADB and WB (2009) report, over 80 percent of the
population of the crisis affected districts depends on agriculture as their
main source of livelihood. The impact of the war on the agriculture sector
as described by these sources is given below.
z Major damages occurred as animals and standing crops ready for
harvest were abandoned when civilians moved to safer places.
z In addition, major losses occurred due to lost production as
farmers could not return to plant the next crop, physical damage to
buildings, roads and public utilities, including irrigation facilities,
government offices, including veterinary hospitals, offices and
research facilities which were looted and vandalized.
z The direct damage in the form of lost livestock is estimated at
Rs28,952 million. A total of 553,000 large animals (buffalo, cows,
sheep, and goat) and 594,000 small animals (donkeys and asses)
and 1.8 millions heads of poultry have either perished or subjected
to distress sale (around 40 percent of total lost animals) at prices
as low as half the prevailing market prices.
z Livestock losses vary significantly among districts. Comparing
64 losses with the pre-crisis stocks, Swat has suffered the most
losses (42-65 percent ). This is followed by Buner (36-60 percent),
 CHAPTER 5
Shangla (26-50 percent), Dir Lower (24-38 percent) and Dir Upper
(8-17 percent).
z The direct damage in the form of un-harvested standing crops of
the Rabi 2008-09 season is estimated at Rs 6,605 million - mostly
wheat (60 percent of total crop damage), fruits (22 percent), and
vegetables (16 percent).
z In terms of the extent of damage by district, Swat incurred the
highest losses (Rs 3,141 million), followed by Buner (Rs 1,206
million), Dir Lower (Rs 443 million), and Dir Upper (Rs 273 million).
z The direct damage to the irrigation sub-sector is estimated at Rs
873.9 million. The largest share of damage is reported on flood
protection (Rs 398.5 million) and surface irrigation infrastructure
(Rs 383.2 million). It is reported that out of a total of 631 irrigation
canals available in the five districts, 259 canals have been partially
damaged. Out of 127 km of flood protection embankments, 9 km
long embankments have been fully damaged, and 25 km of
embankments partially damaged. Around 26 tube wells and 12 lift
pumps have been damaged. District-wise, Lower Dir represents
the largest share in total damages (39 percent of total damages in
the irrigation sub-sector) followed by Swat (35 percent), Buner (14
percent), Upper Dir (7 percent), and Shangla (5 percent).
z The total indirect losses of livestock sub-sector in the form of lost
milk production of cows, buffalo and goat are estimated at Rs
4,994 million. The total indirect losses of crop sub-sector for 2009
Kharif and 2009-10 Rabi seasons are estimated to be around Rs
14,736 million.

The Industrial Sector

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
The industrial sector of the KPK economy largely comprises of
manufacturing activity. Of the total industrial production, manufacturing
had a share of 64 percent, construction 15 percent and electricity and gas
distribution 21 percent between 2000-01 to 2004-05 (Table 5.8).
Compared to similar shares in industrial production at national level, the
shares of construction
Table 5.8 Composition of Industrial Sector
and electricity and gas Khyber Pakhtunkhwa and Pakistan (%)
distribution are higher in
1991-92 1996-97 2001-02
KPK. The trends in these to to to
shares indicates that the 1996-97 2001-02 2004-05
share of manufacturing Khyber Pakhtunkwa
increased in KPK during Mining & Quarrying 0.2 0.2 0.3
early 1990s to mid 2000s Manufacturing 57.1 58.2 64.1
from an average of 57 Construction 15.3 15.2 14.9
Electricity and
percent per annum to 64 Gas Distribution 27.4 26.4 20.7
percent per annum. Total 100.0 100.0 100.0
Though the share of Pakistan
construction in industrial Mining & Quarrying 2.4 5.3 10.3
production declined Manufacturing 68.5 65.7 68.4
considerably from an Construction 15.7 13.0 9.0
average 15.7 percent per Electricity and
Gas Distribution 13.5 16.1 12.5
annum to 9 percent per
Total 100.0 100.0 100.0
annum at national level, 65
Source: World Bank (2005)
 CHAPTER 5
Table 5.9 Large Scale Manufacturing in Khyber Pakhtunkhwa
Production Value Added
Industries 1995-96 2000-01 2005-06 1995-96 2000-01 2005-06
All Industries (Rs Million) 62,208 50,630 164,313 27,941 26,570 57,563
Share (%)
Food, beverages & tobacco 35.3 35.9 43.7 30.0 39.6 42.3
Metal products,
machinery equipment, 16.9 3.1 1.3 30.9 2.1 0.3
Non-metallic industries 9.2 17.4 22.6 12.3 21.2 27.3
Textile, apparel & leather 27.9 22.0 13.9 19.9 20.2 12.9
Others 10.8 21.7 18.5 7.0 16.9 17.2
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Census of Manufacturing Industries (CMI) 1995-96, 2000-01, 2004-05

in KPK it stabilised around 15 percent per annum. The share of electricity

and gas distribution declined considerably from an average of 27.4
percent per annum to an average of 20.7 percent per annum.
An overview of large-scale manufacturing in KPK based on Census
of Manufacturing Industries (CMI) reveals that there are three groups of
industries that account for more than 80 percent of the total large scale
production in manufacturing (Table 5.9). These include beverages and
tobacco, textile, apparel and leather, and non-metallic industries.3 Food,
beverages and tobacco have the highest share in large scale production
(43.7 percent) and value added (42.3 percent), and these shares have
been growing since 1994-95. Non-metallic industries, which accounted
for 9 percent share in value of production and 12 percent in value added
in 1995-96, grew rapidly and the shares increased to 22.6 percent and 27
percent respectively by 2005-06. Shares of textile, apparel and leather,
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

and the other industries including metal products, machinery equipment,

handicrafts and sports have declined.

66
 CHAPTER 5
Table 5.10 Performance of Selected Large-scale Manufacturing Items in KPK
Growth (%)
Share of KPK in Khyber
Pakistan (%) Pakhtunkhwa Pakistan
2001-02 2004-05 2001-02 2004-05 2001-02 2004-05
to to to to to to
Industry and Items 2004-5 2008-09 2004-5 2008-09 2004-5 2008-09
Food, beverages & tobacco
Cigarette 27.8 31.5 -1.8 11.4 4.0 5.6
Cooking Oil 8.4 11.8 59.6 5.4 18.2 4.9
Ghee 25.2 29.5 14.7 3.7 10.0 0.5
Beverages - - -3.7 35.8 12.2 22.7
Sugar 3.8 1.6 7.9 -22.9 2.5 3.9
Textile
Cotton Cloth 1.2 0.4 76.5 -15.0 18.4 2.5
Cotton Yarn 0.003 0.003 15.2 1.4 8.3 6.4
Non-metallic industries
Sanitary Ware - - 58.8 3.3 - -
Wall Tiles - - 34.5 15.0 - -
Cement 28.1 27.2 34.4 11.4 22.4 14.9
Sheet Glass - - -0.2 10.9 - -
Source: Computations based on data from NWFP Development Statistics, Economic Survey, SBPAnnual Report

Table 5.10 gives the trend in the quantity of production of selected

items in KPK vis-à-vis the total of Pakistan. In food, beverages and
tobacco, the share of KPK in total production of cigarettes increased from
an average of 28 percent during 2001-02 to 2004-05 to over 31 percent
during 2004-05 to 2008-09. Also, the growth in production from an
average of negative 1.8 percent per annum in the first half of 2000s
moved to an average of 11.4 percent per annum in the second half of

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
2000s. This was double the overall growth in Pakistan.
The share of KPK in the total production of cooking oil and ghee also
increased in the second half of 2000s as compared to that in the first half
of 2000s. The growth in their production declined in the later period which
is in line with the growth trend in Pakistan as a whole. However, on
average, the growth in their production remained higher than that of the
country as a whole in both the sub-periods. Growth in the production of
beverages indicated a jump in KPK as well as at national level in the later
period but in KPK it was well above that at national level. Sugar
production in KPK declined during 2004-05 to 2008-09, when reportedly
there was an increase in the country. During 2001-02 to 2004-05, KPK
contributed 3.8 percent to the sugar production in Pakistan. However,
during the later period this contribution declined to 1.6 percent.
In textiles, cloth production in KPK constitutes a meager 1.2 percent
of total cloth production in Pakistan which declined to less than half
percent during 2004-05 to 2008-09. The share of yarn production
however is almost negligible. As the growth in production of both cloth
and yarn declined in Pakistan, the performance of KPK in textiles has
also been declining and remained below the country's average. In KPK,
the production of cloth grew on average at a rate of nearly 77 percent per
annum during 2001-02 to 2004-05, dropped by an average of 15 percent
per annum during 2004-05 to 2008-09 while the growth in production of
yarn declined from 15 percent per annum to just 1.4 percent per annum. 67
 CHAPTER 5
In the non-metallic mineral products category, cement production
constitutes 27 percent of the total production in Pakistan. Compared to
country wide figures, the growth in its production depicts a massive decline
in KPK. While production grew at an average rate of 34.4 percent per
annum in KPK during 2001-02 to 2004-05 compared to 22.4 percent per
annum in the country, growth during 2004-05 to 2008-09 was 11.4 percent
per annum in KPK compared to an increase of 15 percent per annum in
Pakistan. Other items in this category such as ceramics, including
sanitary ware and wall tiles also registered a declining growth rate. Sheet
glass production however, shows an increase in growth in the later period.
Overall, in the aftermath of rise in militancy and military operations in
KPK, the production in manufacturing, which is already small compared
to that in Punjab and Sindh, has declined. Production of sugar and cotton
cloth declined massively while the cooking oil and ghee, cotton yarn and
non-metallic product industries slowed down from 2006-07 and onwards.
Table 5.11 shows the spread of major large scale manufacturing
units by districts in KPK. It indicates that there are six districts where
manufacturing activity mainly takes place. These include: Peshawar,
Swabi, Swat, Haripur, Mardan and Nowshera. The number of units in
these districts declined from 1,679 units to 1,622 in 2007-08.
Peshawar, the capital of KPK is the industrial hub of the province.
The major industries located in Peshawar include beverages, biscuits and
sweets, flour mills, preservation of fruits, leather, fiber glass, ceramics,
motor cycle rickshaw, marble and chips, and engineering. Haripur is
another major industrial district that accounts for major production of
biscuit and sweets, vegetable ghee and oil, textile loam, fiber glass and
ceramics. Swabi has a concentration of industries such as cigarettes,
textile loam and milling industries while Swat has mostly rice mills. Swat
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

also used to produce motor cycle rickshaws up to 2006. Mardan and

Nowshera also contribute significantly to the production of marble and
chips, Mardan producing flour and ceramics as well. Besides these,
some other important districts are D. I. Khan with rice and sugar mills,
Bannu with leather factories and Buner with marble and chip factories.

Table 5.11 Location of Large Scale Industires by Districts in KPK

Districts Major Industries Other Industries
Peshawar Beverages, Biscuits and Sweets, Flour Mills, Printing Press, Pharmacy,
Preservation of Fruits, Leather, Fiber Glass, Plastic and Rubber and
Ceramics, Motor Cycle Rickshaw, Marble and Arms and Ammunition
Engineering
Haripur Biscuit & Sweet, Vegetable Ghee & Oil, Chemical, Pharmacy,
Preservation of Fruits, Textile Loam, Plastic &Rubber, Packages
Fiber Glass, Ceramics
Swabi Cigarettes, Corn, Textile Loam & Mills, Plastic & Rubber, Chemical
Cement based
Swat Rice, Motor Cycle Rickshaw Silk, Plastic and Rubber
Mardan Marble & Chips, Flour Mills, Ceramics,
Cement based
Nowshera Marble & Chips, Cement based
D.I. Khan Rice & Sugar mills
Bannu Leather
Buner Marble & Chips
68 Source: NWFP Development Statistics, various issues
 CHAPTER 5
The industrial sector in five crisis affected districts (Swat, Shangla,
Buner, Upper Dir and Lower Dir) of Malakand Division, generally
comprise of small and medium-sized units based primarily on locally
available materials. The main industries are mining (marble, granite,
gemstones), mini hydro power generation, flour mills, rice mills, silk mills,
furniture, vegetable and ghee mills, rubber and plastic goods,
handicrafts, and cement based products. Many of these products are
used in the area, whereas marble, silk, gemstones and furniture are
transported to other parts of the country. The area with the maximum
private sector activity is Swat (ADB and WB, 2009).

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
Impact on Industrial Sector
The power loom sector has been a strong presence in Swat due to tax
advantages, skill availability and associated benefits of a developed
cluster. ADB and WB (2009) indicate that 11 units out of 65 have been
damaged due to the war on terror. This constitutes about 17 percent of
the total number of units. It is assumed that the damage rate to industrial
units and businesses would be the same as that of the power loom sector,
i.e. 17 percent. The ADB/WB report gives the preliminary estimates of
damages in the affected districts for shops of Rs 396 million and for
industry and business of Rs 341 million.
According to the All Pakistan Marble Mining, Processing, Industry
and Exporters Association (APMMPIEA), the war on terror has disrupted
the work in marble units. In Mardan, 100 marble units have shut down
and 15,000 workers rendered jobless. In Buner, nearly 250 industrial
units and in other areas 100 units have closed down. Around 20,000
skilled and semi-skilled workers in Buner and about 35,000 indirectly
employed in allied industries have been laid off.
Overall, according to estimates, 1660 out of 2254 industrial units in
the province have closed down, resulting in thousands of people
becoming jobless with shifting of businesses to the Federal Capital and
Punjab. These units belong to the textile, plastics, marble, cosmetics, and
pharmaceutical sectors. The number of industrial workers still on the job
has fallen from 84,000 to 40,000. 69
 CHAPTER 5
Table 5.12 Composition of Services Sector: Khyber Pakhtunkhwa and Pakistan (%)
1991-92 1996-97 2001-02
to to to
1996-97 2001-02 2004-05
Khyber Pakhtunkwa
Transport, storage, and Communication 17.1 20.6 24.0
Wholesale and retail trade 36.2 32.7 29.8
Finance and Insurance 7.3 6.8 4.1
Ownership of dwellings 5.7 4.7 4.1
Public administration and defense 16.4 16.5 20.2
Comunity and social services 17.2 18.6 17.8
Total 100.0 100.0 100.0

Pakistan
Transport, storage and Communication 20.3 21.2 21.3
Wholesale and retail trade 33.0 32.6 35.1
Finance and Insurance 6.4 6.7 6.9
Ownership of dwellings 8.8 7.8 5.9
Public administration and defense 15.8 14.1 12.1
Community and social services 15.6 17.6 18.8
Total 100.0 100.0 100.0

Source: World Bank (2005)

The Services Sector

In the services sector, wholesale and retail trade is the largest activity:
however, its share in services sector output declined from 36 percent
during 1991-92 to 1995-96 and to 30 percent during 2000-01 to 2004-05
(Table 5.12). The share of other activities including transport, storage,
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

and communications and public administration has increased

significantly in the early part of the last decade compared to that in the
1990s. As mentioned earlier that this could be the effect of the 'war

70
 CHAPTER 5
multiplier.' The increased movement of goods and services due to the
presence of the army and supplies to the NATO forces in Afghanistan
has caused an increase in activities related to transport and
communications.
Tourism had grown as a major sector in KPK over the past three to
four decades, which had been a major source of employment and income
generation. In particular, Swat emerged as a major attraction for tourists,
resulting in investment in hotels and ancillary services. These are
supported by a large network of shops and businesses all over Swat as
trading in the region had grown, creating employment opportunities. It is
estimated that about 40,000 persons are associated with the tourism and
ancillary industry. The decline in wholesale and retail trade that also
includes hotels could be at least partially due to damage to the tourism
industry in Swat.
ADB and WB (2009) mention that about 500 hotels have been
operating in the Malakand division out of which about 60 were damaged
in the crisis. Some of these were prominent and popular hotels such as
the Pakistan Tourism Development Corporation (PTDC) Hotel at Malam
Jabba, Pamir Hotels, and Rock City Hotel at Fizzagut, which received
extensive damage before and during the military operation.

Tax Collection
ax collection is used as a proxy for the size and growth of different tax
T bases. Growth in collection of federal excise duty (FED) and general
sales tax (GST) indicates the performance of manufacturing sector and
growth in income tax shows the performance of the overall provincial
economy, excluding the agriculture sector.

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
In the earlier years of the last decade, KPK accounted for over 17
percent of the total excise duty collected in Pakistan (see Table 5.13).
One of the negative implications of war on terror is the decline in FED
both in terms of magnitude and share in the total FED collection in
Pakistan. After the earthquake of October 2005, the share of FED in total
collection declined to 10.6 percent in 2005-06, and fell further to 5.3
percent by 2008-09 as a result of security crisis in the province. Collection
of duty under FED on cigarettes and tobacco, perfumery and cosmetics
shows an increase while those on beverages concentrate and natural gas
shows a decline.
The share of sales tax collected from Khyber Pakhtunkwa was over
3 percent ten years ago which declined to less than 2 percent in recent
years. In 2008-09, the province contributed only 1.2 percent of the GST
collected in Pakistan.
The share of KPK in total income tax collected in Pakistan was 4
percent in 2004-05. Since then this share has declined to less than 2
percent. Moreover, the magnitude of income tax collected in the province
during 2006-07 and 2007-08 was far below that collected in 2004-05 and
2005-06 (see Table 5.13).
Therefore, the overall lack of buoyancy in tax revenues from KPK
confirms the process of slowing down in the process of economic growth
in the province, especially after 2004-05. This is largely attributed to the
intensification of the war on terror.
71
 CHAPTER 5
Table 5.13 Trend in Collection of Taxes in Khyber Pakhtunkhwa
Value (Rs millions) Share (%)
Khyber Khyber
Pakhtunkhwa Pakistan Total Pakhtunkhwa Pakistan Total
Federal Excise Duty
2000-01 8,853 40,337 49,190 18.0 82.0 100.0
2001-02 7,381 39,827 47,208 15.6 84.4 100.0
2002-03 7,960 36,976 44,936 17.7 82.3 100.0
2003-04 7,881 37,742 45,623 17.3 82.7 100.0
2004-05 9,260 43,893 53,153 17.4 82.6 100.0
2005-06 5,882 49,636 55,518 10.6 89.4 100.0
2006-07 7,628 64,312 71,940 10.6 89.4 100.0
2007-08 7,468 84,706 92,174 8.1 91.9 100.0
2008-09 6,238 111,292 117,530 5.3 94.7 100.0
General Sales Tax
2000-01 5,204 148,361 153,565 3.4 96.6 100.0
2001-02 6,111 160,450 166,561 3.7 96.3 100.0
2002-03 5,355 189,784 195,139 2.7 97.3 100.0
2003-04 5,326 213,841 219,167 2.4 97.6 100.0
2004-05 5,602 287,844 293,446 1.9 98.1 100.0
2005-06 5,355 321,881 327,236 1.6 98.4 100.0
2006-07 6,512 339,913 346,425 1.9 98.1 100.0
2007-08 5,923 399,682 405,605 1.5 98.5 100.0
2008-09 5,889 472,851 478,740 1.2 98.8 100.0
Customs Duty
2000-01 2,629 62,418 65,047 4.0 96.0 100.0
2001-02 2,252 45,566 47,818 4.7 95.3 100.0
2002-03 1,810 67,026 68,836 2.6 97.4 100.0
2003-04 2,307 88,738 91,045 2.5 97.5 100.0
2004-05 1,787 113,586 115,373 1.5 98.5 100.0
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

2005-06 1,967 136,417 138,384 1.4 98.6 100.0

2006-07 2,767 129,532 132,299 2.1 97.9 100.0
2007-08 1,869 148,794 150,663 1.2 98.8 100.0
2008-09 2,110 146,293 148,403 1.4 98.6 100.0
Income Tax
2000-01 3,105 114,357 117,462 2.6 97.4 100.0
2001-02 3,474 133,068 136,542 2.5 97.5 100.0
2002-03 3,846 141,520 145,366 2.6 97.4 100.0
2003-04 4,634 166,998 171,632 2.7 97.3 100.0
2004-05 7,910 175,463 183,372 4.3 95.7 100.0
2005-06 8,083 216,905 224,989 3.6 96.4 100.0
2006-07 5,200 328,537 333,737 1.6 98.4 100.0
2007-08 6,577 381,285 387,861 1.6 98.3 100.0
2008-09 8,430 435,118 443,548 1.9 98.1 100.0
Source: FBR Yearbook, various issues

The Pattern of Employment in Khyber Pakhtunkhwa

he labour force participation rate in KPK depicted a declining trend in
T the first half of the 1990s showing a movement in line with that in rest
of Pakistan (Chart 5.3). In the second half of 1990s, it exhibited several
fluctuations while an upward trend was observed in the rest of Pakistan.
The participation rate in KPK declined from 39.5 percent in 1991-92 to
36.4 percent in 2001-02. During the last decade it has risen in KPK as
72 well as in rest of Pakistan. During 2001-02 to 2005-06, the initial period
 CHAPTER 5
Chart 5.3 Trend in Labour Force Participation and Unemployment Rates
Labour Force Pariticpation Rates Unemployment Rates
49 14
47 12
45 10
8
percent

percent
43
41 6
39 4
37 2
35 0
1990-91
1991-92
1992-93
1993-94
1994-95
1996-97
1997-98
1999-00
2001-02
2003-04
2005-06
2006-07
2007-08
2008-09

1990-91
1991-92
1992-93
1993-94
1994-95
1996-97
1997-98
1999-00
2001-02
2003-04
2005-06
2006-07
2007-08
2008-09
Rest of Pakistan Khyber Pakhtunkhwa
Source: FBS, Labour Force Survey

of war on terror, the labour force participation rate in KPK increased from
36 percent to almost 40 percent, and has remained, more or less,
constant since then.
The unemployment rate in KPK, while showing several fluctuations,
particularly in the second half of the 1990s, increased from as low as 1.6
percent in 1993-94 to as
high as 11.9 percent in Table 5.14a Employment Size and Trend
1990-00. As against in Khyber Pakhtunkhwa and Pakistan
the rest of Pakistan, the Period Pakistan KPK Other
unemployment rate provinces
increased from 5.8 Employment (Million)
percent in 1993-94 to 7.3 1991-92 31.1 3.3 27.7
1996-97 34.1 3.8 30.4
percent in 1999-00.

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
2001-02 39.6 4.3 35.3
According to the Labour
2005-06 46.9 5.2 41.7
Force Survey, in the 2007-08 49.1 5.7 43.4
2000s, the unemploy-
ACGR (%)
ment rate in KPK initially
1991-92 to 1996-97 1.9 2.5 1.8
increased even further 1996-97 to 2001-02 3.0 2.7 3.1
and then declined 2001-02 to 2005-06 4.3 5.0 4.3
somewhat. Employment 2005-06 to 2007-08 2.3 4.8 1.9
growth appears to have Note: ACGR implies average cumulative growth rate.
been fairly rapid in KPK Source: Computations based on data from Labour Force Survey
during the last decade
(see Table 5.14a). Table 5.14b Employment Size and Trend
The Household Khyber Pakhtunkhwa and Pakistan
Integrated and Economic Period Pakistan KPK Other
provinces
Survey (HIES) depicts a
rather different picture of Employment (Million)
1998-99 39.6 4.16 35.6
employment growth in
2001-02 42.2 4.44 37.8
KPK as reported in Table 2005-06 45.1 5.06 40.0
5.14b. Compared to the 2007-08 46.2 5.07 41.1
period of 2001-02 to
ACGR (%)
2005-06, the decline in 1998-99 to 2001-02 2.13 3.07 2.02
employment growth is far 2001-02 to 2005-06 1.65 3.32 1.44
more pronounced in KPK 2005-06 to 2007-08 1.26 0.08 1.41
during 2005-06 to 2007- Note: ACGR implies average cumulative growth rate. 73
08 than in other Source: Computations based on data from HIES
 CHAPTER 5
Table 5.15 Youth and Graduate Unemployment Rate (%)
Both Male Female
2001-02 2005-06 2008-09 2001-02 2005-06 2008-09 2001-02 2005-06 2008-09
Youth
Pakistan 13.4 8.7 8.3 12.0 8.4 7.5 20.6 9.6 11.3
Punjab 13.4 8.5 9.0 11.9 9.1 8.6 19.2 6.8 9.8
Sindh 8.3 6.5 5.0 7.5 6.1 3.9 18.3 11.0 10.7
KP 20.9 14.5 13.6 19.5 11.2 11.6 33.6 31.4 20.8
Balochistan 18.2 5.8 3.3 16.0 5.6 2.1 42.9 7.8 14.3
Graduate
Pakistan 8.7 7.1 6.2 7.4 6.2 4.2 16.7 11.6 15.4
Punjab 10.6 6.9 7.0 8.5 5.1 5.0 16.1 13.0 14.0
Sindh 5.8 6.3 3.6 5.1 6.0 2.9 9.8 8.5 8.2
KP 11.6 10.9 12.3 11.2 7.9 6.9 15.0 24.2 36.0
Balochistan 12.5 7.4 2.0 11.1 7.2 2.2 28.6 22.2 5.3
Source: FBS, Labour Force Survey

provinces. Thus according to this source the employment in KPK has

been adversely affected by the militancy and military operation in the
conflict areas.

Youth Unemployment
There is a view that young males who are unemployed are likely to get
attracted more towards militant groups. Table 5.15 indicates that youth
unemployment rate has been highest in KPK and remained well above
the national rate in all the three years reported in the Table. In 2008-09,
the unemployment rate in KPK was 13.6 percent followed by 9 percent in
Punjab. Comparison among 2005-06 and 2008-09 shows that while youth
unemployment rate of male declined considerably in Sindh and
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

Balochistan and somewhat in Punjab, it slightly increased in KPK.

Impact of Crisis on the Social Sector of KPK

he acute security situation in KPK has adversely affected
T performance of the social sector in the province. This section
discusses the state of social sector since the province has become a
centre for the war on terror.
According to ADB and WB (2009), in five crisis affected districts of
Malakand Division (Swat, Shangla, Buner, Upper and Lower Dir) of KPK,
there are 5,347 government schools and colleges, 820,000 students (37
percent of which are girls) and 22,364 enrolled teachers. In these five
districts, 427 (8 percent) school have been fully or partially damaged
including residences and hostels of which 237 are fully damaged and 190
partially damaged. Of the total fully damaged schools 63 percent are girls
schools. The most affected district is Swat, with 276 fully or partially
damaged schools. The total cost for restoring fully or partially damaged
educational buildings, material, furniture and equipment is estimated at
Rs2,696 million (see Table 5.16).
The health delivery system in KPK comprises both public and private
providers where the latter are largely limited to urban areas. According to
ADB and WB (2009), out of a total of 217 public health facilities in five
crises affected districts, 63 (29 percent) facilities have been damaged
74 (Table 5.17). Among these, 19 are fully damaged and 44 partially
 CHAPTER 5
Table 5.16 Summary of Damaged Schools
Number of Damaged Schools Cost of Damaged Schools
Fully Partially Total (Rs millions)
Male Female Total Male Female Total Male Female Total Male Female Total
Swat 46 125 171 63 42 105 109 167 276 1234.0 566.1 1800.2
Buner 8 1 9 17 10 27 25 11 36 59.1 133.2 192.3
Upper Dir 16 6 22 7 0 7 23 6 29 206.9 144.3 351.2
Lower Dir 12 17 29 16 12 28 28 29 57 162.6 34.4 196.9
Shangla 6 0 6 21 2 23 27 2 29 44.3 111.0 155.3
Total 88 149 237 124 66 190 212 215 427 1707.0 989.0 2696.0
Source: ADB and WB (2009) Preliminary Damage and Needs Assessment

Table 5.17 Summary of Damaged Health Facilities

Number of Damaged Cost of Damaged Health Facilities
Health Facilities (Rs millions)
Fully Partially Total Fully Partially Total
Swat 6 12 18 97.3 52.9 150.2
Buner 1 21 22 16.2 92.6 108.8
Lower Dir 9 7 16 145.9 30.9 176.8
Upper Dir 3 3 6 48.7 13.2 61.9
Shangla 0 1 1 - 4.4 4.4
Total 19 44 63 308.0 194.0 502.0
Source: ADB and WB (2009) Preliminary Damage and Needs Assessment

damaged. The damaged facilities include first level health care facilities
or the community health centers and civil dispensaries (such as Rural
Health Centers, Basic Health Units, MCH/CH Centers) and other health
facilities including dispensaries and first aid posts. The secondary health

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
care facilities (District Headquarter Hospital (DHQ)/Agency Headquarter
Hospital (AHQ) and Tehsil Headquarter Hospital (THQ)) however, have
been less affected. The damage to health facilities includes offices,
residences, medical equipment, furniture and vehicles.
Of the five crisis affected districts, fully damaged health facilities
were largely reported in Lower Dir and partially damaged facilities in
Buner. The total damage cost is estimated to be Rs502 million. Among
completely damaged health facilities, 93 percent of the damaged cost is

75
 CHAPTER 5
related to the damage of offices and buildings while for the partially
damaged this cost is 80 percent. These estimates are likely to be
understated as they do not include estimates of damage to private health
care facilities.
The security crisis in Malakand Division has affected the housing
settlements in all the five districts severely. Forceful occupation
particularly of private houses by militants in both urban and rural areas
forced the population to take shelter in rescue camps of the government
or NGOs, or to flee to adjoining or distant locales. Moreover, the recent
military operations in the area also caused an internal displacement of
around 2 million people. In the affected districts, altogether 13,214
houses were damaged, of which 5,934 were fully damaged and 7,280
partially damaged. Swat is the worse affected with 3,738 fully damaged
and 4,387 partially damaged houses. The overall estimated cost of
damage is Rs3,538 million (see Table 5.18).

Table 5.18 Summary of Damage to Houses

Number of Damaged Cost of Damaged Houses
Houses (Rs millions)
Fully Partially Total Fully Partially Total
Swat 3738 4387 8125 1495 702 2197
Buner 1126 990 2116 450 158 608
Shangla 292 373 665 117 60 177
Lower Dir 233 428 661 93 69 162
Upper Dir 545 1102 1647 218 176 394
Total 5934 7280 13214 2373 1165 3538
Source: ADB and WB (2009) Preliminary Damage and Needs Assessment
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

Table 5.19 Summary of Damage to Water Supply Schemes

Number of Damaged Estimated Cost of Damaged Scheme
Total Schemes (Rs millions)
Schemes Fully Partially Total Fully Partially Total
Swat 371 21 148 26.9 169 0.44 27.34
Shangla 256 21 44 5 65 0.45 5.45
Buner 248 23 49 7.13 82 2.03 9.16
Upper Dir 308 23 31 4.8 54 2.03 6.83
Lower Dir 325 23 58 11.32 81 2.03 13.35
Total 1508 111 330 55.15 451 6.98 62.13
Source: ADB and WB (2009) Preliminary Damage and Needs Assessment

Various types of drinking water facilities exist in Malakand Division

including tube-wells with distribution networks, protected springs, hand
pumps, open wells etc. Almost all water supply facilities are ground water
based and cater to almost 60 percent of the total population. Out of 1508
water schemes, 451 (30 percent) have been damaged. Of these 111 have
been completely damaged and 340 have been partially damaged. The
worst affected district is Swat. Estimated cost of damage comes to Rs62
million (see Table 5.19).
Sanitation facilities in Malakand Division include mainly street
pavements and street drains, and sewerage network in some urban
centres. Damage to sanitation facilities is estimated to be Rs 44 million
76 (Table 5.20).
 CHAPTER 5
Table 5.20 Damage to Sanitation Facilities in Malakand
Facility Unit Damaged Estimated Cost
Quantity (Rs millions)
Street Pavement sft 1,053,536 21.92
Street Drains rft 72,877 17.64
Sewerage Pipes rft 51,000 4.94
Total 44.5
Source: ADB and WB (2009) Preliminary Damage & Needs Assessment

Though this damage is not sizeable in monetary terms, but given the
importance of these basic facilities and their impact on overall health of
people and the environment, the indirect effect is significant.

Future Outlook
iven the challenges of socio-economic revival in KPK, both the
G Government of Pakistan and international donor community have
provided various relief measures and additional resources. The summary
of these relief measures and initiatives is given in the following two sub-
sections.

Government Relief for KPK

In an attempt to compensate for the economic losses the federal
government has granted various relief measures to the province, as
follows:
z Under the 7th NFC Award, one percent of the net divisible pool (1.8
percent of the provincial pool) is earmarked for KPK, in recognition
of its role in the war on terror.

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA
z The long standing issue of payment of the net profits on account of
the Hydel power generation to KPK has been resolved. As a
result, KPK will benefit on two counts. First, receipt of net Hydel
Profit as per agreed formula would likely enhance this profit in
future. Second, KPK will receive arrears of the net Hydel profit
amounting to Rs110 billion from the federal government over the
next five years. The first instalment of Rs. 10 billion has been paid
to the Government of KPK in November 2009 while the remaining
four instalments of Rs25 billion each will be made on 1st July every
year.
z KPK has been exempted from 50 percent on leviable rate of sales
tax on supplies made of goods excluding cement, sugar,
beverages and cigarettes .
z Under the Prime Minister's Fiscal Relief Package for KPK, FATA
and Provincially Administered Tribal Areas (PATA), an additional
tax relief of about Rs2 billion has been provided to benefit 300,000
taxpayers.
z Under the Relief Package, Banks and DFIs shall charge a mark-up rate
on all business loans (corporate, SMEs, agriculture, microfinance)
outstanding as on December 31, 2009 from the borrowers of KPK,
FATA and PATA at 7.5 percent per annum or six month KIBOR,
whichever is lower for the period from January 1, 2010 to July 1, 2010. 77
 CHAPTER 5
This exclude loans extended to cigarette, cement, sugar and
beverages. Earlier, the textile sector of these areas was not
included in this package but later the Federal Government
amended it for KPK, FATA and PATA. The sector also stands
eligible to receive this mark-up rate subsidy on business loans
taken during the period from January to June 2010.
z The KPK government has established the Provincial
Reconstruction, Rehabilitation and Settlement Authority (PaRRSA)
to exclusively concentrate on the reconstruction, rehabilitation and
settlement activities in the affected areas of the Malakand Division.
z As a short term measure, Rs. 850 million of the Italian Debt Swap
Grant is being given to the agriculture sector in Malakand Division.
Under this program, seeds, fertilizers, orchards and farm related
services will be provided to the farmers free of cost to boost the
agriculture sector on immediate basis.

Role of the Donor Community in Reconstruction and Rehabilitation

of KPK
Alongside the government, the donor community is providing sizeable
amount of funds for the reconstruction and rehabilitation of Malakand
Division, as follows:
z The KPK Government in collaboration with the World Bank and
Asian Development Bank (ADB) has worked out the Damage
Needs Assessment (DNA) survey in the Malakand Division and is
planning to launch DNA-II to determine the requirements of all the
remaining districts of the Province.
z The Government of Pakistan and USA through USAID have signed
T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

an assistance agreement for the implementation of Emergency

Supplemental Funding. USAID will carry out the Malakand
reconstruction and recovery program of $36 million. This includes
elementary and secondary education of $20 million, health
facilities of $12 million, water and sanitation schemes $3 million
and capacity building of PaRRSA $1 million.
z The United Nation Development Programme (UNDP) is funding a
project "Sustainable Development through Peace Building,
Governance and Economic Recovery in Khyber Pakhtunkhwa" to
the tune of $25 million primarily for the rehabilitation of vulnerable,
disadvantaged and traumatized population.
z China has invested Rs720 million in humanitarian recovery
schemes such as construction machinery and equipment for
technical education.
Other projects that are in the pipeline include:
z KOICA through government of Korea intends to invest in
rehabilitation and reconstruction in Malakand Division in education,
health, water supply and technical education sectors.
z Islamic Development Bank (IDB) intends to provide school
uniforms, books and teaching material.
z USAID intends to fund construction of 15 sub-complexes in
78 Malakand Division at a cost of about Rs2.5 billion and "Restoration
 CHAPTER 5
of Natural Resources at Landscape Level in District Swat and
Buner" with an indicative cost of US$ 40 million.
z World Vision, an international NGO intends to invest in
rehabilitation of partially damaged schools in District Dir (Lower).
z Cordaid an international NGO intends to invest in reconstruction of
fully damaged schools in District Shangla.
z Aid for Refugees and Orphans (ARO), a local NGO, intends to
establish a technical training school in Mingora and Swat through
German assistance.

These relief measures together with additional resources from the

government and donors provide a window of opportunity for the socio-
economic revival of KPK.
In conclusion, the province of KPK has suffered large economic
losses due to the war on terror. The process of economic growth has
slowed down sharply since 2004-05. In the previous chapter, it was
assumed based on the above evidence that the province has
experienced an economic growth rate two percentage points below the
national average for the last five years. This implies that the regional
economy of KPK has grown at the average rate of about 2.5 percent and
per capita income has been largely stagnant over the last few years.

T H E P R O V I N C I A L E C O N O M Y O F K H Y B E R PA K H T U N K H WA

NOTES:
1 In 2008, the government had launched three major military operations, all in FATA. The
first military operation, Sirat-e-Mustaqeem, was launched in June 2008, while
Operation Sherdil was launched in August 2008 and Operation Darghalam in
December 2008. In 2009, five military operations-Buner Operation (April 2009), Rah-e-
Rast (May 2009), and operations Bia Darghalam, Kwakhbadesham and Rah-e-Nijat
(October 2009)-were launched and were more successful than the operations in 2008
(PIPS, 2010).
2 ADB and WB (2009), “Preliminary Damange and Need Assessment: Immediate
Restoration and Medium Term Reconstruction in Crisis Affected Areas.”
3 The non-metallic sector consists of the cement, ceramics, glass and lime. Their
products are used in a wide range of applications, from entirely in the construction
industry like cement, bricks and roof tiles, wall and floor tiles, sanitary ware and some 79
glass products, to consumer products like tableware and decorative goods.
 IMPACT OF

CHAPTER 6
CONFLICT ON
HOUSEHOLD WELFARE 6

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

Armed conflict
strongly affects the
living conditions of
households at the time
of the conflict and for
many years thereafter. 81
 CHAPTER 6
IMPACT OF
CONFLICT ON
HOUSEHOLD WELFARE

s mentioned earlier in this report, the on-going war has added to

A the challenges confronted by the government besides causing

insurmountable sufferings to the people of Pakistan. Chapter 1
discusses the external and internal dynamics of the state and societal
security. Moreover, the escalation seen in the conflict along with an
increase in violence and terrorism clearly is indicative of the widening gap
that exists between the political understanding of the issues of terrorism
and the popular societal perceptions of its causes.
Armed conflict strongly affects the living conditions of households
at the time of the conflict and for many years thereafter. The important
channels through which armed combat impacts households living in
conflict settings are illustrated in Box 6.1, while a few empirical
findings from conflict exposed areas are listed in Box 6.2. Effects may
depend on each household's initial asset endowment, vulnerability
and other specific characteristics that may make them more prone to
being a target of violence. However, to assess the average impact of
armed conflict on household welfare, micro-level household surveys
are vital.
SPDC conducted a household survey in selected districts of Khyber
Pukhtunkhwa (KPK) province to empirically evaluate the impact of conflict
on household socio-economic status. In this chapter we present the
findings of the survey of four districts (Peshawar, Hangu, Bannu, and
Tank), which are located at the border of FATA. Swat was also selected as
a special case. An inclusive structured questionnaire was administered to
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

82
 CHAPTER 6
assess the direct impact of conflict and 552 questionnaires were
administered across the districts as shown in Box 6.3 and Chart 6.1.

Box 6.1 Important Channels through which Armed Conflict

Impacts Households
rmed civil conflict is wide-ranging term, which designates a variety of political
A phenomena. However following Justino (2009), this research focuses on the
household impact of violence that results from "armed combat within the boundaries of a
recognized sovereign entity between parties". The term household in this paper designates
civilian non-state actor, living in areas of combat or in areas where direct combat did not
take place but are indirectly affected by the fighting between Government of Pakistan and
the militants.
Household welfare during the conflict is affected by a number of shocks and it is often
very difficult to isolate the impact of one specific shock. Justino (2009) has proposed a
framework to think systematically about important channels through which armed combat
impacts households living in conflict settings. These channels are illustrated in the
following figure and include both direct and indirect effects of armed conflict.

Static and dynamic effects of armed conflict on household welfare

Conflict Shock Growth

Distribution

Social Political
Markets
Networks Institutions

Households IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

Source: Justino (2009)

According to Justino, direct effects of armed conflict on the household (represented by the
dotted line in the figure) include changes in household composition due to killings, injuries
and recruitment of fighters by either the government or the rebel groups, changes in the
household economic status due to the direct destruction of assets and effects caused by
forced displacement and migration. Indirect effects (represented by the full lines in the
figure) include changes in households' surrounding institutions and environments such as
changes in social networks, changes in access to or destruction of exchange and
employment markets and changes in local and national political institutions. In addition,
we consider important indirect effects of armed civil conflict on household welfare,
transmitted through two key macroeconomic variables: economic growth and
distributional channels. 83
 CHAPTER 6
Box 6.2 Empirics from the Conflict Exposed Areas
orking on Colombian children, Rodriguez and Sanchez (2009) find that conflict
W especially affects children older than eleven, inducing them to drop out of school and
enter the labour market too early. They provided evidence that such effects may be
generated through higher mortality risks, negative economic shocks and lesser school
quality.
Dewhirst (1998) concludes that the most visible direct impact of armed civil conflict on
household welfare is the destruction of human lives. These are often young men in prime
working age (El Salvador, Kenya, and Rwanda).
Macro-level information could erroneously lead to the conclusion that there is no
medium-term negative impact on education due to armed conflict. This is clearly shown for
educational outcomes in a study conducted by Akresh and de Walque (2008) on Rwanda.
Using two nationally representative cross-sectional household surveys, the authors initially
show that average schooling outcomes in the country did improve after the 1994 genocide.
However, when they concentrate on the educational outcomes of school-age children
directly exposed to the conflict, the situation was very different. Using a difference in
difference approach, the authors find that, on average, exposed children achieved 0.5
years less of education than non-exposed ones, and are 15 percent less likely to complete
fourth grade.
During armed conflicts assets get lost or destroyed through heavy fighting and looting.
These include houses, land, labour, utensils, cattle, livestock and other productive assets.
The very poor are likely to be the worst affected. For instance, Shemyakina (2006) finds
that the homes and livelihoods of around 7 percent of households were damaged during
the civil war in Tajikistan between 1992 and 1998. Gonzalez and Lopez (2007) found that
violence has significantly affected the efficiency of farm holdings in Colombia due to the
disruption of rural labour markets.
Justino (2009) asserts that armed conflicts are typically accompanied by large
population movements. Civilian populations are often targets for both armies and rebel
groups trying to expand their territorial control, weaken population support for opponent
groups, increase their own support base and/or add to their resources through looting and
appropriation of valuable assets and sites. This leads to population flights from areas of
more intense fighting or areas where the outbreak of violence is expected. In 2002, almost
34.8 million people across the world were forced to seek asylum in another country or
within the national borders due to violent conflicts (USCR, 2004).
Using two cross-sections, Justino and Verwimp (2006) establish empirical evidence for
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

convergence between provinces following the conflict shocks: previously richer provinces
in the east and in the north of Rwanda experienced lower, even negative, economic growth
compared to the poorer western and southern provinces. This has in turn affected
significantly the dynamics of household poverty in Rwanda in the same period. Using a
small but unique panel of households surveyed before and after the conflict period, they
find that households whose house was destroyed or who lost land ran a higher risk of
falling into poverty. This was particularly the case for households who were land-rich before
the genocide. They however, did not find this for the loss of household labour. In the latter
case, the effect depends on the violent or non-violent character of the loss.
Paul Collier (1999) quantified the effects of civil war on growth both during the war and
in a five-year period after the conflict. Collier claims that "During civil war the annual growth
rate is reduced by 2.2 percent. A 15-year civil war would thus reduce per capita GDP by
around 30 percent".
Rodrik (1998) argues that external shocks could lead to an immediate and substantial
deceleration in growth in societies characterized by the presence of "latent" social conflicts
(e.g. high ethnic diversity) and low institutional or social capacity for resolving conflicts (e.g.
84 those characterized by low political and individual rights).
 CHAPTER 6
Box 6.3 Sample Size and Survey Methodology
even (four rural and three urban) locations (primary sampling units - PSUs) were
S randomly selected from each of the five districts (Peshawar Hangu, Bannu, Tank and
Swat. These locations are listed in Population and Housing Census, 1998. A few PSUs in
district Swat and Tank were replaced due to law and order situation. At the second stage,
sixteen and twelve households were randomly selected from rural and urban PSUs
respectively. Two starting points were preferred in each randomly selected location. Eight
and six interviews were conducted around each starting point. A skipping of five
households was made after one successful interview. A schematic view of the realized
sample is provided below. Overall, the sample gives 4 percent error margin at 95
confidence level.
An inclusive structured Sample across Districts
questionnaire was administered Region
to assess the direct impact of Overall Urban Rural
conflict. The questionnaire was (%) (%)
developed and pre-tested in a Peshawar 132 27.3 72.7
pilot survey conducted in the Hangu 88 27.3 72.7
vicinity of Peshawar district. The Bannu 120 20.0 80.0
questionnaire consisted of the Tank 92 13.0 87.0
following modules: Household FATA Contiguous Districts 432 22.2 77.8
Demography; Education;
Labour Force; Housing Swat 120 20.0 80.0
Condition and Services; Income, Total 552 21.7 78.3
Expenditure and Possession of
Household Assets; and Status of Mental Health. Besides the structured questions, detailed
open remarks about the conflict were also documented.
Indirect impact was evaluated through community questionnaires. In each selected
location (PSU), three community leaders (among teachers, elected representatives,
mosque imams and social workers ) were requested to comment on the current conflict,
household migration (in and out), labour market situation, refugee related problems and
household coping strategy.
The survey was administered in collaboration with "Jobs Creating Development
Society (JCDS, a Khyber Pukhtunkhwa based NGO) and with the help of local
enumerators. SPDC staff supervised the survey and provided in-depth training (office as
well as field) to the designated local staff before starting the field survey. The survey was
conducted during the months of March and April 2010.

IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

Empirical Findings
he major findings of the primary survey in selected districts of Khyber-
T Pakhtunkhwa Province are summarized in three categories. Besides
portraying an overall combined picture, the survey results are arranged
separately for FATA Contiguous Districts (FCDs) and district Swat. FCDs
consist of Peshawar, Hangu, Bannu and Tank districts. Due to the small
sample, disaggregated district-wise empirical results have not been
presented. Research findings related to district Swat, however, are
provided in parallel to distinguish between a directly hit conflict area
(Swat) and indirectly conflict-affected areas (FCDs).
The situation analysis and impact assessment in the sample combat
areas are presented in the following subsections: poverty and
unemployment, impact on household economic status, child education
and labour force participation, causes of death, status of mental health
and comments from the households on the current conflict. The last
subsection documents the perceptions and opinions of community
leaders of the survey locations.
85
 CHAPTER 6
Chart 6.1 Location of Sample Districts

Sample
Districts

Poverty and Employment

rmed conflict through direct and indirect channels significantly affects
A the poverty status of households. To assess the current poverty
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

incidence in the conflict exposed areas, the Pakistan official poverty line
for the year 2005-06 is used after making inflationary adjustment.
According to Table 6.1, the per capita expenditures of about 56
percent households are below the poverty cut-off point in sample conflict
affected areas. Rural poverty incidence is significantly high as compared

Table 6.1 Household Current Poverty Status -

Percentage of Households below the Official Poverty Line
Overall FATA Swat
Contiguous Districts
Poor Households 55.8 54.4 60.8

Urban Poor 46.7 46.9 45.8

Rural Poor 58.3 56.5 64.6
Source: Household Survey
86 Note: CPI adjusted official poverty line for the year 2005-06 is applied to household expenditure
for estimating current household poverty incidence.
 CHAPTER 6
with urban areas. The Chart 6.2 Poverty Headcount Rate:
estimated incidence for Swat Khyber Pakhtunkhwa vs Pakistan
is 5 percentage points higher 45
as compared with other areas
40
mainly due to the relatively
high incidence of rural poverty 35
(64.6 vs 56.5 for FCD). 30
Although after 2005-06,
25
no reliable estimates of
national or provincial poverty 20
1998-99 2000-01 2004-05 2005-06
incidences are available, it is
Khyber Pakhtunkhwa Pakistan
certain that poverty is on the
Source: World Bank Estimates:
rise due to the continuous http://siteresources.worldbank.org/PAKISTANEXTN/Resources/Po
declining rate of growth and verty-Assessment/361361-1216396471531/PAK_OPL.pdf
high rate of inflation.
Chart 6.3 Comparative Household
Historically, poverty remained Poverty Status - 2010 vs 2005
high in the province of
[Percentage of Household below the Poverty Line]
Khyber-Pakhtunkhwa. Chart 70.0
6.2 shows the trend of poverty 60.0
incidence in the province. 50.0
An attempt is also made 40.0
to compare poverty incidence 30.0
in the sample areas before 20.0
and after the security crises. 10.0
Estimated poverty incidence 0.0
FATA Contiguous District Swat
(Chart 6.3), although are not 2005 24.7 29.8
2010 54.4 60.8
strictly comparable due to
Source: Poverty estimates for 2005 were estimated from
differences in methodology, the unit record data of HIES/PSLM, 2004-05. For
indicates almost double the methodology see SPDC Research Report Number 70,
http://www.spdc.org.pk./pubs/rr/rr70.pdf
magnitude after 2005. The
poverty incidence in Swat has risen from 30 percent to 60 percent, while
in FCDs poverty has ascended from 25 to 54 percent.
Armed conflict negatively affects the domestic economy not only by
reducing private domestic investment but also by shifting public
expenditure priorities. Thus a stable macroeconomic framework, which is IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
a key source of growth and employment generation, does not exist during
the conflict.
An attempt has been made to assess the extent of unemployment
and child labour in the sample areas. Table 6.2 gives the employment
characteristics of the sample households. Overall 5 percent
unemployment rate is estimated, while 8 percent youth aged 15 to 25
years are reportedly unemployed. In the provincial context, it appears that
unemployment rate is under estimated for the sample area. The Pakistan
Labour Force Survey (2008-09) reports an unemployment rate of 8.5
percent for the Khyber Pakhtunkhwa province. Surprisingly, a significant
decline in unemployment rate is reported in two consecutive Labour
Force Surveys. The unemployment rate in the province has declined from
11.82 percent in 2005-06 to 8.5 percent in 2008-09. Keeping the rising
trend of violence and worsening law and order situation in mind, the
phenomenon, however, needs further research and examination.
87
 CHAPTER 6
Table 6.2 Household Employment Chracteristics
Overall FATA Swat
Characteristics Contiguous Districts
Adult Unemployment Rate (15+) 5.12 8.34 1.9
Youth (15-25) Unemployment Rate 8.16 13.37 3.0
Child (10-15) Labour 7.40 8.20 6.6
Average Adult Earners in Household 1.93 1.89 1.97

Source: Household Survey

Unexpectedly, the table shows that unemployment rate in Swat is

relatively low (1.9) as compared with FCDs (8.34). The survey data
reveals that adult male to adult female ratio in Swat is quite low (116) as
against FCDs (159). Therefore, it may be possible that Swat adult males
are working temporarily as inland or overseas migrants. Data on sources
of household income also confirm the phenomenon as about 13 percent
households are getting remittances in Swat. Similarly, youth (aged 15 to
25 years) unemployment rate is also low in Swat district as compared
with FCDs where about 13 percent youth unemployment rate is
estimated.
The table also reports that about 7 percent children aged 10 to 15
years are working for pay. This percentage is relatively high (8.2 percent)
in FCDs. Moreover, two adult earners per household, on the average, are
documented during the survey.

Impact on Household Economic Status

One of the main purposes of the primary survey in Khyber-Pakhtunkhwa
province was to assess the impact of armed conflict on the household
economic status. According to the Table 6.3, FATA Contiguous Districts
show, on the average, an increase of about 9 percent in nominal income
from 2008 to 2010. Keeping double-digit inflation during this period in
mind, it may be easily inferred that real income has dropped and poverty
incidence has risen in FCDs. Nonetheless, in district Swat even nominal
income on the average has declined by about 15 percent.
About 75 percent of households in district Swat reported a decline in
nominal income in comparison with the year 2008, while the comparative
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

percentage in FCDs is about 26 percent. These households reported an

average 75 percent fall in nominal income. The table also highlights the
rising trend in number of earning members working regularly since 2008.

Table 6.3 Impact on Household Earnings

Overall FATA Swat
Characteristics Contiguous Districts
Current Nominal Income (Per capita Per month) 2186 2253 1945
Income in 2008 2113 2065 2285
Change in Nominal Income 3.5 9.1 -14.9
Percentage of Households Reported
Decline in Nominal Income 36.6 25.9 75.1
Average Decline in Nominal Income (%) 75.41 78.74 71.26
Number of Earners Working Regularly (now) 1.89 1.88 1.92
Number of Earners Working Regularly (in 2008) 1.74 1.76 1.68
88 Source: Household Survey
 CHAPTER 6
Table 6.4 Reasons for Negative Impact on Household Income
[Compared with the year 2008]
Overall FATA Swat
Contiguous Districts
Impact of bad weather on agriculture 2.5 4.2 .0
Loss of agricultural land due to war 15.5 18.3 11.5
Increase in prices of agriculture inputs 2.2 3.7 .0
Drop in prices of agricultural produce 2.2 3.1 .8
Decline in Purchasing Power - Inflation 19.9 21.5 17.6
Decrease in sales volume due to war/conflict 53.4 42.4 69.5
Other 4.3 6.8 .8
Source: Household Survey

The trend exemplifies the evidence of economic pressure on households

to manage the consequences of the current conflict.
Households who reported decline in nominal income since 2008
were requested to explain the main reasons of the fall in income. Table
6.4 reports their responses. The main causes include: decrease in sales
volume due to the war/conflict (53.4 percent), decline in purchasing
power (19.9). and loss of agriculture land due to war (15.4 percent).
Almost 70 percent of households in district Swat expectedly reported
bad impact of armed conflict on the scope and activities of their
businesses. The data, not shown in the table, also reveals that about 35
and 19 percent households in Bannu and Tank districts respectively
reported loss of agricultural land due to conflict as a main cause of
decline in income. The comparative percentage is however lower (11.5
percent) in district Swat.
Table 6.5 is developed to deduce the level of household vulnerability
in terms of income. According to the table, about 50 percent of
households depend on wages/salary from a job. This percentage
however is low in case of Swat where only 29 percent households
declared this as a source of livelihood. Household dependency on
remittances definitely reduces vulnerability. About 11 percent households
(12.6 percent in case of Swat) reported inland and/or overseas
remittances as a main source of income. Interestingly, barring Swat the
magnitude of social assistance by Government and/or NGOs as a source IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
of income is not so high. Only 8 percent households reported this as an
income source. On the contrary, about 22 percent households of Swat
depend on social assistance.

Table 6.5 Sources of Household Income

Overall FATA Swat
Sources Contiguous Districts
Wages/Salary from a job 48.5 55.8 28.6
Earnings from selling/trading/hawking products 11.3 8.8 18.1
Income from Crops 14.9 14.9 15.1
Income from Livestock 4.2 4.8 2.5
Income from rental of property 1.8 2.0 1.3
Social assistance 7.6 2.3 21.8
Inland Remittances 2.4 2.3 2.5
Overseas Remittances 8.6 8.1 10.1
Source: Household Survey
89
 CHAPTER 6
Table 6.6 Reasons for Loss of Household Assets
Overall FATA Swat
Sources Contiguous Districts
Sold - to buy food 7.1 8.9 .0
Sold - to pay health bills 22.4 25.2 11.4
Sold - to pay debt 8.8 8.1 11.4
Sold - for other expenses 10.6 13.3 .0
Looting during the war 12.9 5.9 40.0
Theft/Snatched 9.4 10.4 5.7
Inherited 2.4 3.0 .0
Destroyed/Damaged 26.5 25.2 31.4
Source: Household Survey

Loss of household assets is another type of direct impact of conflict

on household economic welfare. Households were scrutinized in terms of
possession of household assets and loss of assets, if any. However, only
12.5 percent households reported any loss of assets after 2008. Although
this percentage is not so high, the reasons of loss are interesting and
expected. According to Table 6.6, about 13 percent households reported
loss of assets as a consequence of war/conflict. This percentage is 40 in
case of district Swat. Sale of household assets due to economic pressure
is also evident in the table.
Box 6.4 presents real life examples of the change in the living
standards experienced by people in the affected areas.

Child Education and Labour Force Participation

To examine the impact of armed conflict on children's schooling and
labour force participation, a special survey module was administered
relating to children aged 5 to 17 years. The purpose of this module was
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

90
 CHAPTER 6
Box 6.4 Declining Standard of Living: Anecdotal Evidence from the Field
he prevailing insecurity has had a deep impact on the economic condition of those
T living in affected areas. One such case is Hassanullah*, a salt dealer in Bannu who
earns around Rs.4,000-5,000 a month. This is not sufficient to fulfill the needs of his wife
and three school-going children. Hassanullah's business has suffered due to the security
situation as shops and businesses are forced to close down due to curfew. Moreover,
threat of bomb blasts also disrupts everyday life. Previously, Hassanullah's monthly
income used to be around Rs.10,000, but now he earns half this amount. He wants to send
his children to private schools but his financial position does not permit it. The family has
had to budget their meager resources to survive. They have stopped spending money on
fruits, new clothes, etc. and social activities have also been curtailed due to immobility.
Visits to the doctor have become unaffordable so they are forced to do self-medication or
use household remedies. Hassanullah is not optimistic about the future. He feels that the
U.S. is aiding the terrorists and that strangers in the guise of Taliban are the ones engaging
in criminal acts.
The past year has been especially difficult for Sardar Naeem* and his family who
grieve the loss of their eldest son, a victim of the military operation in Swat. Although there
was no direct operation in their village, the sense of fear and insecurity is palpable. Naeem
left Swat along with his family in June 2009 and took refuge in a school in Charsadda. By
then his tailoring business had started to slow down due to terrorism, inflation and power
crisis. His family therefore was entirely dependent on the support given by his brothers who
live in Charsadda and are reasonably better off. No support was provided by the
government for evacuation and Naeem was forced to manage the expense of his two-
month stay from his savings of Rs.30,000. It was during this time that Naeem's eldest son
lost his life when he returned home one day along with friends to oversee their house.
Mistaking them for militants, a military helicopter shot a missile at the house that martyred
the 18-year old. Sardar Naeem who has five other sons still mourns the loss of his eldest
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
who had also provided financial support to their family. The army did not officially
acknowledge their mistake nor did they provide any compensation for the loss. Moreover,
when officials came to provide financial assistance to displaced persons, Naeem was
unable to benefit as his name was not registered. Instead the government arranged buses
for the IDPs and Naeem's family was given a one-hour notice to board the bus. No fare
was provided for the journey back home. Faced with personal tragedy and bereft of any
help from government, Naeem's family returned to Swat. He again started his tailoring
business but the electricity shortage coupled with the loss of an earning son has led him
to undertake casual labour for survival. They are completely dependent on the support
from their extended family for food and living expenses. It has been one year since their
return but their struggle continues.

*Name has been changed to protect privacy.

91
 CHAPTER 6
Table 6.7 Child Enrollment and Labour Force Participation
Overall FATA Swat
Sources Contiguous Districts
BOYS
Current Enrollment [5-15 years] 84.8 85.0 84.3
Drop outs (after 2009) 2.7 2.0 5.0
Child Labour [10-17 Years] 12.8 12.7 13.2
Child Labour (Entered Labour market after 2008) 4.1 5.0 1.1
GIRLS
Current Enrollment [5-15 years] 59.1 52.3 78.4
Drop outs (after 2009) 7.8 7.7 8.0
Child Labour [10-17 Years] 2.4 3.1 .0
Child Labour (Entered Labour market after 2008) 1.4 1.8 .0
Source: Household Survey

to assess the current enrolment rate, drop-outs after 2009 and extent of
child labour. The combined enrolment rate for children aged 5-15 years
who are currently attending school are computed. This age group covers
class 1 to class 10 (Matric). To estimate the extent of child labour, an age
group of 10-17 years is considered. Table 6.7 summarizes these
estimates.
Overall, 85 percent boys aged 5-15 years are attending school, while
the comparative percentage for girls is 59. However, girls' enrolment in
Swat is relatively high (78.4 percent) as compared with FCDs (52.3). Drop-
out rates (after 2009) were estimated at 2.7 and 7.8 percent for boys and
girls aged 5-15 years respectively. In Swat district, however drop-out rate
are higher as compared with FCDs. About 8 and 5 percent drop-outs are
estimated for girls and boys respectively. Though the statistics do not
reflect the impact of conflict on education, Box 6.5 illustrates the
environment in which children are continuing their education.

Box 6.5 Education in a Fearful Environment

he mountains which surround Shahid Shah's* village, at an hour's distance from Tank,
T serve as the hide-out for Taliban. Shahid, a student of FSc, is the eldest of six brothers
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

and three sisters. His father, a dispenser, is the only earning member of the family. It has
become harder to make ends meet since the law and order situation began to deteriorate
from 2005 onwards. As the military operation commenced, Shahid's family shifted to
another house about 4 km away. Shahid's education was suspended during this time due
to curfew and terrorist threats. The family was forced to cook meals for one day and
consume it over two days; often they would eat only rice and store rations for when the
curfew was imposed. After three military operations in the area the situation is now slightly
improved. But the Taliban are not entirely out of the picture and they create trouble from
time to time. An environment of fear thus continues to persist. Shahid and his siblings have
now resumed their education after almost two years of interruption. Children are able to
play outside their homes and businesses are open. Hospitals too are open but are not
easily accessible whenever the situation worsens. Mobile phones which were closed for
about two years are operating again. Weddings are held with less fanfare compared to
before as there is a fear of blasts. Everyone in the community is aware of the threats but
no one has a contingency plan to deal with the crisis. Shahid regrets that although
politicians make promises when they come for campaigns, they do not fulfill them.
92 *Name has been changed to protect privacy.
 CHAPTER 6
Table 6.8 Reasons for Not Sending Children to School
Overall FATA Swat
Sources Contiguous Districts
[Boys 5-15 years who are not attending school]
School Expensive 28.6 27.2 33.3
Insecurity 28.0 23.2 44.4
Not Interested 13.7 16.8 2.8
Had to work for pay 11.8 12.8 8.3
School far 6.8 8.8 .0
Too young 5.0 4.0 8.3
Disability/Illness 5.0 5.6 2.8
Going to Madarsah 1.2 1.6 .0
[Girls 5-15 years who are not attending school]
Insecurity 30.9 29.0 42.6
School Expensive 22.5 21.3 29.8
School far 14.4 15.4 8.5
Not Interested 10.5 11.9 2.1
Cultural Restriction on Girls Education 9.0 9.1 8.5
Too young 5.1 5.2 4.3
Disability/Illness 4.2 4.2 4.3
Help at home/business 2.4 2.8 .0
Going to Madarsah .9 1.0 .0
Source: Household Survey

The extent and magnitude of child labour is disturbing. The survey

results, reported in Table 6.7, indicate that about 13 percent boys aged
10-17 are currently working for pay. Among these, about 4 percent have
been entered in the labour market after 2008.
Tables 6.8 list household responses regarding reasons for not
sending children to school. Economic (school is expensive) and insecurity
are two main reasons which are documented in the survey. Insecurity and
fear of unforeseen events are reported by 31 percent among the girls
aged 5-15 who are not attending school, while this percentage is slightly
lower (28 percent) in case of boys. Other major reasons for not sending
children to school include: cultural restriction for girls (9 percent), not
interested (boys 14 percent, girls 11 percent) and distance to school.
Insignificant percentage for the reason "Going to Madarsah" is evident IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
from the table.

Cause of Death
A direct impact of armed conflict on households is the destruction of human
lives. Empirics from Kenya, Rwanda and El Salvador suggest that conflict
victims often are young men in prime working age. To assess the human
losses due to conflict, Table 6.9 presents causes of death in sample
households since 2005. According to the table, about 9 percent deaths
were reported as a result of injuries due to armed conflict. This percentage
is quite high (17.4 percent) in district Swat. The average age of these
victims, as reported by the sample households, was 40 and 34 years in
FCDs and Swat respectively. Box 6.6 reports incidents from the field.

Status of Mental Health

An important objective of the primary survey in the conflict exposed areas
of Khyber-Pakhtunkhwa province was to assess the status of mental
health of heads of households and other adult male earning members.
93
 CHAPTER 6
Table 6.9 Causes of Dealth [Deaths after 2005]
Overall FATA Swat
Sources Contiguous Districts
Chronic disease (After long illness) 34.6 35.5 30.4
Sudden death 24.1 25.5 17.4
Road accidents 15.0 17.3 4.3
Old Age 12.0 11.8 13.0
Injuries due to armed conflict 9.0 7.3 17.4
Unintentional injuries 2.3 1.8 4.3
Pregnancy complications 1.5 .0 8.7
Newborn 1.5 .9 4.3
Source: Household Survey

Box 6.6 Costly Mistakes

any families have paid a high price for the military operation in Swat. Khalid Gul*, a
M farmer and father of six, has suffered a personal tragedy. On 5 April 2009, his 20-year
old son was gunned down by the security forces who mistook him for a suspected militant
as he was walking down the street. They later realized that they had shot an innocent
young man but the damage was irreparable. In April 2010, the government gave his family
a cheque of Rs. 3 lacs and an NGO also promised to help but they have not received
anything as yet. In Khalid's area, it is the NGOs who are providing help the most. His family
wanted to leave the area but was unable to do so due to the curfew. Khalid Gul and his
wife are very depressed and dejected after the death of their son and he is finding it difficult
to work as well because of the psychological trauma he has suffered. Further, they are also
under a financial burden as whatever little savings they had has now depleted and they
have already sold off their livestock.
The pain that Khalid Gul's family has suffered is also shared by others like him.
Saifullah*, a street vendor in Swat, was also left bereft of a son in the 5 April 2009 incident.
His 22-year old son was going down the street with his friends when the forces opened fire
after mistaking them for suspected terrorists. Altogether three boys were martyred in this
incident. Saifullah's son had worked as labour and would earn around Rs.6,000-7,000 a
month. His death had a profound impact on his entire family. Saifullah's father fell into
depression and his wife developed mental disorder. With great difficulty he has tried to gain
a handle on these tough circumstances. The medical expenses of his family have
increased and are a burden on their meager financial resources. Saifullah has approached
several government offices but to no avail. No compensation has been provided to his
family as yet whereas the other families have received assistance. Due to the worsening
condition he has been forced to sell off jewelry. The family lives in a rented house and owns
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

no livestock which can be sold to make ends meet. For three months, they went to stay at
his in-laws in Mardan but have now returned. The government has provided Rs.25,000
assistance. Saifullah notes that although NGOs are active in Swat, unfortunately they have
to work along with the more influential people in the community so the deserving people
sometimes do not get help. Still, NGOs are helping the poor and the government also has
provided food assistance to the IDPs. Even the local people had stepped up to provide
food and clothing. In fact, the locals often help the police and security forces. As for now,
the situation is gradually improving and Saifullah is hopeful for the future.

*Names have been changed to protect privacy.

Respondents were requested to answer 20 questions on specific health

events in the last 30 days. Table 6.10 present the percentage of positive
answers to each specific health symptom. A summary of mental health
score is also provided which indicates the proportion of respondents who
positively affirmed 7 or more symptoms. According to WHO, this
94 population may be considered as having significant psychological
distress and being "potential psychiatric cases".
 CHAPTER 6
Table 6.10 Mental Health Status
Head of Household Other Adult Male Earners
Overall FATA* Swat Overall FATA* Swat
Do you often have headaches? 74.8 75.6 72.6 46.8 45.5 57.1
Is your appetite poor? 46.7 49.5 35.9 34.9 33.3 47.6
Do you sleep badly? 46.7 49.3 36.8 36.0 37.6 23.8
Are you easily frightened? 26.8 28.8 18.8 28.5 31.5 4.8
Do your hands shakes? 20.3 21.9 14.5 12.4 13.3 4.8
Do you feel nervous, tense or worried? 33.4 37.0 19.7 23.7 24.2 19.0
Is your digestion poor? 42.9 43.0 41.9 34.4 33.9 38.1
Do you have trouble thinking clearly? 36.5 36.5 35.9 31.2 34.5 4.8
Do you feel unhappy? 44.5 42.3 53.0 37.6 36.4 47.6
Do you cry more than usual? 25.0 25.8 22.2 23.1 22.4 28.6
Do you find it difficult to enjoy your
daily activities? 37.2 38.4 33.3 38.2 39.4 28.6
Do you find it difficult to make decisions? 44.2 46.0 36.8 36.6 39.4 14.3
Is your daily work suffering? 39.8 39.1 42.7 34.4 37.0 14.3
Are you unable to play a useful part in life? 30.1 29.5 31.6 31.2 30.9 33.3
Have you lost interest in things? 28.1 29.5 23.1 30.1 31.5 19.0
Do you feel you are a worthless person? 57.7 55.3 65.8 52.7 50.3 71.4
Has the thought of ending your life been
on your mind? 42.2 40.9 47.0 21.5 23.0 9.5
Do you feel tired all the time? 64.2 63.0 68.4 41.9 40.6 52.4
Do you have uncomfortable feeling in
your stomach? 44.3 44.4 44.4 36.6 35.2 47.6
Are you easily tired? 48.5 51.2 39.3 34.9 36.4 23.8
Mental Health Score - At least 7 67.0 67.7 64.1 53.2 54.5 42.9
(7 or more symptoms)
(Population having significant psychological
distress and "potential psychiatric cases")
Average Age 48 48 48 28 28 29

* Contiguous Districts
Source: Household Survey

Overall 67 percent heads of households had a mental health score IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
of 7 or more. This high score indicates the alarming level of psychological
distress. The table also shows that a large proportion (more than 50
percent) of heads of households indicated that they often have
headaches and also feel tired all the time. About 58 percent heads of
households had thought that they were worthless person at some point
during the last 30 days. This percentage is relatively high in district Swat.
Table 6.10 also presents the percentage of positive answers to
specific health symptoms in the case of adult male earners in the
household. The average age of these respondents was 28, in contrast the
average age of heads of households was 48. About 53 percent of the
male earners scored 7 or more. Though somewhat lower than the heads
of households, this is also a significantly high percentage and indicates a
critical situation. 53 percent male adult earners in the sample (with an
average age of only 28 years) had thought that they were worthless at
some point during the last 30 days. Box 6.7 presents experiences of
families leading to the psychologically distressed states. 95
 CHAPTER 6
Box 6.7 A Forgotten Populace
alibanisation poses a serious threat to people in Hangu and the nearby tribal agencies.
T Akbar Khan* used to record videos at stage programmes and weddings. After receiving
threats from the Taliban, he has given up his business. Before 2005, business was good
and he would earn up to Rs. 2,000 at a time, whereas, now he barely made a few hundred.
He is now forced to do labour instead. Akbar's family has also suffered personal loss due
to rapid deterioration in the law and order situation. In March 2010, his mother was
martyred in a blast along with his aunt and cousin. In this incident, his five-year old niece
lost both her legs. Akbar has four brothers and one sister. In 2009, one of his brothers was
killed by Taliban on his return from Afghanistan where he had gone for labour. The
attackers stole his money and took the body as well. The family found the dead body after
six days. For his niece's treatment, Akbar's brothers provided monetary assistance. Before
the attack she used to attend madrassa but now she is not able to go. The situation was
not always this bad. Before 2005, there was a thriving market in Hangu where people from
tribal areas used to come. But business has suffered as a result of the conflict. Akbar
himself used to run a CD shop which was later destroyed by the Taliban. He suffered a
huge monetary loss but did not receive any compensation. Football and cricket are popular
sports but no major tournaments are organized because of terrorist threats. When the
situation was good, big events were organized in which teams from nearby areas used to
compete. The government appears apathetic to their plight. The local MNA has not visited
the area for the last three years. Moreover, no arrangements were made in Hangu for IDPs
arriving from Kurram. It was the local people who provided them with a place to stay,
clothes, etc. In some cases, displaced persons have resorted to begging.
Manzoor Khan* also bemoans the persistent insecurity in Hangu which borders the
conflict- stricken tribal areas. Manzoor who works as a labourer and is married with seven
daughters and two sons has also suffered personal loss as a result of the crisis. In March
2010, his 17-year old son was killed when a suicide bomber attacked a military convoy. Not
only did he lose a son but also an earning hand as his son used to work on the fields.
Manzoor petitioned to the DCO for assistance but did not receive any compensation. He
has a kidney problem and is mentally disturbed because of his son's untimely demise. Due
to this he cannot work anymore. Hangu is a gateway to the tribal areas so anyone wishing
to go the agencies must travel through it. As a result, this area has become a safe haven
for criminals. Incidents of kidnapping for ransom have become very frequent. Due to this
persistent insecure environment, business has been badly affected. Manzoor Khan does
not feel hopeful of improvement in his state at least in the near future.
*Names have been changed to protect privacy.
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

96
 CHAPTER 6
Table 6.11 Respondents Open Remarks on the Current Situation
Overall FATA Swat
Contiguous
Districts
Worse economic condition after the conflict 10.8 10.1 13.9
Lack of employment opportunities 8.6 9.5 4.7
Feel unsafe even at home 8.4 9.2 5.0
Scared of unforeseen incidents 7.5 9.1 0.6
Reduction in business opportunities 7.0 6.4 9.5
No development work in area after the conflict 7.0 8.2 1.6
Increased incidence of suicide attacks and target killing 6.9 8.0 2.2
Government and Taliban both are responsible 6.9 2.2 27.1
Difficult for children specially girls to go to school 6.8 7.1 5.4
US, Israel and Pakistani Government are equally responsible 4.0 5.0 0.0
Living conditions are worsening 3.9 4.8 0.0
Government failure in providing peace, safety and services 3.8 3.8 3.5
Community facing problems du tot IDPs 3.3 3.8 0.9
Heavy losses of household assets 3.0 2.1 7.3
Youth heading towards violent activities 2.7 3.3 0.0
Youth are joining Taliban due to unemployment and poverty 2.4 2.9 0.3
Remarkable Role by Pak army 2.2 0.0 11.7
Foreign elements (not Taliban) are involved 2.0 1.6 3.8
Political leadership is responsible for this worse situation 1.6 1.4 2.5
Operation in FATA should be stopped 1.4 1.7 0.0
Source: Household Survey

Respondents' Open Remarks on the Conflict

Besides the structured questionnaire which was administered during the
primary household survey, respondents were also requested to comment
on the current conflict situation in the area. Comments of the sample
households are summarized in Table 6.11. The majority of respondents
were worried about the critical economic condition and continuously
declining employment and business opportunities. These percentages
are relatively higher in Swat district as compared with FCDs. A good
percentage of respondents also worried about the deteriorating law and IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
order and security situation. In terms of responsibility of this chaos, there
were mixed opinions. In case of district Swat, 27 percent heads of
households were of the opinion that Government and Taliban both are
responsible for this mess. In contrast, about 4 percent of respondents
were of the opinion that foreign elements, and not Taliban are involved in
this disaster. Interestingly, only 11 percent respondents admired the role
of Pakistan Army in fighting against the militants. A few respondents (3.8
percent) recorded their protest over the government failure in providing
safety and public services. About 7 percent indicated the lack of
development work since the start of armed conflict. A few respondents
also recorded their concerns regarding in-migration of IDPs.

Views of Community Leaders

Indirect impacts of the armed conflict were evaluated through the views
and perceptions of community leaders. The questionnaire was
administered in 37 communities (27 rural and 10 urban). In each 97
 CHAPTER 6
Table 6.12 Reasons of Outmigration after 2008
Overall FATA Swat
Contiguous Districts
Percentage of Communities Reported Out-Migration 55.3 43.2 100.0
Reasons:
In search of farm land 4.8 6.3
In search of employment 26.2 34.4
Schooling 28.6 37.5
Escape war/violence 38.1 18.8 100.0
Escape drought/famine/disease 2.4 3.1
Source: Household Survey

randomly selected location (Primary Sample Unit), three community

leaders (among teachers, elected representatives, mosque imams and
social workers.) were requested to comment on the current conflict,
household migration, labour market situation, refugee related problems
and household coping strategy.
According to Table 6.12, about 19 percent of households in FCDs
had migrated because of war, violence or armed conflict. Due to the direct
military operation in Swat, however, all households had to escape.
About 14 percent community leaders perceive that the Talibanization
is the major cause for the worse standard of living after 2005 (Table 6.13).
The comparative percentage is high (23 percent) in case of district Swat.
However, the majority (36.2 percent) understand that economic crises or
inflation is the most important reason for the worsening standard of living.

Table 6.13 Causes of Worse Standard of Living after 2005

Overall FATA Swat
Contiguous Districts
Economic crisis / Inflation 36.2 40.6 30.8
Immigration/refugees/IDPs 13.8 6.3 23.1
Talibanization 13.8 6.3 23.1
Bad weather / Natural disaster 12.1 15.6 7.7
Crop pests 10.3 6.3 15.4
Worse public services 8.6 15.6
Declining crop prices 3.4 6.3
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

More expensive public services 1.7 3.1

Source: Household Survey

Community leaders perceive problems because of Internally

Displaced Persons (IDPs). The majority (40.6 percent) were conscious
about the declining business and employment opportunities due to the
inflow of IDPs. Swat is a special case, where an urban-rural migration
phenomenon is taking place due to the intensity of violence. Therefore,
all communities in Swat complained about the decline in economic
opportunities. Other major worries include: increase in incidence of theft
and murder (28 percent) and land and business occupied by refugees
(18.8 percent). Shortage of residential houses is also narrated by a few
(6.3 percent) community leaders (See Table 6.14).
Table 6.15, documents the various household coping strategies to
tackle economic shocks due to the conflict. Friend/family help, temporary
98 out-migration and expenditure management were recorded by
community leaders as major strategies to cope with the miseries of
 CHAPTER 6
Table 6.14 IDPs Related Problems in the Community
Overall FATA Swat
Contiguous Districts
Decline in economic and employment opportunities 40.6 38.7 100.0
Increased incidence of theft and murders 28.1 29.0
Land and business occupied by refugees 18.8 19.4
Shortage of residential houses 6.3 6.5
Impact on law and order situation 3.1 3.2
Loss of forest areas 3.1 3.2
Source: Household Survey

Table 6.15 Coping Strategy to Tackle Economic Shocks during the Conflict
Overall FATA Swat
Contiguous Districts
Friends/Family help 32.4 11.9 65.4
Temporary out-migration 25.0 40.5
Expenditure management 14.7 9.5 23.1
Part-Time Job/business 13.2 21.4
NGOs 11.8 11.9 11.5
Sale of assets 2.9 4.8
Source: Household Survey

current conflict. Support from NGOs was also cited by close to 12 percent
of the respondents. Sale of household assets was indicated by a few
community leaders.
Table 6.16 consolidates views of community leaders on the current
conflict. About 15 percent were of the opinion that this is an international
conspiracy against Pakistan. This percentage is relatively higher in district
Swat. Declining employment and business opportunities were affirmed by
about 20 percent respondents. Talibanization as a root cause of the
current conflict was declared by 8 percent. Insecurity, rising incidence of
suicide attacks, theft and dacoities were also raised. About 7 percent
community leaders were afraid of youth joining Taliban due to economic
as well as religious reasons.

IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

Table 6.16 Open Remarks about the Current Conflict
Overall FATA Swat
Contiguous Districts
Less Employment/Economic Opportunities 20.4 21.7 15.8
International conspiracy against Pakistan 14.9 10.5 31.6
Worse impact on business 8.8 8.4 10.5
Insecure due to suicide attack 8.3 10.5
Talibanization 8.3 9.1 5.3
Insecurity (Law and Order) 7.7 8.4 5.3
Youth joining Taliban due to unemployment 6.6 3.5 18.4
Theft and Dacoities are common 5.0 6.3
Government failure in providing safety and services 5.0 5.6 2.6
Bad impact on education 3.9 4.9
Rise in Poverty 3.3 2.8 5.3
Property destroyed 3.3 2.8 5.3
IDP creating problem 2.8 3.5
Increase Migration 1.7 2.1
Source: Household Survey
99
 CHAPTER 6
Summary and Conclusions
he survey of households in KPK, in districts contiguous to FATA yields
T
z
the following findings.
Per capita expenditures of about 56 percent households are below the
poverty cut-off point in sample conflict affected areas. The estimated
incidence for Swat is 5 percentage point high as compared with other
areas mainly due to the relatively high incidence of rural poverty.
z Overall a 5 percent unemployment rate is estimated, while 8 percent of
youth aged 15 to 25 years have reported to be unemployed.
z About 7 percent of children aged 10 to 15 years are working for pay.
This percentage is relatively high in FATA bordering districts.
z FATA Contiguous Districts (FCDs) show an increase of about 9 percent
in nominal income from 2008 to 2010. Keeping double-digit inflation
during this period in mind, it may be easily inferred that real income
has dropped and poverty incidence has ascended in FCDs.
Nonetheless, in district Swat even the nominal income has declined by
about 15 percent.
z The main causes of decline in nominal income include: decrease in
sales volume due to the war/conflict, decline in purchasing power and
loss of agriculture land due to war. Almost 70 percent of households in
district Swat reported negative impact of armed conflict on business
scope and activities.
z About 50 percent of households in the sample areas depend on
wages/salary from a job. This percentage however is lower in case of
Swat where only 29 percent of households declared this source of
livelihood. About 11 percent of households reported inland and/or
overseas remittances as a main source of income. Interestingly,
barring Swat the magnitude of social assistance by government and/or
NGOs as a source of income is not so high. Only 8 percent households
reported this as an income source. On the contrary, about 22 percent
households of Swat depend on social assistance.
z About 13 percent of households reported loss of assets as a
consequence of war/conflict. This percentage is 40 in case of district
Swat. Sale of household assets due to economic pressure is also
IMPACT OF CONFLICT ON HOUSEHOLD WELFARE

recorded by the sample households.

z Overall, 85 percent of boys aged 5-15 years are attending school,
while the comparative percentage for girls is 59. However, enrolment
of girls in Swat is relatively high as compared with FCDs. Drop-out
rates (after 2009) were estimated at 2.7 and 7.8 percent for boys and
girls aged 5-15 years respectively. In Swat district, however, the drop-
out rates for both girls and boys are higher as compared with FCDs.
z About 13 percent of boys aged 10-17 are currently working for pay.
Among these, about 4 percent have entered the labour market after
2008.
z Economic difficulties and insecurity are two main reasons given by
respondents for not sending children to schools. Insecurity and fear of
unforeseen events were reported by 31 percent among girls aged 5-15
who were not attending school. Other major reasons include cultural
restrictions girls and the distance to school. Going to Madarsah" is not
100 a significant reason.
 CHAPTER 6
z About 9 percent of deaths since 2005 were reported as a result of
injuries due to armed conflict. This percentage is quite high in district
Swat. The average age of these victims, as reported by the sample
households, was 40 and 34 years in FCDs and Swat respectively.
z Overall 67 percent heads of households are psychologically distressed
. About 53 percent of other adult male earners are also under such
stress.
z The majority of respondents were anxious with the critical economic
condition and continuously declining employment and business
opportunities. A good percentage of respondents also worried with the
deteriorating law and order and security situation. In Swat, 27 percent
head of households were of the opinion that government and Taliban
both are responsible for this mess. In contrast, about 4 percent of
respondents were in opinion that foreign elements, not Taliban are
involved in this disaster. Interestingly, only 11 percent respondents
admired the role of Pakistan Army in fighting against the militant.
z The community leaders perceive that 19 percent of households in
FCDs had migrated because of war, violence or armed conflict. Due to
the direct military operation in Swat however, all households had to
escape.
z About 14 percent community leaders believe that Talibanization is the
major cause for the worse standard of living after 2005. The
comparative percentage is high in case of district Swat. However, the
majority understand that economic crises or inflation is the most
important reason for the worsening standard of living.
z The majority of community leaders were conscious about the declining
business and employment opportunities due to the inflow of IDPs.
Other major worries include: increase in incidence of theft and murder
and land and business occupied by refugees.
z Community leaders identified various strategies they have used to
cope with the situation. Friend/family help, temporary out-migration
and expenditure management were recorded. Some also indicated
support of NGOs. Sale of household assets was indicated by few
community leaders.
z About 15 percent of the community leaders believe that this is the IMPACT OF CONFLICT ON HOUSEHOLD WELFARE
international conspiracy against Pakistan. This percentage is relatively
higher in district Swat. Declining employment and business
opportunities were affirmed by about 20 percent respondents.
Talibanization as a root cause of the current conflict was declared by 8
percent. Insecurity, rising incidence of suicide attacks, theft and
dacoities were also documented. About 7 percent community leaders
were afraid of youth joining Taliban due to economic as well as
religious reasons.

101
 RESPONSE OF

CHAPTER 7
THE CIVIL SOCIETY
7

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

It is important for the state

and society to come together,
recognise the issues, accept
each other's roles and
responsibilities and come to a
shared vision. 103
 CHAPTER 7
RESPONSE OF
THE CIVIL SOCIETY

ith the worsening of the security situation in the country over the

W last decade, thousands of civilians have been killed or maimed,

several million displaced and many are still living as refugees in
various parts of the country. Many organisations actively working in the
affected areas have either relocated, or ended their programs. The
content of public debate and discussion is now predominantly on security
issues; media messages have changed to project the effects of terrorism
on the civilian population; intellectuals and writers focus on stories of
terror and fear; and educational institutions and their staff are
overwhelmed with concern for safety of students. The entire population of
Pakistan has been affected and it is certain that the physical, social and
economic impacts will be felt for a long time.
This chapter as part of an overall analysis of the implications of
violence, terrorism and the security situation in Pakistan on social
development looks at a broad section of civil society in general, namely
those institutions and groups which are outside the government, to
understand the issues they confront each day in this changed security
environment and its response to the impact of on-going conflict and
terrorism. The analysis is based on the review of secondary information,
and is supported by direct interviews and email communications with
selected non-government organizations and media professionals.

Civil Society in Pakistan- An Overview

ivil society is "an umbrella term for a range of non-state and non-
C market citizen organisations and initiatives, networks and alliances
operating in a broad spectrum of social, economic, and cultural fields.
These include formal institutions, non-governmental organisations, trade
unions, professional associations, philanthropies, academia, independent
pressure groups, think tanks, and traditional informal formations, such as
faith based organizations, shrines, seminaries, and neighbourhood
RESPONSE OF THE CIVIL SOCIETY

associations" (Sattar and Baig, 2001). It plays a role of a watch dog, it

initiate and foster social, cultural and intellectual movements, acts as
early sensors of social changes and early warning systems, besides
giving impetus to behavioural changes within society at large. This broad
definition of civil society illustrates the complexity and diversity of
organized societal forces, and reflects on the divergent ways in which it
can assist, or hinder social development. In Pakistan, traditionally, civil
society is perceived to be represented by NGOs and in recent years the
media. Therefore, the chapter only addresses selected groups within this
broader framework.
In contrast to South Asia, where the civil society movement has been
vibrant, active and very vocal, in Pakistan it has been stifled under
various military regimes which have ruled the country for more than 30
104 years, almost half of the country's age. It was in the 80s, that the civil
 CHAPTER 7
society movement took on fervour and protests began in all large cities
against some of the laws which were deemed contrary to international
standards of human rights and also in response to changing socio-
political developments in the country. The 90s saw a rapid growth of
NGOs involved in the development sector, the expansion of community
based organizations (CBOs) and various issue based platforms and
coalitions with advocacy as their main strategy for change. The non-
governmental sector grew with the influx of donors into Pakistan, and
gradually moved from a project based approach to large scale programs,
and from service delivery to advocacy. These NGO's are currently major
players within civil society.
Most of the NGOs are national, many are relatively small, often set
up by individuals for purposes of charity and service delivery. Even
though development work by NGOs has increased over the past decade,
welfare and charity remains the overriding areas of attention. With the
state having proved to be inefficient and unwilling, NGOs have had to
move back to service delivery and relief, as seen during recent natural
disasters and in country's internal displacement.
The most vocal and effective role of civil society was seen when
NGOs working for women issues rose against the military regime in the
late 80s. Their advocacy and lobbying role however, relatively limited. It
was after the imposition of emergency rule in February 2007 by the
Musharraf government that civil society, led by the lawyer's movement
found a new impetus to its activism. In the past two decades civil society
has shifted its traditional focus from social welfare, and moved towards a
rights based approach encompassing human rights. Recently, a section
of NGOs have focused on peace and security issues. While civil society
represents, by and large, the power of the people, it has faced opposition
from state actors. Even when the country went through short phases of
elected governments, NGOs and the media have been curbed through
restrictions on their freedom.
A study carried out by SPDC (Pasha and Iqbal, 2002) describes the
attitude of the government as both ambivalent and inconsistent,
supportive at times, and repressive and resentful at others. According to

RESPONSE OF THE CIVIL SOCIETY

105
 CHAPTER 7
the study, while the government was supportive at the policy level, it was
obstructionist at the operational level, as government agencies saw
NGOs as a major competitive force, having increasing influence, and
"cutting into the functions and responsibility" of the line departments. The
government was seen to be generally supportive of the welfare and
service providing role of the NGOs, but openly hostile to their activities in
social and political advocacy. Successive governments were
"increasingly threatened by the role played by nonprofit organizations in
mobilizing support of civil society at large on issues like violence against
women, honor killings, blasphemy law, freedom of the press,
accountability and corruption, etc. The resulting hostility has been
reflected in attempts at penetration of various nonprofit organizations
and, in extreme cases, at attempts even for closure through
deregistration."
The dichotomy continued well beyond into the early 2000s, although
many known civil society workers were inducted into the federal cabinet.
Many more national and international NGOs started work in Pakistan,
others slowly expanded their charity work to take on a more development
approach, and provincial governments provided endowments to NGO
such as the rural support programs.
Social mobilization and participative development was actively taken
on by the NGO sector, probably because of the policies and approaches
determined by development donors. With continued failure of the state to
deliver education and health services to the rural population, service
delivery became increasingly the role of both NGOs and the private
sector.
Also, as the process of devolution brought into action local bodies
and locally elected councilors who were supported by the hundreds of
CBOs (community based organizations), formed and provided financial
and technical help by many national and provincial NGOs. Local opinions
of communities began to be highly favourable towards NGOs and the
sector has gained strength in terms of recognition and general support.
The dichotomy that exists today is tempered by the realization on the
part of government and communities that the non-governmental sector
and recent floods have been largely effective where government
structures have failed, not the least because of the role played by the
RESPONSE OF THE CIVIL SOCIETY

106
 CHAPTER 7
latter in the wake of the 2005 earthquake. The response of civil society to
these events has been overwhelming, especially to the earthquake in
2005 and the recent floods. These events have been milestone in many
ways, including the manner in which civil society is viewed both by the
government and the public.
Despite the odds, civil society in Pakistan does seem to have taken
on another dimension. The restoration of the Chief Justice, the growing
public resentment of the Taliban, and an increasing pressure on Pakistani
politicians for accountability and responsibility to their voters, has led to a
surge of reporting and debates in both print and electronic media. This is
partly due to a civil society which has gained strength through alliances
and coalitions with other stakeholders, including the media, community
based organizations to develop a critical mass towards democratic
change. Many civil society groups are vying for a consensus for
substantial reforms towards good governance, peace, and an inclusive
and equitable society.
The chapter primarily focuses on the impact on and response of
non-governmental sector and media, whereas the impact on educational
institutions (including madrassahs) has also been briefly discussed.

Causes and Spread of Terrorism- A Civil Society Perspective

ome civil society organisations we spoke with raised over concern on
S the alleged role played by the military, security agencies and militant
religious organisations to foster and support " non state actors ", who are
now variously termed as extremists, jihadis, Taliban and militants. The
group of Taliban, who successfully put up a long term resistance and
guerilla warfare against the Soviets in Afghanistan, were a diverse but
ideologically inspired group from Afghanistan, various Central Asian
Republics especially Chechnya, and Arabs. Additionally, there were the
militants who were provided support for the ongoing resistance in
Kashmir. Along with these groups came the criminals, warlords,
smugglers, sectarian groups which had arisen and were indoctrinated in
beliefs of violence, intolerance and distortions of religious teachings.
Increasingly, among these groups are disgruntled and unhappy ethnic
groups who believe they have been deprived of rights and resources for
too long by succeeding governments, as in Balochistan.
Since 2001, there have been many accounts of the actions taken
RESPONSE OF THE CIVIL SOCIETY

to clamp down on terrorists organisations, centres, camps and militant

groups They include the remnants of the Afghan " mujahideen" who
were created, nurtured and supported jointly by the US and Pakistan to
fight the Soviets in Afghanistan. When the Soviet war ended, thousands
of these well trained and highly motivated individuals who were inspired
spiritually by the idea of creating an Islamic brotherhood were left
without an alternative to channel their skills, which were to fight a
guerilla war. Their energies and focus was strengthened by large
numbers of young recruits from the thousands of madrassahs which
flourished in the 80s and 90s, who were motivated to fight the Indian
army in Kashmir. Thus, the numbers of the left over mujahideen
expanded to include younger, more ideologically driven and well trained
individuals from several provinces, and especially Punjab and Khyber
Pakhtunkhwa. 107
 CHAPTER 7
The Pakistani society, led by political and religious parties and
groups, remains divided over the justification of an army operation against
Pakistanis, and supported by the highly controversial "drone attacks". This
is the point of view held by those who believe that the use of force was the
only way out for the government to reign in elements such as the followers
of Sufi Mohammad and Maulana Fazlullah, who demanded for the
implementation of their version of the Sharia law in Swat, started
negotiations with the government and then violated the terms of the
agreement. Those who hold this point of view, also say that the war is no
longer the war of the US, but it is a war for the survival of Pakistan.
The other perspective is
he militants are not, as is perceived by
that the Taliban are righteous,
God fearing people aiming to T people in other parts of the country, the
enforce the laws of Islam, and Afghan mujahideen. They are a mix of local
that the government is Taliban including from south Punjab and
following the dictates of the foreigners from other countries, and
criminals. The media projects the number of
west, killing and maiming its
foreigners to be in a few hundreds. In actual
own people and allowing fact, there are 11,000 Uzbeks, 6000 Arabs
drones to kills civilians. Even and 9000 Punjabis. From Waziristan to
groups who are not directly Swat, there are 4,000 Pushtuns. The people
supportive of the tactics used of the conflict ridden areas also believe that
by the Taliban believe that the military has been collaborating with the
stories of these tactics have militants all these years, and have only
been distorted and carried out half hearted operations, until
misrepresented, or that it is 2009.
not the Taliban who have
Peshawar Declaration, Aman Tehreek
perpetrated the reported
crimes, but elements claiming to belong to Taliban groups.
As the NATO offensive in Afghanistan continues and there are
frequent reports of attacks on the convoys by the Taliban, the influence of
the Taliban and like minded or vested interest groups is on the rise. It is
suspected that the increase in US forces within Afghanistan caused
movement of the Taliban from the Pak Afghan border into Pakistan, and
further aggravation to a country almost besieged by internal terrorist
attacks.
Civil society also argues that had the country been governed by
effective democratic institutions, and had the state fulfilled its
responsibilities in ensuring protection of life and property, and people's
RESPONSE OF THE CIVIL SOCIETY

need, rather than to external security threats, Pakistan would not be

crippled by the internal terrorism and conflict it faces now. Two years into
a faltering democracy, both politicians and parliament have yet to
demonstrate sensitivity to what the people need in the country. According
to the respondents, people need access to low cost and quality education
at all levels, equal opportunities to raise income, large scale investments,
easily available and low cost health services and equitable distribution of
national resources. The low spending in the development sector
continues, and the terrorism rampant in the country has added to neglect
and lack of attention to eradicating the reasons which have bred an
atmosphere conducive to violence and terrorism.
The militants had initially been able to gather wide support among
the people of Swat. They brought speedy justice, resolved disputes over
land and property, and established simple and workable systems of
108 revenue collection. They provided a parallel informal system of redress
 CHAPTER 7
and provided alternatives to the people, and filled the vacuum left by the
state. They were thus able to become the governance of choice, when
compared to what the state had been offering to the people. It was later,
when brutal violence began and when executions and flogging became a
matter of pride by the perpetrators that the common person began to fear
for his/her life, family, and property.
Before 9/11, funds to FATA came primarily for Afghan refugees, and
very little was invested for development of the region, or even for
provision of basic social services for the people living there. NGOs started
work in 1999, and this continued until 2004, when the Taliban factor
became serious enough for almost all NGOs to migrate from FATA to
Islamabad, Peshawar or other cities. The spread of militancy is attributed
to the Taliban's initial strategy to win over people by providing them
speedy justice and quick resolution of issues which had been pending for
a long time. It was when the brutalities started to appear- the general
perceptions changed.
NGO's working on issues related to FATA believes that many of the
issues in FATA are due to the low level of development, and the Frontier
Crimes Regulation (FCR) which controls FATA. This regulation is the
cause of lack of political, social and economic deprivation of society.
According to some of the senior analysts, the main issue is the neglect of
FATA, the lack of justice, and decades of neglect. There is a lack of trust
among the tribal people and the authorities, who do not recognize the
growth and integration of the tribal people into the economy of the
country. Over the years, these tribal people have educated themselves,
moved into an upper stratum of society, migrated to the Gulf countries in
search of employment, and contributed to the social, economic and
political development Pakistan. Yet, they have to subscribe to an archaic
system of governance. For many years no real reforms have taken place,
to include these areas into the mainstream. The absence of social justice
and basic rights, where power is still controlled by the political agent is an
unfair system. The FCR contains a clause where an entire tribe can be
punished for the crime of an individual. This law of "collective
responsibility" is still applicable in areas governed by the FCR. This
complete lack of understanding of the problems, and allowing incidents of
injustice to accumulate and grow into contentious issues, are the main
reasons for the rise of violence, and terrorism in the tribal areas.
Terrorism is not confined to FATA and Khyber Pakhtunkhwa, and is
RESPONSE OF THE CIVIL SOCIETY

far more pervasive phenomenon, with all major urban areas of Sindh,
Punjab including Islamabad and Balochistan, spilling into AJK and the
Gilgit Baltistan province affected by it. The Taliban are no longer the
militants who had gathered and regrouped after the defeat of the Soviets
in Afghanistan. They are now almost indistinguishable from the criminals,
land grabbers, drug mafias, sectarian and ethnic groups, tribal clans,
political and ideologically based parties, disaffected youth and individuals
with vested interests. The TTP (Tehrik-e-Taliban of Pakistan) is still
flourishing, but its aims have been bolstered by these diverse groups with
whom it has developed working relationships.
Thus, many blame rampant poverty, far above the percentages
quoted in official documents, to be the underlying cause of terrorism, hard
line militants luring the young and the disaffected to promises of a better
future, whether in terms of riches in this world, or paradise in the 109
 CHAPTER 7
hereafter. Others cite the spread of rigid and misunderstood religious
doctrines to be the main cause. Both are valid, but the reasons for
widespread poverty and religiosity, the nature of it, and any cures for the
same requires further analysis and understanding if terrorism is to be
effectively countered.
"Within civil society, an important source of this conflict is the
education system in Pakistan, which is stratified according to socio-
economic class and is expressed roughly in terms of media of instruction
or type of educational institution. At one extreme, there are elitist English-
medium schools that cater for the upper classes. On the other end of the
spectrum are the madaris, which cater for very poor children mostly from
rural and urban working class localities. In the middle, there are non elitist
Urdu medium schools catering for lower-middle and middle class
children. The worldview of the students of these institutions is so different
from each other that they seem to live in different worlds. The most acute
polarization is between the students of madaris and of elitist English-
medium schools. The former are deprived but they express their anger -
--the rage of dispossessed--- in the idiom of religion. This brings them in
conflict with the Westernized elite which looks down upon them in
contempt (Rehman, 2003)."
While poverty and illiteracy are at alarmingly high levels, there is
also a very large number of people out of jobs. Many are unemployable,
lacking basic skills, whether technical, business or service oriented, and
others cannot find opportunities, except if they move to large cities where
civic systems are already overburdened by increasing populations. High
rates of unemployment, coupled with lack of opportunities to improve
their lot has provided the young, and especially the rural young to lose
hope and look for a meaning to their lives by whichever means they can
find. They are recruited by militants, criminals, drug traffickers and dope
pedlars, and resort to violence and acts of aggression against both the
state and the society.
Consistently repressive policies, state control over social and
cultural activities and lack of encouragement to sharing of information
RESPONSE OF THE CIVIL SOCIETY

110
 CHAPTER 7
and debates have contributed to rigidity and intolerance to any views
other than one's own. Availability of justice to the wronged, and strict
implementation of laws has not been a priority. Many alliances have been
developed between criminals, the police and powerful politicians,
bureaucrats and business men, resulting in frauds, crimes against
humanity and social evils.
Major cities, places of worship and gatherings of minorities have
been targets by ethnic and sectarian groups. In Karachi alone, a mix of
ethnic clashes and sectarian killings cause hundreds of deaths and
injuries, the number rising every year. Sufi shrines, Shia and Sunni
mosques, churches, places of worship of Ahmadis and Hindu temples
have been targeted frequently. Political rival groups have mixed with
ethnically motivated individuals to create the much feared "target killings"
in Karachi, and to which there seems to be no pragmatic solution as yet.
According to the Human Rights Commission of Pakistan, the monthly
average number of those killed in Karachi has increased from 104 in 2008
to 147 in 2009 and 172 in 2010 (Cowasjee, 2010).
With such a corrosive mix of social, economic and political issues,
and the apparent lack of ability, willingness and commitment from
successive governments, has civil society been responsive at all? One
may argue that civil society has been restricted, controlled and prevented
from developing a coherent and collective deterrence. Yet, civil society
itself is partly responsible. It has been too absorbed in individually driven
agendas, competing for funds rather than investing in coalitions and
networks for better advocacy, giving up difficult issues in the face of
resistance, and retaining an elitist mode of operation. Civil society has not
been able to bring groups with differing opinions to the same table, and
has continued to act in isolation of each other, either duplicating efforts,
or neglecting major issues altogether for want of funding or interest.

Impacts of Terrorism on Civil Society

hile the findings of the previous chapter highlight the affect of
W conflict on household in selected districts of Khyber Pakhtunkhwa,
civil society at large throughout the country has been affected. The impact
of terrorism on civil society has been much more severe, because the
militants themselves are non state actors, and have been drawn from the
same society they are targeting. The underlying sense of shock still
RESPONSE OF THE CIVIL SOCIETY

exists, since most people cannot believe that local people have decided
to wage a war against their own kind. And it is not necessarily "foreign
"elements that are causing this chaos.
This impact has been multifold, because the most affected are the
general public. The number includes over 500,000 children who have
been affected, and in particular, over 3.5 million people displaced in
NWFP and over 1.3 m from the tribal areas who were forced to move to
other cities as a consequence of either the activities of the militants, or the
army operations, or both (IDMC, 2009).
One of the less tangible, and incipient impacts has been on cultural
norms and traditions. Social interactions, arts and music have been
deeply affected in the Khyber Pakhtunkhwa and FATA, since the Taliban
banned what they termed frivolous and ant-Islamic activities. Additionally,
the indiscriminate use of violence against unarmed people has in reality 111
 CHAPTER 7
assaulted the traditional "pashtun" culture, where no violence was
allowed against women, and enemies were treated with utmost courtesy
if he were to take refuge within one's home (Momand, 2010).
One of the main dangers faced were kidnappings for ransom. No
authentic data is available to determine how many were kidnapped, but it
is known that some were released after negotiations and payment, and
some people have never been released.
SPDC survey and anecdotal evidence based on personal
interactions with people of different cities and villages show that terror
attacks claimed to have been carried out by the Taliban and their other
militant sympathizers are feared in Khyber Pakhtunkhwa, but are
increasingly considered to be the added costs of living in a country which
is waging a war not of its own making. Terms related to terrorism and the
war against terror have entered daily conversations, and parents face
queries from their children on what is happening to their country. People
are increasingly afraid of going to open and crowded areas, including
large markets and shopping places.
Civil society is unarmed, with little resources to fight back and is
often composed of the more vulnerable groups of children, women and
old people. The intensity of this impact will be determined by the pace and
effectiveness of the corrective actions taken jointly by the state and
society at large.
Many NGOs describe the plight of internally displaced persons
(IDPs), in particular, that of women and children as most traumatic as
they relate stories of how social, cultural and economic norms have been
disturbed, centuries old traditions destroyed and social cohesion lost
during the mass migration of families with a large number of women. The
impact of this social change may only be felt in the future. Today, it is still
a humanitarian crisis.
As discussed earlier, the power structures which had hitherto been
seen to be constraining and hindering the work of NGOs, began to be

Box 7.1 Voices from IDPs of Swat

"Those that were involved in petty crime and drugs became the Taliban. But they keep their
faces covered so we don't know who they are".
"We don't want to be a burden on our hosts any more. We are ready to return to our
homes as directed by the government but we are unsure of the conditions on reaching our
RESPONSE OF THE CIVIL SOCIETY

homes. We fear that shelling and mortars may have destroyed our homes and schools and
colleges. Our children are particularly scared. We are also fearful that the conditions back
home may return to lawlessness or be worse than before."
We don't ant to return at this time, as there is curfew and also problems with earning
an income. We are not willing to return until there is peace. What will happen if we go back
and there is no peace? Will we come back here? "
"The government must help us rebuild our homes and also provide immediate shelter.
It should rebuild schools, health facilities, including hospitals and other infrastructure
destroyed so that we can live peacefully there. Agricultural loans must be written off,
interest free loans should be provided and electricity and gas bills should be waived. Health
care should be given free of costs."
"Policies should benefit people, especially the poor so that conditions do not re-emerge
that allow for any kind of talibanisation"
"We now understand that we too made some mistakes and were misled by individual
and some organizations which is why we have brought this tragedy on ourselves."
112 Source: OAKDF (2009)
 CHAPTER 7
more supportive, or at least, offered less resistance. These positive
perceptions continued until 2007, and it was around this time when public
opinion in Khyber Pakhtunkhwa shifted again, when offices of NGOs
were attacked, and the militants began to put restrictions on the
movement of women. These changes are attributed to the propaganda
and tactics of Taliban elements, incited by the government operations
after 9/11.
NGOs depend on the good will and trust of the communities they are
working for. Many offices of NGOs had received threats, but possible
damage was averted when villagers came to their support, gathering in
madrassahs to talk about, and vocalize support for the community work
the NGOs were doing. All the respondents were unanimous in saying that
generally communities remain against the militants, and support those
who would work towards development and education in their areas.
It has never been easy to work in Khyber Pakhtunkhwa, FATA and
the surrounding areas. Some level of extremist tendencies existed even
earlier. The serious problems started when the Taliban began to spread
their influence amongst the communities, threatened NGOs, restricted
movement of women, and were able to create fear and insecurity among
the local population. No research has been carried out so far to assess
RESPONSE OF THE CIVIL SOCIETY

the extent to which social development and the work carried out by NGOs
has been affected. What everyone agrees to is the fact that most local
grass root organisations have either migrated to other cities and
provinces, or stopped their work altogether. Many of these are CBOs
(Community Based Organisations) and social activists. This impact was
created initially by the threat and fear of the jihadis, and later by the army
operations, which resulted in the IDP phenomenon. Back home, these
displaced persons face forced kidnappings, murders, thefts, complete
lack of social services, an absence of governance structures, with no
access to social justice.
In Mansehra, in January 2008, the office of an international NGO,
Plan International was attacked by armed men, who lined up their staff
and shot them. Plan carries out development work focused on provision
of services for children and had been working since 1998 in the area. It 113
 CHAPTER 7
seems that they were targeted merely because the militants wanted to
prove that they can carry out such activities with impunity. Everyone
knows who they (the attackers) are, but no one dare speak out. Plan has
since then, withdrawn from working in Mansehra. International NGOs
seem to have been especially targeted and attacked, with several staff
deliberately shot. Plan International, World Vision and CARE are among
those who have been affected. National NGOs, on the other hand, have
been threatened, caught in cross fire and have had attempted attacks
which have been aborted through the support of local people. Some of
their offices have also been directly bombed. Written and verbal threats
have been received, and staff has received threats through telephone
and pamphlets. The response has been varied, according to the severity
of the threat. Where an office has been bombed, direct operations have
been suspended for a few months, but activities have continued, through
field based activists. Where women were the main target, care was taken
to provide them vehicles with security cover, or to restrict their movement.
Both access and mobility have been affected and hence development
work has suffered. Where roads were barricaded, or channels closed,
alternate routes had to be found to provide access to affected
communities. This resulted in additional time, expenses, and additional
security measures.

Impact on social development

In the more intensively affected areas, social development has been
halted, restricted and hampered. It will take years to rebuild and bring the
area back to where it was before the displacement began. One reason
cited for the negative effect on development is the shift of attention of
development NGOs to relief and rehabilitation. Where livelihoods have
been affected, homes and property destroyed, and able men either killed
or in hiding, priorities shifted from provision of education or preventive
health services to relief and rehabilitation.
Women and children oriented development, particularly in education
and health services has suffered too. Announcements over the FM radio
that polio vaccinations were against the teachings of Islam caused
hundreds of parents to decline to have their children vaccinated, rural
BHUs were bombed and destroyed as were thousands of schools, and
women were prevented from going out to obtain medical help, especially
from male doctors. As service delivery NGOs had to move out to safer
RESPONSE OF THE CIVIL SOCIETY

cities, many areas were left without even the most rudimentary level of
support.
According to some of the people working in NGOs active in Khyber
Pakhtunkhwa and FATA, prior to the open conflict, there was no social
development at all, and the war on terror may have had a positive impact
as it has allowed access to areas previously ignored by the state and
NGOs. There is now some hope that development will come to these
places. However, the approach to any kind of social development must
necessarily be different, involving the people, being responsive to their
needs and establishing transparency, accountability and respect. In
general, there is a sense of fear and hopelessness, but now tempered
with hope. With renewed commitment by the civilian government, and
operations by the military, in Swat, Buner and parts of South Waziristan,
114 militants seem to be losing their foothold. The state run war on terror, is
 CHAPTER 7
no longer in response to demands from the US to "do more". Instead,
there is some recognition of the fact that the situation created by the
decade's old alliance of the cleric, and militants and the doctrine of
strategic Pakistan created many of the internal problems related to
terrorism.
One of the most long term and damaging impacts of terrorism has
been on education. Initially, people were ordered not to send their girls to
schools and then the Taliban banned school education for girls. Many
schools have been destroyed by bombings. According to one estimate,
close to 1,000 schools have been attacked or damaged in Malakand and
FATA, more than one million children have been deprived of education
and thousands of teachers have been affected1. Since the army
operation, several schools have been occupied and are used as camps
by security forces. This has made the schools even more susceptible to
terrorist attacks2.
Other than the physical destruction of schools, both students and
teachers have been prevented from going to their schools, having being
threatened or intimidated, and many parents have feared sending their
girls to school. School closures have affected academics, and many
teaching institutions have been closed for a few days almost every month
in one city or the other. School, college and university administrations
have installed special security measures which have included physical
barriers, issue of passes to teachers and students, security personnel
and check posts and identity cards. Teaching institutions now resemble
army barracks, and security staff holding rifles can be found sitting atop
their assigned stations. This and the daily events of bombings and
shootings have created a sense of fear and insecurity among the young,
particularly the children who find themselves immersed into a world of
explosions, death and injury. The mental and emotional impact on the
children of Pakistan is as yet un- researched, but psychologists and child
experts believe that long terms impacts may be unavoidable.

Responses to Terrorism
n reviewing impact and responses to the security situation in the
I country, major differences are evident between the state and civil
society. For the state, its writ has been challenged by the laws verbalized
by the militants and subsequently, state agencies and personnel have
RESPONSE OF THE CIVIL SOCIETY

suffered casualties. The response has been to direct offensives, marked

by military power and strikes, mainly against the militants but giving rise
to civilian casualties and sufferings. Although the Parliamentary Security
Committee has drafted recommendations to curb terrorism, including
banning all militant groups, destruction of all militant training camps,
development in conflict areas and indiscriminate application of anti
terrorism laws, no progress on implementation is visible. It is as yet
unclear what steps, if any, have been taken to adopt measures other than
military force. Civil society has different ideas on how to respond.

Response of NGOs
Many organisations claim that peace and democracy has always been a
part of their core programs. However, the war on terror and its
ramifications have served to reinforce the significance of these core 115
 CHAPTER 7
values, and to intensify efforts in this area of work. Civil society, and
NGOs in particular, have responded to the security situation in Pakistan
by reinforcing their call for peace, tolerance and a plural and diverse
society.
NGOs working in Khyber Pakhtunkhwa responded to the internal
displacement which occurred when the army action against militants
began in May 2009. Millions fled their homes from FATA and Khyber
Pakhtunkhwa leaving behind their livelihoods, personal belongings, and
even family members in search of peace and security. The NGOs initially
responded with relief goods and services. The internally displaced
persons in many areas were provided shelter by local people in
neighbouring districts. The government was not prepared to receive this
influx of IDPs and these people found themselves in extremely difficult
living conditions. Lack of basic facilities, food shortages and the economic
strain affected women, the elderly, and children the most. The international
community, donors (see Box 7.2), NGO's INGOs, and philanthropists,
responded with relief goods, and donations to rebuild shattered lives.
During the relief efforts directed towards IDPs, many NGOs followed
a process of setting up small committees who would determine the needs
and requirements of the displaced. During this process they also held
discussions with the IDPs, asking them about the conditions in the places
they had fled, and listened to their stories. Most of the displaced people
responded positively to such opportunities of discourse, and made
commitments to continue this process of self mobilisation, and collective
resolution of issues.

Box 7.2 Response of Donors

evelopment donors seem to have recognised the role of civil society in building peace
D and democracy, more than they did before, and this has resulted in increased funds
to NGO managed programs on peace and conflict, sometimes at the cost of funds for the
government.
The same response, however, is unfortunately lacking for provision of relief and
rehabilitation services to the IDPs. A press statement from the Pakistan Humanitarian
Forum issued on April 16th, 2010 describes the continuing plight of the more than 3 million
IDPs including those who have returned to their villages. Firstly, donors have focused more
on the IDPs from the Malakand division, and very little support has been provided to those
from the tribal areas. Second, only 16% of the donor funds have been channeled through
NGOs, while 56% has been through UN agencies, thus affecting both needs based
RESPONSE OF THE CIVIL SOCIETY

support and its pace of delivery (Khan, 2010). And finally, most of donor funds have been
ear marked for life saving activities, whereas more support is required to enable the
affected people, especially women and children to live with dignity and hope to regain their
livelihoods. Many NGOs involved in provision of services to the IDPs are likely to end their
programs within 2010 unless funds can be found to continue their work. According to
almost all NGOs interviewed, very little resources are being earmarked for long term
development, provision of basic services and justice to those who have been deprived of
these, and the lack of which remains a key factor in the rise of Talibanisation in the affected
areas.
In the wake of massive floods which have affected almost one third of the country, and
which have exposed the plight of millions of rural people who were extremely vulnerable
to such disasters, many donors are beginning to believe that Pakistan needs to invest
much more in health, education, income generation and skill development. The US,
European Union and the UK plan to fund large social development programs, and have
announced working with and through civil society organizations. Such funding is over and
116 above the amounts already announced as aid under the US Kerry Lugar Bill.
 CHAPTER 7
Despite security threats, not a single national NGO has stopped
working even in the more sensitive areas, except for short periods of time.
Nor did the situation restrict movement of women staff. Measures taken
include the slowing down of activities or suspension for a while, and
women have been asked to travel in office vehicles. Staff has been
moved temporarily to "safer "places. The common strategy is of "lying
low" for defined periods, and biding time until the situation becomes more
stable. This allows these organisations to remain committed to their
constituency, garner support amongst them and return when the situation
appears to improve. Staff has been provided special training on security
measures, office security and additional vigilance systems have been
installed. According to these NGOs, they have found it very difficult to
retain a "security culture" since their staff feels it creates barriers with the
very people they are trying to assist. Thus, while development workers
are now much more security conscious, and have more access to
security systems, they are more than ever aware of the need to be seen
to be a part of the same people they are working for.
The single most prominent difference between the response of the
state and that of NGOs at a broader level, is in their approach and
strategy. While the state looks to counter terrorism, taking on short term
offensives against those it would term militants, civil society is more
involved with different segments of society. Several organisations from
Khyber Pakhtunkhwa and FATA have called for a new social contract
between the citizen and the state, and between citizens (Box 7.3); others
have proposed a four pronged strategy based on political, economic,

Box 7.3 Response of NGOs to Contribute to Lasting Peace

man Tehrik, an alliance of NGOs, individuals, teachers, activists and political parties
A based in Khyber Pakhtunkhwa has been set up to promote peace, across NWFP, as
a response to the ongoing conflict. It has brought several civil society actors to one
platform, using their belief in the Pashtun culture as a binding force, and aims to revive and
re-establish interest in cultural activities as one of the essential elements for a tolerant and
peaceful society. Aman Tehrik has developed an agenda called the Peshawar Declaration,
which makes a three tiered set of recommendations to bring peace to the conflict torn
areas, based on political reforms, creation of economic opportunities, enhancing education
and awareness and fostering cultural activities.
Aman Ittehad is another movement of civil society individuals and organisations, which
is focusing on the establishment of a "new social contract" between citizens and the state,
RESPONSE OF THE CIVIL SOCIETY

calling for reducing inequity, promoting diversity and tolerance, strengthening democratic
processes and institutions and enhancing spending on social development. These
networks and others demand the conversion of Pakistan from being a "security state ", with
priorities determined by perceived threats from its neighbours, to a people's state, with
priorities emanating from the needs of its people.

cultural and administrative changes, and many in FATA are asking for a
major restructuring of the relationship between FATA administration, the
government and the people of FATA.
The situation in FATA is different from that in Khyber Pakhtunkhwa.
Expectations of the people after the army operations have been raised in
terms of rehabilitation, rebuilding and attention to provision of basic
services. This unfortunately is too late, and too far between according to
many social workers. The situation, they say is dangerous as it could
result in a return to the insurgency conditions. If that happens, peace will 117
 CHAPTER 7
become almost impossible. The environment for NGO workers in the
tribal areas remains precarious, and even after the army operations, they
find it difficult to resume their identity as suspicion surrounds them and
target killings and kidnappings are routine.
Initiatives for peace building still seem isolated and have not yet
found resonance at the same level as that of a social movement. It is
disappointing to see that civil society at a national level is still not
mobilized adequately. Nor does it realize the seriousness of the issue at
hand. When terror incidents happen in Khyber Pakhtunkhwa, or FATA,
Punjab or Sindh, only those who are physically there feel the intensity of
pain. After a couple of days, the news fizzles out, to be replaced by other
more interesting items. The "peace movement" has not taken on the
imagination of the whole country, unlike what took place during the
lawyer's movement. Civil society has still not mobilized itself into a
national movement which on the one hand denounces violence and
terrorism in all its forms and manifestations and work to change an
inequitable and repressive social and economic system which continues
to promote and facilitate militancy, intolerance and radicalization.
The issue of terrorism is multi layered, and necessitates a multi
layered solution. It must reside in political and social change, with
rationalised spending on development vs. defense, investment in human
capital, demilitarization of society, breakup of feudal systems and
governance which is people centered.

Impacts on and Response of Madrassha

Madrassahs are an important stakeholder of the civil society sector in
Pakistan. Teaching at madrassahs is centered on the study of Islam.
However, many of them also provide basic education, including study of
language, maths and science. Iqbal and Siddiqui (2008) estimates that
the number of madrassahs in 2005 was 16,000. Many of these
institutions have come under much scrutiny, and suspicion, particularly
from both the international donors and the Pakistan government, and to
some extent from certain sections of civil society. They are alleged to be
teaching hate and intolerance to young minds on the one hand, and thus
creating suicide bombers and terrorists, and on the other, turning out
graduates who are ill equipped to fund suitable employment or to serve
as responsible citizens. Traditional sectarian based religious teachings
continue in the majority of such institutions especially those in Khyber
RESPONSE OF THE CIVIL SOCIETY

Pakhtunkhwa and FATA, and in the absence of any alternate educational

mechanism, and financial incentives, people have little option but to send
their children to the madrassahs.
The focus of madrassahs has slowly been shifting over the years in
response to wider political and economic changes. Many large madrassahs
have responded to the job market needs of their target population by
incorporating subjects related to modern sciences in their curricula and
offering equivalent degrees of bachelors and masters, including in
disciplines such as computer science (Iqbal and Siddiqui, 2008).
According to a report by the Pakistan Institute of Peace Studies
(PIPS, 2009), most militant groups have also changed their operations by
adding a social welfare section to their work, and including English
medium curricula. Of the 246 religious organizations active in the country,
118 145 are sectarian, 25 are politically active and 12 are trying to establish
 CHAPTER 7
the Islamic caliphate system. At least 24 are militant and most are running
madrassahs and training camps.
It is debatable whether the addition of science based curricula will
help in diluting the messages of the intolerance doctrine, and ritualistic
interpretation of religion which many madrassahs are known for.
Proponents say that many terrorists have not had madrassah education
and hence it would be unjustified to put the blame solely on this alternate
but necessary form of education in absence of services from the state.

Impact on and Responses by Media

The content of media messages have shifted, from being purely
entertainment, to being more provocative, analytical and raising issues
for public debate, ranging from terrorism to development and social
issues which had hitherto been brushed under the carpet. Another point
of view is that terror incidents occupy so much space in the media, that
social development gets short shrift, and attention is directed away from
the less newsworthy, but more substantive issues. Media has played both
a negative and a positive role. They have created panic, brought
sensationalism, and played a role in de-sensitisation of the public, but
RESPONSE OF THE CIVIL SOCIETY

have also helped to raise awareness of bigger issues, and helped to

create the beginnings of a more informed society3.
The media in Pakistan has evolved from a small nascent press to a
complex and diverse institution, which plays a key role in policy making
and forming public opinion. From a few newspapers in 1947 to over 800
newspapers in English, Urdu, and Sindhi in 2010, the print media is an
influential player in the decision making process. Radio is another
important and effective channel for communication, particularly since the
literacy rate is so low those living in remote areas rely on radio for daily
information. Radio Pakistan has grown from 5 radio stations in 1947 to 31
stations located all over the country, with outreach to almost 96.5 % of the
population. It broadcasts in 21 languages, and covers current affairs,
entertainment, sports, and a range of issues relevant to rural and urban
listeners. Competing with the FM stations Radio Pakistan has introduced
its own FM channels and has 4 stations in FATA.
119
 CHAPTER 7
Television began in 1964, and PTV reaches 95% of the population
and telecasts in English, Urdu, and regional languages. It coverage
extends to 75% of the country. However, in the past ten years, there has
been an increase in the range of local language T.V. channels which has
allowed greater outreach and access to information by people in remote
areas. Satellite TV has also entered the arena and subsequently ended
the monopoly of State owned television. New channels have increased
the choice available to viewers. A change in policy has allowed foreign
media access through satellite and internet has also increased the flow of
communication and information. Debates and discussions on socio,
economic, and political issues are more frequent, and influence public
opinion. Due to this wider outreach the media has become a vital medium
between state and civil society, and between politicians and the people.
Amidst this surge of private TV channels, cross media ownership is
another phenomena which makes a few media houses extremely
powerful. This is a trend which could become "dangerous" since the
media is the only source of information, communication, and
entertainment to the public.
Responses from media persons interviewed indicate that, the media
in the Khyber Pakhtunkhwa and FATA functions under extremely difficult
conditions. Caught in the conflict zone, journalists are in constant danger,
live in fear, insecurity, and unpredictable conditions and cover events
from the conflict zones at great risk, without the skills, infrastructure, and
knowledge required to deal and manage conflict situations4. They are in
a difficult situation because they are unable to confirm information
independently, and to rely on government sources, or militant versions of
events. They have no training of how to operate in hostile areas; very little
protection against armed militants and security forces, and are paid low
salaries. Many have fled the danger; those who remain cannot risk
practicing independent journalism. Five journalists have been killed in
Bajaur, North Waziristan and South Waziristan since February 2005,
according to the Tribal Union of Journalists (Khattak, 2010).
The year 2007, has been recorded as the worst year for the media in
terms of attacks on journalists, on media property, and severe restrictions
on freedom of the press. Many have been killed; several injured, and
almost all live under a constant fear of one or the other organised actors
of the war on terrorism5. According to a news report, intimidation of the
media by militants has become a serious issue, even though journalists
RESPONSE OF THE CIVIL SOCIETY

are refusing to be intimidated. The country's rampant violence made

Pakistan one of the deadliest environments in the world last year for
reporters. In 2009, 7 journalists were killed during their assignments, and
in 2010 three journalists have lost their lives. Two of them died in
Balochistan, and one in Khyber Pakhtunkhwa (Khattak, 2010).
In these circumstances the media has to respond to the changing
situation on a regular basis. In terms of responses to the current security
situation of content, policy, and coverage, according to Ismail Khan of
daily Dawn, "The media has come of age from being confused and
ambivalent, particularly the media based in Islamabad and elsewhere, to
owning it altogether. I think the last operation in Swat changed its
perspective .The media in Peshawar has had frustrating moments while
trying to make their colleagues in head offices understand the magnitude
120 and seriousness of the challenges. The change did not occur overnight
 CHAPTER 7
and it took time from calling militants," askariyat pasand" to terrorists.
The media has also responded by adjusting its own role in reporting
conflict. It has become central to the way the conflict is perceived and
reported, and the relationship between the government and the press
changes according to whether official policy is to coerce or cultivate the
media. This is based on whether the official position is to project a particular
perspective, or to prevent criticism of policy and action (Ahmed, 2010).
According to a senior journalist (Zaffar Abbas, daily Dawn) the
security situation has been a learning experience for most people in the
media. Those in the print media had some experience in the past of
covering terrorism, violence and related issues, but for the more recent
private TV channels, this has been an extremely challenging situation.
Initially in the past, there was an element of sensationalism in TV
coverage, and there was little effort to analyse, or examine the context of
the emerging situation. During this time, "grave mistakes were made, and
as a result media also contributed to the marked increase in fear and
anxiety in society." Another change in terms of response is that there is
greater coordination between directors and editors, who share
information, and exchange views on the evolving situation. The purpose
of this is to improve the quality of reporting, to rectify mistakes, "without
compromising on truth". This is an important shift in the level of
responsibility of the media, given the intense competition among different
sections of the media. It also reflects a maturity and sense of
responsibility within the media, which is positive in these difficult and
stressful times.
The current conflict has shifted to remote areas, where the media
has no access. Therefore, journalists depend on information provided to
them by the army, the militants, or security agencies. This means that
there is often limited verification of facts, and very little analysis of the
underlying issues, or reflection of the scenario. The militants often
threaten the press, which increases the difficulty of cross checking facts.
Since Their is lack of access to the conflict zones journalists tend to
support the prevailing policies, in the name of national security.
It seems that the media has not developed any consolidated
strategies in response to the security situation. There is no unified
strategy while the main issues are related to the safety and security of
media personnel. Media representatives and their unions have raised this
issue with the government and their respective media companies. There
RESPONSE OF THE CIVIL SOCIETY

are only a few cases where journalists have been provided trainings, and
security in the field. Bullet- proof jackets, helmets, and safety gear, have
only been provided to a few people. The courage of these journalists and
media persons who operate in such difficult and stressful circumstances
must be recognized, and their endurance applauded. Among the many
media persons out in the field it is the camera persons and photographers
whose job demands that they are closest to the "theatre of war", to take
pictures to send the story to the rest of the world.
Some television channels have shown silent empathy towards
militancy. It was also felt that since access to the conflict areas is limited,
only footage available of army operations is aired, and clashes between
the military and the militants is rarely captured. There seems to be a very
strong sense of patriotism within the media which does not allow a hard
line of questioning to be raised. And there is no focus on the causes of 121
 CHAPTER 7
this conflict, on analysis of history, past and present foreign policy,
political processes, and socio-economic factors which have contributed to
the root of the conflict.
As discussed earlier, NGOs have formed an alliance with other
stakeholders to develop strategies towards achieving peace. These are
still in the early stages, but if the momentum grows it may offer some
concrete alternatives to the people suffering in the conflict zones. The
media has a role to play here as well, in terms of strengthening the
movement, supporting the issue of peace, and projecting the message to
a wider audience. Issues such as peace and solutions towards harmony
are not being emphasized in the media in general. Some channels do
discuss this issue, and have covered events organized by these peace
movements, but they are limited in their outreach, and there is yet to be
a concerted response from the media to the causes of the conflict and
finding solutions for peace.
Media in Pakistan has always been inclined to cover political stories
as opposed to investigative reporting or development issues. The focus,
content, and agenda of each media company depends on the policies of
the company owners, and senior news directors and editors. In recent
years, the change in political and security situation is reflected in the
media as well. In terms of coverage, there has been an increase in
reporting about conflict, because these are issues faced on a daily basis.
This has led to more "on the spot" reporting, and gradually an analysis of
the problem has also emerged. Coverage of issues related to security
and an analysis of events dominates the print media, and on television
talk shows there is a constant discourse and debate on the implications
of the growing threat to security. To a large extent the media has been
supportive of the army -led operation. However, it is important to note that
a consensus has not developed within the media on what the conflict is
all about, and whether there is a need for a collective stance.

Conclusions
he key findings are from this chapter on the impact of the security
T situation, and responses from development NGOs and media are
summarized below.
z Apart from the general public, the main institutions which have been
RESPONSE OF THE CIVIL SOCIETY

targeted, with loss of property and life have been educational

institutions, non-governmental organizations, and journalists.
Hundreds of schools have been destroyed, the number is increasing
with each passing day. Staff of all three sectors have been killed,
kidnapped or wounded.
z While there is no single and collective strategy, by and large, civil
society has demonstrated a commitment to continuing its development
work and reaffirms their agenda towards supporting peace and
harmony.
z In response to the situation in the country, many NGOs have added
relief and rehabilitation to their ongoing work, either developed or
enhanced their programs on advocacy for rights and peace, and set up
122 people's networks in and around the affected areas.
 CHAPTER 7
z Civil society discourse is increasingly focusing on the cruciating affects
of the nexus that exists between social development, democracy,
peace and good governance.
z Some donors have made commitment to assist civil society and
strengthen its initiatives, but very little of this commitment is as yet
tangible especially in the directly affected areas such as Malakand and
FATA.
z Media, particularly journalists are among the most vulnerable and
unprotected. They are caught between the security agencies and the
terrorists and prone to attacks from both. The most vulnerable are
those reporting from the "war zones." Most TV channels and
newspapers rely on stringers and district correspondents in tribal
regions, and Malakand, since they are reluctant to send their senior
journalists unprotected into these areas.
z To a large extent the media has been supportive of the army -led
operation, However, it is important to note that a consensus has not
developed within the media '' on what the conflict is all about, and if
there is a need for a collective stance."
z Media has yet to find a role for itself in promoting peace and tolerance
and in joining hands with other members of the civil society to carve
out a strategy which can help reduce the prevailing terror and fear.
It is indeed very clear to all that only an army operation is not the
answer to a problem of this scale currently faced by Pakistan. It is
important for the state and society to come together, recognise the
issues, accept each other's roles and responsibilities and come to a
shared vision of what needs to be done to get out of the quagmire of
terror. Equally important is to develop a national consensus on a
comprehensive strategy and a shared program to combat terrorism.
Although public opinion has changed to some extent, civil society
remains divided over the justification of the army operations, and the war
on terror. This is partly due to anti west sentiments amongst Pakistanis
and partly due to the silence maintained by, and lack of condemnation of
terrorist attacks from any of the religious parties or clerics. Opinions are
divided on the justification of the US drone attacks, and while these claim
to have killed many key terrorist leaders, they have also caused collateral
damage. For any anti terror strategy to succeed, the actions taken by the
RESPONSE OF THE CIVIL SOCIETY

state need to be seen to be just and in the interests of the public whereas,
the civil society needs to come forward and play a greater role in building
an environment conducive to the making of a just and inclusive society.

NOTE:
1 Daily Dawn, April27, 2010.
2 Pakistan Institute of Peace Studies (PIPS), Security Reports.
3 Verbal communications by a senior staff member of a national NGO
4 Reporting from the Frontier, media capacity building for peace in Pakistan's
Tribal areas, Altafullah Khan
5 Capital Talk, Geo News, May 3rd, 2010.
123
IN SEARCH OF

CHAPTER 8
A SOLUTION
8

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

The situation demands

for adopting a
consensus-based
strategy aiming both at
preventing terrorism and
minimizing its effects on
social development. 125
 CHAPTER 8
IN SEARCH
OF A SOLUTION

he previous chapters have demonstrated that Pakistan is

T confronting a dire and unprecedented crisis of its history. Pakistan

joined the coalition for the war on terror primarily because of the
changed international political environment, which was defined by
unilateralism and coercive diplomacy. Over the past one decade,
incidence of terrorism has spread all over the country affecting all the
major cities of Pakistan including FATA and its bordering areas. However,
militancy, extremism, violence and intolerance are not an exclusive
outcome of war on terror but also have deep seated roots embedded in
systemic failure both of institutions and social development policies. The
crisis is multidimensional and can be characterized by a political-security-
development nexus where each factor feeds into the other and the failure
on one front raises the probability of failure on all fronts.
Terrorism has taken a heavy toll on Pakistan's economy, which is
faced with challenges such as slowdown of economic growth, decline in
investment, high inflation and higher levels of fiscal and current account
deficits. The costs of participation in the war on terror are rising
exponentially in terms of dislocation of economic activity, high losses of
life and property and impact on the investment climate. The war has
shifted public expenditure priorities away from the social sectors
especially after 2004-05, which has caused a slowdown in the pace of
social development. During the past decade, most of the social
development indicators have shown little or no improvement. For
instance, the SPDC estimates show the incidence of poverty at 38
percent in 2007-08, which may have crossed 40 percent by the end of
2010. The war has caused serious regression in Pakistan's efforts to
meet the targets of the MDGs by 2015.
The province of Khyber Pakhtunkhwa has particularly suffered large
economic losses due to the war on terror. At the household level, the
armed conflict have disrupted the lives and livelihoods of local
populations. The SPDC survey of households in selected affected areas
of the province shows an average decline of 75 percent in nominal
IN SEARCH OF A SOLUTION

income of households. Per capita expenditures of about 56 percent of

households are below the poverty cut-off point in the sample areas
affected by the on-going conflict. The extent and magnitude of child
labour in these areas have increased alarmingly where about 13 percent
boys aged 10-17 are currently engaged in paid employment. Among
these, about 4 percent have entered the labor market after 2008.
Another disconcerting dimension of the impact of war, which is largely
ignored in public discourse, is the mental health of the people in affected
areas. According to the survey findings, 67 percent heads of households
could be termed as having significant psychological distress and being
126 "potential psychiatric cases".
 CHAPTER 8
Both the state and the civil society have responded to the crisis in
different ways and to a different extent. The single most prominent
difference between the response of the state and civil society sector is in
their approach and strategy. While the state is relying on short term
military offensives against militants, civil society organisations are more
directly involved with different segments of society. Though there is no
single and collective strategy, the civil society, by and large, has
demonstrated a commitment to continuing its development work and
reaffirmed its agenda towards supporting peace and harmony.
The situation demands for adopting a consensus-based national
strategy aiming both at preventing terrorism and minimizing its effects on
social development. In view of the analysis and findings presented, some
key recommendations are:
z The analysis of budgetary priorities indicates sizable shift of public
resources from social sectors to defence and public safety affairs.
Moreover, the focus on internal and external unprecedented
security has caused a change in the development priorities
envisaged in MTDF whereby the financial resources have been
taken away from socio-economic sectors. This not only affected
the economic growth but has also influenced the pace of social
development. Therefore, during the course of the on-going conflict,
efforts need to be made to minimize the negative effects of the
security crisis on social development. It needs to be ensured that
security related expenditures are not enhanced at the cost of
spending on socio-economic sectors.
z The 7th NFC Award allocates higher share of taxes to provincial
governments, which provides a window of opportunity to provincial
governments to focus more on social and economic development.
The provincial governments need to ensure that these resources
are effectively utilised for achieving MDGs targets. One of the key
features of the 7th NFC Award is higher transfers of resources to
relatively less developed provinces. These provinces need to avail
the opportunity to reduce the gap in socio-economic development
among provinces.
z Together with security crisis, supply bottlenecks including gas and
power load shedding are considered as a major factor affecting
private investment and economic growth. The decline in private
investment and economic growth also leads to greater
IN SEARCH OF A SOLUTION

unemployment, which may cause further worsening of the security

situation. Therefore, a sustainable and cost effective solution is
needed to remove supply bottlenecks.
z In order to make a meaningful impact, the recently announced
relief packages by the federal and provincial governments need
proper and timely implementation. Moreover, in the development
projects, effective targeting of affected population and regions
needs to be assured. It is equally important to ensure transparency
in utlilisation of resources by devising appropriate mechanism for
monitoring and evaluation. 127
 CHAPTER 8
z Though a direct and causal link has not been established between
poverty and terrorism, there is ample evidence to suggest that a
large number of people who join militant groups are from the lowest
socio-economic segments of the population in Pakistan. Therefore,
the national goal of poverty reduction should be considered an
essential element of the strategy to eliminate terrorism.
z It is a known fact that majority of the suicide attacks have been
carried out by young males. Given that there is relatively high
unemployment rate among youth - the highest in Khyber
Pakhtunkhwa compared to other provinces - it can be inferred that
'unemployed young males' are more prone to join the militant
groups. There is an urgent need to initiate skill development
programs for youth, both in urban and rural areas. The programs
need to be designed in accordance with the demand for labour in
local economies. Moreover, the programs must have a component
on youth career guidance.
z In affected areas, the process of infrastructure development and
rehabilitation and re-integration of people needs immediate
attention. Rebuilding of schools, destroyed houses, and small
industries needs to be done on a priority basis.
z Systemic weakening of the institutions has caused sufferings and
insecurity at the societal level. The trend shows that at large
governance indicators have worsened over time. The increasing
socio-economic disparities alongwith the weakening of
governmental institutions have created the vacuum for the
emergence of non-state groups. Disequilibrium existing between
political institutions and institutions of bureaucracy and military is
believed to be one of the major of causes leading to this situation.
It is important to address the culture of power politics existing
between these institutions.
z There is a need to initiate dialogue at provincial and federal level
involving all political parties and representatives from the various
segments of civil society for developing consensus on various
dynamics of the issues of security. Also, required is a
multidisciplinary fact-based research to develop a preventive
strategy.
z The Parliamentary Committee on National Security has drafted
recommendations to curb terrorism, including banning all militant
IN SEARCH OF A SOLUTION

groups, destruction of all militant training camps, development in

conflict areas and application of anti terrorism laws.
Recommendations of the committee need to be taken into account
for developing the peace plan.
z The parliamentary committee has also called for cessation of the
drone attacks in Pakistan. While these claim to have killed many
key terrorist leaders, they have also caused major collateral
damage. The government needs to take a clear stance on the
controversies surrounding the drone attacks and take its people on
128 board.
 CHAPTER 8
z The state and society need to address all the various forms and
manifestations of extremism and violence. The government needs
to play its role in providing an enabling environment for civil society
organisations seeking to establish trust, generate ideas and
collective actions in affected areas.

In summary, it has become very clear to all that military offensives

against militants is a necessary but not a sufficient strategy to mitigate
terrorism and violence in the country. It is important for the government to
ensure a balance between the military and the civilian surge strategy.
Equally important is for the state and society is to come together,
recognise the issues, accept each other's roles and responsibilities and
develop a shared vision of what needs to be done to escape from the
quagmire of terror.

IN SEARCH OF A SOLUTION

129
 APPENDICES

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0 APPENDICES

127
 APPENDICES
A.1
SPDC PUBLICATIONS

RESEARCH REPORTS Indices of Multiple Deprivations 2005

Haroon Jamal and Amir Jahan Khan
A Profile of Social Protection in Pakistan: RR 72, July 2007.
An Appraisal of Empirical Literature
Haroon Jamal Education Status of Districts: An
RR 81, May 2010. Exploration of Inter-Temporal Changes
Haroon Jamal and Amir Jahan Khan
Assessing Vulnerability to Poverty: RR 71, July 2007.
Evidence from Pakistan
Haroon Jamal Income Poverty at District Level: An Application
RR 80, April 2009. of Small Area Estimation Technique
Haroon Jamal
Estimation of Multidimensional Poverty in RR 70, July 2007.
Pakistan
Haroon Jamal Updating Poverty and Inequality Estimates:
RR 79, January 2009. 2005 Panorama
Haroon Jamal
Understanding Rural Poverty Dynamics: RR 69, June 2007.
The Case of the Poorest District of Sindh,
Pakistan Determinants of Total Factor Productivity in
Haroon Jamal and Hari Ram Lohano Pakistan
RR 78, June 2008.
Qazi Masood Ahmed and Kalim Hyder
RR 68, June 2007.
Exploring the impact of Microfinance in
Pakistan
Gender Inequality and Trade Liberalization:
Haroon Jamal
A Case Study of Pakistan
RR 77, June 2008.
Naeem Ahmed and Kalim Hyder
RR 67, March 2007.
Fiscal Policy Choices in Budget 2008-09
SPDC Research Team
Determinants of Recent Inflation in Pakistan
RR 76, May 2008.
Abdul Aleem Khan, Kalim Hyder and Qazi
Masood Ahmed
Pay Offs to Schooling and Returns to
Credentials RR 66, March 2007.
Amir Jahan Khan
RR 75, January 2008. Estimating the Black Economy through
Monetary Approach: A Case Study of Pakistan
S P D C P U B L I C AT I O N S

Satisfaction or Frustration: A Survey of Qazi Masood Ahmed and Haider Hussain

Selected District Governments RR 65, October 2006.
Haroon Jamal, Muhammad Asif Iqbal et al
RR 74, January 2008. State of the Economy: Growing
Macroeconomic Imbalances
Trends in Regional Human Development Indices Shaghil Ahmed, Haroon Jamal, Qazi Masood
Haroon Jamal and Amir Jahan Khan Ahmed et al
132 RR 64, July 2006.
RR 73, July 2007.
 APPENDICES
Special Report: The Economy in The Impact of Ownership and Concentration of
Aftermath of the Earthquake Land on Schooling: The Case of Rural
Shaghil Ahmed, Kalim Hyder and Tabinda Areeb Punjab
RR 63, December 2005. Haroon Jamal and Amir Jahan Khan
RR 54, April 2003.
State Of The Economy: An Overheating
Economy? Zakat as a Social Safety Net: Exploring
Shaghil Ahmed, Haroon Jamal, Qazi Masood the Impact
Ahmed et al. Imran Ashraf Toor and Abu Nasar
RR 62, June 2005. RR 53, April 2003.

Cancer: Social Implications Of Treatment Mapping the Spatial Deprivation of

And Financial Burden Pakistan
Hina Shahid and Mahpara Sadaqat Haroon Jamal, Amir Jahan Khan, Imran Ashraf
RR 61, May 2005. Toor and Naveed Aamir
RR 52, April 2003.
Province-wise Growth Patterns in Human
Capital Accumulation Price and Income Effects on Urban
Muhammad Sabir and Zehra Aftab Undernutrition
RR 60, May 2005. Haroon Jamal
RR 51, April 2003.
In Search of Poverty Predictors: The Case
of Urban and Rural Pakistan Private Returns to Education: Evidence for
Haroon Jamal Pakistan
RR 59, December 2004. Haroon Jamal, Imran Ashraf Toor and Farhan
Sami Khan
Does Inequality Matter for Poverty RR 50, April 2003.
Reduction? Evidence from Pakistan's
Poverty Trends Returns to Education: The Case of Fertility
Haroon Jamal Haroon Jamal and Imran Ashraf Toor
RR 58, December 2004. RR 49, April 2003.

State of the Economy: A Shift towards Microfinancing: Fighting Against Poverty

Growth Hari Ram Lohano and Haroon Jamal
Kaiser Bengali, Qazi Masood Ahmed, Haroon RR 48, April 2003.
Jamal et al.
RR 57, June 2004. The Changing Profile of Regional Inequality
Haroon Jamal and Amir Jahan Khan
State of the Economy: Behind the RR 47, April 2003.
Aggregates
Kaiser Bengali, Qazi Masood Ahmed, Zehra The Knowledge Divide: Education Inequality
Aftab et al. in Pakistan
S P D C P U B L I C AT I O N S

RR 56, June 2003. Haroon Jamal and Amir Jahan Khan

RR 46, April 2003.
Poverty and Inequality During the
Adjustment Decade: Empirical Findings Pakistan's External Debt Burden: Causes,
from Household Surveys Complexities and Remedies
Haroon Jamal Asad Sayeed and Ejaz Rashid
RR 55, April 2003. RR 45, September 2003.
133
 APPENDICES
The Slowing Down of the Growth of Total Evaluation of the Federal Budget, 1999-2000
Factor Productivity in Pakistan Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H.
Hafiz A. Pasha, Aisha Ghaus-Pasha and Kalim Ismail et al.
Hyder RR 23, June 1999.
RR 44, December 2002.
Essays on the Federal Budget, 1998-99
Cost of Living Index by City of Pakistan Aisha Ghaus-Pasha, Zafar H. Ismail, Sajjad
Hafiz A. Pasha and Aisha Ghaus-Pasha Akhtar, Ajaz Rasheed et al.
RR 43, November 2002. RR 22, July 1998.

Recasting Sindh Budget (Expenditures) Decentralized Governance of Sindh Katchi

From Head of Account To Department Basis Abadis Authority
Kaiser Bengali and Fauzia Mukarram
Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H.
RR 42, January 2002.
Ismail et al.
RR 21, May 1998.
Impact of the Afghan War on the Economy:
Options for Pakistan
Kaiser Bengali, Qazi Masood Ahmed and Fiscal Decentralization: Lesson From the
Kalim Hyder Asian Experience
RR 41, December 2001. Hafiz A. Pasha
RR 19, January 1997.
Stabilization vs Growth: Federal Budget
2001-02 Social and Economic Ranking of Districts of
Kaiser Bengali, Qazi Masood Ahmed, Hari Pakistan
Ram Lohano et al. Aisha Ghaus-Pasha, Hafiz A. Pasha, Rafia
RR 40, June 2001. Ghaus et al.
RR 18, January 1998.
Incidence of Income Poverty in Pakistan
Aisha Ghaus-Pasha and Haroon Jamal
Growth of Public Debt and Debt Servicing
RR 39, March 2001.
in Pakistan
Hafiz A. Pasha and Aisha Ghaus-Pasha
Credit to the Poor: Consultations with
Borrowers RR 17, April 1996.
Hari Ram Lohano, Fauzia Mukarram and
Haroon Jamal Review of the Social Action Programme
RR 38, February 2001. Aisha Ghaus-Pasha, Michael G. McGarry, Asad
U. Sayeed et al.
Social Development and Economic Growth: RR 16, August 1997.
A Statistical Exploration
Haroon Jamal The Provincial Budgets, 1997-98
RR 37, February 2001. Zafar H. Ismail, Ajaz Rasheed, M. Asif Iqbal et al.
RR 15, July 1997.
The 1998 Population Census
Aisha Ghaus-Pasha, Zafar H. Ismail, Abu
S P D C P U B L I C AT I O N S

An Evaluation of the Federal Budget, 1997-98

Nasar and Naveed Hanif
Zafar H. Ismail, Sajjad Akhtar, Asad U. Sayeed et al.
RR 25, June 1999.
RR 14, July 1997
Gender Inequality in Developing Countries:
A Case Study of Pakistan An Evaluation of the Budget, 1996-97
Hafiz A. Pasha, Aisha Ghaus-Pasha and Abu Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H.
Nasar Ismail et al.
134 RR 24, June 1999. RR 13, July 1996.
 APPENDICES
Resource Mobilization and Expenditure Specification of Integrated Social
Planning for Social Sectors in Pakistan Sector Revenue and Expenditure
Aisha Ghaus-Pasha, M. Asif Iqbal, Rafia Planning Model
Ghaus and Naeem Ahmed Hafiz A. Pasha, Aisha Ghaus-Pasha, M. Aynul
RR 12, June 1996. Hasan, et al.
RR 3, August 1993.
The World Summit for Social Development:
Its Implications for Social Sector A Study on Improving the Efficiency and
Development in Pakistan Effectiveness of Spending in the Social
Asad U. Sayeed and Zafar H. Ismail Sectors and Increasing Resource
RR 11, June 1996. Mobilization in the Provinces
Hafiz A. Pasha, Aisha Ghaus-Pasha, M. Aynul
Social Development Ranking of Districts of Hasan et al.
Pakistan RR 2, September 1992.
Aisha Ghaus-Pasha, Hafiz A. Pasha, Rafia
Ghaus et al. Fiscal Policy in Pakistan
RR 10, June 1996. Hafiz A. Pasha, Aisha Ghaus-Pasha and Rafia
Ghaus
Continuation Rates in Primary Education: A RR 1, October 1991.
Study of Pakistan
Hafiz A. Pasha, Zafar H. Ismail and M. Asif Iqbal
RR 9, May 1996. GENDER RESEARCH PROGRAM
Gender Dynamics of Social Safety Nets:
National Finance Commission: 1995 -
The Case of Zakat Recipients in Pakistan
Intergovernmental Revenue Sharing in Pakistan
Haroon Jamal
Aisha Ghaus-Pasha, Rafia Ghaus, A. Rauf
GRP-RR 4, November 2010.
Khan and M. Asif Iqbal
RR 8, January 1996.
Socio-economic Characteristics of Female-
headed Households in Pakistan:
Integrated Social Policy and
Baseline Survey, 2009-10
Macroeconomic Planning Model for
Nadeem Ahmed
Pakistan
GRP-RR 3, November 2010.
Hafiz A. Pasha, M. Aynul Hasan, Aisha Ghaus-
Pasha et al.
Trade Liberalisation and Gender Dynamics
RR 7, June 1995.
of Employment in Pakistan
Iffat Ara
Optimal Enrolment and Cost-Effective
GRP-RR 2, May 2010.
Expenditures for Public School System
Hafiz A. Pasha, M. Aynul Hasan, Ajaz Rasheed et al.
Public Spending on Education and
RR 6, October 1994.
Health in Pakistan: A Dynamic Investigation
through Gender Lens
Optimal Mix of Health Sector Expenditure
S P D C P U B L I C AT I O N S

Muhammad Sabir
Hafiz A. Pasha, M. Aynul Hasan, Ajaz Rasheed et al.
RR 5, September 1994. GRP-RR 1, May 2010.

Database Development for Integrated Social

Sector Revenue and Expenditure Model
Aisha Ghaus-Pasha, Zafar H. Ismail, M. Asif
Iqbal et al.
RR 4, February 1994. 135
 APPENDICES
POLICY PAPERS Financial Sustainability of NGOs: Proposal
for 1998-99 Federal Budget
On the Estimation of An Absolute Poverty
Aisha Ghaus-Pasha, Zafar H. Ismail et al.
Line: An Empirical Appraisal PP 13, May 1998.
Haroon Jamal
PP 23, April 2003. Political Economy of Tax Reforms: The
Pakistan Experience
Hidden Subsidies Hafiz A. Pasha
Hafiz A. Pasha, Aisha Ghaus-Pasha and PP 12, February 1997.
Naveed Hanif
PP 22, April 2002. Ninth Five-Year Plan (1998-2003): Issues Paper
Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H.
Why has the Tax-to-GDP Ratio Fallen? Ismail et al.
Hafiz A. Pasha, Aisha Ghaus-Pasha and PP 11, April 1996.
Muhammad Sabir
PP 21, February 2002. Fiscal Effort by Provincial Governments in
Pakistan
A National Poverty Reduction Strategy and Rafia Ghaus and A. Rauf Khan
the Role of Donors PP 10, November 1995.
Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H.
Implications of the TOR of the New NFC
Ismail et al.
Aisha Ghaus-Pasha
PP 20, October 2000.
PP 9, June 1995.
Macroeconomic Framework for Debt Provincial Budgets of 1995-96
Management Aisha Ghaus-Pasha, Rafia Ghaus and A. Rauf
Aisha Ghaus-Pasha and Hafiz A. Pasha Khan
PP 19, May 2000. PP 8, July 1995.

Revamping the SAP Switch Over to Ad Valorem Octroi Rates at

Hafiz A. Pasha, Aisha Ghaus-Pasha, Zafar H. Dry Ports
Ismail and Sehar Rizvi Aisha Ghaus-Pasha, M. Asif Iqbal and Naveed
PP 18, May 2000. Hanif
PP 7, October 1994.
Statement to the Commonwealth Delegation
Hafiz A. Pasha Rationalization of Octroi Rates
PP 17, October 1999. Aisha Ghaus-Pasha, A. Rauf Khan and
Naveed Hanif
Unsustainability of the Balance of Payments PP 6, October 1994.
Hafiz A. Pasha and Zafar H. Ismail
PP 16, September 1999. User Charges in Health
Zafar H. Ismail and M. Asif Iqbal
PP 5, August 1994.
Broad-Basing of the GST: The Strategy for
S P D C P U B L I C AT I O N S

Transition
Sindh Government Budget of 1993-94
Hafiz A. Pasha
Aisha Ghaus-Pasha, Rafia Ghaus, M. Asif
PP 15, July 1999. Iqbal and A. Rauf Khan
PP 4, July 1994.
Provincial Resource Mobilization
Aisha Ghaus-Pasha, A. Rauf Khan and Rafia Ghaus User Charges in Education
PP 14, June 1998. Zafar H. Ismail and M. Asif Iqbal
136 PP 3, June 1994.
 APPENDICES
Sales Taxation of Services by Provincial Budgets and Fiscal Decentralization: A
Governments Case Study of Sindh
Hafiz A. Pasha and Rafia Ghaus Qazi Masood Ahmed and Mohammad Sabir
PP 2, June 1994. CP 54, October 2003

Rationalization of Stamp Duties on Districts level of Development as Push and

Financial Assets and Transactions Pull factors in Inter-district Migration in
Aisha Ghaus-Pasha and A. Rauf Khan Pakistan
PP 1, June 1994. Abu Nasar, Mehtab S. Karim
CP 53, December 2002

CONFERENCE PAPERS Is Female Illiteracy a Determinant for Child

How External Shocks And Exchange Rate Malnutrition: An Analysis of Developing
Depreciations Affect Pakistan? Implications Countries
for choice of an Exchange Rate Regime Naveed Aamir and Abu Nasar
Shaghil Ahmed, Iffat Ara and Kalim Hyder CP 52, December, 2003.
CP 61, December 2005
Tax Holidays, Cost of Capital and
Agricultural Terms of Trade in Pakistan: Investment Behaviour: Jorgenson
Issues of Profitability and Standard of Approach
Living of the Farmers Qazi Masood Ahmed
Abdul Aleem Khan and Qazi Masood Ahmed CP 51, October 2003.
CP 60, May 2005.
Why Private Investment in Pakistan
Is Pakistan's Manufacturing Sector has Collapsed and How can
Competitive? it be Restored?
Iffat Ara Kalim Hyder and Qazi Masood Ahmed
CP 59, May 2005. CP 50, June 2003.

The Plight of Working Mothers in Pakistan: Hidden Subsidies

Advantages and Disadvantages of A Joint Hafiz A. Pasha, Aisha Ghaus-Pasha and
Family System Naveed Aamir
Naveed Aamir CP 49, January 2003.
CP 58, May 2004.
Gender and Public Spending on Education
Macroeconomic Reforms And Return to in Pakistan: A Case Study of Disaggregated
Human Capital in Pakistan Benefit Incidence
Mohammad Sabir Muhammad Sabir
CP 57, January 2004. CP 48, January 2003.

Burden of Stabilization on Provinces and its Non-Profit Sector in Pakistan: Government

Implication On Social Sectors Policy and Future Issues
S P D C P U B L I C AT I O N S

Qazi Masood Ahmed and Mohammad Sabir Aisha Ghaus-Pasha and Muhammad Asif Iqbal
CP 56, January 2004. CP 47, January 2003.

Macroeconomic Reforms and Total Factor The Income Tax Regime and the Non-Profit
Productivity Growth in Pakistan: An Sector: The Case of Pakistan
Empirical Analysis Zafar H. Ismail
Mohammad Sabir and Qazi Masood Ahmed CP 46, January 2003.
CP 55, October 2003 137
 APPENDICES
The Long-Run and Short-Run Impact of Policy Research and Its Implementation:
Exchange Rate Devaluation on Pakistan's Pakistan and Canada
Trade Performance Zafar H. Ismail and Richard Shillington
Zehra Aftab and Aurangzeb CP 35, September 2000.
CP 45, December 2002.
Issues in Institutional Reform for
Crowding Out Hypothesis in a Vector Error Devolution
Correction Framework: A Case Study of Kaiser Bengali
Pakistan CP 34, August 2000.
Kalim Hyder
CP 44, January 2002. Issues in Fiscal Decentralization
Aisha Ghaus Pasha and Hafiz A. Pasha
Dynamic Consequences of the 1997 CP 33, August 2000.
National Finance Commission Award:
Provincial Social Sector Expenditures Public Expenditure Reform
Muhammad Sabir Hafiz A. Pasha
CP 43, January 2002. CP 32, July 2000.

Political Economy of Fiscal Reforms in the Social Sector Policies Under SAP
1990s Zafar H. Ismail
Qazi Masood Ahmed and Mahnaz Fatima CP 31, October 1999.
CP 42, January 2002.
Impediments to Social Development in
Stabilization Policy vs Growth Oriented Pakistan
Policy: Implications for the Pakistan Zafar H. Ismail
Economy CP 30, November 1999.
Kaiser Bengali and Qazi Masood Ahmed
CP 41, January 2002. Pakistan's Ranking in Social Development:
Have We Always Been Backward?
Internal Migration: The Case of Sindh Province Aisha Ghaus-Pasha and Naeem Ahmed
Abu Nasar and Naveed Aamir CP 29, November 1999.
CP 40, October 2001.
An Econometric Evaluation of Pakistan's
Some Issues of Governance in Pakistan National Education Policy, 1998-2010.
Zafar H. Ismail and Sehar Rizvi Sajjad Akhtar and M. Ajaz Rasheed
CP 39, May 2000. CP 28, July 1999.

Impediments to Improvement of Social

Governance, Decentralization and Poverty:
Sectors in Pakistan
The Case of Pakistan
Zafar H. Ismail
Zafar H. Ismail and Sehar Rizvi
CP 27, March 1998.
CP 38, January 2001.
Gender Differentials in the Cost of Primary
Devolution and Fiscal Decentralization
S P D C P U B L I C AT I O N S

Education: A Study of Pakistan

Hafiz A. Pasha and Aisha Ghaus-Pasha Zafar H. Ismail
CP 37, January 2001. CP 26, December 1996.

Brief on Annual Review of Social Policy and Integrated Social Sector Macroeconomic
Development Centre for 2000: Towards Model for Pakistan
Poverty Reduction Hafiz A. Pasha, M. Aynul Hasan, Aisha Ghaus-
Hafiz A. Pasha Pasha and Ajaz Rasheed
138 CP 36, December 2000. CP 25, December 1996.
 APPENDICES
Determinants of Rates of Octroi Tax in Is the Social Action Programme (SAP) in
Pakistan Pakistan Financially Sustainable?
Aisha Ghaus-Pasha, A. Rauf Khan and Rafia Hafiz A. Pasha, M. Aynul Hasan, Aisha Ghaus-
Ghaus Pasha and M. Ajaz Rasheed
CP 24, April 1995. CP 14, April 1995.

Social Development Ranking of Districts of Results of Policy Simulations

Pakistan Aisha Ghaus-Pasha
Aisha Ghaus-Pasha, Hafiz A. Pasha and Rafia CP 13, March 1995.
Ghaus
CP 23, December 1996. Software Development and Use of the
Model
The City of Karachi: Planning and Managing Ajaz Rasheed
for Urban Development CP 12, March 1995
Zafar H. Ismail
CP 22, August 1996. Specification of the Integrated Social Policy
Macroeconomic Model
Sustainability of Public Debt in Pakistan
M. Aynul Hasan
Hafiz A. Pasha and Aisha Ghaus-Pasha
CP 11, March 1995.
CP 21, July 1996.
Overview of Integrated Revenue and
Has Poverty Returned to Pakistan?
Expenditure Planning Model for Social
Aisha Ghaus-Pasha and Asad U. Sayeed
Sectors
CP 20, July 1996.
Hafiz A. Pasha
Improved Health Status and Economic CP 10, March 1995.
Growth: Some Co-Integration Results from
Developing Economies Development of Property Taxation
M. Aynul Hasan, M. Rashid Ahmed and Aisha Abdul Waheed Khan
Bano CP 9, March 1995.
CP 19, July 1996.
Prospects of Resource Mobilization by the
Is There a Long-Run Relationship Between Provincial Governments
Economic Growth and Human Imtiaz Ahmed Cheema
Development? Some Cross-Country CP 8, March 1995.
Evidence from Developing Countries
M. Aynul Hasan, Nadeem Ahmed and Nazia Bano Expenditure Planning Issues
CP 18, June 1996. Tariq Sultan
CP 7, April 1993.
Municipal Finance in Small Cities
Hafiz A. Pasha and Aisha Ghaus-Pasha Local Government Resource Mobilization
CP 17, December 1995. Kashif Murtaza
CP 6, April 1993.
Financial Development of Megacities
S P D C P U B L I C AT I O N S

Hafiz A. Pasha and Aisha Ghaus-Pasha Local Government Resource Mobilization

CP 16, October 1995. Hafiz A. Pasha and Aisha Ghaus-Pasha
CP 5, April 1993.
Is Public Sector Investment Productive?
Some Evidence from Pakistan Problems in Resource Mobilization in
Hafiz A. Pasha, M. Aynul Hasan, Aisha Ghaus- Punjab
Pasha and Ajaz Rasheed Imtiaz A. Cheema
CP 15, September 1995. CP 4, April 1993. 139
 APPENDICES
Provincial Government Resource Database Report 1997: Provincial Finance
Mobilization in Punjab Module
Hafiz A. Pasha Zafar H. Ismail, A. Rauf Khan, Abu Nasar et al.
CP 3, April 1993. DB 2, September 1997.

Investment Strategy and Expenditure Database Report 1997: Federal Finance

Requirements for Social Development Module
M. Aynul Hasan Zafar H. Ismail, A. Rauf Khan and Naeem
CP 2, April 1993. Ahmed
DB 1, July 1997.
The Implementation Environment of the
Social Action Programme
Javed Sadiq Malik SPDC BOOKS
CP 1, April 1993. Provincial Governments and the Social
Sectors in Pakistan
Aisha Ghaus-Pasha, Hafiz A. Pasha and Zafar
WORKING PAPERS H. Ismail
Provincial Accounts of Pakistan: SPDCB 2, 1997.
Methodology and Estimates (1973-2000)
Kaiser Bengali and Mahpara Sadaqat Resource Mobilization and Expenditure
WP 5, 2005. Planning in the Provinces of Pakistan
Hafiz A.Pasha, Aisha Ghaus-Pasha. and M.
Non-Profit Sector in Pakistan: Historical Aynul Hasan
Background SPDCB 1, 1996.
M. Asif Iqbal, Hina Khan and Surkhab Javed
WP 4, 2004.
ANNUAL REVIEWS: SDIP
Law and the Non-Profit Sector in Pakistan Social Development in Pakistan:
Zafar H. Ismail Women at Work
WP 3, 2002. Annual Review 2007-08.

Non-Profit Sector in Pakistan: Government Social Development in Pakistan:

Policy and Future Issues Devolution and Human Development in
Aisha Ghaus-Pasha, Hafiz A. Pasha and M. Asif Iqbal Pakistan
WP 2, 2002. Annual Review 2006-07.

Dimensions of the Non-Profit Sector in Social Development in Pakistan: Trade

Pakistan Liberalization, Growth and Poverty
Aisha Ghaus-Pasha, Hafiz A. Pasha and M. Annual Review 2005-06.
Asif Iqbal
WP 1, 2002. Social Development in Pakistan
Combating Poverty: Is Growth Sufficient?
Annual Review 2004.
DATABASE REPORTS
S P D C P U B L I C AT I O N S

Socio-Economic Indicators by Gender: A Social Development in Pakistan: The State

Regional Comparison for Pakistan of Education
Naushaba Khatoon, Muhammad Sabir and Iffat Ara Annual Review 2002-03.
DB 4, September 2005
Social Development in Pakistan: Growth,
Database Report 1997: Education Module Inequality and Poverty
Zafar H. Ismail, A. Rauf Khan, Abu Nasar et al. Annual Review 2001.
140 DB 3, November 1997.
 APPENDICES
Social Development in Pakistan: Towards
Poverty Reduction
Annual Review 2000.

Social Development in Pakistan: Social

Development in Economic Crisis
Annual Review 1999.

Social Development in Pakistan

Annual Review 1998.

CONFERENCE PROCEEDINGS
Proceedings of the Seminar on Prospects
and Policies for the Future
CPP 4, January 2000.

Proceedings of the Second Conference on

Resource Mobilization and Expenditure
Planning
CPP 2, March 1995.

Proceedings of the Conference on

Resource Mobilization and Expenditure
Planning
CPP 1, April 1993.

OTHER PUBLICATIONS
The Elimination of Textile Quotas and
Pakistan-EU Trade
Shaghil Ahmed, Iffat Ara, Aurangzeb, Haider
Hussain and Abdul Aleem Khan
Research Report, March 2007

ABC of the Economics of Tariffs and Import

Quotas
Shaghil Ahmed and Iffat Ara
Booklet, April 2007

The Elimination of Textile Quotas and

Pakistan-EU Trade
Iffat Ara
Policy Brief, April 2007
S P D C P U B L I C AT I O N S

141
 APPENDICES
A.2

ANNUAL REVIEWS OF
SOCIAL DEVELOPMENT IN PAKISTAN
Annual Review of Social Development in Pakistan
1998
irst of the annual series, the Review of Social Development in Pakistan was launched in the
F wake of a growing realization that the country was lagging behind in social development. It
was felt that access to basic social services such as primary
education, health care, and drinking water was limited, and that
social underdevelopment had, perhaps, begun to slow down the
pace of economic development as well. As such, the Review
addressed the relationship between economic and social
development, and the central role of human development in the
growth process. It then traced in detail the evolution of the social
sectors in Pakistan over the 50 years since independence, and
compared Pakistan's social development between the provinces and
with other countries in the region. Based on the custom-developed
242-equation Integrated Macroeconomic & Social Policy Model, a
detailed quantitative analysis and assessment was made of the
government's programmes and policies in the social sectors,
including the Social Action Programme - the largest single social
development programme in Pakistan's history - focusing on issues
such as sources of financing, user-charges, and issues relating to
cost-effectiveness of social service provision.
ANNUAL REVIEWS OF SOCIAL DEVELOPMENT IN PAKISTAN

Social Development in Economic Crisis

Annual Review of Social Development in Pakistan
1999
he second Review dealt with social development in an environment of severe economic crisis
T caused by international sanctions imposed on Pakistan following the country's decision to
conduct the nuclear tests. The Review began by tracing the short
and long term causes of the crisis, leading to Pakistan's return to the
IMF/World Bank program. Further, based on SPDC's 246-equation
Integrated Macroeconomic & Social Policy Model, it quantified the
cost of the economic sanctions following the adoption of the nuclear
path. It delineated the various options available to deal with the
crisis, including the path of self-reliance, to achieve sustained
development. It then explored the impact of each option on some of
the key social dimensions: poverty, unemployment and the status of
women and children. It also appraised the Social Action Programme,
and forewarned that it was in jeopardy due to growing fiscal and
institutional constraints. Given the prospect of rising poverty, it
examined the types, nature and adequacy of different social safety
nets - governmental as well as non-governmental - and highlighted
142 the underlying problems of coverage and targeting.
 APPENDICES
Towards Poverty Reduction
Annual Review of Social Development in Pakistan
2000
he Review focuses on the subject of poverty, identifying its nature, extent and profile, and
T highlighting the structural dimensions of poverty. Based on the conclusions that a poverty
reduction strategy will have to be comprehensive and multidimensional in character, it covers a
wide agenda. It comprises an appraisal of the role of the informal
economy, not only as a residual employer but also as a household or
community based welfare and support system, in mitigating poverty.
Based on the results of SPDC's 250-equation Integrated
Macroeconomic & Social Policy Model, it underlines the need for
appropriate macroeconomic and fiscal policies to achieve faster
growth in income and employment. In this respect, macro and micro
aspects of a revival strategy, including options such as reducing the
tax burden on the poor and orienting public expenditure towards the
poor have been outlined. It also covers structural issues such as land
reforms and development of human resources through access to
social services, particularly pro-poor services. It discusses different
elements of a strategy consisting of increased economic
opportunities for the poor, their empowerment, and access to welfare
and support through appropriate social safety nets, namely, public
works, microfinance, food support and zakat. It also deals with issues
of governance and poverty, devolution, economic governance, institutional capacity, and
corruption.

Growth, Inequality and Poverty

ANNUAL REVIEWS OF SOCIAL DEVELOPMENT IN PAKISTAN

Annual Review of Social Development in Pakistan
2001
he Review is a detailed analysis and documents the pervasive inequalities across class and
T regional lines and in access of social services. Spread over six chapters, it begins with the
profile of achievements in the realm of economic and social development since 1947;
acknowledging as well that the gains have not been equitably distributed. Based on SPDC's 255-
equation Integrated Macroeconomic & Social Policy Model, it presents the macroeconomic
analysis of the state of the economy, along with the factors behind
the aggregates with respect to unemployment, inequality and poverty.
It questions the balance between stabilization and growth objectives
and discusses policy options that can help or hurt the poor. There
follows a comprehensive analysis of inequality from different
perspectives: income inequality, consumption inequality, inequality
between income groups - nationally and province-wise - inequality in
public services and land inequality. The next chapter is devoted to
inequality between and within provinces, including a district analysis
and ranking of deprivation levels. Social policy finds specific
attention, with a review of housing and evaluation of the ambitious
Five Point Programme and the Social Action Programme. The last
chapter attempts to provide an overview of the factors that determine
inequality and poverty, and more generally, social development. 143
 APPENDICES
The State of Education
Annual Review of Social Development in Pakistan
2002-03
he Review is an in-depth analysis of the state of education in Pakistan. It breaks new ground,
T given that the traditional discussion relating to education has generally been limited to the
issue of enrolment, particularly primary and girls' enrolment, and
resource allocation. The Review is spread over seven chapters
and begins with a broad profile of education in the country:
Pakistan's standing regionally; literacy, enrolment and dropout
trends; and availability of schools and teachers. It then documents
the regional and class inequalities in education indicators, issues
relating to the role of education in development - particularly in the
context of the emergence of the knowledge based economy - and
fiscal and sociopolitical factors that have inhibited the growth of
education. The discussion ranges from the federal-level
macroeconomic policy imperatives that have constrained
provincial-level resource allocation to social sectors to the role of
land inequality on education. There follows specific chapters
devoted to critical issues in primary education and science
education - matters relating to curriculum, textbooks and
examinations- and a final chapter that discusses the sociopolitical
impact of the creation of multiple and mutually exclusive streams of
education in the country.

Combating Poverty: Is Growth Sufficient?

ANNUAL REVIEWS OF SOCIAL DEVELOPMENT IN PAKISTAN

Annual Review of Social Development in Pakistan

2004
PDC has over the years consistently highlighted the problems
S of social underdevelopment and inequality and poverty. It has
advocated a macroeconomic policy framework that is pro-poor and
leads to equitable growth; with equity defined in terms of class,
region and gender. The Annual Review 2004 attempts to further
advance this agenda. While earlier Reviews have largely been
diagnostic, this issue is more prescriptive in nature. It suggests a
policy framework whereby accelerated growth and rapid poverty
reduction can be rendered complementary and feasible in the
medium term. The Review presents a vision of poverty reduction at
the outset and subsequent chapters provide empirical support for
the suggested strategy. Spread over five chapters, it begins with
the analysis of the development experience during the different
political eras over the past three decades. It appraises the officially
adopted national and provincial Poverty Reduction Strategy Papers
(PRSPs). The Review presents the hard empirical analysis of the
relationship between growth, inequality and poverty reduction and establishes the imperative of
engaging with the issue of inequality to achieve poverty reduction. It also analyses the distribution
144 of the burden of taxes and the benefits of public expenditure, with the objective of rendering the
 APPENDICES
fiscal regime pro-poor. Further, it discusses issues relating to land reform - considered an
essential factor in rural poverty reduction. In addition, the Review also includes a Sector Study,
which focuses on the demand and supply aspects of export growth as a means to manage the
current account balance.

Trade Liberalization, Growth and Poverty

Annual Review of Social Development in Pakistan
2005-06
ince the late 1980s, there has been a clear effort to reduce
S trade barriers and to liberalize the economy in Pakistan, and
this effort has been accelerating over time. The events of
September 11, 2001 - and the GoP's response to them - have also
led to a substantial change in the external environment facing
Pakistan.
The above changes raise a host of questions: What has been
the pace and sequencing of trade liberalization in Pakistan? How
do Pakistan's trade restrictiveness measures compare to those of
other developing countries in Asia? How has Pakistan's trade
evolved over time in response to liberalization and how does this
compare to the evolution of trade in other developing countries of
Asia? What are the most important channels through which the
process of trade liberalization affected Pakistan's economy? If
trade had not been liberalized in Pakistan, would the economic growth, inflation and poverty
situation be better or worse? How can policy makers guard against the adjustment costs of trade
liberalization and reap maximum gains from any further increases in trade openness? How have
the changes in the external environment and the policy responses resulting from the tragic events

ANNUAL REVIEWS OF SOCIAL DEVELOPMENT IN PAKISTAN

of September 11, 2001 shaped Pakistan's economy? How are the effects of the textile quota
removal likely to play out on Pakistan's exports going forward? What policies would work best for
the GoP's avowed objective in the MTDF of enhancing exports to achieve sustainable high
growth?
Trade Liberalization, Growth and Poverty, SPDC's seventh annual review of social
development in Pakistan, attempts to answer these questions. It places the on-going worldwide
debate on the interactions between trade liberalization, growth and poverty in the context of
Pakistan. The authors isolate the effects of trade liberalization on Pakistan's economy using
econometric techniques and evaluate the empirical evidence in light of the predictions of
economic theory. Policy implications concerning the GoP's goal of poverty alleviation are drawn
from the results.

Devolution and Human Development in Pakistan

Annual Review of Social Development in Pakistan
2006-07
mplementation of the Devolution Plan in 2001 represents a significant move towards the
I decentralization of basic services in Pakistan. Six years ago a new legislative framework was
introduced to bring a noticeable change in society. With the promulgation and implementation of
the Local Government Ordinance, the responsibility of the provision of a large number of basic 145
 APPENDICES
social services such as education, health and water supply and
sanitation was devolved to the local level.
The critical appreciation of the efforts has raised questions such
as: To what extent devolution has improved efficiency in public
services? Has devolution empowered the people? Has it improved
efficiency and equity in terms of fiscal decentralization? What has
been the effect of devolution on human development, regional
disparities, gender equality and poverty in Pakistan?
Devolution and Human Development in Pakistan being eighth in
the series of Annual Review looks into various dimensions of the
process of devolution and decentralization i.e. efficiency, equity,
people's participation and empowerment. The report deals with the
saliences of the problem and has proposed second generation
reforms.

Women at Work
Annual Review of Social Development in Pakistan
2007-08
n Pakistan, although women's labour force participation rate has
I increased from a very low level to almost 22 percent, it is still
disappointing as out of the total female population, 78 percent of
women of productive age are out of the labour force. A large part of
employed women are working as unpaid family helpers or engaged
in residual jobs. These alarming statistics guided SDPC to
investigate questions such as: Is there any dynamism in the
ANNUAL REVIEWS OF SOCIAL DEVELOPMENT IN PAKISTAN

structure of female employment in Pakistan? Has improvement in

women's education translated into their greater integration in the
economy? Can women labour force participation be increased by
encouraging women entrepreneurship? Will development of the
microcredit sector help in generating employment opportunities for
women? Does gender differential exist in access to paid jobs,
especially at higher levels of education? Does vertical gender
segmentation prevail in the labour market of Pakistan? What
explains the gender wage gap? Is there any evidence of sexual
harassment and violence against women in the workplace in Pakistan? Does domestic legislation
provide an enabling environment for working women? How have the recent adverse economic
developments affected the working woman? Women at Work, SPDC's ninth Annual Review of
Social Development in Pakistan attempts to answer these questions. It also sets out a multi-
pronged strategy for promoting women's employment in Pakistan by addressing gaps in various
socioeconomic policies.

146
 SOCIAL DEVELOPMENT
INDICATORS
SELECTED

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0 SELECTED SOCIAL DEVELOPMENT INDICATORS

147
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
LITERACY RATE MEAN YEARS OF SCHOOLING COMBINED ENROLMENT RATE
Year Male Female Total Male Female Total Male Female Total

PUNJAB
1990 45.5 24.2 35.4 3.3 1.0 2.2 36.4 23.6 30.3
1995 52.9 30.3 42.1 3.9 1.4 2.7 36.0 27.0 31.6
2002 63.5 41.7 52.8 9.0 4.7 3.5 38.2 30.7 34.5
2004 63.6 42.9 53.3 9.4 8.7 3.7 39.3 32.3 35.9
2006 66.0 47.0 56.0 4.6 2.3 3.5 52.5 45.3 49.0
2007 67.0 48.0 58.0 4.6 2.4 3.5 54.7 47.3 51.1
2008 70.0 48.0 59.0 4.9 2.6 3.7 55.8 48.0 52.0
2009 69.0 50.0 59.0 5.0 2.7 3.8 56.9 48.6 52.8
SINDH
1990 45.6 26.9 36.9 4.4 1.5 3.0 32.5 13.1 23.3
1995 51.7 31.5 42.3 4.7 2.0 3.4 31.6 17.3 24.8
2002 58.7 38.9 49.3 10.4 5.9 4.3 34.5 24.0 29.4
2004 66.9 42.2 55.3 10.7 6.4 4.5 36.9 26.6 31.9
2006 67.0 42.0 55.0 5.5 2.7 4.2 47.7 37.6 43.0
2007 67.0 42.0 55.0 5.9 2.7 4.4 51.7 41.1 46.8
2008 69.0 42.0 56.0 6.0 2.7 4.4 52.8 41.7 47.9
2009 71.0 45.0 59.0 6.1 2.7 4.5 54.0 42.4 48.9
NWFP
1990 36.1 12.0 24.5 2.6 0.3 1.5 43.5 12.1 28.5
1995 45.3 17.0 31.5 3.1 0.4 1.7 46.3 17.7 32.5
2002 60.4 24.1 42.2 8.0 1.7 2.5 41.1 32.9 37.2
2004 61.8 25.2 43.0 8.5 2.2 2.7 52.2 28.1 40.5
2006 64.0 30.0 46.0 4.1 1.0 2.5 59.1 33.9 46.6
2007 67.0 28.0 47.0 4.8 1.1 2.9 63.1 38.3 51.2
2008 68.0 33.0 49.0 4.7 1.2 2.9 65.4 40.4 53.3
2009 69.0 31.0 50.0 5.0 1.3 3.0 67.7 42.5 55.5
B A L O C H I S TA N
1990 23.1 8.2 16.3 1.9 0.3 1.1 26.0 9.1 18.4
1995 30.4 11.9 21.9 1.8 0.2 1.1 30.1 13.1 22.4
2002 41.1 18.6 30.5 5.3 1.0 1.7 31.0 19.7 25.8
2004 52.1 17.6 36.0 6.3 1.4 2.1 30.1 21.3 26.0
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

2006 54.0 20.0 38.0 3.2 0.6 1.9 47.6 26.3 38.3
2007 58.0 22.0 42.0 3.6 0.7 2.2 59.8 37.9 50.0
2008 66.0 23.0 46.0 4.4 0.8 2.7 58.7 42.4 51.4
2009 62.0 23.0 45.0 5.1 0.9 3.1 58.5 46.8 52.8
PAKISTAN
1990 43.2 22.4 33.3 3.4 1.0 2.3 35.9 18.8 27.7
1995 50.5 27.9 39.7 3.9 1.4 2.7 36.1 22.7 29.6
2002 60.9 37.7 49.6 8.2 3.4 3.0 37.3 28.9 33.2
2004 63.7 39.2 51.6 8.8 4.8 3.3 40.1 29.8 35.1
2006 65.0 42.0 54.0 4.7 2.1 3.5 52.0 40.8 46.6
2007 67.0 42.0 55.0 4.9 2.2 3.6 55.4 44.0 50.0
2008 69.0 44.0 56.0 5.1 2.3 3.7 56.6 45.1 51.1
2009 69.1 45.0 57.0 5.3 2.4 3.8 57.8 46.2 52.3
Definitions:
Literacy rate: The number of literate persons as a percentage of population aged 10 and above.
Mean year of schooling: Average number of years of schooling received per person aged 25 and above.
Combined enrolment rate: The number of students enroled in all levels as a percentage of the population aged 5 to 24.
Notes:
1. Figures for Pakistan represent the four provinces combined
2. Prior 2002, primary and secondary school enrolment represent only the enrllment in government sector
3. Mean years of schooling and combined enrollment rates for 2009 are extrapolated
Sources: 1. Development Statistics of Provincial Governments (various issues); 2. Education Statistics of Provincial Governments (various issues); 3. GOP, Pakistan
School Statistics, Central Bureau of Education (various issues); 4. GOP, Pakistan Education Statistics, Central Bureau of Education (various issues); 5. National and
Provincial Education Management Information Systems (various issues); 6. GOP, Labour Force Survey, Federal Bureau of Statistics (various issues); 7. GOP, Census
148 Report of Pakistan, Population Census Organization (various issues); 8. Facts & Figures Pakistan 2002, Ministry of Education, EFAWing; 9. PSLM (various issues),
Federal Bureaue of Statistics; 10. National Education Census (various isssues) FBS, GOP
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Gross Primary Enrolment Rate
URBAN RURAL T O TA L
Year Male Female Total Male Female Total Male Female Total

PUNJAB
1996 95 92 93 82 62 72 85 70 78
1999 91 97 94 79 58 69 82 68 75
2002 95 93 94 80 61 70 84 69 76
2005 111 108 110 96 82 89 100 89 95
2006 112 107 110 93 83 88 98 89 94
2007 113 111 112 103 88 96 106 95 100
2008 113 110 111 97 86 92 102 92 97
2009 110 110 110 99 86 93 102 92 97
SINDH SINDH
1996 95 90 93 78 39 59 86 62 74
1999 100 88 94 59 33 47 75 54 64
2002 91 78 84 69 37 53 76 51 63
2005 103 94 99 70 44 58 84 65 75
2006 103 96 100 79 51 66 88 71 80
2007 105 101 103 77 45 63 88 68 79
2008 102 100 101 77 53 66 87 72 80
2009 107 99 103 83 57 72 93 75 84
NWFP NWFP
1996 88 82 85 79 42 61 85 70 78
1999 97 83 90 82 49 66 84 54 70
2002 100 86 93 96 52 74 97 56 77
2005 100 84 92 92 62 78 93 65 80
2006 98 84 91 93 67 81 93 70 83
2007 98 89 94 96 63 80 96 67 82
2008 97 91 94 94 67 81 94 71 83
2009 101 92 97 102 67 85 102 70 87
BALOCHISTAN B A L O C H I S TA N
1996 97 72 96 84 61 73 86 63 75
1999 99 77 88 77 42 61 79 46 64

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
2002 98 75 88 73 38 57 77 44 62
2005 101 86 94 79 41 61 83 49 67
2006 100 83 92 72 41 57 79 50 65
2007 104 78 92 85 45 67 89 52 72
2008 106 87 97 83 50 68 88 59 75
2009 109 91 100 89 45 68 93 54 75
PAKISTAN PAKISTAN
1996 95 90 92 81 54 68 85 64 75
1999 95 92 94 75 50 63 80 61 71
2002 80 52 66 80 52 66 83 61 72
2005 107 100 104 89 68 79 94 77 86
2006 107 100 104 89 71 80 94 80 87
2007 108 104 106 95 72 84 99 81 91
2008 108 104 106 92 74 83 97 83 91
2009 108 104 106 95 74 85 99 83 91

Definition:
Gross Primary Enrolment Rate: The number of total students enrolled in primary level classes (I toV) as a percenatge of the
population aged 5 to 9.

Sources:
1. Pakistan Integrated Household Survey, 1998-99 and 2001-02, Federal Bureau of Statistics, Government of Pakistan.
2. Pakistan Social and Living Standards Measurement Survey, 2004-05, 2005-06, 2006-07 and 2007-08, Federal Bureau of Statistics,
Government of Pakistan.
149
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Net Primary Enrolment Rate
URBAN RURAL T O TA L
Year Male Female Total Male Female Total Male Female Total

PUNJAB
1996 55 55 55 49 34 42 50 39 45
1999 54 57 56 44 35 40 47 40 44
2002 57 58 57 44 38 41 47 43 45
2005 69 68 68 57 50 54 60 55 58
2006 72 68 70 56 47 52 60 53 57
2007 69 70 70 62 55 59 64 59 62
2008 71 72 71 59 54 56 62 59 61
2009 72 72 72 61 55 58 64 60 62
SINDH SINDH
1996 58 57 57 45 24 35 50 39 45
1999 63 57 60 37 21 29 47 35 41
2002 56 50 53 41 25 33 46 34 40
2005 64 59 61 45 29 38 53 42 48
2006 62 63 62 48 34 42 54 47 50
2007 67 61 64 49 31 41 56 43 50
2008 61 62 62 51 35 44 55 46 51
2009 64 62 63 53 40 47 57 49 54
NWFP NWFP
1996 52 50 51 40 24 32 42 28 35
1999 59 49 54 45 27 37 47 30 39
2002 59 51 55 47 31 39 48 33 41
2005 58 52 56 52 37 45 53 40 47
2006 59 52 55 54 40 47 54 42 49
2007 59 53 56 56 39 48 56 41 49
2008 59 55 57 55 39 47 55 41 49
2009 65 56 61 57 43 50 58 45 52
BALOCHISTAN B A L O C H I S TA N
1996 57 41 49 49 39 44 51 39 45
1999 58 51 54 42 25 34 44 28 36
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

2002 55 41 49 36 21 29 39 24 32
2005 59 53 56 41 24 33 44 29 37
2006 51 42 47 36 23 30 39 27 34
2007 58 49 54 46 28 38 49 32 41
2008 61 53 57 42 29 36 47 35 41
2009 61 56 59 49 31 40 51 36 44
PAKISTAN PAKISTAN
1996 56 55 55 47 31 39 49 38 44
1999 58 56 57 43 30 37 47 37 42
2002 57 54 56 43 33 38 46 38 42
2005 53 42 48 53 42 48 56 48 52
2006 66 64 65 53 42 47 56 48 53
2007 67 65 66 57 46 52 60 51 56
2008 66 67 66 56 46 51 59 52 55
2009 68 67 68 58 48 53 61 54 57

Definition:
Net Primary Enrolment Rate: The number of students aged 5-9 enrolled in primary level classes (I to V) as a percenatge of the
population aged 5 to 9.

Sources:
1. Pakistan Integrated Household Survey, 1998-99 and 2001-02, Federal Bureau of Statistics, Government of Pakistan.
150 2. Pakistan Social and Living Standards Measurement Survey, 2004-05, 2005-06, 2006-07 and 2007-08, Federal Bureau of Statistics,
Government of Pakistan.
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Net Middle Enrolment Rate
URBAN RURAL T O TA L
Year Male Female Total Male Female Total Male Female Total

PUNJAB
1999 27 26 26 18 12 16 21 16 19
2002 24 32 28 16 12 14 18 18 18
2005 28 30 29 18 14 16 21 19 20
2006 31 31 31 17 14 16 21 19 20
2007 27 29 28 19 14 17 21 19 20
2008 23 32 27 16 15 16 18 20 19
2009 29 33 31 20 17 18 23 21 22
SINDH SINDH
1999 29 27 28 14 3 9 20 13 17
2002 22 27 24 12 4 8 15 12 14
2005 28 25 26 14 5 10 20 15 18
2006 25 28 26 12 3 8 18 16 17
2007 27 25 26 13 5 9 19 14 17
2008 23 28 25 19 6 13 21 16 18
2009 24 24 24 19 8 14 21 15 18
NWFP NWFP
1999 24 17 21 15 5 10 16 7 11
2002 25 21 23 15 6 11 16 8 12
2005 24 22 23 19 9 14 20 11 16
2006 23 19 21 14 12 13 15 12 14
2007 25 19 23 19 9 15 20 11 16
2008 22 20 21 17 9 13 18 11 14
2009 27 24 25 19 11 16 20 13 17
BALOCHISTAN B A L O C H I S TA N
1999 23 13 18 9 5 7 11 6 9
2002 19 13 16 10 2 6 11 4 8

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
2005 18 17 17 8 4 6 10 7 8
2006 13 15 14 6 2 4 8 6 7
2007 19 22 20 9 3 6 11 7 9
2008 26 23 24 10 5 8 14 10 12
2009 22 18 20 12 4 9 14 8 11
PAKISTAN PAKISTAN
1999 27 25 26 16 9 13 19 13 16
2002 15 8 12 15 8 12 17 14 16
2005 27 27 27 17 11 14 20 16 18
2006 27 28 28 15 11 13 19 16 18
2007 27 27 27 17 11 14 20 16 18
2008 23 29 26 17 12 14 18 17 18
2009 27 28 27 19 13 16 21 18 20

Definition:
Net Middle Enrolment Rate: The number of students aged 10 to 12 enrolled in middle level classes (VI toVIII) as a percenatge of the
population aged 10 to 12.

Sources:
1. Pakistan Integrated Household Survey, 1998-99 and 2001-02, Federal Bureau of Statistics, Government of Pakistan.
2. Pakistan Social and Living Standards Measurement Survey, 2004-05, 2005-06, 2006-07 and 2007-08, Federal Bureau of Statistics,
Government of Pakistan.
151
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Net Matric Enrolment Rate
URBAN RURAL T O TA L
Year Male Female Total Male Female Total Male Female Total

PUNJAB
1999 14 18 16 9 4 6 10 8 9
2002 15 18 17 10 6 8 12 10 11
2005 17 20 18 9 7 8 12 11 11
2006 14 17 16 7 7 7 9 11 10
2007 16 20 18 9 6 8 11 11 11
2008 15 19 17 12 9 10 13 12 13
2009 18 22 20 12 9 10 14 13 13
SINDH SINDH
1999 16 16 16 12 3 7 14 9 12
2002 17 12 14 5 3 4 10 7 9
2005 17 19 18 9 3 6 13 11 12
2006 16 17 16 6 2 4 11 10 11
2007 15 15 15 7 2 5 11 9 10
2008 13 17 15 9 3 6 11 10 11
2009 17 14 16 9 4 7 13 10 11
NWFP NWFP
1999 8 12 10 5 1 3 6 3 4
2002 10 12 11 5 3 4 6 5 5
2005 12 13 13 9 4 6 10 5 7
2006 16 8 12 10 4 7 10 4 7
2007 13 9 11 7 3 5 8 4 6
2008 14 7 10 5 5 5 6 6 6
2009 13 11 12 9 4 7 9 5 8
BALOCHISTAN B A L O C H I S TA N
1999 12 9 11 10 0 6 10 2 6
2002 6 5 6 2 1 2 3 2 3
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

2005 11 10 10 5 1 3 6 3 5
2006 11 13 12 3 2 3 5 5 5
2007 8 13 10 3 1 3 4 5 5
2008 12 10 11 4 1 3 6 4 5
2009 10 9 9 4 2 3 5 3 5
PAKISTAN PAKISTAN
1999 14 16 15 9 3 6 10 7 9
2002 8 5 6 8 5 6 10 8 9
2005 16 19 17 9 6 7 11 10 11
2006 15 16 16 7 6 6 10 9 10
2007 15 17 16 8 5 6 10 9 10
2008 14 17 16 10 7 8 11 10 11
2009 17 18 18 10 7 9 12 11 12

Definition:
Net Matric Enrolment Rate: The number of students aged 13 to 14 enrolled in matric level classes (IX to X) as a percenatge of the
population aged 13 to 14.

Sources:
1. Pakistan Integrated Household Survey, 1998-99 and 2001-02, Federal Bureau of Statistics, Government of Pakistan.
152 2. Pakistan Social and Living Standards Measurement Survey, 2004-05, 2005-06, 2006-07 and 2007-08, Federal Bureau of Statistics,
Government of Pakistan.
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Pupil-teacher ratio Percentage of cohort Availability of Ratio of boys % of female
(Primary)a reaching Class V primary schools to girls teachers
Year Male Female Total Male Female Total Male Female Total (Primary) (Primary)
PUNJAB
1975 43.4 39.6 42.0 52.1 31.2 43.8 176.0 258.0 207.0 1.9 36.0
1980 41.5 41.1 41.3 50.6 29.1 41.3 177.0 251.0 206.0 1.7 36.6
1985 36.1 43.3 38.4 44.1 28.0 37.2 129.0 256.0 169.0 1.7 32.6
1990 38.6 46.7 41.5 46.2 26.9 37.0 136.0 199.0 160.0 1.5 35.7
1995 35.9 49.9 40.9 50.0 32.8 41.3 149.0 221.0 176.0 1.3 35.9
2002 58.1 40.6 48.8 60.0 54.9 57.8 159.7 252.3 194.0 1.3 53.2
2005 57.0 36.2 45.7 51.1 63.3 55.4 159.3 259.1 195.7 1.3 54.7
2008 66.3 40.3 50.9 61.3 58.5 60.0 180.0 186.6 183.1 1.1 59.2
SINDH SINDH
1975 27.9 20.6 25.3 36.8 43.5 38.6 136.0 661.0 220.0 2.5 35.6
1980 35.3 25.8 31.9 37.7 46.0 40.0 154.0 802.0 255.0 2.4 36.3
1985 40.2 30.1 36.5 36.2 41.9 37.9 129.0 633.0 210.0 2.3 36.6
1990 40.4 20.1 32.6 40.6 51.6 42.9 81.0 519.0 138.0 3.3 38.1
1995 22.0 27.1 23.4 38.5 35.4 37.5 82.0 416.0 134.0 2.0 28.5
2002 27.5 29.2 28.2 43.8 47.6 45.1 74.8 376.0 120.8 1.6 37.1
2005 30.3 33.0 31.3 44.7 48.7 46.1 74.2 365.5 119.4 1.5 37.4
2008 31.3 35.9 33.0 42.9 41.9 42.5 87.0 102.3 93.4 1.4 37.8
NWFP NWFP
1975 52.5 52.2 52.4 40.4 37.5 39.7 196.0 510.0 279.0 3.3 23.4
1980 68.8 54.8 65.2 27.9 30.9 28.5 209.0 547.0 297.0 3.7 25.5
1985 50.9 48.9 50.5 23.5 20.3 22.8 207.0 541.0 294.0 3.7 22.1
1990 44.7 36.5 42.6 22.0 17.5 21.0 116.0 357.0 172.0 3.6 25.3
1995 36.8 41.8 38.1 21.2 20.9 21.1 83.0 287.0 126.0 2.5 26.0
2002 34.5 37.8 35.6 71.9 60.0 67.4 99.7 201.8 131.6 1.8 33.9
2005 32.6 30.6 31.9 - - - 102.4 212.9 136.2 1.9 35.7
2008 34.3 33.1 33.8 68.6 51.9 61.9 124.0 181.0 145.2 1.6 39.8
BALOCHISTAN BALOCHISTAN
1975 35.2 40.2 36.2 20.1 23.5 20.8 165.0 686.0 262.0 3.5 20.1
1980 38.3 53.9 40.7 22.9 21.8 22.7 197.0 857.0 315.0 4.0 15.1
1985 40.4 84.0 45.7 15.9 25.2 17.8 121.0 895.0 207.0 3.5 12.2
1990 23.6 41.0 26.1 14.2 26.8 16.5 93.0 869.0 159.0 3.4 14.4
1995 20.7 38.3 23.8 17.5 11.3 15.6 85.0 426.0 133.0 2.5 17.8

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
2002 66.8 55.2 62.0 39.7 40.8 40.1 91.1 206.5 121.0 1.7 41.5
2005 25.5 33.5 28.1 38.3 41.4 39.5 91.2 205.0 120.8 1.6 32.3
2008 29.0 35.7 31.3 45.4 43.2 44.6 115.3 270.8 154.4 1.6 34.2
PAKISTAN PAKISTAN
1975 39.6 34.4 37.8 45.2 33.7 41.3 167.0 343.0 221.0 2.2 34.1
1980 42.6 37.4 40.8 41.3 32.2 38.1 176.0 352.0 232.0 2.1 34.9
1985 39.1 40.4 39.5 36.1 29.5 33.8 136.0 348.0 192.0 2.1 31.7
1990 38.7 38.9 38.8 36.5 27.9 33.4 112.0 268.0 156.0 2.0 33.4
1995 30.7 42.5 34.4 37.3 30.4 34.5 110.0 267.0 153.0 1.6 31.1
2002 43.0 37.8 40.7 56.4 53.4 55.2 113.8 259.3 155.5 1.5 44.6
2005 41.1 34.5 38.1 56.7 63.1 59.0 113.9 264.7 156.5 1.4 45.1
2008 44.2 37.4 40.9 57.1 53.4 55.5 128.4 155.1 139.7 1.3 47.9
Definitions:
Pupil-teacher ratio (primary): The ratio of pupils enrolled in primary level classes (I to V) to the number of teachers in primary schools
Percentage of cohort reaching Class V: The percentage of children starting primary school who reach Class V
Availability of primary schools: The ratio of population aged 5 to 9 to the number of primary schools
Ratio of boys to girls (primary): The ratio of male students to female students enrolled in primary level classes (I to V)
Percentage of female teachers (primary): The number of female teachers as a percentage of total teachers in primary schools
Note: aData for 2002 onwards include private sector schools
Sources:
1. Development Statistics of Provincial Governments (various issues); 2. Education Statistics of Provincial Governments (various issues)
3. GOP, Pakistan School Statistics, Central Bureau of Education (various issues) 4. GOP, Pakistan Education Statistics, Central Bureau of
Education (various issues); 5. National and Provincial Education Management Information Systems (various issues); 6. National Education
Census 2005, FBS, GOP
153
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Availability of Primary Pupil-teacher ratio (Secondary) Ratio of % of Female
School Teachersa (Secondary) Boys to Girls Teachers
Year Male Female Total Male Female Total (Secondary) (Secondary)
PUNJAB
1980 76.0 120.0 92.0 24.9 8.2 18.7 3.1 49.5
1985 57.0 108.0 74.0 26.7 8.6 18.1 2.7 53.5
1990 52.0 87.0 65.0 15.4 14.2 15.0 2.2 33.3
1995 50.0 84.0 62.0 14.6 16.6 15.3 1.8 33.2
2002 69.0 56.5 62.3 14.2 7.7 10.4 1.3 58.8
2004 74.0 57.1 64.8 16.0 8.2 11.3 1.3 59.4
2006 74.4 60.8 67.1 16.9 7.4 10.7 1.2 65.1
2007 76.0 59.2 66.9 17.4 7.6 11.0 1.2 65.2
2008 86.3 55.4 68.0 17.3 7.5 10.8 1.2 65.6
SINDH SINDH
1980 61.0 101.0 75.0 24.2 17.2 21.2 1.9 42.7
1985 63.0 105.0 78.0 30.3 19.4 25.6 2.0 43.5
1990 63.0 97.0 76.0 27.1 17.7 23.1 2.0 42.8
1995 34.0 80.0 47.0 24.8 19.5 22.6 1.9 40.4
2002 36.9 56.8 44.3 20.5 10.6 14.8 1.4 58.1
2004 37.8 57.3 45.1 19.6 8.2 12.4 1.4 63.5
2006 46.1 66.1 53.6 19.7 6.9 11.2 1.5 66.4
2007 47.7 68.3 55.4 20.2 7.4 11.7 1.4 66.5
2008 37.6 57.3 45.0 20.3 7.5 11.8 1.4 66.5
NWFP NWFP
1980 98.0 267.0 141.0 14.6 9.1 13.6 7.5 17.6
1985 70.0 228.0 105.0 14.0 10.3 13.4 7.0 16.2
1990 48.0 131.0 69.0 15.8 13.2 15.4 5.9 16.8
1995 38.0 101.0 55.0 18.8 17.9 18.6 4.1 20.7
2002 35.2 63.3 44.7 16.4 11.9 14.9 2.7 34.1
2004 36.6 60.5 45.1 16.8 12.8 15.5 2.5 34.2
2006 42.5 65.1 51.0 16.3 11.7 14.6 2.3 37.3
2007 42.7 61.1 49.7 17.0 12.2 15.2 2.3 37.8
2008 38.8 52.4 44.2 17.0 12.3 15.2 2.2 38.4
BALOCHISTAN B A L O C H I S TA N
1980 125.0 672.0 207.0 6.7 5.8 6.5 3.7 23.5
1985 92.0 607.0 155.0 5.9 6.7 6.1 3.2 21.5
1990 40.0 206.0 64.0 5.7 6.8 5.9 3.9 17.8
1995 33.0 127.0 50.0 8.5 9.3 8.6 4.3 16.4
2002 103.0 115.3 108.1 4.5 5.8 4.8 2.2 25.8
2004 55.6 92.1 67.4 6.7 7.1 6.8 2.0 32.7
2006 61.7 110.4 77.9 7.0 6.7 6.9 1.9 35.3
Social Development in Pakistan, 2009-10

2007 60.6 112.7 77.7 7.0 6.5 6.8 1.9 36.0

2008 67.0 122.8 86.1 7.1 6.5 6.9 2.0 35.9
PAKISTAN PAKISTAN
1980 76.0 131.0 95.0 21.7 10.0 16.7 2.9 42.8
1985 61.0 123.0 81.0 23.1 10.6 17.5 2.7 45.0
1990 53.0 97.0 68.0 16.3 14.7 15.8 2.4 31.9
1995 42.0 87.0 56.0 16.0 16.9 16.3 2.0 31.6
2002 51.9 59.1 55.1 14.5 8.5 11.3 1.5 53.4
2004 52.9 58.8 55.6 16.0 8.5 11.8 1.5 55.9
2006 57.7 64.5 60.7 16.6 7.6 11.1 1.4 60.6
2007 54.8 59.1 56.8 15.3 7.5 10.6 1.4 59.4
2008 53.3 53.8 53.5 16.2 7.8 11.2 1.4 59.8
Definitions:
Availability of primary school teachers: The ratio of population aged 5 to 9 to the number of primary school teachers
Pupil-teacher ratio (secondary): The ratio of pupils enrolled in secondary level classes (VI to X) to the number of teachers in secondary schools
Ratio of boys to girls (secondary): The ratio of male students to female students enrolled in secondary level classes (VI to X)
Percentage of female teachers (secondary): The number of female teachers as a percentage of total teachers in secondary schools
Note: aData for 2002 onwards include private sector schools
Sources:
1. Development Statistics of Provincial Governments (various issues); 2. Education Statistics of Provincial Governments (various issues)
3. GOP, Pakistan School Statistics, Central Bureau of Education (various issues); 4. GOP, Pakistan Education Statistics, Central Bureau of Education (various issues)
154 5. National and Provincial Education Management Information Systems (various issues); 6. National Education Census 2005, FBS, GOP
 SELECTED SOCIAL DEVELOPMENT INDICATORS
EDUCATION
Percentage of cohort reaching Availability of Availability of secondary
Class VI Class X secondary schoolsa school teachersa
Year Male Female Total Male Female Total Male Female Total Male Female Total
PUNJAB
1975 87.0 62.0 79.8 41.6 36.6 40.5 906.0 1705.0 1147.0 96.0 85.0 91.0
1980 91.8 66.9 84.1 32.8 35.6 33.5 947.0 1749.0 1200.0 95.0 83.0 89.0
1985 88.6 71.3 83.1 34.5 33.6 34.2 857.0 1569.0 1088.0 94.0 72.0 82.0
1990 88.2 81.2 85.8 34.7 33.2 34.2 706.0 998.0 819.0 43.0 78.0 55.0
1995 87.9 78.1 84.0 44.2 41.0 43.0 647.0 946.0 762.0 37.0 69.0 47.0
2002 91.3 89.7 90.6 36.0 50.3 41.3 274.0 894.0 413.0 45.0 29.0 36.0
2005 95.4 92.4 94.1 45.7 52.7 48.3 259.0 875.0 393.0 45.0 29.0 35.0
2008 79.9 81.8 80.7 46.4 49.1 47.6 190.0 172.5 181.3 40.7 20.0 27.1
SINDH SINDH
1975 70.5 88.3 75.8 52.5 46.5 50.4 942.0 2066.0 1241.0 96.0 100.0 97.0
1980 70.6 88.0 76.1 56.0 47.0 52.7 1059.0 2472.0 1431.0 99.0 111.0 104.0
1985 81.8 89.2 84.2 52.7 48.3 51.3 1023.0 2687.0 1431.0 104.0 116.0 109.0
1990 83.5 94.5 86.9 46.9 45.2 46.4 938.0 1876.0 1220.0 90.0 103.0 95.0
1995 67.2 78.2 70.7 55.6 54.8 55.3 988.0 1890.0 1268.0 93.0 118.0 103.0
2002 57.9 67.1 61.2 52.6 58.6 54.8 359.0 1622.0 560.0 72.0 44.0 56.0
2005 62.2 72.1 65.7 70.4 68.7 69.7 339.0 1594.0 533.0 62.0 30.0 42.0
2008 64.8 70.2 67.0 62.7 68.5 65.1 315.0 1507.6 520.0 61.2 25.9 37.7

NWFP NWFP
1975 60.1 27.1 52.5 50.3 47.3 50.0 987.0 3457.0 1455.0 73.0 431.0 117.0
1980 65.0 32.6 57.8 45.3 44.6 45.2 1092.0 3602.0 1597.0 69.0 271.0 105.0
1985 74.3 49.5 69.5 34.4 29.9 33.7 1041.0 3533.0 1541.0 64.0 281.0 99.0
1990 77.8 67.9 76.0 40.8 28.9 38.9 869.0 2811.0 1284.0 49.0 212.0 76.0
1995 96.0 72.8 89.8 46.6 36.0 44.3 802.0 1903.0 1105.0 45.0 157.0 68.0
2002 72.5 60.5 68.5 47.0 44.6 46.4 321.0 1236.0 498.0 38.0 67.0 48.0
2005 79.7 65.4 75.1 45.2 50.0 46.5 313.0 1277.0 492.0 37.0 67.0 47.0
2008 81.7 76.0 79.8 48.7 42.7 46.8 590.1 1005.8 733.4 32.5 46.6 37.9
BALOCHISTAN BALOCHISTAN
1975 72.7 49.5 67.4 42.1 40.9 41.9 905.0 2906.0 1277.0 90.0 308.0 128.0
1980 65.3 73.8 66.8 32.0 47.6 35.0 867.0 3183.0 1253.0 92.0 221.0 123.0
1985 72.2 54.6 67.1 37.4 29.2 35.5 769.0 2635.0 1097.0 63.0 169.0 86.0
1990 80.7 43.8 69.5 26.7 32.8 27.9 546.0 2086.0 791.0 43.0 146.0 62.0
1995 81.3 76.7 80.3 46.5 29.8 42.9 559.0 2117.0 808.0 38.0 129.0 54.0
2002 82.8 65.7 76.4 39.5 44.3 40.8 449.0 1318.0 619.0 23.0 47.0 29.0
2005 86.7 70.6 80.8 43.2 51.3 45.7 428.0 1000.0 562.0 32.0 47.0 37.0

Social Development in Pakistan, 2009-10

2008 72.3 71.8 72.1 50.4 48.3 49.7 454.0 1139.2 965.3 40.2 64.3 48.9

PAKISTAN PAKISTAN
1975 79.4 63.2 74.9 44.5 40.1 43.5 924.0 1954.0 1208.0 92.0 103.0 97.0
1980 82.3 69.0 78.4 38.9 39.9 39.1 983.0 2084.0 1295.0 91.0 102.0 96.0
1985 84.6 73.7 81.3 38.6 37.7 38.4 907.0 1947.0 1205.0 87.0 92.0 89.0
1990 85.0 85.8 85.3 37.9 35.7 37.2 757.0 1288.0 937.0 50.0 94.0 64.0
1995 84.6 77.6 82.1 46.6 42.7 45.3 719.0 1201.0 886.0 44.0 86.0 57.0
2002 79.3 78.8 79.1 41.4 51.1 44.8 304.0 1056.0 459.0 45.0 36.0 40.0
2005 84.1 82.6 83.5 49.2 55.3 51.4 288.0 1032.0 439.0 45.0 33.0 38.0
2008 77.2 78.7 77.8 49.8 51.8 50.6 233.3 217.1 225.5 38.0 23.2 29.2

Definitions:
Percentage of cohort reaching Class VI: The percentage of children finishing primary school who reach Class VI
Percentage of cohort reaching Class X: The percentage of children enrolled in Class VI who reach Class X
Availability of secondary schools: The ratio of population aged 10 to 14 to the number of secondary schools
Availability of secondary school teachers: The ratio of population aged 10 to 14 to the number of secondary school teachers

Note: aData for 2002 onwards include private sector schools

Sources:
1. Development Statistics of Provincial Governments (various issues); 2. Education Statistics of Provincial Governments (various issues)
3. GOP, Pakistan School Statistics, Central Bureau of Education (various issues); 4. GOP, Pakistan Education Statistics, Central Bureau of Education (various issues); 5.
National and Provincial Education Management Information Systems (various issues); 6. National Education Census 2005, FBS, GOP
155
 SELECTED SOCIAL DEVELOPMENT INDICATORS
HEALTH
P e r c e n ta g e o f f u l l y i m m u n i z e d c h i l d r e n
URBAN RURAL T O TA L
Year Male Female Both Male Female Both Male Female Both

PUNJAB
1996 57 58 57 46 43 45 48 47 47
1999 62 68 64 56 37 52 57 52 55
2002 72 80 76 52 50 51 57 58 57
2005 89 89 89 82 80 81 85 84 84
2006 84 91 87 71 71 71 75 76 76
2007 87 86 87 82 81 82 84 83 83
2008 83 84 83 78 68 73 79 73 76
2009 90 87 88 84 83 84 86 84 85
Sindh SINDH
1996 38 45 41 45 48 46 42 46 44
1999 66 54 60 31 24 27 42 35 38
2002 66 63 64 39 26 33 49 40 45
2005 86 87 87 64 60 62 74 72 73
2006 82 81 82 64 63 63 70 71 71
2007 84 84 84 52 53 53 65 65 65
2008 83 76 80 64 55 59 71 62 67
2009 85 84 85 57 58 57 69 68 69
NWFP NWFP
1996 46 50 47 38 37 37 39 38 39
1999 82 74 77 49 54 51 52 56 54
2002 81 57 70 52 57 55 56 57 57
2005 84 86 85 74 72 73 77 76 76
2006 77 79 78 63 59 61 65 62 64
2007 88 86 87 77 71 74 79 73 76
2008 87 88 88 65 78 72 69 80 74
2009 84 88 86 71 72 71 73 74 73
Balochistan B A L O C H I S TA N
1996 67 56 61 60 48 54 61 50 56
1999 51 52 51 35 29 32 36 32 34
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

2002 34 37 36 22 21 22 24 24 24
2005 80 77 79 57 54 55 64 60 62
2006 69 70 69 50 37 41 56 43 48
2007 68 72 70 53 46 49 56 52 54
2008 75 74 74 47 52 50 55 58 57
2009 73 74 73 37 35 36 43 42 43
Pakistan PAKISTAN
1996 48 52 50 45 42 44 46 45 45
1999 64 63 64 47 42 55 52 47 49
2002 48 45 46 48 45 46 53 52 53
2005 86 87 87 73 71 72 78 77 77
2006 83 86 84 67 65 66 72 71 71
2007 86 85 85 74 72 73 77 75 76
2008 83 81 82 71 67 69 75 71 73
2009 87 86 87 75 74 74 78 77 78
Definition: Percentage of children aged 12-23 months that have been immunized (based on recall and record).
Note:
For being classified as fully immunized, a child must have received the following vaccination: BCG, DPT1, DPT2, DPT3, Polio1, Polio2,
Polio3 and Measles.

Sources:
1. Pakistan Integrated Household Survey, 1998-99 and 2001-02, Federal Bureau of Statistics, Government of Pakistan.
156 2. Pakistan Social and Living Standards Measurement Survey, 2004-05, 2005-06, 2006-07 and 2007-08, Federal Bureau of Statistics,
Government of Pakistan.
 SELECTED SOCIAL DEVELOPMENT INDICATORS
HEALTH WATER SUPPLY
Proportion of pregnant women Contraceptive Access to
with pre-natal care prevalance rate Drinking Water
Year Urban Rural Total Urban Rural Total Urban Rural Total

PUNJAB
1996 - - - 21 9 12 47 9 19
1997 43 22 27 26 11 16 48 7 19
1998 58 25 33 28 16 19 49 8 20
2002 64 31 40 33 17 22 54 6 20
2006 73 45 53 41 27 31 50 16 27
2008 73 54 59 52 40 44 51 18 28
2009 75 55 61 53 41 44 52 16 28
Sindh SINDH
1996 - - - 26 5 15 77 10 43
1997 76 23 44 29 5 16 78 10 44
1998 70 19 37 32 7 17 64 7 32
2002 68 22 38 27 8 15 67 4 30
2006 82 38 56 32 11 21 71 11 43
2008 82 46 59 40 13 25 73 17 45
2009 84 43 60 43 15 27 74 11 43
NWFP NWFP
1996 - - - 25 11 13 60 46 40
1997 44 26 28 20 11 13 64 28 34
1998 36 20 22 21 9 10 62 34 38
2002 45 19 22 29 12 14 57 35 39
2006 53 42 43 31 22 23 56 45 47
2008 61 46 48 37 33 34 70 47 51
2009 67 46 49 39 36 37 66 47 50
Balochistan B A L O C H I S TA N
1996 - - - 8 4 5 79 19 30
1997 25 5 8 14 4 5 76 16 25

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
1998 43 15 18 22 5 7 77 18 25
2002 45 16 21 20 10 12 80 14 25
2006 60 30 36 19 7 10 77 25 36
2008 53 33 39 14 7 9 82 24 40
2009 57 30 36 13 6 9 85 25 38
Pakistan PAKISTAN
1996 - - - 23 8 13 60 13 28
1997 54 22 30 27 10 15 60 11 27
1998 60 22 31 29 12 17 55 12 26
2002 63 26 35 31 14 19 58 10 25
2006 74 42 52 36 21 26 59 21 34
2008 74 50 56 45 32 36 61 22 36
2009 77 50 58 49 35 39 62 21 35
Notes:
1. Ever married women aged 15 – 49 years who had given birth in the last three years and who had attended at least one pre-natal
consultation during the last pregnancy, expressed as a percentage of all currently married women aged 15 – 49 years who had given
birth in the last three years.
2. Currently married women aged 15-49 years who are currently using contraceptives expressed as percentage of all currently married
women aged 15-49 years.
3. Households obtaining Tap water expressed as a percentage of the total number of households. ‘Tap water” includes both tap water
inside and out side house.
Source: Same as on previous page
157
 SELECTED SOCIAL DEVELOPMENT INDICATORS
DEMOGRAPHY
Crude death rate Crude birth rate Infant mortality rate Natural growth rate Life
Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total expectancy
Year (years)
PUNJAB
1979 9.5 11.7 11.1 41.4 42.5 42.2 80.0 107.0 100.0 3.2 3.1 3.1 n.a
1986 8.6 12.5 11.0 39.8 44.6 42.7 88.0 131.0 120.0 3.1 3.2 3.2 57.6
1989 8.3 11.5 10.6 37.6 43.0 41.4 93.0 119.0 105.0 2.9 3.2 3.1 57.8
1992 7.9 11.2 10.2 33.5 41.2 38.9 83.0 129.0 110.0 2.6 3.0 2.9 58.0
1997 7.6 10.3 9.5 31.7 38.3 36.3 71.0 110.0 99.0 2.5 2.8 2.7 60.5
2001 7.0 8.6 7.9 26.1 31.7 29.2 71.0 86.0 80.0 1.9 2.3 2.1 62.3
2005 6.6 7.5 7.2 23.7 27.3 26.0 - - - 1.7 2.0 1.9 -
2007 5.6 7.5 6.8 23.4 26.8 25.6 - - 81.0 1.8 1.9 1.9 -
SINDH SINDH
1979 6.1 11.5 9.2 33.7 43.9 39.5 57.0 83.0 74.0 2.8 3.2 3.0 n.a
1986 8.5 13.0 10.6 40.2 45.3 42.5 86.0 138.0 114.0 3.2 3.2 3.2 55.1
1989 7.8 13.7 10.8 35.4 43.3 39.4 76.0 145.0 113.0 2.8 3.0 2.9 54.4
1992 7.1 13.2 10.1 34.7 44.0 39.3 68.0 138.0 98.0 2.8 3.1 2.9 55.4
1997 7.5 12.3 9.9 31.9 41.3 36.6 65.0 140.0 105.0 2.5 2.9 2.7 57.3
2001 5.9 9.0 7.4 27.0 33.7 30.2 61.0 82.0 73.0 2.1 2.5 2.3 62.5
2005 5.5 7.0 6.3 23.4 27.6 25.6 - - - 1.8 2.1 1.9 -
2007 4.7 7.3 6.1 22.9 26.4 24.7 - - 81.0 1.8 1.9 1.9 -
NWFP NWFP
1979 9.0 11.1 10.7 41.0 43.6 43.2 100.0 111.0 109.0 3.2 3.3 3.2 n.a
1986 10.1 9.8 9.7 38.8 46.3 44.2 146.0 83.0 93.0 2.9 3.7 3.4 58.7
1989 7.3 9.7 9.3 38.1 46.9 45.5 67.0 80.0 76.0 3.1 3.7 3.6 59.3
1992 7.5 10.1 9.7 34.0 44.7 43.1 74.0 94.0 90.0 2.6 3.5 3.3 59.6
1997 6.6 9.1 8.7 31.3 38.3 37.1 53.0 75.0 72.0 2.5 2.9 2.8 57.1
2001 6.8 8.4 7.8 28.8 29.9 29.5 70.0 82.0 78.0 2.2 2.1 2.1 56.6
2005 6.9 8.2 8.0 26.6 27.8 27.6 - - - 2.0 2.0 2.0 -
2007 6.3 7.9 7.6 25.6 26.6 26.5 - - 63.0 1.9 1.9 1.9 -

BALOCHISTAN BALOCHISTAN
1979 6.4 7.2 7.1 33.1 36.9 36.3 44.0 69.0 66.0 2.7 3.0 2.9 n.a
1986 8.4 13.8 12.1 45.4 45.6 45.9 101.0 166.0 155.0 3.7 3.2 3.4 50.4
1989 8.7 11.4 11.0 44.4 44.3 44.4 104.0 117.0 114.0 3.6 3.3 3.3 51.0
1992 7.9 12.0 11.5 35.5 45.6 44.1 88.0 128.0 117.0 2.8 3.4 3.3 51.5
1997 5.9 9.2 8.6 29.5 37.1 35.7 79.0 119.0 114.0 2.4 2.8 2.7 60.3
2001 7.3 8.4 8.0 28.4 28.8 28.6 85.0 91.0 88.0 2.1 2.0 2.1 57.3
2005 6.5 7.4 7.2 26.0 26.4 26.3 - - - 1.9 1.9 1.9 -
2007 6.9 7.5 7.4 24.3 27.3 26.6 - - 49.0 1.7 2.0 1.9 -
S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0

PAKISTAN PAKISTAN
1979 8.2 11.4 10.5 38.4 42.7 41.5 74.0 101.0 94.0 3.0 3.1 3.1 n.a
1986 8.7 12.2 10.8 40.1 45.1 43.0 92.0 126.0 116.0 3.1 3.3 3.2 56.9
1989 8.1 11.6 10.5 37.0 43.7 41.6 85.0 117.0 106.0 2.9 3.2 3.1 57.1
1992 7.6 11.4 10.2 34.0 42.5 39.8 77.0 125.0 105.0 2.6 3.1 3.0 57.3
1997 7.4 10.4 9.4 31.7 38.6 36.4 67.0 103.0 93.0 2.5 2.8 2.7 61.8
2001 6.7 7.1 7.0 26.0 26.7 26.5 67.0 81.0 76.0 1.9 2.0 1.9 64.0
2005 6.3 7.5 7.1 23.9 27.4 26.1 67.1 81.2 76.7 1.8 2.0 1.9 65.0
2007 5.4 7.5 6.8 23.4 26.7 25.6 66.5 80.7 75.2 1.8 1.9 1.9 68.0

n.a: not available

Definitions:
Crude birth rate: The number of live births per thousand population in a year
Crude death rate: The number of deaths per thousand population in a year
Infant mortality rate: The number of deaths of children under 1 year per thousand live births in a year
Natural growth rate: ([Crude birth rate]-[Crude death rate])/10
Life expectancy: The number of years a newborn would live if prevailling patterns of mortality at the time of birth were to stay the same

Source:
1. GOP, Pakistan Demographic Survey, Federal Bureau of Statistics (various issues)
158 2. Unpublished data, Federal Bureau of Statistics
3. Economic Survey, GOP
 SELECTED SOCIAL DEVELOPMENT INDICATORS
DEMOGRAPHY
Percentage of live birthsa Fertility rate Sex ratio Dependency
in medical institutions (per woman) (%) ratio (%)
Year Urban Rural Total Urban Rural Total Urban Rural Total Urban Rural Total
PUNJAB
1976 4.9 0.7 1.8 7.3 7.1 7.1 111 107 108 96 98 98
1979 4.6 0.6 1.6 7.4 7.3 7.3 110 107 108 96 100 99
1985 0.0 0.0 8.2 6.3 8.0 7.2 107 104 105 94 101 98
1990 18.2 4.7 8.2 5.2 6.6 6.1 106 103 104 89 98 95
1996 28.9 9.4 14.3 4.6 5.9 5.4 106 105 105 91 97 95
2001 38.8 13.1 19.7 - - 4.0 106 104 105 72 88 82
2005 46.5 21.3 30.9 - - 4.1 105 104 104 67 78 77
2007 52.7 20.8 29.7 - - 3.9 105 103 104 68 79 76
SINDH SINDH
1976 33.6 0.6 12.4 5.4 7.3 6.4 112 116 114 87 97 93
1979 32.4 0.2 11.2 5.1 7.3 6.3 112 117 115 84 98 92
1985 0.0 0.0 19.1 5.9 7.5 6.6 107 114 110 91 103 96
1990 41.4 4.1 20.7 5.2 6.9 6.0 109 109 109 87 103 95
1996 48.0 8.8 26.7 4.9 6.2 5.5 108 113 111 87 99 93
2001 55.2 14.8 28.7 - - 4.3 109 112 110 77 98 88
2005 59.2 20.1 37.4 - - 4.2 110 112 111 71 98 84
2006 69.3 25.0 45.1 - - 4.3 107 111 112 71 98 84
NWFP NWFP
1976 4.6 0.2 0.9 6.6 6.9 6.8 108 101 102 94 108 106
1979 4.5 0.6 1.3 7.3 6.7 6.7 109 100 101 100 115 112
1985 0.0 0.0 3.8 7.0 8.4 7.8 107 102 104 99 110 105
1990 19.5 3.7 5.6 5.0 6.9 6.6 107 102 103 90 113 109
1996 25.1 12.3 13.6 4.4 5.8 5.5 107 102 103 91 114 110
2001 30.1 14.1 16.2 - - 4.3 106 100 101 79 96 93
2005 32.5 23.5 26.6 - - 4.3 105 100 101 78 95 92
2007 45.1 24.5 28.0 - - 4.3 108 101 101 79 95 93

BALOCHISTAN BALOCHISTAN
1976 19.8 0.8 2.9 5.9 7.3 7.1 106 108 108 86 91 90
1979 17.9 0.6 4.1 7.6 4.9 5.2 101 115 113 92 95 94
1985 0.0 0.0 2.6 6.6 6.5 6.6 114 109 111 105 109 107
1990 26.2 6.7 9.0 5.2 7.6 7.3 110 105 106 103 115 113
1996 17.6 6.4 7.7 4.0 6.1 5.6 109 115 113 109 108 108
2001 22.4 2.8 6.1 - - 4.2 112 112 112 92 100 98
2005 26.8 11.0 17.6 - - 4.2 116 116 116 83 95 92
2007 40.5 8.9 14.8 - - 4.1 109 110 114 84 97 94

S O C I A L D E V E L O P M E N T I N PA K I S TA N , 2 0 0 9 - 1 0
PAKISTAN PAKISTAN
1976 13.7 0.6 4.1 6.6 7.1 6.9 111 108 109 93 99 97
1979 13.0 0.5 3.8 6.6 7.1 6.9 110 108 109 92 101 98
1985 19.8 2.5 10.1 6.2 7.8 7.1 108 106 107 94 103 100
1990 26.8 4.6 10.6 5.2 6.7 6.2 107 104 105 89 102 98
1996 35.1 9.7 16.4 4.7 5.9 5.5 107 106 106 90 101 97
2001 43.5 13.2 21.0 - - 4.1 107 105 106 75 92 86
2005 45.2 20.5 30.2 3.3 4.1 3.8 107 105 106 69 89 81
2007 57.1 21.3 31.9 3.3 4.5 4.1 106 104 105 70 88 81

n.a: not available

Definitions:
Percentage of births in medical institutions: The number of births in medical institutions as a percentage of total births
Fertility rate: The average number of children that would be born to a woman if she were to live to the end of her childbearing age and bear children
Sex ratio: The number of males per hundred females
Dependency ratio: Dependent population (those under 15 and over 64) as percent of the working-age population (aged 15 to 64)

Source:
1. GOP, Pakistan Demographic Survey, Federal Bureau of Statistics (various issues)
2. Pakistan Contraceptive Prevalence Surveys, Population Welfare Division, Ministry of Planning and Development, Islamabad
3. Pakistan Integrated Household Survey (various issues)
4. Unpublished data Federal Bureau of Statistics
159
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