Poverty is not an accident of fate. It is shaped by government institutions and government policy. That is the consistent message from Nobel laureates — Theodore Schultz (1979), Robert Solow (1987), Douglass North (1993), Amartya Sen (1998), Joseph Stiglitz (2001), Elinor Ostrom (2009), Angus Deaton (2015), and Abhijit Banerjee and Esther Duflo (2019).
According to Government of Pakistan, Ministry of Planning, Development and Special Initiatives, around 50 million Pakistanis were living below the poverty line in 2018. By 2024, that number had risen to roughly 70 million.
Red alert: Poverty in Pakistan is not cyclical — it is structural.
In 2018, the average electricity tariff hovered around Rs11 per unit. Today, households are paying around Rs50 per unit. That is not an adjustment. That is a structural shock. When electricity becomes four times more expensive – food becomes expensive, real wages fall, manufacturing contracts and small shops shut. That is how a tariff becomes structural poverty.
In Pakistan, power tariff has produced five consequences: One-It has repriced survival. Two-It has turned a utility into a liability. Three-It has converted light into a monthly negotiation with hunger. Four-It now determines what is eaten, what is postponed, and what is abandoned. Five-It has shifted the burden from balance sheets to dinner plates.
How does government policy determine what is eaten? When the bill is Rs22,000 instead of Rs6,000, protein is the adjustment variable. Chicken becomes lentils. Milk is diluted. Fruit becomes seasonal. The electricity bill is fixed; nutrition is flexible.
How does government policy determine what is postponed? School fees are delayed. A doctor’s visit is deferred. A broken ceiling fan stays broken.
How does government policy determine what is abandoned? After two reminders from school, a child stops attending. The uniform hangs. The books gather dust. School is not formally cancelled; it is quietly surrendered. And what replaces it? Income. The same child who once carried a school bag now carries tools. A workshop. A tea stall. A mechanic’s bench. Education exits – and labour enters. When policy raises fixed costs faster than incomes, childhood becomes the shock absorber.
Food must adjust. Education must adjust. Health must adjust. And that is how tariff becomes structural poverty.
In 1995, Roush (Pakistan) Power Limited (RPPL) signed a Power Purchase Agreement with WAPDA. The project cost $560 million. Today, the generation cost stands at Rs745.05 per kWh.
In 2017, the China Power Hub Coal Power Project was established at a cost of $1.995 billion. Its generation cost is Rs349.92 per kWh, with annual capacity charges of Rs142 billion. The capacity payment for Port Qasim is Rs122 billion, the plant runs at 18 percent.
These projects were not accidents. They were products of government policy. Higher capacity payments mean higher electricity prices. Higher electricity prices mean higher production costs – and higher production costs mean expensive food, expensive transport, expensive everything.
Red alert: When life becomes expensive, poverty expands. Yes, government policy writes the price of survival.
Tariffs Pakistanis pay today is not the price of electricity; it is the recovery of past multi-billion dollar policy errors. This is how middle-class Pakistanis households have slid into poverty – as a consequence of government policy.
Tariff is not just a household issue – it has shrunk factories. When factories shrink jobs disappear – poverty deepens. Poverty in Pakistan is not a mystery. It is arithmetic. Government policy sets the tariff — and the tariff sets the poverty line of survival.
—The writer is a journalist and
political analyst.
