Inflation, climate shocks, and post-COVID challenges push inequality higher despite expanded social protection measures
Pakistan has witnessed a rise in its national poverty headcount, which increased to 28.9 percent during the fiscal year 2024-25. Alongside this increase, inequality levels have also shown an upward trend, reflecting continued economic strain on vulnerable households across the country.
Despite this recent setback, long-term data indicates that poverty has declined significantly over the years. However, a series of overlapping shocks in recent times has placed renewed pressure on household welfare.
These include the lingering effects of the COVID-19 pandemic, persistent inflationary trends, climate-related disruptions, devastating floods, and ongoing economic adjustment measures. Together, these factors have weakened income stability and increased vulnerability among lower-income groups.
In response to these challenges, the government has maintained an active role in strengthening social protection systems and increasing pro-poor spending. During the period of July to March FY 2026, total pro-poor expenditures reached Rs 4.66 trillion.
This spending reflects substantial investment in key sectors such as social security, welfare programs, disaster response initiatives, infrastructure development including roads and bridges, as well as improvements in environmental services, water supply, sanitation, education, and healthcare.
The Benazir Income Support Programme (BISP) continues to serve as the flagship social safety initiative, providing targeted cash assistance to low-income households.
Through its various components—including unconditional cash transfers (UCTs), conditional cash transfers (CCTs), education support, nutrition assistance, and digital payment reforms—the programme aims to reduce poverty and improve human development outcomes.
Other welfare institutions such as Pakistan Bait-ul-Mal (PBM), Zakat system, Workers Welfare Fund (WWF), Employees Old-Age Benefits Institution (EOBI), and Pakistan Poverty Alleviation Fund (PPAF) have also played a key role.
These organizations continue to support disadvantaged communities through financial aid, pensions, livelihood programs, community infrastructure projects, and broader financial inclusion initiatives.
Additionally, microfinance services have contributed to poverty alleviation by offering credit, savings, and insurance facilities to low-income households, enabling small businesses and household resilience.
Overall, while poverty and inequality have increased in the short term, continued government intervention and expanded welfare programs aim to cushion vulnerable populations and support long-term inclusive growth.
