Formal Social Safety Nets in Pakistan

Abdullah Ismail

Muhammad Ahsan Rana

MGMT 263

16th March 2015

Write a note on Formal Social Safety Nets in Pakistan.

Poverty has been the plight of many developing nations, and there have been consistent efforts to eradicate poverty and increase the living standards of the general populace subdued in the curse of poverty. Speaking of Pakistan, poverty has been a major concern as it poses serious threats to the growth and prosperity of the economy because of the allowances that need to be directed towards this segment of the society. According to facts national statistics every third Pakistani is caught in the poverty bracket: 58.7 million out of a total population of 180 million subsist below the poverty line. This substantially removes any cushion for investment in other sectors, which can potentially generate growth and development otherwise.

Owing to the significant chunk of the population subsisting below the poverty lines, the governments are supposed to take responsibility to cater to issues pertaining to poverty. Over the course of time, many attempts have been made to ensure the social safety of the poor populace in the economy. This paper attempts to cover the major policies that have been undertaken in lieu to eradicate poverty from the economy. They can be broadly categorized into three headings: direct transfer of funds to the poor, pensions and retirement plans, micro finance and individual policies like Benazir Income Support Program (BISP) and Social Action Program (SAP)

Transferring Funds to the Poor

BaitulMaal

Pakistan BaitulMal was recognized as a sovereign body in February 1992 after establishment of the Pakistan BaitulMal Act of 1991. It was formed to provide aid to those groups of people that were not entitled to receive Zakat. Examples are of those who are not Muslims or even within Muslims, those following some sects not entitled for Zakat funds like Shia Muslims. The geographical spread of this program was increased, and areas like Azad Kashmir and Gilgit Baltistan were also included. It was primarily financed by the grants that were received from the government of Pakistan. It also received certain nominal grants from central Zakat fund and provincial and local governments, local authorities, national organizations, and voluntary donations. Funds from the BaitulMaal are also available to NGOs and agencies that are involved in social welfare programs. The BaitulMaal provides two types of benefits to those entitled of financial support from the government: The Individual Financial Assistance Scheme and the Food Subsidy Scheme (also referred to as the Atta Subsidy Scheme). The major initiative of this programme was the food stamp program, which made