The Vision of Human Security 1

Human Security in Pakistan Hafiz A. Pasha September 2023

CONTENTS PART I WHAT IS HUMAN 1 Chapter 1: THE VISION OF HUMAN 3 1.1 The Vision of Human 3 1.2 Human Development and Human 5 1.3 Human Rights and Human 5 1.4 Operationalization of Human 6 1.5 Components of Human 7 Chapter 2: DEVELOPMENTS IN THE APPROACH TO HUMAN 9 2.1 Conceptual 9 2.2 Empirical 10 2.3 Support for the Concept and Application of Human 14 Chapter 3: THE NATIONAL SECURITY POLICY OF 17 3.1 The Policy 17 3.2 20 Chapter 4: THE HUMAN SECURITY 23 4.1 The HSI for 23 4.2 The Individual 24 PART II ESTIMATION OF THE HUMAN SECURITY 31 Chapter 5: STATEMENT OF 33 5.1 Methodology of Construction of 33 5.2 Analysis of 34 5.3 Quantification of Contribution by 34 Chapter 6: INDEX OF FREEDOM FROM 35 6.1 Territorial 35 6.2 External Financial 37 6.3 Personal 40 6.4 Health Hazards and 42

6.5 Environmental Protection and Natural 43 6.6 Overall Index of Freedom from 45 Chapter 7: INDEX OF FREEDOM FROM 49 7.1 49 7.2 Food 50 7.3 Employment and 52 7.4 55 7.5 Energy 57 7.6 58 7.7 59 7.8 62 7.9 64 7.10 Overall Index of Freedom from 65 Chapter 8: FREEDOM FROM 71 8.1 Income 71 8.2 Regional 72 8.3 73 8.4 Gender 75 8.5 Overall Index of 76 Chapter 9: INDEX OF 79 9.1 Index of 79 Chapter 10: ESTIMATES OF THE NATIONAL HUMAN SECURITY 85 10.1 Number of 85 10.2 Estimates of National 85 10.3 The 86 10.4 Correlation of the HSI with 88 10.5 Rising and Falling Indices since 88 Chapter 11: THE HUMAN SECURITY INDEX OF SELECTED 91 11.1 Selection of Countries 91 11.2 Selection of the HSI 92 11.3 Country 95 PART III POLICIES, REFORMS AND LAWS FOR ACHIEVING HIGHER 99 Chapter 12: THE MAJOR 101 12.1 The Major 101 12.2 The Key Focus Areas for Improving the 102

Chapter 13: STRATEGY FOR AVOIDING DEFAULT The Biggest Threat toHuman 105 13.1 Implications of 105 13.2 Policy Instruments to Avoid 108 13.2.1 Promoting Import 108 13.2.2 Intensive Use of Monetary 109 Chapter 14: CHARTER OF THE ECONOMY The Financing 111 14.1 Tax 111 14.2 Enhancing Non-Tax 114 14.3 Rationalization of an Economy in 115 14.4 Summary of 117 Chapter 15: POLICIES, REFORMS AND LAWS FOR HIGHER 119 15.1 Alleviating 119 15.2 Territorial 121 15.3 Environmental 122 15.4 Education and 123 15.5 Gender 124 15.6 Food 125 15.7 Energy 125 15.8 Regional 126 15.9 Governance and 128 PART IV REGIONAL HSI IN 131 Chapter 16: THE PROVINCIAL HUMAN SECURITY 133 16.1 The Number of 133 16.2 Extent of Regional 138 16.3 The Provincial 140 16.4 Strategy for Increasing the Provincial 143 Chapter 17: THE HUMAN SECURITY INDEX AT THE DIVISIONAL LEVEL OF THE 147 17.1 Construction of the 147 17.2 The HSI at the Division 148 TECHNICAL 157 Technical Annexure-I: The Balance of Payments Module of the Macro Econometric 159

STATISTICAL 161 Statistical Annexure-I: The Actual Values of Indicators of 163 Statistical Annexure-II: The HSI Indicators of Selected 171 Statistical Annexure-III: The HSI Indicators of the 175 Statistical Annexure-IV: Indicators of the Components of the HSI of the Divisions in the 187 List of 197 List of 200 List of 201 List of 203

Introduction INTRODUCTION The report on Human Security in Pakistan comes at the right time. Pakistan is perilously close to being unable to honor its external debt repayment obligations. The year 2022 also saw the worst natural disaster in the form of floods, which cost the economy over$30 billion in the form of damage to output and destruction of the capital stock. Consequently, due to the severe stagflation, there has been a quantum jump in unemployment and poverty, leading to a big decline in human security. The report represents the first step at quantification of the level of human security in Pakistan and its trend after 2001-02. It includes 87 indicators on diverse aspects of human security and goes well beyond the Human Development Index. The Human Security Index so derived shows a big fall after 2015-16. The need to sustain the level of human security at this difficult time is proposed to be met by the design and implementation of a comprehensive Charter of the Economy. A financing plan is presented for resource mobilization through progressive tax reforms and strong containment of public expenditure. The fiscal space thus created is used to augment the components of human security, which are currently under the greatest threat. The support of the Friedrich Ebert Stiftung in the preparation of this report is appreciated. The role as co-author of Ayesha Sheikh and the assistance of Rida Shahid and Muhammad Rizwanullah Khan in the preparation of the report is acknowledged. Dr. Hafiz A. Pasha Professor Emeritus, BNU former Federal Minister and UN Assistant Secretary General i

Summary SUMMARY PART I: WHAT IS HUMAN SECURITY? Chapter 1: The Vision of Human Security The concept of human security was first visualized by Mahbub ul Haq. He saw human security as the security of people, not just territory; security through development, not through arms and security of people everywhere. The UNDP Human Development Report identified the basic characteristics of human security as universal, people-centered, and focusing on early prevention. Seven components of human security were listed, including economic, food, health, environment, personal safety, community protection, and political security. The concept of human security in its broadest form is freedom from‘fear,’ freedom from ‘want’, and freedom from‘inequality and exploitation.’ There are strong links between human development and human security. Also, human rights are an integral part of human security. Human security can be used as a tool for policy and for programming by application of five principles, namely, people-centered, interconnected, comprehensive, context-specific, and preventive in nature. Chapter 2: Developments in the Approach to Human Security The first major application of the concept of human security was by the UNESCAP in 2010 by the development of a Human Security Index(HSI) for Asian countries with 11 components. Pakistan was ranked low at the 19 th percentile of countries. A more recent effort is the construction of an African Human Security Index for 10 African countries. This HSI has 7 major components and 18 individual indicators. Chapter 3: The National Security Policy of Pakistan The first National Security Policy(NSP) of Pakistan was announced in January 2022 for the period 2022 to 2026. The NSP articulates a citizen-centric‘Comprehensive National Security’ framework and places economic security at the core of national security. It sees iii

Human Security in Pakistan a symbiotic relationship between traditional and non-traditional security. The thematic sections include ensuring equality, securing the economic future, defense and territorial integrity, internal security, foreign policy in a changing world, and human security. However, it is disappointing that the word‘human’ was not included in the title of the Policy. Also, human security is seen as only one of the five thematic sections. Chapter 4: The Human Security Index This chapter constructs a human security index for the first time for Pakistan from 2001- 02 to 2020-22. There are four major components, namely, freedom from‘fear,’ freedom from ‘want,’ freedom from‘inequality’, and governance. At the second level, there are 23 subcomponents. Finally, at the third level, there are 87 individual indicators. For each indicator, the source of data and the latest year for which information is available are indicated. 20 different sources of data have been accessed. The number of indicators in each component of the HSI are as follows: Freedom from‘Fear’ 27 Freedom from‘Want’ 44 Freedom from‘Inequality’ 11 Governance 5 TOTAL 87 PART II: ESTIMATION OF THE HUMAN SECURITY INDEX Chapter 5: Statement of Methodology The methodology of aggregation of indicators at each sub-component level, then to the component level, and finally to the HSI is indicated. Also, the methodology for quantifying the impact on the HSI of different components is presented. Chapter 6: Index of Freedom from‘Fear’ This Index of Freedom from‘Fear’ has five group indices and 27 individual indicators. Among the five group indices, three show a long-run declining trend. These are territorial security, external financial vulnerability, and environmental protection. Two group indices, namely, personal safety and health hazards, reveal an improving trend since 2001-02. The overall Index of Freedom from‘Fear’ has an inverted U-shaped trend. It rises from 2001-02 to 2015-16 and then declines sharply up to the latest year. In fact, it is a matter of iv

Summary great concern that over the two decades, there has been a fall in this index from 0.450 in 2001-02 to 0.367 in the latest year. The peak value of this index was attained in 2015-16 at 0.549. Out of the 27 individual indicators, 17 have declined in value since 2015-16, while 10 have shown some improvement. Two of the group indices, viz., territorial security and external financial vulnerability, have a relatively strong correlation with the overall Index and will need to be focused on more in coming years. Chapter 7: Index of Freedom from‘Want’ This Index of Freedom from‘Want’ has nine group indices and 44 individual indicators. Among the group indices, four show a fall after 2015-16. These are food security, employment, energy security, and education. The other five group indices which show improvement are income, shelter, health, women and children. The overall Index of Freedom from‘Want’ shows an increase from 2001-02 to 2017-18 of 43.3% but a decline thereafter to the latest year of 1.4%. The biggest declines over the two decades are observed in food security and energy security of 19.6% and 7.1% respectively. As expected, the highest correlation of a group index with the overall Index of Freedom from‘Want’ is income. The least correlations are observed in the case of food security and energy security, implying that these are the two factors constraining improvement in the index. Overall, 20 out of the 44 individual indicators show a deterioration with respect to the magnitude in 2001-02 and/ or 2015-16. 24 indicators demonstrate a rising trend. Chapter 8: Freedom from‘Inequality’ There are four group indices and 11 individual indicators in the Index of Freedom from ‘Inequality.’ Three of the group indices, viz., income inequality, regional disparities, and poverty, show a worsening trend. Consequently, the overall Index of Freedom from ‘Inequality’ shows a fall of 15.9% over the two decades. It is significant that gender inequality demonstrates a rising trend. Both income inequality and regional disparities have a high correlation with the overall index and will need to be focused on. Out of the 11 individual indicators, 4 show a rising trend while 7 have declined over the years. v

Human Security in Pakistan Chapter 9: Index of Governance Good governance is a fundamental prerequisite for greater human security. Reliance has been placed on the assessment by international agencies of the quality of different types of governance in Pakistan. Two of the ratings are by the World Bank, one by the Heritage Foundation on Index of Economic Freedom, Corruption perceptions by Transparency International, and by the Economist Intelligence Unit on the functioning of democracy. The overall Index of Governance has an inverted U-shaped trend. It improves by 26.8% from 2001-02 to 2015-16 and then falls by 7.4%. The World Bank Index of Governance Matters shows the biggest improvement, while the Index of Economic Freedom has a moderate increase. The other three indices show a deterioration either after 2001-02 and / or after 2015-16. The highest correlation of the overall Index of Governance is with the democracy and economic freedom indices. Chapter 10: Estimates of the National Human Security Index This is a key chapter and presents the magnitude and trends in the overall Human Security Index(HSI) of Pakistan. As highlighted earlier, there are four major components, 22 group indices, and 87 individual indicators. One of the striking findings is the low absolute value of the national HSI. It has remained below 0.5 throughout the two decades with the exception of one year, 2015-16. Therefore, 2015-16 has been the best year for the HSI since 2001-02. The trend is a well-defined inverted U-shaped curve. The HSI rises by 18% from 2001- 02 to 2015-16 and then falls by 14.1% from 2015-16 to the latest year. Consequently, over the two decades, there has been an improvement of only 1% in the HSI of Pakistan, as compared to an increase of 23.3% in the HDI during the same period. Therefore, the HDI significantly overstates the improvement in the lives of the people of the country. The Index of Governance has the highest correlation with the HSI. In turn, this Index has a high correlation with the Indices of Freedom from‘Want’ and‘Fear’. This highlights the crucial role of governance. The bottom line is the contribution of change in each of the four component Indices to the decline in the HSI after 2015-16. By far, the biggest quantitative contribution of 67.5% is attributable to the fall in the Index of Freedom from‘Fear.’ A smaller but significant impact of 23.2% has been registered by the Index of Freedom from‘Inequality.’ Out of the 22 sub-component group indices, 9 have shown an increase, while 13 have declined after 2015-16. The biggest declines are in the five group indices of external financial vulnerability, territorial security, environmental protection, energy security and poverty. vi

Summary Chapter 11: The Human Security of Selected Countries The objective of this Chapter is to construct a country cross-sectional HSI to see where Pakistan stands with respect to a group of countries, mostly from Asia. 12 Countries have been included in the analysis. These countries, in descending order of the latest HDI, are Türkiye, Thailand, Sri Lanka, Egypt, Indonesia, Vietnam, Philippines, Bangladesh, India, Nepal, Pakistan and Nigeria. Therefore, according to the HDI, Pakistan is ranked eleventh among these twelve countries. The HSI of countries are based on the four component indices described above. There are 27 individual indicators with data of the latest year. The overall HSI of Pakistan emerges with a ranking of ninth out of the twelve countries. Therefore, in relation to the HDI, Pakistan improves its ranking by two places and emerges with a HSI higher than that of Bangladesh and Nepal. Pakistan performs exceptionally well in the ranking of the Index of Freedom from‘Fear’ with a ranking of fourth and in the Index of Freedom from‘Inequality’ with a ranking of eighth. It does poorly in the index of governance with a ranking of eleventh. Pakistan does poorly at the group level in income per capita, energy security, education and health, external financial vulnerability and territorial security. PART III: POLICIES, REFORMS, AND LAWS FOR ACHIEVING HIGHER HSI Chapter 12: The Major Findings The key finding, as highlighted earlier, is that the absolute value of the HSI is low and the trend since 2001-02 is an inverted U-shaped curve. The magnitude of the HSI in 2001-02 was 0.429, which rose to a peak value of 0.504 in 2015-16, and has since declined to 0.433, thereby showing only a marginal improvement over the two decades. Also, Pakistan has a higher ranking among selected countries in the HSI than in the HDI. From the viewpoint of identifying the key areas of focus in the strategy for improving the HSI, the approach is to find the groups in which Pakistan does poorly in both the time series and cross-sectional approaches. vii

Human Security in Pakistan These are as follows: Common to both Approaches • External Financial Vulnerability • Territorial Security • Governance • Energy Security In One Approach • Income per Capita • Poverty • Education and Health • Environmental Protection • Regional Disparities • Food Security • Gender Inequality The National Security Policy, 2022-26, had identified the following areas for improving human security in Pakistan: • Health Hazards • Environmental Protection • Food Security • Shelter • Employment • Gender Inequality Therefore, the above listings clearly identify the priority areas for improving the HSI. However, the big surprise is the lack of exclusion of a focus on external financial vulnerability in the National Security Policy. Already, by the beginning of 2022, the current account deficit had increased sharply, and foreign exchange reserves had started falling rapidly. Chapter 13: Strategy for Avoiding Default: The Biggest Threat to Human Security As identified earlier, Pakistan is perilously close to default in its external debt repayments. Other countries which have defaulted earlier have witnessed the worst form of stagflation. For example, Sri Lanka, which defaulted a year earlier, has since seen the GDP fall by 11% and the inflation rate rise to 64%. Inevitably, this leads to a quantum jump in unemployment and poverty and a big fall in the HSI. Pakistan will need to use the available policy instruments to avoid default. This will require bringing the current account deficit down to very near zero level. In effect, the size of the trade deficit in goods and services will need to be curtailed to achieve the following: Net secondary income= trade deficit+ net primary income (Including remittances) viii

Summary The first instrument is higher import tariffs to promote import substitution and reduce the level of imports. There is evidence that Pakistan has over-liberalized its imports. The average MFN Tariff of Pakistan is only 11% as compared to 14% of Bangladesh and 18% of India. This has helped the latter two countries to restrict the size of their trade deficits. Consequently, there should be an immediate escalation in import tariffs as follows: Import Tariff Slab 1 Slab 2 Slab 3 Slab 4 Present 3% 11% 16% 20% Proposed 5% 15% 22% 30% This will also lead to more import-based revenues. Further, both the instruments of exchange rate depreciation and hike in the interest rates will need to be used intensively. Estimates are that a 60% devaluation of the rupee and an increase in the interest of up to 8 percentage points will be required to achieve a zero current account deficit in the second half of 2022-23. Similar big moves will be required in 2023-24. Consequently, with the big negative impact on other HSI indicators, the magnitude of the HSI could fall significantly below 0.4, even lower than the level in 2001-02. Pakistan will need to have the IMF program umbrella till such time as the process of restructuring of debt repayment obligations is completed and some semblance of human security starts being restored. Chapter 14: Charter of the Economy: The Financing Plan The current period of adversity also provides an opportunity. The political leadership of Pakistan must move expeditiously to present a ‘Charter of the Economy.’ This will not only reduce the risk of large-scale unrest but will also facilitate major structural reforms of progressive taxation, strong containment of public expenditure, and substantial increase in relief to the poor. Simultaneously, a measure of financial stability and higher development spending for raising the rate of growth will become possible. The progressive tax reforms will focus on broad-basing the income tax system and increasing revenues from unearned capital income, agricultural income, property rental values, and income of under-taxed sectors like wholesale and retail trade, stock market, real estate, etc. In addition, there will be implementation of indirect tax reforms, especially the harmonization of the provincial sales tax on services with the federal sales tax on goods. Similarly, non-tax measures will involve escalation in service charges and tolls and higher flow of profits from SOEs and the SBP. ix

Human Security in Pakistan Strong measures will also be needed to achieve a significant reduction in public expenditure. This will require downsizing of both the federal and provincial governments, devolution of functions and avoiding the overlapping of functions, improved efficiency of SOEs, privatization of SOEs operating in competitive markets, and reduction in non-combat military expenditure. The overall impact will be the creation of substantial‘fiscal space’ with an increase in the tax-to-GDP ratio and non-tax-to-GDP ratio of 3% of the GDP and 0.75% of the GDP, respectively. The expenditure containment will be equivalent to 1.5% of the GDP. Overall, the‘fiscal space’ from the reforms will be equivalent to 5.25% of the GDP. The Charter of the Economy will use this fiscal space for the following: • Increase in the level of pro-poor spending by 150% from 1% of the GDP to 2.5% of the GDP. • Increase in spending on social sectors from 2.25% of the GDP to 3.0% of the GDP, an increase of 34%. • Rise in development spending(excluding social sectors) from 1.75% of the GDP to 2.75% of the GDP, a jump of 57%. • Reduction in the budget deficit from 6.5% of the GDP to 4.5% of the GDP, a cut of over 30%. This will also lead to a primary surplus of over 1% of the GDP. The next chapter indicates how the additional funds can be used to maximize the increase in the HSI. Chapter 15: Policies, Reforms and Laws for Higher HSI The first priority has to be poverty alleviation. Following the floods and the recent stagflation, the incidence of poverty has risen to almost 40%. The estimated poverty gap is Rs 11,820 per month per poor household on average. Therefore, the national poverty gap is estimated at Rs 1700 billion. BISP cash transfers of Rs 400 billion in 2022-23 are only 22% of this gap. The report contains various forms of pro-poor interventions for 2.5% of the GDP. The target beneficiaries are poor households primarily through BISP cash transfers, small farmers, less skilled workers,‘idle’ youth, SMEs, minorities, female workers, child labor, the disabled and transgender. x

Summary The problem of falling and increasingly unsustainable territorial security in the form of military spending will be largely resolved due to the larger revenue cover and creation of a primary surplus. There will be less pressure on a big containment of defense expenditure. Environmental protection has also been accorded high priority in the National Security Policy. Increased development spending will enable the faster completion of major dams, an expanded program of forestation, projects for climate adaptation and disaster preparedness, rehabilitation of the irrigation system, and investment in solar and wind energy. This will simultaneously raise the level of energy security. The education and health sectors will begin to function better with the additional spending. Priority will need to be given to the expansion and improvement of the school network, more funding for vocational and technical training, and the establishment of a network of IT Institutes to promote exports. The primary emphasis in improving gender equality will need to be on interventions in the labor market. This will include the promulgation and implementation by provincial governments of laws relating to equal access and equal remuneration. In addition, there is a need for affirmation action by provision of gender quotas in public services and a special tax credit for hiring women to employers. Also, a law needs to be introduced for the banning of child labor. Food security needs to be enhanced not by offering a free wheat bag to people in long queues with the risk of being trampled but through the major augmentation of the size of the BISP cash transfer per poor household and also by increasing the coverage of the program. Subsidized credit to small farmers will facilitate food production not only for selfconsumption but also for the market. Shift to renewable energy, as highlighted above, will augment energy security. In addition, substantial improvements are required in the transmission and distribution system through replacement investment and by improving the billing recovery process. As in India, the case for handing over the management of DISCOs to provincial governments may be examined. In addition, substantial fiscal incentives may be offered for oil and gas exploration. The focus on regional disparities has to be on facilitating faster and more inclusive development in Balochistan, a province that has fallen substantially behind over the last two decades, and serious local security issues have emerged. The next NFC Award must increase the share in the horizontal sharing formula of backwardness/ poverty and inverse population density. This should lead to a major increase in the revenue share of Balochistan. Also, federal support should be forthcoming to the province on investment in highways, water resources and oil/gas exploration. xi

Human Security in Pakistan One other major area for improving the HSI is better governance and more effective functioning of democracy. A series of recommendations are made in the report relating to‘good’ economic governance; voice, transparency and accounting; strengthening regulatory agencies; enabling more ease of doing business; consolidating the Federation, rightsizing government and devolving to local governments. PART IV: REGIONAL HSI IN PAKISTAN The objective of this last part of the report is to regionally disaggregate the national HSI down first to the provincial level and then further to the divisional level within provinces. Chapter 16: The Provincial Human Security Index As usual, there are four components of the HSI. There are also the same number of subcomponents. Due to the absence of regionally disaggregated data in some cases, the number of indicators is down from 87 to 78. The provincial level of HDI has been estimated earlier by UNDP[2020]. The ranking is Sindh at the top, followed by Punjab, then Khyber-Pakhtunkhwa, and the lowest HDI in Balochistan. The results are a similar ranking of HSI but with a bigger spread. The HSI of Sindh is 0.485, while that of Punjab, Khyber-Pakhtunkhwa and Balochistan is 0.469, 0.430 and 0.307 respectively. The absolute magnitude of the HSI’s is also lower than the HDIs. The construction of the provincial HSI enables the identification of three key areas of focus in each province for improvement in the HSI as follows: PUNJAB • Health • Energy Security • Extent of SelfReliance SINDH • Intra-Provincial Disparity • Education • Income Inequality KHYBERPAKHTUNKHWA • Energy Security • Extent of SelfReliance • Food Security BALOCHISTAN • Poverty • Income • Energy Security xii

Summary Chapter 17: The Human Security Index at the Divisional Level of the Provinces There are 30 divisions in Pakistan, with an average population of 7.5 million. 9 divisions are in Punjab, and 7 each in the other three Provinces. The following Indices have been used to construct the HSI of each division as follows: • Human Development Index •% of Food Secure Population(a proxy for incidence of Poverty) • Access to Residential Services There are altogether 15 indicators, given the limited availability of data. Most indicators represent an aggregation of district magnitudes to the divisional level, with population weights. There are 6 divisions in Pakistan with an HSI above 0.5; 9 divisions have an HSI between 0.4 and 0.5, while the remaining 15 divisions have an HSI value below 0.4. the highest division HSI value of 0.689 is of Karachi division, and the lowest HSI at only 0.192 is of Naseerabad and Zhob divisions in Balochistan. This difference of 259% highlights the very large regional disparities in the HIS in Pakistan. The inter-divisional inequality is the largest in Sindh. It is the least in Punjab, while Balochistan and Khyber-Pakhtunkhwa have an intermediate level of inequality when the PASHUM ratio is used to measure inequality within a province. However, when the PALMA ratio is used, the inequality among divisions is larger in Punjab than in KhyberPakhtunkhwa. The report concludes with one technical annexure and four statistical annexures. xiii

Developments in the Approach to Human Security PART I WHAT IS HUMAN SECURITY? 1

The Vision of Human Security Chapter: 1 THE VISION OF HUMAN SECURITY The vision of human security is the‘brainchild and final legacy’ of the outstanding economist Mahbub ul Haq. Earlier, he had undertaken pioneering work on human development. 1.1 The Vision of Human Security The central motivation behind the concept of human security is clearly indicated in his book Reflections on Human Development (1996) as follows: Security to be interpreted as: • Security of people, not just territory • Security of individuals, not just nations • Security through development, not through arms • Security of people everywhere – in their homes, in their jobs, in their streets, in their communities and in their environment. He emphasized that“human security is not a concern with weapons; it is a concern with human dignity. In the last analysis, it is a child who did not die at birth, a disease that did not spread, an ethnic tension that did not explode, a dissident who was not silenced, or a human spirit that was not crushed”. The UNDP Human Development Report of 1994 articulated the vision of Mahbub ul Haq as follows: • Identified four basic characteristics of human security: universal, people-centered, interdependent, and focusing on early prevention. • Listed seven interconnected‘components’ or seven specific values of human security that needed to be protected as follows: 3

Human Security in Pakistan The concept of human security and its application has evolved considerably. In its final and broadest form, human security is defined as freedom from‘fear,’ freedom from‘want’, and life with dignity. Freedom from fear refers to the protection of individuals from direct threats to their safety and physical integrity. This includes violence arising from actions by external states, from the actions of the state against its citizens, from the actions of groups against groups, and from the action of individuals against individuals. Also, it focuses on the threats created by environmental degradation, contagious diseases, natural disasters, etc. Freedom from want refers to the protection of basic needs and the economic, social, and cultural aspects of life and livelihoods. Life with dignity refers to the promotion of an improved quality of life and enhancement of human welfare that permits people to make choices and seek opportunities that empower them. It emphasizes the need for less inequality and exploitation . In the final analysis, the concept of human security poses as the center of its focus on the well-being of individuals and communities in addition to the survival of states. Threats can be to their survival (physical abuse, violence, persecution or even death, disease), to their livelihoods (unemployment, food insecurity, energy insecurity, etc.), and to their dignity (lack of human rights, inequality, exclusion, discrimination, etc.) Beyond territorial security , human security focuses on two types of threats. The first is more localized threats, which are particular to different societies or regions and vary by level of development and geographical location. Second, there are threats that are global and could spill beyond national frontiers. Such transnational threats could include disparities in global income, international migration of displaced populations, environmental degradation like climate change, drug and arms trafficking, smuggling and international terrorism. 4

The Vision of Human Security Two examples clearly highlight the impact of transnational threats. The first is the terrorist attack of 9/11 in New York which led to the invasion of Afghanistan by the US armed forces. The second is the global spread of COVID-19, the communicable disease. More recently, the Russia-Ukraine war has led to a global upsurge in commodity prices and a slowdown of the world economy. 1.2 Human Development and Human Security The human development concept is concerned first with building human capabilities through investment in people and, secondly, using those capabilities fully through an enabling environment for growth and employment, Mahbub ul Haq asserted that for human development to take place, economic growth is essential. But equal attention must be given to the quality of economic growth and its distribution. The links between growth and human development have to be created through investment in education, health, skill development, job creation, women’s empowerment, and equitable distribution of assets, as well as through social safety nets and political and cultural freedom. While all of these components of human development reduce people’s depreciation and enhance their capability and opportunity in society, the last three–social safety nets, political and cultural freedom–have the additional advantage of protecting people from‘downside risks’, thus highlighting the critical connection between the concepts of human development and human security. 1.3 Human Rights and Human Security The link between human rights and human security is equally strong. The Universal Declaration of Human Rights and the Declaration on the Right to Development assert that civil and political rights, as well as economic, social, and cultural rights, constitute an integral part of human rights. Together these two documents form the foundation for ‘human rights and fundamental freedoms that are the birthright of all human beings; their protection and promotion is the first responsibility of government.’ Under the overall umbrella of human rights, human development can enrich peoples’ lives, while human security can protect those in need. And when all three concepts come together to promote, protect, and reduce risks of conflicts, downturns, and devastation, the potential for achieving peace is enhanced. 5

Human Security in Pakistan 1.4 Operationalization of Human Security Human security can a used as a tool for policy and programming by the use of the following five principles , which apply to both processes and outcomes. Efforts must be made for simultaneous application of the five principles. These principles include: • People-centered: The individual/community is at the center of the analysis. His/ her role as both actors(agents) and subjects(beneficiaries) of policies, programs, and projects should be recognized, as well as the broad range of insecurities that threaten the survival, livelihood, and dignity of individuals. Furthermore, the human security approach recognizes that such variables as gender, age, socio-economic status, geography, ethnicity, culture, and religion impact the way that individuals and groups feel human security in their lives and develop capabilities to mitigate threats and develop resilience. Therefore, in practical terms, people-centered policies and programming for human security are based on an analysis of needs (as current and recurring deficits of the community or individuals), vulnerabilities (as structural issues/weaknesses that expose one to future risks and future challenges to security), as well as capacities (which include what exist that could prevent vulnerabilities if properly used/ developed). At the community level, these, for example, include traditional practices, coping mechanisms, human and social capital, environmental resources, knowledge, and assets. These capacities and resources provide a foundation for empowerment strategies. • Interconnected: Because threats to human security are mutually reinforcing and interlined in a domino effect both across sectors and across regions, their linkages should be understood in order to avoid negative harms while promoting multiplying effects of positive interventions. • Comprehensive: Human security components, such as economic, food, environmental, health, personal, community, and political security, are mutually reinforcing both through positive and negative externalities. Because threats are interconnected, human insecurities cannot be tackled in isolation via fragmented stand-alone responses. Instead, the human security approach recognizes the need for comprehensive/holistic approaches and integrated strategies that stress the need for cooperative and multi-sectoral responses. • Context-specific: Although the human security framework is universal, in that it is relevant to people everywhere, insecurities vary considerably across different settings and at different times. Local situations also need to be contextualized within the larger context to be sustainable. 6

The Vision of Human Security • Preventive: The human security approach insists on preventive measures which avert downside risks and mitigate their impacts from escalating(across insecurities) when they happen. An emphasis on early prevention rather than late intervention is a significantly more cost-effective way to deal, for example, with impoverishment, inequalities, and social exclusion than with the potential consequences of societal collapse and war. The preventive aspect of programming, for example, can be developed and reinforced by: a) early warning system, b) analyzing and targeting structural root causes of insecurities, c) targeting long-term solutions which address structural and behaviour conditions, and d) emphasizing on developing capacities through empowerment. 1.5 Components of Human Security The Human Development Report of 1994 also identified seven-interrelated components of human security, as shown in Chart 1.1. Overall, the above vision statement of human security and its operationalization provide an adequate basis for empirical research on the state of human security in Pakistan and areas of relative failure in providing a modicum of security to the people of the country. Chart 1.1: The Individual Set of Human Security Indicators Type of Security Main threats Requires Economic security Persistent poverty, unemployment An assured basic income––either from productive and remunerative work(through employment by the public or private sector, wage employment, or self-employment) or from government-financed social safety nets. Food security Hunger, famine, inability to purchase food, bad quality food, etc. All people at all times should have both physical and economic access to basic food–– that they should be entitled to food by growing it for themselves, by buying it, or by using the public food distribution system. Health security Deadly infectious diseases, unsafe food, malnutrition, lack of access to basic healthcare, women’s productive health, etc. Access to healthcare and health services, including safe and affordable family planning. Environmental security Environmental degradation, resource depletion, natural disasters, pollution, etc. A healthy physical environment, and security from environmental threats such as the degradation of the local ecosystems, air and water pollution, deforestation, desertification, salinization, natural hazards, and man-made disasters. 7

Human Security in Pakistan Personal security Community security Political security Source: UNDP, 1994. Various forms of violence, including sudden, unpredictable violence (e.g., threats from the state through physical torture inflicted by the military or police), threats from other groups of people such as ethnic or religious conflicts, threats from individuals or gangs against other individuals or street violence, threats directed against women such as domestic violence, abuse or rape, directed against children such as child abuse, neglected child labor, or child prostitution, and threats to one’s self such as suicides or drug abuse. Interethnic, religious, and other identity- based tensions, disrespect for the integrity of cultural/group diversity, marginalization, exclusion, discrimination, etc., including violations of women’s rights as a group. Political repression, human rights abuses, stateinduced violence, fear, torture, ill-treatment or disappearance, political detention, imprisonment, etc. A protective environment that prevents violence curbs it and instigates adequate punishments. Law and order are necessary but also a respect for human rights. Security from oppressive traditional practices and discriminatory practices and beliefs against ethnic or indigenous groups, women, refugees, etc. Respect for human rights, protection from military dictatorships or abuse, and from political or state repression. 8

Developments in the Approach to Human Security Chapter: 2 DEVELOPMENTS IN THE APPROACH TO HUMAN SECURITY The objective of this chapter is to highlight recent advances in the concept of human security and in empirical applications to measure the level and variation in human security. Also, an assessment is made of its acceptance internationally and by countries. 2.1 Conceptual Advances The evolution of the concept of human security was extended by the Independent Commission of Disarmament and Security to account for the“securitization” of individuals by including issues like inequality, poverty, environmental degradation, chronic illness, and disease, and also enhanced horizontally by shifting the focus from state security to the security of the individual. Efforts have also been made to explicitly identify the security components of freedom from ‘fear’ and freedom from‘want’ as follows: Freedom from‘Fear’ • Personal Security • Community Security • Political Security • Environmental Security Freedom from‘Want’ • Economic Security • Food Security Further, the concept of human security from the viewpoint of a safeguarding approach is as follows: 9

Human Security in Pakistan 2.2 Empirical Applications The first application in terms of measuring the level of human security was undertaken by the UNESCAP for selected Asian countries in 2010. Indicators were classified into three groups –– Economic Fabric Index, Environmental Fabric Index and Social Fabric Index. There were altogether 30 indicators. Pakistan was included in the list of countries. The Human Security Index(HSI) values of Pakistan and its components are shown in Table 2.1. Table 2.1: Index Value of Pakistan in Different Components of the Human Security Index(HSI), 2010 Index Value* Economic Fabric Index 0.606 • Gini-Adjusted Income Index 0.582 • Financial Governance Index 0.653 Environmental Fabric Index 0.502 • Environmental Vulnerability Index 0.292 • Environmental Protection Index 0.278 • Emissions per Capita Index 0.693 Social Fabric Index 0.391 • Diversity Index 0.326 • Peacefulness Index 0.457 • Information Empowerment Index 0.393 • Governance Index 0.163 • Health Index 0.556 • Food Security Index 0.450 Overall HSI 0.499 *a minimum value of 0 and maximum value of 1 Source: UNESCAP(2010) Pakistan has an overall HSI of 0.499. It was ranked low at the 19 th percentile of countries, below Sri Lanka, China, India, Indonesia, Malaysia, Philippines, Thailand, Turkey and Vietnam. However, it had a higher HSI than Afghanistan, Bangladesh and Nepal. 10

Developments in the Approach to Human Security Table 2.1 indicates that it does poorly with a HSI below 0.400 in the following: I Environmental Vulnerability Index II Environmental Protection Index III Diversity Index IV Information Empowerment Index V Governance Index Components where the index value is between 0.400 and 0.600 are as follows: • Gini-Adjusted Income Index • Peacefulness Index • Health Index • Food Security Index Index Value 0.582 0.457 0.556 0.450 High values of HSI components above 0.600 are observed in the following: Earlier, the UNDP Human Development Report of 1994 used a number of indicators of human security. It was termed as the Human Insecurity Index (HISI). It had components and individual indicators, as shown in Chart 2.1. • Financial Governance Index • Emissions per Capita Index Index Value 0.653 0.693 A more recent attempt is that of construction of the African Human Security Index(AHSI). Work is still in progress, but Saad Badaoui(2021) has built a composite index for 10 African countries. The components used by him for constructing the AHSI are shown in Chart 2.2. Finally, a HSI is being developed by the CROP institute. The objective is to identify indicators that may be used by development analysts/strategists/implementers by emphasizing outcomes rather than modalities. The HSI is conceptually framed in a trinity of economic, environmental and social fabric. 11

Human Security in Pakistan Chart 2.1: Human Insecurity Indicators and Index Source : UNDP Human Development Report, 1994 12

Developments in the Approach to Human Security Chart 2.2: Components of the African HIS Source : Saad Badaoui(2021) 13

Human Security in Pakistan 2.3 S upport for the Concept and Application of Human Security A Commission on Human Security was established in January 2001 in response to the UN Secretary General’s call at the 2000 Millennium Summit for a world “free from want” and “free from fear.” This was accompanied by the creation of the United Nations Trust Fund on Human Security. The Fund carries out and finances activities carried out by UN organizations to demonstrate the value-added of the human security system. Today, Canada and Norway are the most ardent supporters of the human security concept at the country level. The Government of Japan, for instance, covers comprehensively all the channels that are considered threats to dignity and human survival, like violations of human rights, environmental degradation, transnational organized crime, refugees, illicit drugs, poverty, infectious diseases, such as AIDS, and anti-personnel land-mines and supports endeavors to face these threats. Other nations, such as Canada, Austria, Chile, Jordan, Ireland, Switzerland, Slovenia, Netherlands. Norway and Thailand have adopted a narrower definition of human security. These countries emphasize on human rights law, children in armed conflict, small arms, and antipersonnel landmines. There is a need to highlight Bhutan’s Gross National Happiness Index (GNH). The GNH is based on the principle that“sustainable development should take a holistic approach towards progress and give equal importance to non-economic aspects of wellbeing.” The idea behind the creation of the GNH was to provide policymakers the means to verify the impact that key decisions have on the population in general and to also provide incentives for improving overall policy decisions. The GNH is built on four fundamental pillars: good governance, sustainable socio-economic development, cultural preservation and environmental preservation. These four aspects are broken down further into seven domains: psychological well-being, health, education, time use, cultural diversity and resilience, and living standards. The GNH lens requires that all government decisions and policies must be evaluated in terms of their potential impact on any of the seven dimensions before implementation. The proof of the pudding is in the eating, as they say, in that the poverty rate has been reduced from 36% to 12% from 2007 to 2017 in Bhutan, according to the World Bank. In Pakistan, a National Security Policy for 2022-26 was announced on the 14 th of January 2022, which represents a major step forward from the traditional notion of security as defense, military preparedness, and sovereignty. The focus now in the policy is to take a holistic approach and include human security and the well-being of citizens; underlining this paradigmatic shift is the emphasis on economic security, promoting equitable economic development, and removing regional disparities. However, this citizen-centric policy is still to be presented to the Parliament. 14

Developments in the Approach to Human Security The contents of the National Security Policy of Pakistan are presented in the next chapter. A Human Security Index will be constructed for the first time in Pakistan in this report which is the need of the time. 15

The National Security Policy of Pakistan Chapter: 3 THE NATIONAL SECURITY POLICY OF PAKISTAN ‘A country is as secure as its most vulnerable citizen. The safety, security, dignity, and prosperity of citizens will remain the ultimate purpose of Pakistan’s national security.’ 3.1 The Policy Statement* The National Security Policy(NSP) 2022-2026 is the first national security policy document of Pakistan. The NSP articulates a citizen-centric‘Comprehensive National Security’ framework. It recognizes that traditional and non-traditional threats and opportunities together impinge on overall national security. The Policy places economic security at the core of national security, emphasizing a geo-economic vision to supplement the focus on geo-strategy, and recognizes that sustainable and inclusive economic growth is needed to expand our national resource pie. Achieving this will allow greater availability of resources to bolster both traditional and human security as shown below. The foremost aim of our foreign policy and military capability will remain peace and stability in the region and beyond, based on mutual respect and sovereign equality. Symbiotic Relationship Between Traditional and Non-Traditional Security Greater Redistribution * The text here is a replication of the official statement by the Security Division, Government of Pakistan. 17

Human Security in Pakistan National Security Vision Pakistan is envisioned as an Islamic welfare state, internationally relevant and aligned with universal principles of justice, equality, and tolerance, seeking a peaceful neighborhood based on mutual co-existence, regional connectivity, and shared prosperity. A secure and economically resilient Pakistan, empowered by diversity of culture and demographic dividends while ensuring fundamental rights and social justice without discrimination on the basis of caste, creed, or belief and promoting good governance through strengthening of institutions, transparency, accountability, and openness as articles of faith. The thematic sections are as follows: Ensuring Equality An Islamic Republic based on the principles of equality and justice, empowered by diversity of culture, ensuring fundamental rights and social justice without discrimination, and delivering on its social contract with its people through good governance to strengthen national esteem and cohesion. • Promoting‘unity in diversity’ and patriotism by cherishing our ethnic, religious, cultural, and linguistic diversity. • Strengthening the federal nature of Pakistan’s structure by adhering to democratic principles and ensuring harmony among federating units and territories. • Promoting transparency and effective and equitable delivery of public services to strengthen the state-citizen contract. Securing Our Economic Future Achieve economic security and sovereignty through sustainable growth, inclusive development, and financial solvency: • Addressing the three critical economic challenges linked to national security: external imbalance, socio-economic inequalities, and geographic disparities between developed and under-developed regions of Pakistan. • Channelizing Pakistan’s geo-economically pivotal location for trade, investment, and connectivity. • Moving towards a market-based energy sector and prioritizing indigenous energy resource development while securing dependable international access to energy sources. • Ensuring access to affordable quality education and ushering in an era of technological innovation to produce globally competitive human resources. 18

The National Security Policy of Pakistan Defence and Territorial Integrity Ensure the defense and territorial integrity of Pakistan in all their manifestations: • Defending our territorial integrity and guaranteeing border security at all costs. • Deterring war through full-spectrum deterrence within the precincts of credible minimum nuclear deterrence in concert with our conventional military capabilities and all elements of national power. • Maintaining a cost-effective and adaptive military focused on modernization and optimization of force structures. • Strengthening space-based technology and its application to meet future challenges. • Combating hybrid warfare through enhancing information and cyber security while confronting disinformation, influence operations, and economic coercion, among other hybrid warfare tools. Internal Security A stable and secure Pakistan where citizens enjoy their constitutional privileges and are protected against violence, extremism, and crime, and where the rule of law is upheld equally for all. • Ensuring writ of the state across the country to guarantee the security of life and property of all citizens. • Pursuing a policy of zero-tolerance towards terrorism, extremism, and violent subnationalisms. • Fighting the menace of organized crime to ensure a safe environment for intellectual and economic activity. • Developing an equitable, responsive, and citizen-focused justice system that preserves all rights guaranteed by the Constitution. Foreign Policy in a Changing World Secure Pakistan’s interests and position in the comity of nations through political and economic diplomacy. • Cultivating broad-based relationships with global powers based on shared convergence on strategic and economic interests. • Seeking regional peace through normalization of relations in our immediate neighborhood on the basis of mutual respect and sovereign equality. • Ensuring a just and peaceful resolution of the Jammu and Kashmir dispute in accordance with UNSC resolutions. • Enhancing the role of economic diplomacy in our foreign policy initiatives. 19

Human Security in Pakistan • Leveraging our diversity and vast potential while countering negative perceptions about Pakistan and proactively engaging Pakistani diaspora on national issues. Human Security Pakistan’s youth is the future of our country. Equipping them with the necessary tools and environment for their productive contribution towards to the nation will help leapfrog Pakistan into the future. • Ensuring population stabilization and management, urban planning, reenergizing the rural economy, and the equitable development of smaller cities and towns to decrease urban migration. • Pursuing youth-focused policies to promote skills development and entrepreneurship. • Guaranteeing food security by increasing cultivatable land, adopting climate-resilient agriculture, and legislating against illegal market practices. • Improving preventive healthcare, strengthening disease surveillance and prevention, and instituting pandemic and epidemic response mechanisms. • Mainstreaming climate adaptation and strengthening robust disaster preparedness, management, and response mechanisms. • Developing a cohesive response to looming water scarcity through improved storage capacity, sustainable water management, and protecting transboundary water rights. • Enabling participation of women and transgender persons in all avenues of public life and maximizing their inclusion in public institutions and decision-making forums. 3.2 Comments The new National Security Policy for 2022-2026, which is described above, represents a major step forward from the traditional notion of security as defense, military preparedness, and sovereignty. The focus now in the policy is to take a holistic approach and include human security and the well-being of citizens. Underlining this paradigmatic shift is the emphasis on economic security by reducing external financial vulnerability, promoting equitable economic development, and removing regional disparities. However, this citizencentric policy is still to be presented to the Parliament. It is significant that the term‘human’ has not been included in the title of the policy. This testifies to the continued orientation towards the traditional notion of security. Human security has been included as only one of the six components. Two of the components of defense and territorial integrity and internal security continue to have the same inclination to the traditional notion of security. Clearly, more progressive steps will need to be taken to focus on the broader concept of human security in the country. 20

The National Security Policy of Pakistan Hence, the key research and policy analysis components of this project on Human Security include the following: i) Identification in a comprehensive manner of the multiple dimensions of human security; ii) Quantification of trends in each dimension of security over the last twenty years; iii) Identification of the positive correlation and the trade-offs between different dimensions of security; iv) Development of key components in operational terms of the strategy for enhancing national human security. A Human Security Index will be constructed for Pakistan in this report. This is the urgent need of the time. 21

The Human Security Index Chapter: 4 THE HUMAN SECURITY INDEX One of the prime objectives of the report is to construct a Human Security Index(HSI) for Pakistan, which truly reflects the various security concerns of the people and is able to gauge the change in the level of security over the last two decades. The Chapter is in three parts. The first part describes the structure of the proposed HSI in terms of the hierarchy of indicators of security. The second part identifies indicators at the lowest level of the hierarchy and the sources of data on these indicators. The time series is from 2001-02, in five yearly intervals, to the most recent year for which data is available. 4.1 The HSI for Pakistan As highlighted in Chapter One, we have preferred to go back to the original concept of human security as enunciated by Mahbub ul Haq. He saw human security as primarily consisting of the following: Freedom from‘Want’ Freedom from‘Fear’ Two more dimensions have been added by us to reach a more comprehensive coverage of human security, as follows: Freedom from‘Inequality’ and‘Oppression’ Quality of Governance At the second level, the components are shown in Chart 4.1. This comprehensive coverage of human security has not been achieved before. 23

Human Security in Pakistan Chart 4.1: Components of Human Security HUMAN SECURITY Freedom from ‘Fear’ External Financial Vulnerability Territorial Security Environmental Protection and Natural Disasters Personal Safety Health Hazards and Diseases Freedom from ‘Fear’ Income Food Security Employment and Wages Shelter Energy Security Health Freedom from ‘Inequality’ Income Inequality Regional Disparities Poverty Gender Inequality Governance* Strength of Democracy Voice and Accountability Government Effectiveness Regulatory Quality Level of Corruption Education Women Children *Based on various related international indices 4.2 The Individual Indicators The list of individual indicators in different components of the HSI is shown in Chart 4.2. 24

The Human Security Index Chart 4.2: List of Individual Human Security Indicators Indicators Direction of Improvement in Human Security A. FREEDOM FROM‘FEAR’ Territorial Security • Total Defence Expenditure as% of GDP+ Sources of Data* MOF, BD and PES Latest Year 2021-22 • Real Defence Expenditure per Capita+ PES 2021-22 •% of Defence Expenditure financed by+ Revenues • The ratio of Defence to Health and Education Expenditures External Financial Vulnerability • Real Effective Exchange Rate+ MOF, BD MOF, PRSP Data Base 2021-22 2020-21 SBP Dec. 2022 • External Debt as% of GDP-”” • Foreign Exchange Reserve Cover of+ Imports(months) • Reserves as% of External Debt+ ”” ”” • Current Account Surplus/Deficit as%+ of GDP • Reserves as% of External Financing+ Requirement Environmental Protection and Natural Disasters • Incidence and Cost of Natural Disasters ”” ”” Multiple 2022 • CO 2 Emissions • Forest Area - WB, WDI 2021 + PSY 2020 • Level of Water Stress- PSY 2020 • Renewable Internal Water Resources+ PSY 2020 Personal Safety • Expenditure on Law and Order+ as% of GDP • Weighted Crimes per 1000 Population •(Index: 2001-02=100) •% of Workers injured or getting the disease in the workplace • Number of Traffic Accidents MOF, PRSP Data Base PSY LFS, PBS PSY 20202021 2020 2020-21 2020 25

Human Security in Pakistan Chart 4.2: List of Individual Human Security Indicators Indicators Direction of Improvement in Human Security • Number of Fatalities • Number of Terrorist Attacks • Number of Persons Killed Health Hazards and Diseases • Life Expectancy(Years)+ •% of Deaths from Communicable Diseases •( Including COVID-19 ) •% OF Births with Female Attendant+ • Infant Mortality(per 1000 births) • Incidence of Child Wasting and Stunting TOTAL NUMBER OF INDICATORS B. FREEDOM FROM‘WANT’ Income • Real Per Capita Income+ ( at 2005-06 prices ) Food Security • Per Capita Food Consumption+ ( calories per day ) • Share of Domestic Production in Food+ Consumption • Relative Price of Food vs CPI • Cereal Consumption per capita+ • Wheat Stocks per Capita+ Employment and Wages • Unemployment Rate(%) • Labor Force Participation Rate(%)+ •% of Marginal Workers in Labor Force •% of Employment in the Informal Sector • Average Real Wage Rate+ ( with same occupational distribution ) • Skill Premium+ Sources of Data* PSY PIPS ” Latest Year 2020 2022 2022 WDI WDI, WHO 2021 2021 PSLSMS WDI PSLSMS 2019-20 2021 2019-20 27 PES 2022(Dec) PC 2020-21 PES 2021-22 ” 2022(Dec) ” 2020-21 ” 2021-22 LFS, PBS ” ” ” ” ” 2020-21 2020-21 ” ” ” 2020-21 26

The Human Security Index Chart 4.2: List of Individual Human Security Indicators Indicators Direction of Improvement in Human Security Shelter •% of Housing Units Owned+ Sources of Data* PSLSMS •% of Units with Pucca Roof+” •% of Units with Pucca Walls+” •% of Units with only one room-” •% of Units with Electricity+” •% of Units with Access to Tap Water+” •% of Units with Flush Toilet+” Energy Security • Gas Consumption per Capita+ PES • Electricity Consumption per Capita+” • Petroleum Consumption per Capita+” • Domestic Gas Production as% Consumption •% of Electricity Generation from Renewable Sources • Relative Price Index of Energy with respect to the CPI Education • Literacy Rate +” + NEPRA - PBS + PSLSMS, PBS • Government Expenditure on Education as% of GDP • Share of Expenditure on Primary Education • Net Enrollment Rates: + MOF, PRSP Data Base +” • Primary+ PSLSMS, PBS • Middle+” • High+” •% of Government Schools Enrollment+ AEPAM, MORE Health • Government Health Expenditure as%+ PRSP, MOF of GDP Latest Year 2019-20 ” ” ” ” ” ” 2021-22 ” ” ” 2022 2022(Dec) 2019-20 2020-21 ” 2019-20 ” ” 2021 2021-22 27

Human Security in Pakistan Chart 4.2: List of Individual Human Security Indicators Indicators Direction of Improvement in Human Security • Hospital Beds per 1000 people+ Sources of Data* PSY • Physicians per 1000 people+ PSY • Nurses and Midwives per 1000 people+ PSY Women • School Enrollment, Primary(%)+ PSLSMS • School Enrollment, Secondary(%)+” • Unemployment Rate(%)- LFS • Employment to Population Ratio(%)+ LFS • Literacy Rate(%)+ PSLSMS • Life Expectancy(Years)+ WDI Children •% of Children out of School- AEPAM •% of Children in Labor Force- LFS, PBS TOTAL NUMBER OF INDICATORS C. FREEDOM FROM‘INEQUALITY’ Income and Expenditure Inequality • Income Inequality(PALMA Ratio)- WB, WDI& SPDC • Inequality in Food Expenditure(PALMA Ratio) HIES, PBS Regional Disparities • PALMA Ratio of Per Capita GRP of Provinces - Pasha(2018) • Rural to Urban Income Ratio+ HIS Poverty • Incidence of Poverty( % of Population ) Gender Inequality( Female to Male) • Primary Education - Pasha SPDC + PSLSMS, PBS • Secondary Education+” • Literacy Rate+” • Labor Force Participation Rate+ LFS, PBS Latest Year 2020 2020 2020 2019-20 ” 2020-21 2020-21 2019-20 2021 2021 2020-21 44 2021 2018-19 2018 2018-19 2022 2018 2019-20 ” ” 2020-21 28

The Human Security Index Chart 4.2: List of Individual Human Security Indicators Indicators Direction of Improvement in Human Security • Relative Wage( from the same + distribution of occupations ) • Unemployment Rate Sources of Data* ” ” Latest Year ” ” TOTAL NUMBER OF INDICATORS D. GOVERNANCE • CPIA Rating 11 + World Bank 2021 • Governance Matters+ World Bank 2021 • Index of Economic Freedom • Corruption Perception Index(CPI) • Democracy Index + Heritage 2022 Foundation - Transparency 2022 International + EIU 2022 TOTAL NUMBER OF INDICATORS 5 * Sources: AEPAM= Academy of Educational Planning and Management, BD= Budget Documents, EIU= Economist Intelligence Unit, HIES= Household Integrated Economic Survey, LFS= Labor Force Survey, MOE = Ministry of Education, MOF= Ministry of Finance, NEPRA= National Electric Power Regulatory Authority, PBS= Pakistan Bureau of Statistics, PC= Planning Commission, PES= Pakistan Economic Survey, PIPS= Pakistan Institute of Peace Studies, PRSP= Poverty Reduction Strategy Policy, PSLSMS= Pakistan Social and Living Standards Measurement Survey, PSY= Pakistan Statistical Yearbook, SBP= State Bank of Pakistan, SPDC= Social Policy and Development Centre, WB= World Bank, WDI= World Development Indicators, WHO= World Health Organization The number of indicators is presented in Table 4.1. There are altogether 87 indicators. The Actual values of these indicators are given in Statistical Annexes while the index values are presented in the respective chapters. Table 4.1: Number of Indicators Dimension/ Component A. FREEDOM FROM‘FEAR’ • Territorial Security • External Financial Vulnerability • Environmental Protection& Natural Disasters • Personal Safety • Health Hazards and Diseases Number of Individual Indicators 27 4 6 5 Dimension/ Component B. FREEDOM FROM‘WANT’ • Income • Food Security • Employment and Wages 7• Shelter 5• Energy Security Number of Individual Indicators 44 1 5 6 7 6 29

Human Security in Pakistan Table 4.1: Number of Indicators • Education 7 • Health 4 • Women 6 • Children 2 C. FREEDOM FROM‘INEQUALITY’ • Income Inequality • Regional Disparities • Poverty • Gender Inequality 11 D. GOVERNANCE 5 2• CPIA Rating 1 2• Governance Matters 1 1• Index of Economic Freedom 1 6• Corruption Perception Index 1 • Democracy Index 1 TOTAL: 87 Indicators for the HSI 30

The Vision of Human Security PART II ESTIMATION OF THE HUMAN SECURITY INDEX 31

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Index of Freedom from‘Fear’ Chapter: 6 INDEX OF FREEDOM FROM‘FEAR’ This index has five group indices at the second level and 27 individual indices at the third level. The group and individual indices are described below. 6.1 Territorial Security This refers to the traditional indicator of security, which is the strength of the military establishment. This is measured by the level of defense spending, which corresponds to the expenditure on defense services, military pensions, and civil armed forces. The estimate is up to 2021-22. Two indicators have been used to measure the level of defense expenditure. The first is the level of defense spending as a percentage of the GDP, and the second is real defense expenditure per capita at 2005-06 prices. The trends in these two indicators are shown in Chart 6.1. Chart 6.1: Defence Spending as% of GDP* and Real Defence Expenditure per Capita *The GDP has been reestimated from 2015-16 onwards by the PBS with an upward adjustment in 201516 of 12.5%. However, there is no backward extrapolation. 35

Human Security in Pakistan There is a visible upward trend up to 2018-19. Initially, greater priority was attached to military expenditure in the presence of a military government. Thereafter, the rampant increase in acts of terrorism necessitated a more spread-out and stronger military network. The fall in 2021-22 is the consequence of severe emerging budgetary constraints. The third indicator quantifies the sustainability of defense spending. This is the extent to which the Box 6.1: Financing of Defence Expenditure solely by Borrowing The deterioration in the financial position of the Federal government is amply demonstrated by the fact that the entire defense budget of Pakistan is likely for the first time to be fully financed by borrowing in 2022-23, as shown below: defense budget can be financed by net revenues of the federal government after meeting first the obligation of debt NET REVENUES Tax Revenues 2020-23 (Projected) Rs in Billion) 4,850 7,300 servicing. This was fully Non-Tax Revenues 1,750 the case in the earlier Less Transfer to Provinces 4,200 years, but it has fallen sharply from 100% in 2015-16 to 29% in 202122. DEBT SERVICING Net Revenues after Debt Servicing Defence Expenditure Financing by: 5,200 -350 2,189 The current financial By net revenues 0 year is likely to witness By borrowing 100 virtually full financing of defense expenditure with borrowing by the federal government, as shown in Box 6.1. This indicates that with rising pressure on the containment of the primary budget deficit, there may be a need to move towards a cut in defense spending, especially the non-combat-related component. The last indicator of territorial security is the ratio of expenditure on defense to the expenditure on health and education. This indicates the extent to which targeting for territorial security may divert resources from other forms of human security. This ratio has shown a visible decline from 2.10 in 20001-02 to 1.07 in 2021-22, as shown in Table 6.1. The Territorial Security Index reached a peak in 2017-18 but fell sharply thereafter. Consequently, the Index in 2021-22 is even lower than in 2001-02. 36

Index of Freedom from‘Fear’ Table 6.1: Trend in Index of Territorial Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Total Defence Expenditure as% of GDP Index 0.428 0.428 0.314 0.400 0.543 0.600 2. Real Defence Expenditure per Capita(Rs, at 2005-06 prices) Index 0.218 0.335 0.342 0.418 0.594 0.642 3.% of Defence Expenditure financed by Federal Net Revenues after Debt Servicing Index 1.000* 1.000* 0.814 1.000* 0.719 0.186 4. The ratio of Defence Expenditure to health and education expenditure Index 0.334 0.569 0.683 0.822 0.810 0.751 OVERALL INDEX 0.420 0.534 0.494 0.608 0.658 0.481 *Restricted to 1.000 Latest Year 0.343 0.462 0.120 0.830 0.354 6.2 External Financial Vulnerability Pakistan finds itself very close to a default position because of very low foreign exchange reserves in the presence of large external financing requirements for external debt repayments and for financing the current account deficit in the balance of payments. The level of external debt as of end-December 2022 stands at$126 billion, equivalent to 39% of the GDP. It has risen sharply from less than 25% of the GDP in 2015-16, as shown in Chart 6.2. Perhaps even more worrying is that currently, the import cover by foreign exchange reserves is only one month. Chart 6.2: Indicators of Financial Vulnerability: Level of External Debt as% of GDP and Foreign Exchange Cover of Imports(in months) 37

Human Security in Pakistan The root cause of this problem is the large current account deficit annually since 2017-18, as shown in Chart 6.3. There have been years when imports have been significantly more than double the exports. Chart 6.3: Current Account Deficit/ Surplus as% of GDP There are altogether six indicators in this Index, as shown in Table 6.2. Four of these indicators show a strong declining trend. For example, foreign exchange reserves as a percentage of external debt have fallen from a peak of over 34 percent in 2005-06 to only 4% by December 2022. Further, reserves as a percentage of foreign exchange requirements are down to only 37%. Table 6.2: External Financial Vulnerability 2001-02 2005-06 2010-11 2015-16 2017-18 1. Real Effective Exchange Rate Index 0.395 0.418 0.403 0.581 0.452 2. External Debt(as% of GDP) Index 0.360 0.753 0.682 0.781 0.692 3. Foreign Exchange Reserves(in months of imports) Index 0.729 0.376 0.400 0.447 0.129 4. Reserves as% of External Debt Index 0.535 0.733 0.567 0.633 0.228 5. Current Account Deficit(as% of GDP) Index 0.800 0.215 0.486 0.375 0.139 6. Foreign Exchange Reserves as% of External Financing Requirements Index 0.019 0.294 0.741 0.311 0.113 OVERALL INDEX 0.307 0.419 0.530 0.496 0.228 2018-19 0.348 0.527 0.271 0.314 0.340 0.064 0.263 Latest Year 0.338 0.480 0.047 0.034 0.410 0.046 0.130 38

Index of Freedom from‘Fear’ The trend in the overall Index of External Financial Vulnerability is shown in Chart 6.4. It rose to a peak of 0.568 in 2010-11, when Pakistan had a large current account surplus. Since then, it has been falling and is down to 0.140 only in December 2022. A comparison is made of the vulnerability of 11 countries, which are considered to be in a financially weak position in Box 6.2. Chart 6.4: The External Financial Vulnerability Index, 2001-02 to(December) 2022 The extent of external financial vulnerability is perhaps the biggest security threat currently to the people of Pakistan. Already the country is seeing inflation at over 30%, and industrial production is, more or less, at a standstill or falling due to a shortage of imported raw materials and inputs. A rising trend of unemployment and poverty is being witnessed. Box 6.2: The External Vulnerability Index An External Variability Index(EVI) has been constructed by Pasha(2022) of countries which were considered to be in a precarious financial position as of the end of 2021. 1. Nigeria 2. Ghana 3. Türkiye 4. Ecuador 5. Pakistan EVI 0.285 0.440 0.488 0.519 0.535 6. Egypt 7. Kenya 8. Argentina 9. Ethiopia 10. Sri Lanka EVI 0.539 0.542 0.569 0.637 0.764 The indicators are(1) External debt as% of GNI;(2) External debt as% of Exports;(3) Reserves as% of External Debt;(4) Debt Service as% of Exports;(5) Short-term Debt as% of External Debt. The ranking is as follows: The smaller the EVI, the less the vulnerability. Sri Lanka was the most vulnerable country and has since defaulted. The EVI score of Pakistan is 0.535, indicating an intermediate level of vulnerability. It is estimated that by the end of 2022, the EVI of Pakistan has fallen to 0.412. 39

Human Security in Pakistan There is an extraordinary drop in the index of external financial vulnerability to only 0.130 in end-2022. This is a clear indication of the high risk of default. The index has generally been declining since 2010-11, yet no major reforms have been taken to secure the economy from a crisis in the external balance of payments. 6.3 Personal Safety The personal safety index has three components, as follows: I Incidence of Crime II Incidence of Injuries III Incidence of Terrorism and Violence Potentially, the greatest threat to lives and property in Pakistan is acts of terrorism. These acts started after Pakistan joined the USA after 9/11 in the war in Afghanistan. It is estimated that the cumulative lives cost is over 80,000, including military personnel and civilians. The economic losses aggregate to over$225 billion. The peak of acts of terror was in 2010-11. After the attack on children in the Army Public School, as shown in Chart 6.5. there was a consensus on a National Plan against Terrorism in December 2014, which was very effectively implemented by the Military through Zarbe-Azb . The trend in number of terrorist attacks and lives lost is shown in Chart 6.5. Chart 6.5: Trend in Number of Terrorist Attacks and Lives Lost 40

Index of Freedom from‘Fear’ There has recently been an upsurge in acts of terrorism, especially in Khyber-Pakhtunkhwa and Balochistan. This could emerge once again as a major threat to human security in Pakistan. Table 6.3: Indicators of Personal Safety 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 INCIDENCE OF CRIME 1. Expenditure on Law and Order as% of GDP Index 0.657 0.154 0.577 0.313 2. Weighted Crimes per 10,000 population(Index 2001-02= 100) Index 0.739 0.624 0.592 0.567 INCIDENCE OF INJURIES/FATALITIES 3.% of Workers Injured or Getting Diseases in the Workplace Index 0.491 0.678 0.520 0.376 4. Number of Traffic Accidents Index 0.545 0.608 0.581 0.652 5. Number of Fatalities Index 0.481 0.615 0.534 0.700 INCIDENCE OF TERRORISM 6. Number of Terrorist Attacks Index 1.000 0.830 0.250 0.812 Number Killed Index 1.000 0.867 0.250 0.793 OVERALL INDEX 0.674 0.563 0.446 0.572 0.804 0.563 0.438 0.421 0.396 0.875 0.840 0.552 0.657 0.560 0.573 0.460 0.398 0.891 0.891 0.590 Latest Year 0.674 0.380 0.746 0.584 0.502 0.948 0.968 0.656 The values of the indicators of personal safety are shown in Table 6.3. The Table reveals that the overall index of personal safety has had a cyclical pattern. It declined sharply in 2010-11 when terrorism was at its peak. Thereafter, it has shown a better trend. However, a rise in the incidence of crime is observed, especially in the primate city of Karachi. Box 6.3 shows the safety factor in relation to crime in some South Asian cities. Karachi has a lower safety factor than Lahore and Rawalpindi but higher than that of Dhaka and Delhi. 41

Human Security in Pakistan Box 6.3: Incidence of Crime in South Asian Countries The website numbeo.com gives a ranking of the incidence of crime globally in a number of cities. The cities of South Asia have the following safety factors as of 2022: City Safety Factor* City Safety Factor* PAKISTAN • Karachi 45.8 • Rawalpindi 50.1 • Lahore 63.6 SOUTH ASIA • Delhi 40.8 • Dhaka 36.8 • Mumbai 55.0 • Chennai 59.8 • Kathmandu 63.0 *Ranges from 0 to 100. The higher the value, the higher the safety. Karachi has the lowest safety factor among the three big Pakistani cities. However, Delhi and Dhaka have even lower safety factors. 6.4 Health Hazards and Diseases Ever since 2019, when the global epidemic of COVID-19 spread, there has been great concern about the transmission of epidemics. By the time COVID-19 receded, there had been over 1.6 million people affected and as many as 30,644 deaths in Pakistan. The percentage of deaths from communicable diseases like TB and Malaria has increased, as shown in Table 6.4, from 44.4% in 2001-02 to 73.2% in 2020 due to COVID-19. Both preventive and curative health expenditures have risen significantly from 0.6% of the GDP in 2010-11 to 1.4% of the GDP by 2020-21. This has been facilitated by the additional transfer of revenues to the provincial governments after the 7 th NFC Award in 2009-10. Table 6.4: Index of Health Hazards and Diseases 2001-02 2005-06 2010-11 2015-16 1. Life Expectancy(Years) Index 0.445 0.473 0.520 0.560 2.% of Deaths from Communicable Diseases* Index 0.713 0.742 0.782 0.827 3.% of births with Female Attendant Index 0.091 0.186 0.329 0.484 4. Infant Mortality(per 1000 births) Index 0.376 0.435 0.522 0.638 5. Incidence of Child Wasting or Stunting Index 0.432 0.442 0.398 0.492 OVERALL INDEX 0.342 0.412 0.488 0.583 *Including the deaths from COVID-19 2017-18 0.570 0.846 0.641 0.683 0.574 0.656 2018-19 0.580 0.836 0.673 0.705 0.682 0.690 Latest Year 0.590 0.327 0.705 0.749 0.700 0.589 42

Index of Freedom from‘Fear’ Overall, most of the health numbers have shown a rising trend, although they are still low by international standards and were affected by COVID-19. There has been a sizeable improvement over the two decades in the Index of Health Hazards and Diseases of over 72%. 6.5 Environmental Protection and Natural Disasters Pakistan has witnessed a number of major national disasters during the last two decades, as shown in Chart 6.6. Chart 6.6: Incidence and Costs of Major Natural Disasters The recent floods of 2022 are the worst natural disaster in the history of Pakistan. Over 33 million people have been affected. Also, 12% of the crop output in the Kharif season has been destroyed. Estimates are that the total cost to the economy is over$30 billion. Consequently, the health hazards index has fallen by over 16% in 2020-21. Three indicators of environmental protection, including the forest area, level of water stress, and renewable water resources per capita, also show sizeable declines, according to Table 6.5. Overall, the index of Environmental Protection has fallen by almost 40% since 2001- 02. This is a critical area for future human security in Pakistan. 43

Human Security in Pakistan Table 6.5: Environmental Protection and Natural Disasters 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Incidence and Cost of Natural Disasters Index 1.000 0.812 0.624 1.000 1.000 2. CO 2 Emission(Kg per 201 US$ of GDP) Index 0.446 0.467 0.527 0.507 0.426 3. Forest Area(% of land area) Index 0.557 0.523 0.489 0.422 0.400 4. Level of Water Stress(Fresh Water Withdrawal as% of Available Resources) Index 0.611 0.573 0.542 0.446 0.445 5. Renewable Internal Water Resource per Capita(Cu Meters) Index 0.611 0.492 0.384 0.320 0.295 OVERALL INDEX 0.621 0.562 0.507 0.498 0.468 1.000 0.588 0.378 0.493 0.283 0.499 Latest Year 0.250 0.609 0.305 0.598 0.271 0.376 The environmental protection and natural disasters index consistently shows a downward trend, as shown in Chart 6.7, culminating with the worst floods in 2022. Chart 6.7: Trends in the Environmental Protection and Natural Disasters Index 44

Index of Freedom from‘Fear’ 6.6 Overall Index of Freedom from‘Fear’ The magnitude and trends in the index of freedom from‘fear’ and its components are shown in Table 6.6. Overall, it has effectively followed an inverted U-shaped trend. It showed a rising trend after 2001-02, and the index reached the peak value of 0.543 in 2015-16, as shown in Chart 6.7. Since then, it has declined by 23% to only 0.367 in the latest year. Table 6.6: Trend in the Overall Index of Freedom from‘Fear’ and its components Index of 200102 200506 201011 201516 201718 201819 1. Territorial Security 0.420 0.534 0.494 0.608 0.658 0.481 2. External Financial Vulnerability 0.307 0.419 0.530 0.496 0.228 0.268 3. Personal Safety 0.674 0.563 0.446 0.572 0.552 0.590 4. Health Hazards and Diseases 0.342 0.412 0.488 0.583 0.565 0.690 5. Environmental Protection and Natural Disasters 0.621 0.562 0.507 0.498 0.468 0.499 OVERALL INDEX OF FREEDOM FROM‘FEAR’ 0.450 0.493 0.492 0.549 0.480 0.483 Latest Year 0.354 0.130 0.656 0.589 0.376 0.367 The two biggest factors contributing to the fall are territorial sovereignty and external financial vulnerability. As shown above, environmental protection and natural disasters have also played a role. These trends are clearly revealed in the enclosed charts of the indices. The rank correlation of the components over time with the Overall index of freedom from fear are presented below: Rank Correlation Coefficient of the Components of the Overall Index of Freedom from Fear • Territorial Security 0.661 • External Financial Vulnerability 0.446 • Personal Safety 0.446 • Health Hazards and Diseases 0.375 • Environmental Protection and Natural Disasters 0.374 It is significant that the highest correlation is with territorial security. 45

Human Security in Pakistan Finally, the nature of trends, improving or worsening, has been identified for each individual indicator in Chart 6.9. Out of the 27 indicators, 11 have shown an improving trend while 16 have revealed a worsening with respect to recent years and/or in relation to 2001-02. The agenda for enhancing human security will focus especially on the latter set of indicators. Chart 6.8: Trends of Indices INDEX OF TERRITORIAL SECURITY INDEX OF EXTERNAL FINANCIAL VULNERABILITY INDEX OF PERSONAL SAFETY INDEX OF HEALTH HAZARDS AND DISEASES INDEX OF ENVIRONMENTAL PROTECTION AND NATURAL DISASTERS OVERALL INDEX OF FREEDOM FROM‘FEAR’ 46

Index of Freedom from‘Fear’ Chart 6.9: Recent Trends in Indicators WORSENING IMPROVING TERRITORIAL SECURITY • Defence Expenditure as% of GDP** • Real Defence Expenditure per Capita* •% of Defence Expenditure financed by revenues** • The ratio of Defence Expenditure to Expenditure on Education and Health 3 1 EXTERNAL FINANCIAL VULNERABILITY • Real Effective Exchange Rate** • External Debt as% of GDP* • Foreign Exchange Reserves Cover (in months of imports) ** • Reserves as% of External Debt** • Foreign Exchange Reserves as% of External Financing Requirements* • Current Account Deficit as% of GDP* 6 0 PERSONAL SAFETY • Weighted Crimes per 10,000 population** • Number of Terrorist Attacks* • Number Killed* • Expenditure on Law and Order as% of GDP •% of Workers Injured or Getting Disease in Place of Work • Number of Traffic Accidents • Number of Fatalities 3 4 HEALTH HAZARDS AND DISEASES •% of Deaths from Communicable Diseases**• Life Expectancy •% of Births with Female Attendant • Infant Mortality • Incidence of Child Stunting or Wasting 1 4 ENVIRONMENTAL PROTECTION AND NATURAL DISASTERS • Incidence and Cost of Natural Disasters** • Forest Area (% of land area) ** • Level of Water Stress* • Renewable Internal Water Resources per capita** • CO 2 Emissions 4 1 TOTAL 17 10 *One star shows worsening either with respect to recent years or 2001-02. **Two starts indicate both worsening with respect to recent years and 2001-02. 47

Index of Freedom from‘Want’ Chapter: 7 INDEX OF FREEDOM FROM‘WANT’ The group and individual indices of the index of freedom from‘want’ index are described below: 7.1 Income The real per capita income has the trend shown in Table 7.1. Table 7.1: Trend in Real Per Capita Income 2001-02 2005-06 2010-11 Index* 0.240 0.387 0.418 (at 2005-06 prices) 2015-16 0.554 2017-18 0.609 2018-19 0.626 2022(Latest Year) 0.630 The impact of the floods has been included in the estimate for the latest year. The impact of the floods is shown in Box 7.1. Box 7.1: Impact of the Floods The key magnitudes of the impact of the floods of 2022 are as follows: SUMMARY OF THE IMPACT OF THE FLOODS The overall cost of the floods is estimated at a colossal $ 30 billion 49

Human Security in Pakistan 7.2 Food Security This refers to the availability of an adequate amount of nutritious and affordable food measured by the level of per capita food consumption(calories per day). Fortunately, the calorie consumption per capita has increased from 2361 calories per day in 2001-02 to 2735 calories per day in 2020-21. This is confirmed by data from households in the bottom two quintiles, as shown in Box 7.2. Box 7.2: Nutrition Intake in the Bottom Two Income Quintiles The Household Integrated Economic Survey(HIES) of the PBS gives the per capita food consumption in the bottom two quintiles. These are shown below: Per Capita Nutrition Intake in the Lower Two Quintiles (Monthly Per Capita Consumption) Item Unit 2010-11 2015-16 Wheat and Wheat Flour Kg 7.40 6.75 Rice Kg 0.86 0.84 Pulses Kg 0.23 0.26 Milk(fresh) Ltr 4.13 4.31 Vegetable Ghee Kg 0.67 0.64 Potato Kg 0.95 1.09 Tomato Kg 0.27 0.37 Onion Kg 0.67 0.74 Other Vegetables Kg 1.18 1.62 Sugar Kg 1.08 1.17 Food Expenditure per Capita (at 2010-11 prices) 989 961 2018-19 6.96 0.92 0.31 4.57 0.75 1.20 0.44 0.82 1.80 1.19 991 It is reassuring that from 2010-11 to the latest survey of 2018-19, the consumption of basic food items has generally shown some increase. The second indicator is the share of domestic production in food consumption. The trend in this indicator is shown in chart 7.1. 50

Index of Freedom from‘Want’ Chart 7.1: Per capita food consumption(calories per day) and Share of domestic production in food consumption Domestic production is not enough to meet the increasing need for food consumption of the population. There are numerous factors that are responsible for a falling share of domestic production in food consumption, like climate change, rising agricultural input prices relative to output prices, water shortages, etc. Box 7.3: The High Rate of Inflation in Food Prices The year 2022-23 is witnessing a veritable explosion in food prices. Rate of Inflation in Food Prices (Year on Year, Mid-March) 2022 Wheat Flour 21.3 Onions 10.8 Rice 3.0 Pulses-29.6 Milk 8.7 Sugar-10.9 Vegetable Ghee 49.9 Overall Food Prices* 14.5 2023 56.3 233.9 78.8 69.4 37.4 20.6 38.0 45.0 This has increased the cost of nutrition substantially, thereby raising the poverty line and leading to a big increase in the incidence of poverty in 2022. 51

Human Security in Pakistan The third indicator is the relative price of food. It has increased over time, as shown in table 7.2 in relation to the overall consumer price index. This rising trend is further reinforced by the ongoing wheat flour crisis. The rise in food prices in the first nine months of 2022-23 is shown in Box 7.3. The fourth indicator of food security is cereal consumption per capita. Cereals are significant sources of iron, protein, vitamin E, vitamin B complex, fiber and carbohydrates. Sadly, this indicator also showed a downward trend till 2018-19, with a slight improvement in 2020-21. The last indicator is the wheat stock per capita. This has shown a fluctuating trend, as highlighted in the table 7.2. Wheat is the staple food of Pakistan. Efforts should be made to smooth out wheat stocks per capita so that human security is ensured for the masses of the country. Overall, the food security index has shown a fluctuating trend in Pakistan. Table 7.2: Trend in the Index of Food Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Per capita food Consumption(Calories per day) Index 0.458 0.472 0.492 2. Share of Domestic Production in food consumption Index 0.523 0.455 0.454 3. Relative Price of food Index 0.682 0.653 0.509 4. Cereal consumption per capita Index 0.588 0.470 0.445 5. Wheat stock per capita Index 0.509 0.136 0.274 OVERALL INDEX 0.547 0.389 0.425 0.523 0.477 0.517 0.354 0.684 0.500 0.527 0.469 0.521 0.342 0.386 0.443 0.486 0.455 0.511 0.331 0.262 0.396 Latest Year 0.498 0.464 0.409 0.443 0.392 0.440 7.3 Employment and Wages The first indicator of employment and wages is the unemployment rate. In the case of Pakistan, the unemployment rate has shown a fluctuating trend. A worrying feature is that the unemployment rate is generally higher for the more educated workers. The second indicator is the labor force participation rate, and this represents the active workforce of an economy. The Labor Force survey by the PBS reports that this rate in the year 2020-21 was 44.8 percent. The trend values of these two indicators are shown in 52

Index of Freedom from‘Want’ chart 7.2. Clearly, as the unemployment rate in the economy increases, it takes the many vulnerable workers below the poverty line. Chart 7.2: Labor force participation rate and Unemployment rate The third indicator is the percentage of marginal workers in the labor force, especially women in residual jobs. The index value of this indicator has shown some improvement over time. To ensure human security, efforts should be made to further decrease the percentage of marginal workers in the labor force of Pakistan. The fourth indicator of employment and wages is the percentage of employment in the informal sector. This indicator shows limited access of workers to job security or to the labor welfare services. Table 7.3 shows that this index has declined sharply over the years, indicating a rising share of workers in the informal sector. The fifth indicator is the average real wage. The major determinant to assess the market conditions for labor is to identify the trend in the average real wage. The change in the incidence of poverty among the masses can also be gauged through this indicator. In recent years, the average real wage has shown a downward trend, especially in view of a higher rate of inflation. The sixth indicator is the skill premium. Table 7.3 shows that skill premium in Pakistan has fallen from 2017-18 onwards, indicating a lower private rate of return to higher education and specialized skills. 53

Human Security in Pakistan Table 7.3: Trend in the Index of Employment and Wages 2001-02 2005-06 2010-11 2015-16 1. Unemployment Rate(%) Index 0.347 0.789 2. Labor Force Participation Rate(%) Index 0.446 0.529 3.% Marginal Workers in Labor Force Index 0.329 0.396 4.% employment in the Informal Sector Index 0.638 0.544 5. Average Real Wage Index 0.401 0.477 6. Skill Premium Index 0.229 0.244 OVERALL INDEX 0.379 0.467 0.610 0.520 0.628 0.566 0.326 0.247 0.456 0.621 0.504 0.830 0.524 0.505 0.257 0.510 2017-18 0.795 0.476 0.652 0.458 0.590 0.635 0.590 2018-19 0.558 0.492 0.681 0.467 0.549 0.438 0.525 2020-21 Latest Year 0.593 0.492 0.661 0.430 0.523 0.386 0.505 The year 2022-23 is likely to end with a big increase in the unemployment rate, as shown in Box 7.4. Box 7.4: Big Increase in Unemployment in 2022 The year 2022 is likely to have ended with a big increase in the number of unemployed by 2 million. This will raise the unemployment rate for the first time to almost 8%. This is the consequence of the massive damage inflicted by the floods and the big constraint on imports which has created shortages of inputs and, consequently a big fall in industrial production. The GDP growth rate is likely to be negative 1%, with agricultural and industrial sectors contracting respectively by 3% to 4%. The projections of employment are as follows: Labor Force Employed Unemployed Unemployment Rate(%) 2021-22 73.5 69.6 3.9 5.6 (million) 2022-23 75.0 69.1 5.9 7.9 54

Index of Freedom from‘Want’ 7.4 Shelter Shelter refers to the basic human need for secure and safe living. Adequate shelter is vital for human well-being, survival, and health, and it is considered as a basic human right by the United Nations. The first indicator of shelter is the percentage of housing units owned in Pakistan. According to Pakistan Social and Living Standard Measurement Survey (PSLSMS) of 2020-21, the percentage of housing units owned in Pakistan is 81.8%. The value of this indicator has declined in recent years as shown in Chart 7.3. The second indicator is the percentage of units with pucca roofs. With the passage of time, this indicator has shown a rising trend till 2018-19 and thereafter fallen slightly, with the index value down to 0.559 in 2020-21. The third indicator of shelter is the percentage of housing units with pucca walls. According to PSLSMS 2020-21, approximately 80% of housing units in Pakistan have pucca (permanent) walls. This is in urban and rural areas combined. It is worth mentioning that housing quality differs greatly among various regions and between rural and urban areas. As compared to rural areas, urban areas have a higher percentage of pucca housing units. In the recent time period, the value of this indicator has also fallen. Chart 7.3: Percentage of housing units owned and percentage of units with pucca construction The fourth indicator of shelter is the extent of congestion in housing as measured by the percentage of housing units with only one room. PSLSMS 2020-21 states that the percentage of housing units with only one room in Pakistan is 25.17 percent. This includes both urban and rural areas. However, it must be noted that rural areas have a higher proportion of housing units with only one room in comparison with urban areas. The value of this indicator has improved in the last few years. 55

Human Security in Pakistan The fifth indicator is the percentage of units with electricity. Almost 91% of households have access to electricity. The sixth indicator is the percentage of units with tap water. This indicator has shown a declining trend from 2001-02 to 2018-19, with a slight increase in the year 2020-21. This is shown in the chart 7.4. The last indicator is the percentage of units with flush toilets. This indicator has also shown a rising trend over time. Chart 7.4: Percentage of units with access to tap water Table 7.4: Shelter 2001-02 2005-06 2010-11 1. Percentage of housing units owned Index 0.727 0.697 0.690 2. Percentage of units with pucca roof Index 0.355 0.479 0.347 3. Percentage of units with pucca walls Index 0.307 0.458 0.550 4. Percentage of housing units with only one room Index 0.686 0.674 0.651 5. Percentage of units with electricity Index 0.570 0.684 0.815 6. Percentage of units with access to tap water Index 0.687 0.537 0.424 7. Percentage of units with flush toilet Index 0.250 0.343 0.490 OVERALL INDEX 0.475 0.540 0.548 2015-16 0.650 0.465 0.686 0.509 0.845 0.296 0.610 0.556 2017-18 0.648 0.535 0.737 0.442 0.821 0.254 0.670 0.554 2018-19 0.646 0.573 0.762 0.406 0.817 0.127 0.701 0.506 2020-21 0.599 0.559 0.674 0.637 0.805 0.219 0.701 0.564 56

Index of Freedom from‘Want’ 7.5 Energy Security Energy security refers to the continuing accessibility to energy sources at reasonable prices. The first indicator of energy security is gas consumption per capita. The index value of this indicator is 0.363 in 2020-21, which is very low. The chart 7.5 shows a downward trend in gas consumption over time. The reduction in gas consumption in Pakistan can be attributed to inadequate exploration and production and the change towards other fuels and renewable energy. The second indicator is electricity consumption per capita. Table 7.4 shows that the electricity consumption per capita increased to 523 kWh in 2020-21. This figure denotes electricity consumption, comprising both commercial and residential usage. It is significant to know that this value is comparatively low compared to other nations. Chart 7.5 shows that with the passage of time, gas consumption per capita has decreased while electricity consumption per capita has increased. Chart 7.5: Electricity consumption per capita and gas consumption per capita The third indicator of energy security is petroleum consumption per capita. Table 7.5 shows that the value of this indicator has fallen sharply over the years. It is important to note that Pakistan depends massively on oil imports to meet the demand for petrol, which makes the country vulnerable to price variations and supply interruptions in global petroleum markets. Also, POL prices have increased rapidly in recent times. Further, the use of furnace oil as an input in electricity generation has declined. The fourth indicator of energy security is domestic gas production as a percentage of consumption. The value of this indicator has fallen from 100% in 2001-02 to 79 percent in 2018-19, with a slight increase to 88.3% in 2021-22. Imports of LNG have taken place to supplement domestic gas. 57

Human Security in Pakistan The fifth indicator is the percentage of electricity generation from renewable sources. The percentage of electricity generation from renewable sources in Pakistan is low. However, to reduce reliance on fossil fuels and combat climate change, the government has set the goal to escalate the contribution of renewable energy in the country’s electricity mix by giving inducements for the installation of wind turbines and solar panels and announcing net metering regulations to permit consumers to sell excess electricity back to the grid. As a result of this, the value of this indicator has improved in the recent past. The index of the indicator is shown in table 7.5. Table 7.5: Energy Security 2001-02 2005-06 2010-11 2015-16 1. Gas consumption per capita(mfct) Index 0.296 0.603 0.485 0.415 2. Electricity consumption per capita(kWh) Index 0.258 0.424 0.436 0.426 3. Petroleum consumption per capita Index 0.589 0.322 0.465 0.570 4. Domestic gas production as% of consumption Index 1.000 1.000 1.000 0.863 5. Percentage of electricity generation from renewable sources Index 0.336 0.560 0.583 0.616 6. Relative price index of energy Index 0.740 0.655 0.573 0.793 OVERALL INDEX 0.472 0.557 0.565 0.590 2017-18 0.478 0.603 0.582 0.579 0.270 0.538 0.491 2018-19 0.452 0.602 0.335 0.556 0.293 0.482 0.438 2020-21 0.363 0.620 0.324 0.752 0.366 0.353 0.438 The sixth indicator of energy security is the relative price index of energy with respect to the CPI. The index value has shown a slightly downward trend, but in 2022, it has escalated. 7.6 Health The first indicator of health is the health expenditures as a percentage of GDP. In Pakistan, both preventive and curative health expenditures have risen significantly from 0.6% of the GDP in 2010-11 to 1.4% of the GDP by 2020-21. This has been facilitated by the additional transfer of revenues to the provincial governments after the 7 th NFC Award in 2009-10. The overtime trend in this indicator is shown in chart 7.6. Overall, most of the health indicators have shown a rising trend, although they are still low by international standards. The trends in the indices are given in the table 7.6. 58

Chart 7.6: Health expenditure as a percentage of GDP Index of Freedom from‘Want’ Table 7.6: Health 2001-02 2005-06 1. Health Expenditures as% of GDP Index 0.500 0.109 2. Hospital beds per 1000 people Index 0.231 0.692 3. Physicians per 1000 people Index 0.232 0.333 4. Nurses and Midwives per 1000 people Index 0.361 0.361 OVERALL INDEX 0.313 0.309 2010-11 0.174 0.153 0.333 0.574 0.267 2015-16 0.305 0.153 0.535 0.361 0.308 2017-18 0.501 0.153 0.535 0.574 0.391 2018-19 0.435 0.153 0.636 0.361 0.351 2020-21 0.696 0.153 0.636 0.361 0.395 7.7 Education Access to education is a vital human right and is crucial for the development of any economy and individual security. Access to education in Pakistan has improved with the passage of time, but there are still many challenges in ensuring that all children, specifically those from underprivileged backgrounds, have access to quality education. The first indicator of access to education is the literacy rate. According to WDI or PSLSMS 2020-21, the literacy rate in Pakistan is only 60%, which is much lower than the global literacy rate of 86.3%. The trend values of this indicator are shown in the table 7.7. 59

Human Security in Pakistan Table 7.7: Access to Education 2001-02 2005-06 2010-11 2015-16 1. Literacy rate(%) Index 0.300 0.460 0.560 0.600 2. Government Expenditures on Education(% of GDP) Index 0.222 0.444 0.370 0.666 3. Share of Expenditure on Primary Education Index 0.649 0.531 0.385 0.237 Net Enrollment Rate 4. Primary Index 0.225 0.403 0.467 0.645 5. Middle Index 0.132 0.183 0.233 0.659 6. High Index 0.100 0.167 0.200 0.700 7. Percentage of Government Enrollment Index 0.566 0.533 0.467 0.367 OVERALL INDEX 0.257 0.357 0.364 0.522 2017-18 0.600 0.630 0.221 0.645 0.659 0.700 0.350 0.509 2018-19 0.600 0.555 0.203 0.629 0.684 0.700 0.330 0.491 2020-21 0.600 0.321 0.252 0.591 0.685 0.700 0.409 0.479 The second indicator is the government expenditure on education. In 2020-21, government expenditures on education as a percentage of GDP is 2.1%. There is considerable fluctuation in educational expenditures in Pakistan. Moreover, this indicator has shown a downward trend in recent years. Chart 7.7 shows government expenditures as a percentage of GDP from 2001-02 to 2020-21. The third indicator of access to education is the share of government expenditure on primary education. The government of Pakistan has assigned 32.4% of its overall educational budget to primary education. This shows that the government is focusing less on primary education, which is important for the development of the country. There are numerous challenges in the primary educational sector which include insufficient infrastructure, paucity of qualified teachers, and lack of facilities. Consequently, the quality of education in many primary schools of Pakistan is low. 60

Index of Freedom from‘Want’ Chart 7.7: Government Expenditures on Education and share of expenditure on Primary Education According to the World Bank, Pakistan has made some progress in expanding access to education, with the net enrollment rate in primary education rising from 41% in 2001- 02 to 64% in 2020-21. Similarly, net enrollment rate in middle education has increased to 39% in 2020-21 as compared to only 16% in 2001-02. The net enrollment rate in higher education has also shown an upward trend. However, there are significant differences in enrollment rates between different levels of education in Pakistan, as shown in Chart 7.8. Apart from that, there are still significant disparities in access to education across different regions, gender, and socio-economic groups. Chart 7.8: Net Enrolment Rate Primary, Middle, and High 61

Human Security in Pakistan The last indicator of access to education is the percentage of enrollment in government schools. According to the Academy of Educational Planning and Management(AEPAM), in 2020-21, the percentage of enrollment in government schools in Pakistan was 64 percent. This means that approximately two-thirds of students in Pakistan are enrolled in government schools, while the remaining one-third are enrolled in private schools. The trends in this indicator are shown in Table 7.7. It is worth mentioning that the quality of education in government schools is low. On the other hand, private schools often provide better facilities and have more qualified teachers, but they are expensive for many families to afford. Consequently, private schools are a major source of future inequality. Hence efforts should be made to further improve the quality of education in government schools. Overall, this indicator has shown improvement in the recent years. 7.8 Women The status of women in Pakistan has improved in the recent past, but they still face major challenges and inequity in many facets of their lives, including employment, education, and healthcare. The first indicator of the status of women is their primary school enrollment. According to WDI, the primary school enrollment rate for females in Pakistan was 62% in 2018 while for males it was 73% in the same year. However, the index value of this indicator has increased over time, as shown in Chart 7.9. Similarly, secondary school enrollment of females in Pakistan remains lower than that of males. Nevertheless, this indicator has also shown some progress in recent years. According to the World Bank, the literacy rate among females(age 15 and above) in Pakistan was 46% in 2019 as compared to 69% for males in the same year. The literacy rate among females has shown an upward trend over time, and index values are shown in Chart 7.10. Chart 7.9: Female School Enrollment, Primary and Secondary 62

Index of Freedom from‘Want’ The fifth indicator is the prevalence of unemployment in women. According to Pakistan Labor Force Survey(LFS) 2020-21, the unemployment rate for women in Pakistan is 6.31%, somewhat higher than that for male workers. The sixth indicator of the status of women is the female employment to population rate. World Bank reports female employment to population ratio in Pakistan as 22.1% in 202021. This shows that out of the entire female population of working age, which is normally defined as age between 15 to 64 years, only about one-fifth of women are employed in 2020-21. However, this indicator is also improving in Pakistan. The last indicator of the status of women in Pakistan is the life expectancy. The life expectancy at birth for females in Pakistan as of 2020-21 is 69.1 years, which is lower than the worldwide average of 72.6 years. Chart 7.10: Literacy Rate Table 7.8: Women 2001-02 2005-06 2010-11 1. School enrollment, primary(% net) Index 0.282 0.479 0.587 2. School enrollment, secondary(% net) Index 0.271 0.321 0.390 3. Unemployment rate Index 0.256 0.424 0.988 4. Female Employment to population rate(%) Index 0.239 0.449 0.590 2015-16 0.499 0.449 0.719 0.629 2017-18 0.573 0.488 0.796 0.585 2018-19 0.606 0.571 0.711 0.541 2020-21 0.609 0.614 0.709 0.600 63

Human Security in Pakistan Table 7.8: Women 5. Literacy Rate Index 6. Life Expectancy Index OVERALL INDEX 0.563 0.427 0.321 0.351 0.434 0.405 0.484 0.493 0.562 0.565 0.519 0.555 0.619 0.531 0.590 0.592 0.537 0.590 0.619 0.537 0.612 7.9 Children The status of children in Pakistan is multifaceted and can vary depending on the indicator. The first factor is the percentage of children out of school. Academy of Educational Planning and Management(AEPAM) in 2020-21 reported that the percentage of children out of school in Pakistan is 39.8%, which is decreasing over time. Similarly, another indicator is the percentage of children in the labor force is 4.90%, and this represents a significant decrease from the value of 12.04% in 2001-02. There is a need for the complete elimination of child labor. Chart 7.11 presents the trend in these two indicators. Chart 7.11: Percentage of children out of school and the Percentage of children in the labor force Table 7.9: Children 2001-02 2005-06 1. Percentage of children out of school Index 0.437 0.473 2. Percentage of Children in the Labor Force Index 0.486 0.298 OVERALL INDEX 0.460 0.375 2010-11 0.530 0.502 0.516 2015-16 0.602 0.631 0.616 2017-18 0.622 0.710 0.664 2018-19 0.620 0.764 0.688 2020-21 0.625 0.906 0.752 64

Index of Freedom from‘Want’ 7.10 Overall Index of Freedom from‘Want’ The summary of the group of indices is shown in Table 7.10. Overall, the Index of Freedom from‘Want’ shows a rising trend after 2001-02 and reaches a peak in 2017-18. Thereafter, it has fallen somewhat. It currently has an index value of about 0.5. Table 7.10: Index of Freedom from'Want' Group 200102 200506 201011 Income 0.240 0.387 0.418 Food Security 0.547 0.389 0.425 Employment& Wages 0.379 0.467 0.456 Shelter 0.475 0.540 0.548 Energy Security 0.471 0.557 0.565 Health 0.313 0.309 0.267 Education 0.257 0.357 0.364 Women 0.321 0.405 0.562 Children 0.460 0.375 0.516 OVERALL FREEDOM FROM‘WANT’ INDEX 0.371 0.413 0.446 201516 0.554 0.500 0.510 0.556 0.590 0.308 0.522 0.555 0.616 0.515 201718 0.609 0.443 0.590 0.554 0.491 0.391 0.509 0.590 0.664 0.532 201819 0.626 0.396 0.525 0.506 0.438 0.351 0.491 0.590 0.688 0.502 2021-22 (Latest year) 0.630 0.440 0.505 0.564 0.438 0.398 0.479 0.612 0.752 0.525 Chart 7.12: Trends of Indices INDEX OF INCOME INDEX OF FOOD SECURITY 65

Human Security in Pakistan INDEX OF EMPLOYMENT AND WAGES INDEX OF SHELTER INDEX OF ENERGY SECURITY INDEX OF EDUCATION INDEX OF HEALTH INDEX OF WOMEN 66

INDEX OF CHILDREN Index of Freedom from‘Want’ INDEX OF FREEDOM FROM‘WANT’ The rank correlation of components with the overall Index of Freedom from‘Want’ are given below in Table 7.11. Table 7.11: Rank Correlation of Trends of the Components with the Overall Index of Freedom from‘Want’ Group Rank Correlation Coefficient (0 to 1) • Income 0.821 • Food Security 0.107 • Employment& Wages 0.507 • Shelter 0.786 • Energy Security-0.142 • Health 0.536 • Education 0.821 • Women 0.536 • Children 0.786 Therefore, based on the relatively low or negative magnitude of the rank correlation coefficients of food security and energy security, it can be concluded that these have been the two significant constraints to increased freedom from‘Want’ in Pakistan. 67

Human Security in Pakistan Chart 7.13: Trends in Indicators Improving Worsening INCOME • Real Income per capita 1 0 FOOD SECURITY • Per capita food consumption(Calories per day) • Relative Price of food** • Wheat stocks per capita• Share of Domestic Production in food consumption* • Cereal consumption per capita* 2 3 EMPLOYMENT AND WAGES • Labor force participation rate(%)•% employment in the informal sector** • Unemployment rate(%)* • Average Real Wage • Skill Premium •% marginal workers in labor force 1 5 SHELTER •% of units with flush toilet•% of housing units owned** •% of housing units with only one room* •% of units with access to tap water* •% of units with pucca roof* •% of units with pucca walls* •% of units with electricity* 1 6 ENERGY SECURITY • Electricity consumption per capita(kWh)• Gas consumption per capita(mfct)* •% of electricity generation from renewable sources • Petroleum consumption per capita** • Domestic gas production as% of consumption* • Relative price index of energy* 2 4 HEALTH 68

Index of Freedom from‘Want’ Chart 7.13: Trends in Indicators Improving Worsening • Health Expenditures as% of GDP• Hospital beds per 1000 people* • Physicians per 1000 people • Nurses and Midwives 3 1 ACCESS TO EDUCATION • Literacy rate(%)• Government Expenditures on Education(% of GDP)* • Net Enrolment rate middle• Net Enrolment Rate Primary* • Net Enrolment Rate High• Share of Expenditure on Primary Education* • Net Enrolment rate% of Government Enrollment* 3 4 WOMEN • School enrollment, primary(%net)• Unemployment rate* • School enrollment, secondary(%net)• • Female Employment to population rate(%)• • Literacy Rate• • Life Expectancy• 5 1 CHILDREN •% children out of school• •% of Children in Labor Force• 2 0 TOTAL 20 24 **Two stars indicate both worsening with respect to recent years and 2001-02 *One start shows worsening either with respect to recent years or 2001-02 Therefore, as shown in Chart 7.13, the trend has been improving in the case of 20 indicators and worsening in 24 indicators. 69

Freedom from‘Inequality’ Chapter: 8 FREEDOM FROM ‘INEQUALITY’ The indices of freedom from‘fear’ and from‘want’ may not reflect the true state of human security in the country as they are based on averages. Therefore, there is a need to highlight the extent of inequality in income and other indicators to reflect the conditions of the lower quintiles of the population. 8.1 Income Inequality The Household Integrated Economic Surveys carried out periodically by the PBS are the primary source of income inequality in Pakistan. The trend in the modified PALMA Ratio is shown in the Chart 8.1. This corresponds to the ratio of the household income shares of the top and bottom quintiles. Chart 8.1: Inequality in Income and Food Expenditure The chart also shows the modified Palma ratio of food expenditure. 71

Human Security in Pakistan Both indicators show a declining trend in inequality between 2005-06 and 2018-19. There has been some increase in inequality after the negative impact of COVID-19. Table 8.1: Indicators of Income Inequality 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Income Inequality Index 0.711 2. Inequality in Food Expenditure Index 0.571 OVERALL INDEX 0.637 0.394 0.579 0.478 0.492 0.625 0.554 0.554 0.496 0.524 0.560 0.492 0.525 0.566 0.488 0.526 Latest Year 0.516 0.438 0.475 The HIES tends to grossly understate the extent of income inequality in Pakistan. An estimate of the‘true’ level of inequality is given in Box 8.1. Box 8.1: The‘True’ Level of Inequality in Pakistan HIS Pasha(2022) % Increase PALMA Ratio 5.04 8.30 64.7 Gini Coefficient 0.310 0.406 30.6 Pasha[2022] has presented evidence to establish that the level of inequality in income is significantly higher than revealed by the HIES undertaken by the PBS. The evidence includes a highly skewed distribution of agricultural income, unearned capital income, and home remittances. This leads to the following estimate of income inequality in Pakistan in 2018-19. 8.2 Regional Disparities The two measures of regional disparities are as follows: i. The ratio of per capita income between urban and rural areas of Pakistan. ii. The ratio of per capita income between the most and the least developed province of Pakistan. 72

Freedom from‘Inequality’ Table 8.2: Indicators of Regional Disparities 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Ratio of Urban to Rural Income Per Capita Index 0.458 0.628 0.532 2. Ratio of Provincial* per capita Income Index 0.730 0.450 0.584 OVERALL INDEX 0.578 0.532 0.557 *Highest to Lowest Provincial per capita income 0.482 0.486 0.484 0.492 0.456 0.474 0.457 0.426 0.441 Latest Year 0.469 0.385 0.425 The worrying long-term trend is the falling behind of Balochistan since 2001-02. This is demonstrated by the variation in Provincial growth rates shown in Box 8.2. Box 8.2: Trend in Regional Disparities: Balochistan Falls Behind Annual per capita real GRP growth rate(%) 1999-2000 to 2007-08 2007-08 to 2015-16 2015-16 to 2018-19 Punjab 2.6 1.2 2.6 Sindh 3.7 0.4 1.8 Khyber-Pakhtunkhwa 2.6 1.7 1.9 Balochistan-0.3-0.3-0.6 Pakistan 2.7 0.9 2.1 There has been a wide divergence in the growth rates of the regional economies of the four Provinces of Pakistan over the last two decades. The variation of growth rates in per capita and Gross Regional Product among the Province is shown below as estimated by Pasha(2021): The very striking fact is the negative growth in Balochistan since 1999-2000. The Province has continued to fall behind due to the high cost of infrastructure and services because of low population density, increasing shortage of water, drying up of Sui Gas resources, and relatively low literacy. This has represented a major weakening of the Federation and necessitated special arrangements for security in Balochistan, which today has a large number of missing persons. 8.3 Poverty The last measure is the key indicator of the incidence of poverty in Pakistan. Estimates have been derived from SPDC and the World Bank. There has been a somewhat cyclical pattern of the level of poverty in Pakistan, as shown in Chart 8.2, in line with variations in the growth rate of per capita income. The cost of basic needs approach has been used to derive the poverty line in different years. It is estimated that the incidence of poverty 73

Human Security in Pakistan increased significantly after COVID-19 and the floods. However, there are varying estimates of the level and trend in the incidence of poverty, as shown in Box 8.3. Box 8.3: Conflicting Estimates of the Incidence of Poverty There are different estimates of the level and trend in the incidence of poverty, as shown below: % Incidence of Poverty This Report* Haroon Jamal, SPDC Pasha (2021)** Planning Commission 2001-02 30.61 31.05 2005-06 29.80 28.18 50.4 2010-11 25.01 38.68 36.8 2015-16 34.20 37.90 34.20 24.3 2017-18 31.01 32.03 2018-19 34.22 30.10 21.90 2019-20 30.96 2020-21 36.24 2022(Dec) 40.00 40.00** *Based on smoothing of SPDC series. **Based on projections from the BNU Macro-econometric Model The Planning Commission shows a sharp downward trend, which is extremely unlikely, especially between 2005-06 and 2010-11 when the GDP growth rate was, and the inflation rate was high. Post-floods and with high food inflation, it is likely that the incidence of poverty has approached 40% by the end of 2022 as shown in Box 8.3. Table 8.3: Indicator of Poverty 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 Index of Incidence of Poverty 0.679 0.703 0.547 0.572 0.666 0.571 Latest Year 0.398 We have chosen the estimates which better reflect the underlying trends in the growth rate of real per capita income and in income inequality. 74

Freedom from‘Inequality’ Chart 8.2: Cyclical Pattern of the Level of Poverty in Pakistan Box 8.3 highlights the likely jump in poverty in 2022 due to falling incomes, rising unemployment, and an unprecedented increase in food prices after the flood. 8.4 Gender Inequality Six indicators have been used to measure the level of and the trend in gender inequality in Pakistan, as shown in Table 8.4. these indicators show a gradual reduction in the level of gender inequality over the years. Table 8.4: Gender Inequality Ratio of Females to Males 2001-02 2005-06 2010-11 2015-16 1. Primary Education Index 0.416 0.593 0.731 0.690 2. Secondary Education Index 0.508 0.544 0.581 0.581 3. Literacy Rate Index 0.310 0.382 0.460 0.543 4. Labor Force Participation Rate Index 0.231 0.427 0.603 0.634 5. Unemployment Rate Index 0.372 0.714 0.700 0.677 6. Relative Wage Index 0.573 0.534 0.499 0.460 OVERALL INDEX 0.384 0.521 0.587 0.591 2017-18 0.740 0.621 0.565 0.539 0.754 0.380 0.584 2018-19 0.707 0.690 0.569 0.610 0.719 0.369 0.595 Latest Year 0.694 0.701 0.596 0.597 0.754 0.356 0.599 75

Human Security in Pakistan 8.5 Overall Index of Inequality The overall Index of‘Inequality,’ with the four components, is shown in Table 8.5. Inequality has generally shown a rising trend over the years, with the exception of gender inequality. Table 8.5: Indicators of and the Index of‘Inequality’ 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 Latest Year Income Inequality 0.637 0.478 0.554 0.524 0.525 0.526 0.475 Regional Inequality 0.578 0.532 0.557 0.484 0.474 0.441 0.425 Poverty 0.679 0.703 0.547 0.572 0.666 0.571 0.398 Gender Inequality 0.384 0.521 0.587 0.591 0.584 0.595 0.599 Overall Index of Freedom from ‘Inequality’ 0.556 0.552 0.561 0.541 0.558 0.530 0.468 The rank correlations of the trends are given below in Table 8.6. Table 8.6: Rank Correlation of Trends of the Components with the Overall Index of Inequality Group Rank Correlation Coefficient (0 to 1) • Income Inequality 0.607 • Regional Disparities 0.607 • Poverty 0.267 • Gender Inequality-0.678 It is significant that declining gender inequality has limited the overall increase in inequality. Chart 8.3: Index of Inequality INDEX OF INCOME INEQUALITY INDEX OF REGIONAL INEQUALITY 76

INDEX OF POVERTY Freedom from‘Inequality’ INDEX OF GENDER INEQUALITY INDEX OF FREEDOM FROM INEQUALITY Chart 8.4: Trends in Indicators Improving Income Inequality 0 Regional Disparities • The ratio of Urban to Rural Income per Capita 1 Indicator of Poverty 0 Gender Inequality • Secondary Education • Literacy Rate Worsening Income Inequality • Income Inequality** • Inequality in Food Expenditure** 2 Regional Disparities • Ratio of Provincial Per Capita Income** 1 Indicator of Poverty • Incidence of Poverty** 1 Gender Inequality • Primary Education* • Labor Force Participation Rate* 77

Human Security in Pakistan Chart 8.4: Trends in Indicators Improving • Unemployment Rate 3 TOTAL 4 Worsening • Relative Wage** 3 7 **Falling trend with respect to both recent years and 2001-02 *Declining trend as compared to either recent years or 2001-02 78

Index of Governance Chapter: 9 INDEX OF GOVERNANCE Good governance is a fundamental prerequisite for human security. This is amply demonstrated in the Pakistani context. The failure of economic management over the last many years has brought Pakistan perilously close to sovereign default in its external debt repayments. This has already resulted in the rate of inflation rising to historically unprecedented levels due primarily to the quantum depreciation of the value of the rupee and the cost-push impact on prices due to rising energy and other input costs. This has led to growing unemployment and a big increase in the number of poor in the country. The focus of governance has to be on promoting inclusive growth, achieving greater equity through progressive fiscal policy, effective functioning of institutions related to the rule of law, social protection, market regulation and efficient and well-targeted provision of basic economic and social services, and so on. These achievements lead to more human security for the bulk of the population. 9.1 Index of Governance We have placed reliance on international agencies’ assessment of the relative governance in Pakistan as compared to other countries at different levels of development. In addition, there is a need for such assessment to be available from 2000 onwards so as to be able to judge the evolution of governance over time according to different assessments. Five indices have been obtained which satisfy these requirements as follows: 79

Human Security in Pakistan The performance ratings in different areas of government in the Country Policy and Institutional Assessment(CPIA) by the World Bank are shown in Table 9.1. Table 9.1: World Bank, CPIA 2001-02 Economic Management Equity of Public Resource Use Fiscal Policy 2005-06 4.00 3.50 3.50 2010-11 2.83 3.50 2.50 2015-16 3.50 3.50 3.00 2017-18 3.00 3.50 2.50 (Score 1 to 6 best) 2018-19 2020-21 Latest Year 3.17 3.17 3.50 3.50 2.50 2.50 Gender Equality Policies for Social Inclusion/Equity Policies and Institutions for Environmental Sustainability Property Rights and Rule-Based Governance Social Protection Transparency, Accountability, and Corruption AVERAGE INDEX* 2.00 2.50 2.50 2.50 2.50 2.50 3.10 2.90 3.10 3.20 3.20 3.20 3.50 2.50 3.00 3.00 3.00 3.00 3.00 3.00 2.50 3.00 3.00 3.00 3.00 3.50 3.50 3.50 3.50 3.50 2.50 2.50 3.00 3.00 3.00 3.00 3.12 0.424 2.86 0.372 3.06 0.412 3.02 0.404 3.02 0.404 3.04 0.408 Max= 6, Min= 1 The ratings range from 1 to 6, with higher ratings indicating better governance in a particular function. Table 9.2 clearly reveals that Pakistan is generally close to only 3. In fact, governments in Pakistan, according to the CPIA, have performed more poorly in the realm of fiscal policy and promotion of gender equality. The Index of Economic Freedom gives the percentile of a country in different areas, as shown in Table 9.2. The higher the percentile, the better the performance. In this index, Pakistan performs poorly in protecting property, ensuring integrity in transactions and judicial effectiveness in terms of quick and fair judgments. 80

Index of Governance Table 9.2: Index of Economic Freedom 200102 200506 Property Rights 30.0 Government Integrity 22.0 Judicial Effectiveness 34.0 Labor Freedom 58.6 Trade Freedom 59.0 Investment Freedom 50.0 Average of Above 42.2 INDEX 0.422 Source: Heritage Foundation 30.0 21.0 34.0 58.6 59.0 50.0 42.1 0.421 201011 30.0 24.0 34.0 46.3 67.0 40.0 40.2 0.402 201516 30.0 29.0 34.0 42.1 65.0 55.0 42.5 0.425 201718 30.6 27.3 34.0 40.6 65.9 55.0 13.1 0.431 201819 41.5 30.6 40.2 41.8 64.8 55.0 45.6 0.456 2022-23 Latest Year 29.0 27.4 28.5 51.6 60.0 65.8 43.7 0.437 The Governance Matters assessment by the World Bank, in particular, gives Pakistan’s performance in relation to other countries. These ratings have been converted into indices and are presented in Table 9.3. Table 9.3: World Bank, Governance Matters – Indices 200102 200506 201011 Voice and Accountability 0.064 0.410 0.639 Government Effectiveness 0.647 0.703 0.493 Regulatory Quality 0.175 0.320 0.663 INDEX 0.194 0.452 0.594 Source: World Bank 201516 0.718 0.302 0.587 0.503 201718 0.668 0.438 0.540 0.541 201819 0.621 0.538 0.512 0.555 202021 0.608 0.639 0.484 0.573 The feature of these indices is that they show substantial variation over the years. For example, the index of voice and accountability had a value of only 0.064 in 2001-02, which was the peak time of a Military Government in Pakistan. Overall, the average index value is somewhat better than in the other two governance ratings. The fourth index relates to the ranking of Pakistan in the level of corruption by the Transparency International. Pakistan performs poorly with the 140 th position out of 180 countries in the latest ranking, and its index value for different years is shown in Table 9.4. 81

Human Security in Pakistan The EIU Democracy Index ranks countries on the basis of the following five criteria: electoral process and pluralism government functioning political participation democratic political culture civil liberties Pakistan is ranked 110 th in the latest ranking. The five indices of governance are brought together in Table 9.4, and the overall index of governance is derived. Pakistan does not do well in the overall index, with a value ranging from 0.33 to 0.421. This is likely to bring down the magnitude of the overall Human Security Index. Further, the trend is again inverted U-shaped. It rises up to 2015-16 and falls thereafter. Table 9.4: Index of Governance 2001- 200502 06 1. WORLD BANK CPIA RATINGS Index 0.424* 0.424 2. WORLD BANK, GOVERNANCE MATTERS Index 0.194 0.452 3. INDEX OF ECONOMIC FREEDOM Index 0.422 0.421 4. TRANSPARENCY INTERNATIONAL, CPI Index 0.348 0.197 5. EIU DEMOCRACY INDEX 0.335 0.357 OVERALL INDEX OF GOVERNANCE 0.332 0.355 *Assumed value 201011 0.372 0.594 0.402 0.256 0.399 0.390 201516 0.412 0.503 0.425 0.349 0.430 0.421 201718 0.404 0.541 0.431 0.303 0.416 0.412 201819 0.404 0.555 0.456 0.282 0.424 0.414 Latest Year 0.408 0.573 0.437 0.223 0.396 0.390 82

Chart 9.1: Index of Governance WORLD BANK CPIA RATINGS Index of Governance WORLD BANK, GOVERNANCE MATTERS INDEX OF ECONOMIC FREEDOM TRANSPARENCY INTERNATIONA, CPI EIU DEMOCRACY INDEX OVERALL INDEX OF GOVERNANCE The rank correlations of each of the five indices with the overall Index of Governance are as follows: • World Bank CPIA Ratings • World Bank, Governance Matters • Index of Economic Freedom • Transparency International • EIU Democracy Index -0.464 0.232 0.607 0.302 0.946 83

Human Security in Pakistan World Bank CPIA Ratings have a negative correlation with respect to the overall Governance Index. As opposed to this, the EIU Democracy Index is very highly correlated with the overall Index. The trends of each Index are as follows: Improving • World Bank CPIA Ratings* Worsening • World Bank, Governance Matters • Index of Economic Freedom* • Transparency International Index** • EIU Democracy Index* TOTAL 4 1 **Declining trend both with respect to recent years and 2001-02 *Declining trend either in relation to recent years or with 2001-02 84

Estimates of the National Human Security Index Chapter: 10 ESTIMATES OF THE NATIONAL HUMAN SECURITY INDEX The previous chapters have focused on the quantification of indices at the second and third levels. The objective of this chapter is to aggregate these indices to obtain the estimate of the Human Security Index(HSI) at the national level since 2001-02. 10.1 Number of Indicators Construction of the national HSI has involved estimation of 87 indicators at the third level, as shown earlier in Table 4.1. Multiple sources of data have been accessed, both national and international. The outcome is a very comprehensive HSI. 10.2 Estimates of National HSI The four dimensions of HSI in the form of freedom from‘fear,’ freedom from‘want,’ freedom from‘inequality’, and governance are aggregated in Table 10.1 to yield the national HSI. Table 10.1: Estimates of National Human Security Index 200102 200506 201011 201516 Index of Freedom from‘Fear’ 0.460 0.493 0.492 0.549 Index of Freedom from‘Want’ 0.391 0.413 0.446 0.515 Index of Freedom from‘Inequality’ 0.556 0.552 0.561 0.541 Index of‘Governance’ 0.332 0.355 0.390 0.421 OVERALL INDEX OF HUMAN SECURITY 0.427 0.447 0.468 0.504 201718 0.480 0.532 0.558 0.412 0.492 201819 0.483 0.502 0.530 0.414 0.480 Latest Year 0.367 0.525 0.468 0.390 0.433 85

Human Security in Pakistan Chart 10.1: The Trend in the HSI and in the Components Indices 10.3 The Findings One of the striking findings is the low value of the national HSI. It has remained below 0.5 throughout the two decades except in 2015-16. This clearly demonstrates the need for comprehensive measures to enhance the HSI of Pakistan. The trend is a well-defined inverted U-shaped curve. The HSI rises from 2001-02 onwards and attains a peak in 2015-16. Thereafter, it falls up to the latest year, 2020 to 2022. The rank correlation coefficients among the various indices are presented below in Table 10.2. 86

Estimates of the National Human Security Index Table 10.2: Rank Correlation Coefficients Index of Freedom from ‘Fear’ Index of Freedom from ‘Want’ Index of Freedom from‘Fear’ -0.179 Index of Freedom from‘Want’ Index of Freedom from‘Inequality’ Index of ‘Governance’ Index of Freedom from ‘Inequality’ 0.178 Index of Governance Overall Human Security Index 0.482 0.607 -0.250 0.607 0.571 -0.179 0.071 0.929 The strongest correlation with the overall HSI is of the index of Governance followed by the indices of freedom from‘fear and‘want.’ The near-zero correlation of HSI of the index of ‘inequality’ indicates that inequality has played a different role in influencing the HSI than the other three indices. It is not surprising that there is a moderately strong correlation between the index of governance with the indices of‘fear’ and‘want.’ Chart 10.2: Contribution of the Change in Component Indices to the Change in the Overall Human Security Index As shown in Chart 10.2, the decline in the Human Security Index after 2015-16 is due to over two-thirds of the fall in the index of freedom from‘fear.’ The indices of freedom from ‘inequality’ and governance have also made significant contributions of over 23% and 12%, respectively. It is only the Index of freedom from‘want’ which has made a small contribution to restricting the decline in the overall HSI. 87

Human Security in Pakistan 10.4 Correlation of the HSI with HDI An interesting piece of analysis would be to see the correlation between the national HSI and the Human Development Index(HDI) of Pakistan, as estimated by the UNDP in the Global Human Development Report. A comparison is presented in Table 10.3. Table 10.3: The Human Development Index and Human Security Index of Pakistan 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 2021-22 HDI* 0.441 0.530 0.505 0.534 0.545 0.560 0.544 HSI 0.427 0.447 *for the nearest year to the year of HSI 0.468 0.504 0.492 0.480 0.433 The HDI shows a stronger upward rising trend than the HSI. Over the two decades, the latter has gone up cumulatively by over 23% while the former has increased by only 4%. However, both the HDI and the HSI fell in value from 2018-19 to 2021-22. 10.5 Rising and Falling Indices since 16-2015 The rising and falling indices since 2015-16, the peak year of the HSI, are shown in Table 10.4. Table 10.4: Extent of Change in Components and Sub-Components of HSI from 2015-16 to the latest year INCREASE(%) INCREASE(%) Index of Freedom from‘Fear’-33.2 • Personal Safety • Health Hazards and Diseases Index of Freedom from Want 14.0• External Financial Vulnerability 1.0• Territorial Security • Environmental Protection and Natural Disasters 1.9 -73.8 -41.8 -24.5 • Health • Children • Women • Income 29.2• Energy Security 22.0• Food Security 20.2• Education 13.7• Employment and Wages Index of Freedom from‘Inequality’ -25.8 -12.0 -10.0 -1.0 -13.5 • Gender Inequality 1.3• Poverty-30.4 88

Estimates of the National Human Security Index Table 10.4: Extent of Change in Components and Sub-Components of HSI from 2015-16 to the latest year • Regional Disparities-12.2 • Income Inequality-9.4 Index of Governance-7.4 • World Bank Governance Matters • Index of Economic Freedom 13.9• Transparency International/ Corruption 2.8• EIU Democracy • World Bank CPIA Ratings -36.1 -7.9 -1.0 Components Sub-Components SUMMARY INCREASE 1 9 INCREASE 3 13 The sub-component indices which show bigger declines and contribute more to the fall in the HSI after 2015-16 are listed below in Table 10.5. Table 10.5: Major Sub-Components contributing to the Decline in the HSI after 2015-16 Extent of Decline in the HSI-14.1% Major Contributors to the Decline 1. External Financial Vulnerability Magnitude of Contribution to the Decline in the HSI(%) 36.9 2. Territorial Security 20.9 3. Poverty 18.9 4. Corruption 17.9 5. Environmental Protection and Natural Disasters 12.2 6. Regional Disparities 7.5 7. Energy Security 7.1 8. Food Security 4.2* TOTAL OF ABOVE 125.6 *25.6% contribution has come from other sub-components towards raising the level of the HSI after 2015-16 The above eight sub-components will need to be focused on for raising the HSI in the coming year. 89

The Human Security Index of Selected Countries Chapter: 11 THE HUMAN SECURITY INDEX OF SELECTED COUNTRIES The objective of this chapter is to develop an international HSI similar to the HDI, which has been prepared annually by the UNDP in the Global Human Development Report. The primary purpose is to see how Pakistan stands in relation to other countries in the HSI as compared to its ranking in the HDI. Pakistan’s ranking in the HDI has actually worsened significantly over the years, as shown in Table 11.1. Table 11.1: Pakistan’s HDI and Ranking, 1999 to 2021-22 1999 2005 2010 HDI value 0.498 0.527 0.490 Ranking 127 135 125 Level of HDI Low Medium Medium Source: UNDP Global HDR 2015 0.538 147 Low 2020 0.560 152 Medium 2021-22 0.544 161 Low The absolute value of HDI has also fallen in 2021-22, and Pakistan is down once again to the low level of human development. This is extremely worrying. Unfortunately, neither the government nor the academia or media have taken notice of this alarming development. This chapter will construct a human security index at the country level for selected countries, including Pakistan. This will enable the determination of whether Pakistan stands as low in the HSI as it does in the HDI. 11.1 Selection of Countries With the objective of limiting the comparison, three types of countries have been selected. The first group consists of five countries of South Asia, namely Bangladesh, Nepal, India, Pakistan, and Sri Lanka. All these countries have a higher HDI than Pakistan. The next group is of large South East Asian countries, which are at the next stage of development as compared to Pakistan. This includes four countries, namely, Thailand, Indonesia, the Philippines, and Vietnam. 91

Human Security in Pakistan The last group is of three large Islamic countries from other regions. These are Egypt, Nigeria and Türkiye. Nigeria has a lower HDI than Pakistan. Overall, there are twelve countries. The value of the HDI of all these countries is shown in Chart 11.1 as of 2021-22. Chart 11.1: Selected Countries and their HDI in 2021-22 A= Türkiye; B= Thailand; C= Sri Lanka; D= Egypt; E= Indonesia; F= Vietnam; G= Philippines; H= Bangladesh; I= India; J= Nepal; K= Pakistan; L= Nigeria Source: UNDP, GHDR, 2021-22 The Chart 11.1 clearly reveals the relatively low position of Pakistan. It has a HDI, which is 35% below that of the top country, Türkiye, in the group. Following the construction of the HSI, will Pakistan still remain in the same extremely low position? 11.2 Selection of the HSI Indicators The classification system of the HSI Index is the same as in the previous chapters. There are 27 HSI indicators, as shown in Chart 11.2. 92

The Human Security Index of Selected Countries Chart 11.2: Grouping and Number of HSI Indicators Group A. FREEDOM FROM‘FEAR’ • Territorial Security • External Financial Vulnerability • Environmental Protection B. FREEDOM FROM‘WANT’ • Income • Employment • Energy Security • Food Security • Education • Health C. FREEDOM FROM‘INEQUALITY’ D. GOVERNANCE TOTAL Number of Indicators 7 2 3 2 13 1 4 3 2 2 1 3 4 27 The listing of individual indicators at the third level is given in Chart 11.3. The numbers mostly relate to 2020-21, and the majority are from the World Development Indicators database of the World Bank. Chart 11.3: List of Human Security Indices A. FREEDOM FROM‘FEAR’ Territorial Security 1. Military Expenditure as% of GDP 2. Military Expenditure per Capita(US$) External Financial Vulnerability 1. External Debt as% of GNI 2. Current Account Deficit/ Surplus as% of GDP 3. Foreign Exchange Reserves in Months of Imports Environmental Protection 1. Environmental Performance(Yale University)(Score)* 2. 10-Year Change in Environmental Performance(%) B. FREEDOM FROM‘WANT’ 93

Human Security in Pakistan Chart 11.3: List of Human Security Indices Income per Capita Employment 1. Employment as% of Population 2. Unemployment Rate(%) 3.% Self-Employed 4.% of‘Idle’ Youth Energy Security 1. Domestic Sources of Energy(% of Energy Use) 2. Share of Renewable Energy(%) 3. Level of Energy Use Food Security 1.% of Food Insecure Population 2. Increase in Food Production(from 2014-16 to 2020-21) Education 1. Mean Years of Schooling 2. Expected Years of Schooling Health 1. Life Expectancy C. FREEDOM FROM‘INEQUALITY’ 1. Gini Coefficient 2. Poverty Head Count 3. Gender Inequality Index(UNDP)** D. GOVERNANCE 1. World Bank, Governance Matters 2. Rule of Law Index, World Justice Project 3. Index of Economic Freedom, Heritage Foundation 4. Corruption Perceptions Index, Transparency International *The Yale University Environmental Performance Score is based on 40 indicators in 10 areas, from air quality to water resources. **Based on 5 indicators including relative position of females vs males in areas like secondary education, seats in parliament, labor force participation rate, etc. The values of these indicators are given in the Statistical Annexure-II, along with the country rankings in each indicator. 94

The Human Security Index of Selected Countries 11.3 Country Rankings The country rankings in the four dimensions of the Human Security Index are presented in Table 11.2. The first indications are that Pakistan is likely to do better in the HSI. In summary, the ranking of Pakistan among the 12 countries is as follows: Index Freedom from‘Fear’ Freedom from‘Want’ Freedom from‘Inequality’ Governance Overall HSI HDI *Among the 12 selected countries Pakistan’s Ranking* 4 10 8 11 9 11 Pakistan performs exceptionally well in the index of Freedom from‘Fear’ with a high ranking of 4 th . Overall, Pakistan is ranked 9 th in the HSI among the twelve countries. This represents an improvement of two places in relation to the HDI. The two countries which fall behind Pakistan in the HSI are Bangladesh and Nepal. The change in country rankings in the HSI vs the HDI are shown below: Countries with Improved Ranking India, Pakistan, Thailand, Vietnam, Indonesia, Philippines, Nigeria. Countries with a Worse Ranking Bangladesh, Nepal, Sri Lanka, Egypt, Türkiye Table 11.2: Indices of Human Security Sub-Indices Index of Freedom Rank Freedom Rank Freedom Rank Governance Rank HSI Rank from from from ‘Fear’‘Want’‘Inequality’ SOUTH ASIA Bangladesh 0.304 9 0.321 9 0.503 11 0.416 10 0.378 10 India 0.417 3 0.343 8 0.527 9 0.386 3 0.413 8 Nepal 0.139 12 0.264 12 0.522 10 0.358 8 0.288 12 Pakistan 0.386 4 0.300 10 0.575 8 0.319 11 0.382 9 Sri Lanka 0.346 6 0.543 1 0.646 4 0.373 5 0.461 5 95

Human Security in Pakistan Table 11.2: Indices of Human Security Sub-Indices EAST ASIA Thailand 0.506 1 0.532 2 0.760 1 Vietnam 0.339 7 0.490 5 0.645 5 Indonesia 0.256 10 0.500 4 0.610 6 Philippines 0.310 8 0.391 6 0.579 7 OTHERS Egypt 0.379 5 0.371 7 0.676 3 Nigeria 0.253 11 0.284 11 0.351 12 Türkiye 0.453 2 0.516 3 0.704 2 0.536 0.559 0.592 0.511 0.323 0.406 0.464 4 0.575 1 2 0.495 3 1 0.464 4 6 0.435 6 9 0.419 7 12 0.318 11 7 0.526 2 The ranking of countries in the per capita income, HDI, and HSI are presented below in Table 11.3. Table 11.3: Relative Position of Countries in Different Indices Per Capita Income Human Development Human US PPP$) 2021 Index(HDI) 2021-22 Security Index Index Ranking Index* Ranking Index Ranking SOUTH ASIA Bangladesh 0.108 9 0.478 8 0.378 10 India 0.116 8 0.436 9 0.413 8 Nepal 0.038 11 0.388 10 0.288 12 Pakistan 0.077 10 0.298 11 0.382 9 Sri Lanka 0.310 3 0.664 3 0.461 5 EAST ASIA Thailand 0.412 2 0.692 2 0.575 1 Vietnam 0.222 6 0.543 6 0.495 3 Indonesia 0.265 1 0.546 5 0.464 4 Philippines 0.172 7 0.537 7 0.435 6 OTHERS Egypt 0.256 5 0.586 4 0.419 7 Nigeria 0.064 12 0.269 12 0.318 11 Türkiye 0.731 1 0.750 1 0.526 1 *Recomputed with the maxima and minima within the sample countries The rank correlations are presented below: HDI vs HSI PER CAPITA INCOME vs HSI PCY vs HDI 0.861 0.916 0.979 Change in Ranking from HDI to HSI +2 -1 +2 -2 +2 -1 -3 -1 -1 3 -1 1 96

The Human Security Index of Selected Countries The overall correlation coefficients are high, although, as pointed out above, some individual countries see changes in rankings. The individual indicators in which Pakistan has a relatively low ranking are presented in Table 11.4. There is substantial variation in the HSI among the twelve countries. It ranges from a maximum of 0.575 for Thailand to a minimum of 0.288 for Nepal. Pakistan is in the middle, with a HSI of 0.382. The rank correlation of the components of the HSI with the overall HSI is given below. with Index of Freedom from‘Fear’ Index of Freedom from‘Want’ Index of Freedom from‘Inequality’ Index of Governance Rank Correlation with HSI 0.611 0.916 0.881 0.671 It appears that the HSI is linked more to the indices of freedom from‘want’ and‘inequality’ in the case of the 12 countries. Pakistan does poorly in the former index and better in inequality. The distribution of the index values at the second level are given below in Table 11.4. Table 11.4: Pakistan’s Index Values at the Sub-Component Level I< 0.4 0.4 £ I< 0.6 I> 0.6 Territorial Security 0.348 Environmental 0.430 Protection External Financial Vulnerability 0.384 Income per capita 0.077 Employment 0.510 Energy Security 0.377 Food Security 0.569 Education and Health 0.287 Incidence of Poverty 0.532 Income Inequality Gender Inequality 0.491 Corruption 0.321 Rule of Law 0.332 Governance Index 0.226 Index of Economic Freedom 0.319 Governance 0.296 0.730 97

Human Security in Pakistan Therefore, on the basis of comparison with the selected countries, Pakistan will need to focus on the following sub-components of the HSI to raise the overall HSI: Therefore, as shown above, there are six areas where Pakistan will have to improve its performance Freedom from‘Fear’: Territorial Security External Financial Vulnerability in order to achieve a higher level Freedom from‘Want’: Income Per Capita of human security. In the short Energy Security run, primary emphasis will have to be placed on drastically reducing the extreme external financial vulnerability and avoiding default. Freedom from ‘Inequality’: Education and Health Governance Otherwise, other areas of human security will also weaken, and there will be a big decline in the overall level of human security of the country. Beyond this immediate priority, the key focus areas for raising the HSI in relation to other countries will be income per capita, education and health, gender inequality and governance. There is also value to the UNDP undertaking a global ranking of countries in the HSI, like the HDI, in one of its subsequent Global Human Development Reports. Similar HSI indicators could be used in this report. 98

The Vision of Human Security PART III POLICIES, REFORMS AND LAWS FOR ACHIEVING HIGHER HSI 99

The Major Findings Chapter: 12 THE MAJOR FINDINGS The previous chapters have highlighted some major findings about the Human Security Index of Pakistan both over the years since 2001-02 and in comparison to countries at a similar stage or at the next stage of development. 12.1 The Major Findings The findings are as follows: i. Over the years, the HSI trend has been an inverted U-shaped curve. It rose steadily from 2001-02 onwards to reach a peak in 2015-16, with a cumulative increase of 18.7%, as shown in Chart 12.1. Thereafter, it has been falling up to the latest years, 2020 to 2022. Consequently, over the two decades the HSI has increased only marginally by 1%. Chart 12.1: The HSI Trend 101

Human Security in Pakistan ii. Eleven countries were included in the analysis of the magnitude of the HSI of Pakistan in relation to these countries. A positive finding is that Pakistan does better in the HSI ranking with respect to these countries than in the Human Development Index, HDI. The ranking of Pakistan in the HSI is 9 th out of the 12 countries, as compared to the 11 th position in the HDI. 12.2 The Key Focus Areas for Improving the HSI The critical elements of the findings are as follows: i. In which components and sub-components of the HSI has there been a decline in the value of the index compared to the value in 2015-16? ii. In which components and sub-components of the HSI does Pakistan fare poorly in comparison to the other eleven countries? There is a need to identify reasons which explain the possible differences in the answers to the above two questions. For example, Pakistan may show growth in a part of the HSI after 2015-16 but receive a low index value in comparison with other countries. This is explained by the fact that there has been some improvement, but it has not been adequate to catch up with other countries. Alternatively, Pakistan may show a decline in part of the HSI over the years, but it may do comparatively well with respect to the other countries. This is attributable to an initially high absolute level in comparison with these countries. Answers to the above two questions leading to the identification of HSI components and sub-components which require greater focus are presented in Chart 12.2. Chart 12.2: List of Sub-Components Which Need Greater Focus Sub-Components of the HSI, which shows bigger falls after 2015-16 Sub-Components of the HSI of Pakistan with respect to other Countries with a low Index Value of below 0.4 Common to Both Approaches • External Financial Vulnerability• External Financial Vulnerability • Territorial Security• Territorial Security • Governance• Governance • Energy Security• Energy Security In One Approach • Poverty• Income per Capita 102

The Major Findings Chart 12.2: List of Sub-Components Which Need Greater Focus • Environmental Protection and Natural Disasters • Education and Health • Regional Disparities • Food Security TOTAL 8 6 The next step is a comparison of the above list of components/sub-components with those identified as key focus areas in the National Security Policy of Pakistan for 2022-23, which has been described in Chapter 3. These priority areas are listed in Chart 12.2. There are significant differences in the priority list for improving HSI in Chart 12.2 with those given in Chart 12.3. Chart 12.3: Focus Areas for Improving Human Security in the National Security Policy, 2022-23 Launched: January 14, 2022 Components FREEDOM FROM‘FEAR’ • Health Hazards and Diseases• Improving Preventive Healthcare and Instituting Pandemic Surveillance and Response Mechanism • Environmental Protection and Natural Disasters • Mainstreaming Climate Adaptation and strengthening Disaster Preparedness • Response to Water Scarcity by Improved Storage Capacity, Sustainable Water Management and Transboundary Water Rights FREEDOM FROM‘WANT’ • Food Security• Ensuring Food Security by increasing Cultivable Land, adopting Climate Resilient Agriculture • Shelter and Employment• Promoting Rural Development and Decrease Urban Migration • Employment• Promoting Youth-Focused Policies to Promote Skills Development and Entrepreneurship FREEDOM FROM‘INEQUALITY’ • Gender Inequality• Enabling participation of Women and Transgender persons in all Avenues of Public Life and Maximizing their Inclusion in Pubic Institutions and Decision-Making Forums The biggest omission in the National Security Policy is External Financial Vulnerability, which currently poses the biggest threat to human security in Pakistan. Even when this policy was launched by the Prime Minister on the 14 th of January 2022, the external financial position had visibly deteriorated. The current account deficit had greatly worsened in the period from July to December 2021, when the policy was being prepared. It had risen to over$9 103

Human Security in Pakistan billion, compared to a surplus during the period in July to December 2020. The next few months after December 2021 actually witnessed a massive fall in the foreign exchange reserves. The other important missing area in the National Security Policy is the lack of recognition of the high level of poverty, which had increased significantly after the spread of the COVID-19 epidemic in Pakistan and, more recently, after the floods. However, there is full recognition in the policy of the need for territorial security, environmental protection and natural disasters, food security, gender inequality, shelter, and employment. Based on the above key areas of focus for the improvement of HSI, the subsequent chapters are organized as follows: Chapter 13: Strategy for Avoiding Default Chapter 14: Charter of the Economy: The Financing Plan Chapter 15: Policies, Reforms, and Laws for Higher HSI The Chapter on the Charter of the Economy focuses on a comprehensive National Financing Plan for mobilizing in a progressive manner additional resources and achieving a prioritized cutback in different areas of public expenditure. The resources generated thereby can then be used to aggressively tackle poverty, raise health and education spending, and expand the development program in key areas like water resources by earlier completion of the major dams, forestation, etc. The implementation of the Charter of the Economy will also provide the necessary revenue cover to defense spending and thereby ensure higher territorial security. 104

Strategy for Avoiding Default Chapter: 13 STRATEGY FOR AVOIDING DEFAULT: The Biggest Threat to Human Security Pakistan today faces the worst economic crisis in its 75-year history. The overall HSI has plummeted down to 0.440. This is even lower than the magnitude as far back as 2010-11 of 0.459. The worsening of conditions is most acutely manifest in the drop in the index of freedom from‘fear,’ which is down to 0.372, even below the level in 2001- 02. This is largely due to the cataclysmic drop in the index at the third level of external financial vulnerability, which now stands at 0.140. Therefore, the biggest short-run threat to human security is the risk of a default by Pakistan in its external debt repayments. The numbers in Chapter 6 have highlighted the extent of vulnerability to default in the following ways: i. The level of foreign exchange reserves as of end-February 2023 was$3.9 billion, not even enough to provide import cover for only one month. The‘safe’ level of cover is at least three months. ii. The reserves are equivalent to only 3.1% of the external debt of$126 billion. As such, they can only finance a minor part of the external financing requirements. On top of this, Pakistan’s relationship with the IMF remains effectively suspended. The completion of the 9 th Review of the IMF has been pending for almost two months now. Meanwhile, Pakistan’s credit rating with the major credit-rating agencies is down to near default level. 13.1 Implications of Default The implications of default on the level of human security in Pakistan are horrendous. This will come, if it happens, a few months after the colossal damage caused by the floods, especially to agricultural output. 105

Human Security in Pakistan The countries that have defaulted in recent years are shown in Chart 13.1. They have witnessed a quantum depreciation of the exchange rate, which has led to runaway rates of inflation and a fall in the real size of the economy. The chain of reaction to default is shown in Chart 13.2. Chart 13.1: Economy of Countries After Default Countries Year GDP Growth Rate DEFAULTING COUNTRIES Rate of Inflation Argentina 2020-0.0 Very large Lebanon 2020-14.2 119.8 Ecuador 2020-7.8 188.3 Sri Lanka 2022-11.0 64.1 The impact in the event of a default is across the board on the HSI. The index of freedom from‘want’ is badly affected, first, by greater food insecurity. Energy security is threatened by the exponential increase in the tariffs of electricity and gas, along with substantially higher prices of petroleum products. The contraction in the size of the economy will inevitably lead to substantially greater unemployment and lower real wages. The level of freedom from‘inequality’ will also be adversely affected. Income inequality is likely to rise substantially, with unemployment impacting more the unskilled and selfemployed workers and high food prices hitting more the income households. The worst manifestation of the impact of the financial crisis will be on the level of poverty in the country, as shown in Chart 13.2. Almost 20 million more people have already fallen below the poverty line, and the overall incidence of poverty has risen to over 40% during 2022-23. 106

Strategy for Avoiding Default Chart 13.2: Consequences of Move towards Default WORSENING RESERVES POSITION LIKELY DEFAULT IN EXTERNAL DEBT PAYMENTS SEVERE IMPORT COMPRESSION LOWER EXPORTS REDUCTION IN SUPPLIES EXCHANGE RATE DEPRECIATION HIGHER EXPORTS INTEREST RATE ESCALATION HIGHER FINANCIAL COST AMBIGUOUS IMPACT ON EXPORTS LOWER CONSUMPTION LOWER INVESTMENT NEGATIVE GDP GROWTH HIGHER RATE OF INFLATION IMPACT ON EMPLOYMENT& POVERTY 107

Human Security in Pakistan Based on the above dire consequences of a possible default by Pakistan, the utmost priority from the viewpoint of preserving human security is to avoid such a cataclysmic event. There is the necessity of having the umbrella of an IMF program during this period of acute financial stress as this international financial institution is the ultimate lender of last resort . This will also require adherence to the monetary and fiscal policies agreed with the IMF. 13.2 Policy Instruments to Avoid Default 13.2.1 Promoting Import Substitution The SBP has adopted various measures for restricting imports, like physical controls over import LCs, increasing import margin requirements, and a physical ban on some luxury imports. However, the approach should be to promote import substitution by providing the necessary level of import tariff protection. It may perhaps come as a surprise that Pakistan has over-liberalized its imports. Over two decades ago, the maximum import tariff was 120%. After several downward moves, there are now four import tariff slabs of 4%, 11%, 16%, and 20%. Consequently, the average level of effective protection against imports has come down on average from 134% to 32%. Further evidence of over-liberalization is provided by the fact that the average level of MFN import Tariffs in Pakistan is even lower than those prevailing in India and Bangladesh, as shown in Table 13.1. Table 13.1: Level of MFN Import Tariffs in Pakistan, India and Bangladesh(as of 2021) (%) Agriculture Industry All Pakistan 13.4 10.9 11.2 India 39.2 14.9 18.3 Bangladesh 17.6 13.4 14.0 Source: World Tariff Profiles, WTO. The Table clearly indicates that for all types of items, Pakistan has significantly lower MFN tariffs than India and Bangladesh, even though the trade deficit of these two countries is much smaller than that of Pakistan. Therefore, the appropriate policy for Pakistan is to move quickly towards a regime of higher import tariffs as follows: 108

Strategy for Avoiding Default Import Tariff Slab 1 Slab 2 Slab 3 Slab 4 Current 3 11 16 20 (%) Proposed 5 15 22 30 This will not only provide more effective protection to domestic industry but will also correspondingly lead to higher import-based revenues and reduce the pressure on the budgetary position. 13.2.2 Intensive Use of Monetary Policy The single most important instrument for achieving a degree of stability in the external balance of payments is the resort to a market-determined exchange rate policy. Pakistan has adopted such a policy from the end of January 2023 onwards. The rupee has depreciated by 26% since then. It has helped in reducing the current account deficit to only$74 million in February 2023, as compared to$519 million in the corresponding month of 2022. The other instrument which will also need to be used aggressively is the policy rate of the SBP. This acts as the mechanism for signaling a general escalation in interest rates in the economy, which will help in reducing the level of aggregate demand in the economy and thereby restricting the demand for imports. The combination of these two instruments will be necessary for stabilizing the economy and avoiding default. The likelihood of large inflows of foreign investment, commercial bank loans, and flotation of bonds is very low because of the increasingly negative international perceptions of the state of Pakistan’s economy. The BNU Macro-econometric Model has been used to project the external balance of payments and level of foreign exchange reserves in the second half of 2022-23 and 202324. The balance of payments module of the Model is shown in the Technical Annexure-I. The model is simulated in a way whereby there is enough depreciation of the rupee and increase in the policy rate to ensure that the current account deficit is driven to zero in each of the two periods of the scenario, that is, the second half of 2022-23 and 2023-24 respectively. The results of the model simulations are presented in Table 13.2. 109

Human Security in Pakistan Table 13.2: Balance of Payments Scenarios for the Second half of 2022-23 and 2023-24 2022-23 Second half Scenario 2023-24 Scenario • GDP Growth Rate (%) -2-1 • Rate of Inflation(Average) (%) 32 30 • Current Account Deficit ($ billion) 0 0 • Required Exchange Rate Depreciation 62 53 • Increase in Policy Rate (% points) 8.25 Nil • Surplus in Financial Account 0 3.0 • Foreign Exchange Reserves ($ billion) , End June 2023 5.6 8.6 The escalation of the policy rate is very high. By end-June 2023, the rupee will need to depreciate by 62% in relation to the level prevailing at the end of June 2022. The policy rate will be required to increase by 825 basis points during this period. During 2023-24 Pakistan will need to negotiate a restructuring of its external repayment obligations, especially with bilateral and commercial lenders. Ideally, this should happen under the cover of a three-year new IMF program after June 2023. The outcome in terms of the shape of the economy is inevitably negative, but it must be appreciated that it will be much worse in the event of default. The GDP growth rate is likely to be negative in the second half of 2022-23 and 2023-24 by one to two percentage points. Further, the inflation rate could rise to the historical peak of 30% to 32% on average. The consequences of this grim scenario, though still not the worst-case scenario, will be a further fall in the national HSI. It stands at 0.440 as of end-December 2022. It could be down to significantly below 0.400 by June 2024, the lowest level since 2001-02. 110

Charter of the Economy Chapter: 14 CHARTER OF THE ECONOMY: The Financing Plan The current period of great adversity also provides an opportunity. Based first on efforts to avert default, the political leadership must move expeditiously to present a‘ Charter of the Economy ’ to the people of Pakistan. This will not only reduce the risk of large- scale unrest but also lead to the implementation of major structural reforms and to a more equal distribution of income, with a focus on poverty reduction. The rise in poverty has been shown to be one of the largest contributors to the decline in the HSI in recent years after external financial vulnerability. The Prime Minister has once again appealed in his statement recently to the Senate, on the occasion of the Golden Jubilee celebration, for a broad political consensus on the contours of a strong National Economic Action Plan of the type that was launched against terrorism in December 2014. This plan was implemented successfully by the military through Zarb-eAzb, and the incidents of acts of terrorism substantially reduced. The objective of this Chapter is to highlight the financing plan of the Charter of the Economy . 14.1 Tax Reforms The level of fiscal effort by the Federal and Provincial Governments of Pakistan has consistently been declining, as shown in Table 14.1. Table 14.1: Trend in the Tax-to-GDP Ratio Year Federal% of GDP 2015-16 3377 10.4 2016-17 3647 10.3 2017-18 4065 10.4 2018-19 4071 9.3 2019-20 4334 9.1 2020-21 4764 8.5 2021-22 6142 9.2 2022-23 7200 8.5 Provincial 284 322 401 402 414 508 612 684 % of GDP 0.9 0.9 1.0 0.9 0.9 0.9 0.9 0.8 Total% of GDP 11.3 11.2 11.4 10.2 10.0 9.4 10.1 9.3 111

Human Security in Pakistan Further, the incidence of taxes in Pakistan is regressive, as shown in Box 14.1. Therefore, it is imperative that a Tax Reform Program is implemented, which not only raises significantly the tax-to-GDP ratio but simultaneously also makes the tax system more progressive. Box 14.1: The Incidence of Taxes in Pakistan The incidence of federal taxes in Pakistan in 2020-21 has been quantified by Pasha[2022]. The tax burden by quintile is given below: Quintile 1(Highest) 2 3 4 5(Lowest) Share of Income Tax 64.0 15.5 7.5 7.4 5.6 Share of Indirect Taxes 42.6 21.3 15.7 11.9 8.5 Share of Total Taxes 49.9 19.1 12.9 10.2 7.9 Share of Income 51.5 19.8 12.8 9.6 6.3 Ratio 0.969 0.964 1.008 1.063 1.254 This leads to the incidence being higher on the lower two income quintiles relative to income by 6% and 25%. The proposed targets are as follows: Table 14.2: Target Tax-to-GDP Ratio Federal Direct Taxes Current* 3.75 Increase 1.50 Target 5.25 Indirect Taxes Current 4.75 Increase 0.50 Target 6.00 Total Taxes Current 8.50 Increase 2.00 Target 10.50 Provincial 0.75 0.75 0.75 0.25 1.00 0.75 1.00 1.75 Total 3.75 2.25 6.00 5.50 0.75 7.00 9.25 3.00 12.25 Therefore, the target is to increase the national tax-to-GDP ratio by 3% of the GDP from the projected level of 9.25% of the GDP in 2022-23 to 12.25% of the GDP. 112

Charter of the Economy The bulk of the increase of 2.25% of the GDP is proposed indirect taxes. This will raise the share of direct taxes from 40% currently to almost 50% and make the tax system markedly more progressive. Similarly, the incremental effort will be larger by the Provincial Governments. The Provincial tax-to-GDP ratio currently is only 0.75% which will need to be raised by 133% to 1.75% of the GDP. The Federal tax-to-GDP ratio will be targeted to increase to 10.25% of the GDP from 8.25% of the GDP. The direct tax reforms proposed in the Financing Plan of the Charter are presented in Chart 14.1. Chart 14.1: Tax Reforms by the Federal and Provincial Governments as part of the Financing Plan Potential Revenue (% of GDP) DIRECT TAXES Federal Governments 1. Conversion of Fixed and Final Taxes into Advance Tax and Merger of Income into Total Taxable Income 0.500 2. More Progressive Corporate and Personal Income Tax 0.250 3. Tax on Capital Gains on Land and Property Sales Irrespective of the Holding Period 0.250 4. Advance Tax on Share Transactions 0.125 5. Withholding Tax on Electricity Bills of Traders and large domestic consumers 0.250 6. Reduction in Tax Credits and Exemptions 0.125 TOTAL 1.50 Provincial Governments 1. Higher rates of Agricultural Income Tax 0.375 2. Higher assessed GARVs for Property Tax 0.375 TOTAL 0.75 OVERALL TOTAL 2.25 The indirect tax reforms are presented in Chart 14.2. 113

Human Security in Pakistan Chart 14.2: Indirect Tax Reforms by the Federal and Provincial Governments as part of the Financing Plan Potential Revenue (% of GDP) Federal Governments 1. More Cascading of the Import Tariff Structure 2. Use of ITPs and 0.5% Handling Charge on Imports 0.25 3. Levy of Sales Tax on Import of Services on the‘Reverse Change’ Principle 4. Levy of Sales Tax on Retail Price of Consumer Durables and Non-essential Goods 5. Broadening the Base of Excise Duty by Levy on Polluting Industries 0.25 6. Harmonization of the Sales Tax on Goods with Provinces of the Sales Tax on Services TOTAL 0.50 Provincial Governments 1. Harmonization of the Sales Tax on Services with the Federal Sales Tax on Goods and 0.25 its Broad-basing TOTAL 0.25 OVERALL TOTAL 0.75 14.2 Enhancing Non-Tax Revenues The yield nationally from non-tax revenues currently is 2.40% of the GDP. There is some scope for increasing revenues from these sources by 0.75% of the GDP. The proposed steps are listed in Chart 14.3. Chart 14.3: Steps for Additional Revenues from Non-Tax Revenue Sources of the Federal and Provincial Governments Additional Revenue(% of GDP) FEDERAL 1. Inflation Indexation of the Petroleum Levy on Petroleum Products 0.125 2. Higher Levies on Domestic Natural Gas and Crude Oil 3. Higher Profit Repatriation by the SBP 0.250 4. Higher Dividends by Increased Profitability of SOEs 0.125 TOTAL 0.500 114

Charter of the Economy PROVINCIAL 1. Escalation in Water Charges(Abiana) 2. Escalation in Various Tolls and Service Charges TOTAL OVERALL TOTAL 0.125 0.125 0.250 0.750 In particular, there is a strong need for raising the irrigation water charges(Abiana) by the Provincial Governments, which are currently very low and cover only 8% of the O&M cost of the irrigation system, especially in Punjab and Sindh. A big increase is essential to prevent wasteful use of scarce water supplies. Further, efforts should be made to increase the profitability and dividends of SOEs through privatization, efficiency improvements, and appropriate pricing policies. The extremely high-interest rates should also lead to a big increase in the flow of profits from the SBP to the Government. This has already happened in the first half of 2022-23. 14.3 Rationalization of an Economy in Expenditure The level of public expenditure as% of the GDP has been consistently on the rise since 201516 up to 2021-22, as shown in Table 14.3. However, it is anticipated that it will decline by 1.5% of the GDP in 2022-23, which will help in containment of the size of the budget trends. Table 14.3: Level and Composition of Public Expenditure by the Federal and Provincial Governments (Rs in Billion) 2015-% of 2018-% of 2021-% of 2022-% of 16 GDP 19 GDP 22 GDP 23(P) GDP A. COMBINED Current Expenditure 4694 14.3 7104 16.2 11521 17.2 13900 16.4 Debt Servicing 1263 3.9 2091 4.8 3182 4.8 5200 6.1 Defence* 758 2.3 1147 2.6 1411 2.1 1600 1.9 Others** 2673 8.1 3866 8.8 6928 10.3 7180 8.4 Development Expenditure 1314 4.0 1241 2.8 1657 2.5 1600 1.9 Total Expenditure 6008 18.3 8345 19.0 13178 19.7 15500 18.2 B. SEPERATELY Total Expenditure 6008 18.3 8345 19.0 13178 19.7 15500 18.2 Federal 3826 11.7 5489 12.5 8762 13.1 10800 12.7 Provincial 2182 6.6 2856 6.5 4416 6.6 4700 5.5 *does not include military pensions and expenditure on civil armed forces **includes subsidies, grants, pensions, costs of administration, etc. 115

Human Security in Pakistan There are contrasting trends in the components of current expenditure. First, the cost of debt servicing has risen rapidly from 3.9% of the GDP to the likely level of 6.1% of the GDP in 2022-23. Second, the level of defense expenditure, excluding pensions and the cost of civil armed forces, has fallen from 2.3% of the GDP to 1.9% of the GDP. Third, other current expenditures, consisting of expenditures on subsidies, grants, services, pensions, overhead costs, etc., have been the major component of current expenditure. The level has risen modestly from 8.1% of the GDP to 8.4% of the GDP. The area of greatest concern is the sharp drop in the level of development expenditure. It has fallen in a big way from 4% of the GDP to only 1.9% of the GDP likely in 2022- 23. This has greatly restricted the rate of expansion in infrastructure and services and thereby limited the GDP growth rate of the economy. Based on the above findings, the economy and rationalization of expenditure will have to focus on the cost of debt servicing and rationalization of subsidies and grants, along with a reduction in the cost of running both the Federal and the Provincial Governments. Consequently, the proposals for expenditure rationalization are presented in Chart 14.4. Chart 14.4: Proposals for Expenditure Containment FEDERAL GOVERNMENT 1. Privatization of Loss-Making SOEs and reduction in contingent liabilities and subsidies of other SOEs, especially in the power Sector 2.‘Haircut’ of Government Debt with Banks 3. Reduction in Non-Combat Defence Expenditure 4. Reduction in Non-Salary Expenditure of Government 5. Rationalization of the Number of Ministries and Divisions 6.‘Zero Base’ Budgeting of Attached Departments and Autonomous Bodies 7. Extension of the Age of Retirement to 63 years TOTAL PROVINCIAL GOVERNMENTS 1. Reduction in Non-Salary Expenditure 2. Rationalization of the Number of Ministries/Departments 3. Extension of Age of Retirement to 63 years 4.‘Zero Base Budgeting’ of Provincial Agencies TOTAL OVERALL TOTAL Reduction (% of GDP) 0.500 0.250 0.125 0.250 1.250 1.25 0.250 0.250 0.250 1.500 116

Charter of the Economy The above proposals have led to the identification and quantification of the additional resource mobilization and cuts in expenditure. These combined provide the‘fiscal space’ for implementation of the strategy for enhancing the Human Security Index of Pakistan in line with the priorities identified in Chapter 12. 14.4 Summary of Targets The salient features of the Financial Plan are described below in Chart 14.5. Chart 14.5: Salient Features of the Financing Plan for the Charter of the Economy (% of GDP) Impact of Implementation of Financing Plan A. ADDITIONAL‘FISCAL SPACE’ Higher Tax Revenues 3.00 Federal 2.00 Provincial 1.00 Higher Non-Tax Revenues 0.75 Federal 0.50 Provincial 0.25 Expenditure Cut-1.50 Federal-1.25 Provincial-0.25 Total‘Fiscal Space 5.25 Federal 3.75 Provincial 1.50 B. UTILIZATION OF THE‘FISCAL SPACE Impact of Implementation of Financing Plan % Increase from Present Level (% of GDP) Expenditure Increase in Pro-Poor Spending 1.50 150* Development Spending (excluding social services) Spending on Social Sectors 1.00 85 0.75 34 Reduction in Budget Deficit 2.00-30 *The present level of Pro-Poor Spending is given in Box 14.2. 117

Human Security in Pakistan Box 14.2: Level of Pro-Poor Spending Major Pro-Poor Expenditures by the Federal and Provincial Governments (Rs in Billion) 2020-21 2021-22 2022-23 (B.E) • Cash Transfers(BISP) 246 362 400 • Social Security and Welfare (Provincial Governments 56 62 70 • Differential Subsidy on Electricity to 242 194 355 Small Domestic Consumers • Others*(PASSCO, USC, PBM) 32 40 37 TOTAL 576 658 862 (% of GDP) 1.2 1.2 1.0 Implementation of the Financing Plan will have major positive consequences, as follows: i. It will enable a big increase in the level of poor spending by 150%. This will be tantamount to additional support of Rs 1275 billion 1 for the support of the poor at a time when it is most needed. ii. Development spending has sharply contracted with respect to the GDP. It will become possible to raise it back to the level of almost 3% of the GDP, close to the level four years ago. iii. One of the major findings of factors limiting the HSI in Pakistan, as identified in Chapter 12, is the low total public expenditure on education and health. It will become possible to raise it from 2.2% of the GDP to 3% of the GDP. iv. Finally, the increased fiscal space will be used to bring down the budget deficit from over 6.5% of the GDP to 4.5% of the GDP. Very importantly, this will reduce the inflationary pressures and exert a restraining influence on the size of the external current account deficit and therefore help in sustaining foreign exchange reserves. It will lead to the generation of a primary surplus in the consolidated budget of over 1% of the GDP. The subsequent chapter will specify in detail how the above potential developments can be used to maximize the positive impact on the HSI for the people of Pakistan. 1 At current GDP. 118

Policies, Reforms and Laws for Higher HSI Chapter: 15 POLICIES, REFORMS AND LAWS FOR HIGHER HSI The objective of this Chapter is to identify policies, reforms, and laws to improve subcomponents of the HSI which have contributed more to the fall in the HSI after 2015-16 or are relatively low in comparison to other countries. The presentation of the financing plan under the charter of the economy in the previous Chapter has quantified the additional resources that can potentially become available to achieve the improvements in these sub-components. 15.1 Alleviating Poverty Following COVID-19 and the disastrous floods, there has been a quantum jump in the incidence of poverty to above 40% of the population. There is the risk that it could rise further in the coming months in the presence of severe inflation, especially of food items, and lead to widespread protests. Already, the estimated‘poverty gap’ is Rs 1700 billion, equivalent to 2% of the GDP, as shown in Box 15.1. Cash transfers from the BISP are able to cover only 24% of this gap. Box 15.1: Size of the Poverty Gap The incidence of poverty in Pakistan is likely to have approached 40% of the population after the negative impact of the floods and earlier due to COVID-19. Therefore, almost 12 million households are below the poverty line today, based on the cost of meeting minimum basic needs, especially nutrition. The poverty gap is the difference between the poverty line and the actual income of a typical household. This gap is estimated at Rs 11,820 per household, with the poverty line at Rs 40,500 per month. Therefore, the total estimated poverty gap for the 12 million households is Rs 1702 billion in 2022-23. The cash transfers to poor households during the year are projected at Rs 400 billion. This is equivalent to only 24% of the national poverty gap. Implementation of the Financing Plan can lead to an increase in public pro-poor spending from 1% of the GDP to 2.5% of the GDP. This is a sizeable increase and will enable the launching of various initiatives for generally tackling poverty and for improving the welfare of special underprivileged groups in the population. These initiatives are described in Chart 15.1. 119

Human Security in Pakistan The proposed size of BISP transfers is 1% of the GDP, equivalent to Rs 850 billion, with the 2022-23 GDP. This will represent an increase of over 112% in relation to the budget size of the BISP for 2022-23. Currently, the cash transfer is Rs 7500 per quarter for an eligible household, and seven million households are covered. With the increase in the size of the BISP, it will be possible to double the cash transfer to Rs 15,000 per quarter and cover the 13 million poor households. There will be some significant amount left for other-directed transfers. Chart 15.1: The Under-Privileged in Pakistan and Policies/Program/New Laws for Support Typed Number (million) Policies/Programs of Federal and Provincial Governments Annual Outlay (% of GDP) THE POOR 92.0 • Enhanced cash transfers with wider coverage through BISP; Special Incentives for sending child to school and nutrition 1.000 SMALL FARMERS 7.4. • Subsidized Credit, Lower Prices of Inputs through sales by USC stronger agricultural extension services 0.375 LESS SKILLED WORKERS 10.0 • Minimum wage raised to Rs 35,000 per month with tax credit to employers; Changes in Collective Bargaining Law to Facilitate Trade Unionization; Participation in Pension Scheme of EOBI with Provincial Subsidy 0.250 ‘IDLE’ YOUTH 18.0 • Special Program of Technical and Vocational Training, including IT; Startup funding for small projects; Rural Employment Guarantee Scheme 0.250 SME’S • Subsidized Access to Credit; Technical Support by SMEDA; lower electricity tariffs and taxes 0.250 DISABLED, MINORITIES, TRANSGENDER 7.5 • Specially Designed and Targeted Programs 0.125 FEMALE WORKERS • Laws for Equal Access to jobs and Equal Pay; Tax Credit to Employers for hiring females; Setting up putting out systems for rural females; Quotas in Public Services 0.125 CHILD WORKERS 3.0 • Law Banning Child Work; Support to Households through BISP 0.125 TOTAL ANNUAL OUTLAY 2.50 120

Policies, Reforms and Laws for Higher HSI The strategy for poverty also focuses on raising employment and achieving higher income and more inclusive growth. As such, there are measures proposed for supporting small farmers and SMEs. Also, laws are proposed against discrimination of female workers in the labor market and for banning child work. The National Security Policy has identified the need for productive engagement of youth by enabling skill development and entrepreneurship. This has been reflected in the allocations in Chart 15.1. It is a formidable problem because, as shown in Box 15.2, there are almost 19 million‘idle’ youth in Pakistan, with 7.9 million males and 10.9 million females. Box 15.2: The Youth Bulge: Blessing or Curse? The youth population of Pakistan has increased by 63% between the last two Population Census as compared to the 57% increase in the total population. There are youth, male and female, aged 15 to 29 years, in the population of 64 million. The positive side is the low dependency ratio in Pakistan and the relatively better education, and the greater energy that these youth bring. However, this could emerge as a serious problem if the large population of youth is not engaged in productive activities. This requires an estimation of the number of‘idle’ youth in the country, which is done below: Number of‘Idle’ youth 2008-09 2020-21 Growth Rate (%) Male 5.6 7.9 2.9 Female 8.4 10.9 2.2 Total 14.0 18.8 2.5 Source: LFS, PBS Given the adverse conditions, the number of‘idle’ youth is likely to have reached 20 million in 2023, over 30% of the total population. The threat to security lies in the inclination of some youth to crime, totalitarianism and violation of civil laws. 15.2 Territorial Security The fall in the index of territorial security is the third largest contributor to the decline in the HSI in Pakistan in recent years. This is attributable to the fall in the level of defense expenditure as a percentage of the GDP. In addition, there is the sustainability issue of even the somewhat reduced level of defense spending because in the ongoing financial year of 2022-23, it is likely to be entirely financed by government borrowing. Therefore, if Pakistan is to convert the primary deficit into a primary surplus, there will have to be substantial containment of federal expenditure, excluding debt servicing. Inevitabley, since defense expenditure is the largest item in this type of expenditure, efforts will have to be made to limit this expenditure. 121

Human Security in Pakistan The financing plan under the new social contract, which is described in Table 13.1, proposed enough additional revenue mobilization and expenditure to generate a significant primary surplus from 2023-24 onwards. This will ensure that 80% or more of defense expenditure will be financed by net revenue receipts after covering debt servicing. Further, the financing plan proposes a big expansion in expenditure on health and education, especially by the Provincial governments. This will significantly improve the balance between the social sector and defense spending. 15.3 Environmental Protection Environmental protection has been accorded high priority in the National Security Policy, as follows: ‘Mainstreaming climate adaptation and strengthening robust disaster preparedness, management, and response mechanisms.’ ‘Developing a cohesive response to looming water scarcity through improved storage capacity, sustainable water management and protecting transboundary water rights.’’ The Environmental Sub-Component of the HSI has revealed a significant fall in forest area, higher incidence, and cost of natural disasters. The Financial Plan implementation under the Charter of the Economy creates enough fiscal space to enable an increase in the combined level of development spending, excluding social services, by the Federal and Provincial Governments from 1.2% of the GDP to 2.2% of the GDP, an increase in absolute terms of Rs 850 billion, based on the GDP of 2022-23. Both Federal and Provincial Governments will need to accord the highest priority to the above type of projects in incremental PSDP allocations. In particular, development and better management of water resources will need to be accorded the highest priority by the Federal Government by faster completion of the Dam projects. The pace of construction is slow if the present low allocations of funds continue on these projects, as shown in Box 15.3. Box 15.3: Cost and Federal PSDP Allocations to Major Dam Projects (Rs in Billion) Project Cost Throw- Allocation in Annual Rate of forward 2022-23 Completion* PSDP(%) 1. Diamer-Bhasha Dam Project 655 757 27 5.7 2. Mohmand Multi-Purpose 310 256 12 4.7 Dam Project The allocation in 2022-23 is too small, and at this rate, the projects will take up to 20 more years to be completed. 122

Policies, Reforms and Laws for Higher HSI 15.4 Education and Health The process of achieving higher human development is an integral part of promoting the human security of the people of Pakistan for achieving higher living standards and reducing the vulnerability to negative shocks. The Statistical Annexure on HSI Indicators of Selected Countries shows that Pakistan has the lowest ranking among the twelve countries in expenditure on education and health. Within this low level of expenditure, the changing priorities are shown in Box 15.4. Box 15.4: Changing Priorities in Education and Health Expenditure EDUCATION 2015-16 2020-21 BY LEVEL Expenditure in Education(% Share) Primary 35.0 32.3 Secondary 31.5 35.0 General Universities/ Colleges 19.0 15.5 Professional& Technical Universities/ Colleges 5.4 5.7 Technical and Vocational Education 1.5 1.2 Others 7.6 10.1 BY TYPE Current 84.6 88.2 Development 15.4 11.8 HEALTH 2015-16 2020-21 BY TYPE Expenditure in Health(% Share) Curative Health 67.7 43.0 Mother and Child 0.3 1.5 Preventive Health 9.7 31.8 Others 22.3 23.2 Current 69.6 81.3 Development 30.4 18.7 The development expenditure share has declined in both services. This has limited the rate of expansion in the coverage of these services. Box 15.4 shows that the share of education expenditure at the primary level has declined. This is despite the high percentage of out-of-school children. Similarly, not only is the share of vocational education very low, but it has also declined. 123

Human Security in Pakistan The pattern of expenditure on health has evolved in the right direction, with a rising share of preventive health. In both services, the rate of expansion in coverage has visibly slowed down. Implementation of the Financing Plan will enable an increase of almost 0.75% of the GDP in expenditure on health and education. As emphasized in the National Security Policy, there is a need to allocate more resources for strengthening disease surveillance and instituting epidemic response mechanisms. Also, there is a need for improvement in the network and quality of schools. Further, a moratorium needs to be imposed on the establishment of new general universities, as graduates and undergraduate entrants into the labor force have a very high unemployment rate of over 25%. Instead, the focus should be on the establishment of a network of IT Institutes to promote exports. 15.5 Gender Inequality The sub-component in the HSI relating to gender inequality has shown some improvement since 2015-16 by 1.2%. However, Pakistan has the worst ranking among the twelve countries in gender inequality. The evidence points primarily to differences in the labor market between female and male workers, as follows: i. The labor force participation rate is relatively low at 31% of males. For example, this rate was 21% for females and 68% for males in 2020-21. ii. The unemployment rate is substantially higher for females at over 63% more than that of males. For example, in 2020-21, the unemployment rate for females was 8.9%, while it was 5.5% for male workers. iii. There are big differences in wages in the same occupation between female and male workers, with the latter receiving significantly higher wages. For example, female professionals, on average, receive only 70% of the remuneration of male professionals. The time has come to take strong affirmative action in the labor market for females. This will include the following: i. Similar to job quotas among the provinces for entry positions into different public services, there should also be a national quota for women in these jobs. ii. A law should be enacted by each Provincial Government where equal access and equal pay be ensured for women, especially in the private sector. iii. As an incentive, an employer may be given a tax credit of 10% on the annual increase in wage and salary payments to female employees in the establishment. 124

Policies, Reforms and Laws for Higher HSI 15.6 Food Security Food prices have escalated by 50% from March 2022 to March 2023. This reflects supply shortages due to the damage inflicted on standing crops and loss of livestock by the floods. Further, with a large depreciation of the rupee, the prices of basic imported food items have also gone up sharply. A critical problem that has emerged is the depletion of wheat stocks. According to the 2021-22 Pakistan Economic Survey, the wheat stocks were only 1.8 million tons as of the end of May 2022 as compared to over 8 million tons in June 2021. This ought to have led to a high level of imports during 2022-23. The actual quantity imported is 2.2 million tons from July 2022 to February 2023, as compared to over 3.3 million tons during the same period in 2020-21. The supply shortage and, consequently the escalation in the price of the staple food item, wheat flour, has led to a very big increase in its price of almost 70% from March 2022 to March 23. The government has offered a free wheat bag to BISP members during the month of Ramadan, but this has led to deaths due to trampling of the queues. This modality of distributing wheat needs to be abandoned. There is a need for a number of major steps to increase food security, as follows: i. As recommended above, following the implementation of a big increase in the size of the BISP, there should be an increase in the cash transfers to enable the purchase of wheat flour by poor households at higher prices. ii. Despite the foreign exchange shortage, top priority must be given to importing urgently at least another 3 million tons of wheat. 15.7 Energy Security Pakistan today faces the problem of very high energy prices. Recently, the tariffs for domestic, commercial and industrial consumers have been raised by 60% to 100% in the case of natural gas and by 40% to 60% in the case of electricity. The other growing problem is the increasing inability to import energy to the extent required due to the severe shortage of foreign exchange. Consequently, power load-shedding is likely to peak once again in the coming months while gas supplies remain restricted. The level of petroleum prices has gone up substantially during the last year due to the ongoing large rupee devaluation and the imposition of a large petroleum levy of Rs 50 per liter. As the international oil prices rise following the OPEC quotas, there will be a continuing increase in domestic POL prices. 125

Human Security in Pakistan The options are limited in the short-run, but for greater energy security in the medium run the following steps will need to be completed: i. Switch to power generation by renewable energy from wind, water and solar sources. In particular, as highlighted already, the process of construction of various dams will have to be given top priority by big increases in PSDP allocations to increase the share significantly of renewable hydel power. ii. Concerted efforts will have to be taken to conserve energy by appropriate changes in timings in markets, offices, and other public places. The local administrations will have to effectively discharge the responsibility of ensuring adherence to these timings. iii. Efforts will have to be made by NTDC and the DISCOs to minimize transmission, distribution and billing losses. The option of provincializing the management of DISCOs may be explored. This is the case with the States in India. iv. Big incentives may be offered for oil and gas exploration in the country. 15.8 Regional Disparities The earlier chapters have clearly highlighted the falling behind of Balochistan in terms of the growth rate of per capita income. Today, the province has a real per capita income which is 30% less than the national average. Fifteen years, it was only 11% less than the average for the country. The process of growth in the Province has been restrained by the emerging shortage of water for agriculture, a process of deindustrialization over the last two decades, depressed construction activity, depletion of gas reserves, an underdeveloped financial sector, and limited coverage of infrastructure and services in the presence of very land density of population, which is one-seventh of the national average. Also, the security situation is relatively fragile. The 7 th NFC did recognize the low population density of the Province, and in the horizontal share among the four Provinces, weight was given to the inverse of the population density. But the weight was very small, as shown in Box 15.5, of only 2.7%. 126

Policies, Reforms and Laws for Higher HSI Box 15.5: The NFC Awards The Seventh NFC Award, which was announced in 2009-10, is still operational. According to this Award the horizontal share of the four Provinces from the Federal Divisible Pool of Taxes is based on the following weights: Population Backwardness Revenue Collection Inverse Population Density The resulting shares of the Provinces are as follows: Percentage 82.0 10.3 5.0 2.7 Punjab Sindh Khyber-Pakhtunkhwa Balochistan Percentage 51.74 24.55 14.62 9.09 Balochistan gets a higher share than its population share because of more backwardness and much lower population density. Therefore, there is a well-defined need to ensure the strength of the Federation of Pakistan by ensuring that there is more rapid growth in Balochistan and it emerges from a period of negative growth in real per capita income and extremely high incidence of poverty of over 70%. The following steps need to be undertaken: i. During the deliberations of the 10 th NFC, efforts must be made to arrive at a consensus whereby the share in the horizontal sharing formula of inverse land density is increased from 2.7% to 5%. ii. There was a time when big fiscal incentives in income tax and import duties were given for the location of new investments in the province of Balochistan. These should be fully restored. iii. Balochistan is surplus in the generation of electricity, yet it experiences a relatively high level of load shedding. There is a need for improvement in the power distribution system. iv. Federal support should be forthcoming to Balochistan in the form of joint investment in highways, water resources and oil/gas exploration. Federal funds should be diverted from projects in other Provinces to Balochistan. 127

Human Security in Pakistan There is a need once again to emphasize that from the viewpoint of national security and strengthening of the Federation, faster development of Balochistan must be accorded the highest priority. 15.9 Governance and Democracy The list of comprehensive reforms in governance and functioning of democracy is given below: ‘Good’ Economic Governance • Enhanced and more effective role of the Constitutional Forum, the National Economic Council(NEC), with the Planning Commission as the Secretariat. • More active role of the Constitutional forum, the Council of Common Interests(CCI), on matters related to Federal Legislative List-II. •‘Top-down’ planning should be replaced with‘bottom-up’ planning, which is more in line with the Federal structure of Pakistan. • Improvements in the Economic Information System with regular preparation and dissemination of estimates of quarterly GDP series and Provincial Income Accounts. Voice, Transparency and Accountability • Establishment of an Information Commission as per the provisions of the Right of Information Act of 2010 so as to facilitate greater public access, especially to Government financial transactions. • The National Accountability Bureau must be required to submit an Annual Report to the Parliament. • The MOF website must place the latest financial report of each SOE. The FBR must release an annual report on the latest position of tax expenditures, that is, the revenue losses due to tax exemptions, concessions and reliefs. Strengthening Regulatory Agencies • The Competition Commission may be endowed with the legal powers of a Consumer Court of the type in India. • The SBP may revert to the practice of preparation of an Annual Credit Plan with sectoral targets. • NEPRA must play a stronger role in regulating the power sector by ensuring the merit order of plants, timely adjustment of power tariffs, and focus on system losses to limit the growth in circular debt. 128

Policies, Reforms and Laws for Higher HSI • Local Price Control committees under the Deputy Commissioner must be revived. Ease of Doing Business • Transition to a digital economy. Government agencies must take the load in the digitalization of a wide range of transactions. • Rationalization of small withholding taxes. Strengthening the Federation There is a need for full implementation of the 18 th Amendment as follows: • Small Divisions can be merged with larger Divisions in the Federal Government. This will bring down the number of divisions by over a dozen. • Vertical Federal programs related to functions in Federal Legislative List-II should be financed jointly by the Federal and Provincial Governments. This includes Federal spending on health, higher education, and population planning. • Management of Regulatory Functions is in FLL-II. Therefore, all boards of Regulatory Agencies must have representation of each Province. The Annual Report of each Agency should be reported to the CCI. • Labor-related functions have been transferred to Provincial Governments in the 18 th Amendment. Therefore, the EOBI and revenues of the Workers’ Welfare Fund(WWF) may be transferred to these Governments with an appropriate sharing formula, like collection. Rightsizing the Federal Government Devolution of functions to Provincial Governments after the 18 th Amendment has not led to a significant contraction in the Federal Government. The employment in the Secretariat, autonomous bodies, and attached departments is almost 1 million. There are 40 Divisions and 33 Ministries. The State-Owned Enterprises(SOEs) imposed a big net burden of Rs 1525 billion on the Federal Budget in 2021-22. The recommendations include the following: • Undertaking exercise on‘zero-base’ budgeting of attached departments and autonomous bodies. • Privatization of SOEs as per the recent Triage Report of MOF, highlighted in Chapter 14. 129

Human Security in Pakistan Consensus on the 10 th NFC Award The 7 th NFC Award had a tenure up to 2014-15. However, it continues to the operative because of the failure of the 8 th and 9 th NFCs to achieve consensus on an Award. The 10 th NFC has recently been constituted. Progress may be facilitated by the following: The methodology of the National Resource Picture and initial allocation of funds to priority functions used by the 5 th NFC should be adopted by the 10 th NFC. The weight attached to population density should be increased from 2.7% to 5% to specifically benefit the Province of Balochistan. Items(d) to(h) in the TOR of the 10 th NFC should be included in the Award. There is significant scope, as per the Constitution, for sharing common functions, and the 10 th NFC may specify the cost-sharing formula among the Federating Units in different functions. Devolving to Local Governments The Article 104A in the 18 th Amendment has recognized local government as the third tier of Government to be adequately endowed with political, administrative, and financial authority and responsibility. Recommendations for successful devolution to these governments are as follows: i. The‘subsidiarity’ principle should be adopted in the allocation of functions to local governments. ii. From the viewpoint of an effective role, the ideal form may be a‘two-tiered’ local government with the top tier having the capacity to deliver services and collect revenues while the lower tier is small enough to ensure peoples’ participation in the choice of services and accountability in the delivery of services. The allocation of taxes to local governments should be motivated by the need to link taxation to benefits, thereby increasing the willingness to pay taxes. As such, the property tax and the local rate should be allocated to local governments. Collection responsibility should rest with the top tier of local government. 130

The Vision of Human Security PART IV REGIONAL HSI IN PAKISTAN 131

The Provincial Human Security Index Chapter: 16 THE PROVINCIAL HUMAN SECURITY INDEX There is a dire need for construction of a Human Security Index at the Provincial Level in Pakistan. Following the fundamental changes to the Constitution through the 18 th Amendment, many more functions have been transferred to Provincial Governments. Simultaneously, the 7 th NFC Award transferred a substantially larger share of federal revenues to these Governments. The Provincial Governments now play a key role in ensuring human security to the population within their respective jurisdictions. This includes the provision of basic services like law and order, justice, education, health, water supply and sanitation and roads. They are also responsible for policy and project interventions, especially in the area of agricultural development and natural resources. This chapter is organized as follows. There is first a summary of the number of indicators in each component of the Provincial HSI. This is followed by a listing of these indicators, the sources of data, and the latest year for which relevant data is available. Efforts are made to highlight the inter-provincial disparities in some key indicators. The next section presents the provincial index values in the four components of the HSI, namely, freedom from‘fear,’ freedom from‘want,’ freedom from‘inequality’, and governance. The last section then highlights the magnitudes in major groups in the HSI in each province. 16.1 The Number of Indicators The number of indicators in different parts of the HSI are presented in Table 16.1, along with the sources of data and the latest year for which information is available. 133

Human Security in Pakistan Table 16.1: Indicators in the Provincial HSI Group 1. Freedom from‘Fear’ Extent of Self-Reliance Personal Safety Environmental Protection 2. Freedom from‘Want’ Income Food Security Employment and Wages Energy Security Shelter Education Health Women Children 3. Freedom from‘Inequality’ Inequality Intra-Provincial Disparity Poverty and Social Protection Gender Inequality 4. Governance TOTAL Number of Indicators 12 3 6 3 48 3 6 7 5 10 5 3 6 3 14 2 2 3 7 4 78 As shown in Table 16.2, as many as 78 indicators have been identified for construction of the HSI. This is a diverse group and highlights different dimensions of human security in the provincial context. 134

The Provincial Human Security Index Table 16.2: List of Indicators Group/Indicator 1. FREEDOM FROM‘FEAR’ EXTENT OF SELF-RELIANCE 1. Provincial Own-Revenues as% of GRP 2. The extent of Self-Financing of Provincial Expenditure 3. Trade Deficit as% of GDP PERSONAL SAFETY 1. Law and Order Expenditure as% of GRP 2. Per Capita Expenditure on Law and Order 3. Number of Terrorist Attacks 4. Number Killed in Terrorist Attacks 5. Incidents of Crimes per 1000 Population 6. Number of Accidents per million Population ENVIRONMENTAL PROTECTION 1. Extent of Forest Area 2. Growth Rate of Forest Area 3. Irrigated Area as% of Cultivated Area 2. FREEDOM FROM‘WANT’ INCOME 1. Per Capita Gross Regional Product at Constant Prices 2. Per Capital Gross Regional Income at Constant Prices* 3. Per Capita Household Income FOOD SECURITY 1. Per Capita Food Crop Production 2. Per Capita Livestock Production 3. Food Expenditure per Adult Equivalent 4. Relative Prices of Basic Food Items 5. Production as% of Consumption of Basic Food Items 6.% of Very Food Insecure Population EMPLOYMENT AND WAGES Latest Year Source of Data* 2021-22 2021-22 2019-20 MOF, FO MOF, FO Pasha(2022) 2020-21 2020-21 2020-21 2020-21 2019-20 2019-20 MOF, PRSP MOF, PRSP PIPS PIPS SYB, PBS SYB, PBS 2020 PSY 2020 PSY 2020 PSY 2020-21 2020-21 2018-19 Pasha(2021) Pasha(2021) HIES 2015-16 2015-16 2018-19 2022 2018-19 2019-20 Pasha(2018) Pasha(2018) HIES PBS PBS/HIES PSLSMS 135

Human Security in Pakistan Table 16.2: List of Indicators Group/Indicator 1. Labor Force Participation Rate(%) 2. Unemployment Rate 3.% Employment in the Informal Sector 4.% Employees 5. Skill Premium 6.% of Marginal Workers in the Augmented Labor Force 7. Relative Wage in Public vs Private Sector ENERGY SECURITY 1. Per Capita Electricity Consumption 2. Incidence of Power Outages 3. Per Capita Gas Consumption 4. Electricity Generation as Ratio of Consumption 5.% of Electricity from Renewable Sources SHELTER 1.% of Housing with Pucca Roofs 2.% of Housing Units with Pucca Walls 3.% of Housing Units with only One Room 4.% of Housing Units with Tap Water 5.% of Housing Units with Electricity 6.% of Housing Units with Gas 7.% of Housing Units with Clean Fuel 8.% of Housing Units with Flush toilet 9.% of Housing Units with Solid Waste Disposal 10.% of Owner-Occupied Housing Units SOCIAL DEVELOPMENT – EDUCATION 1. Literacy Ratio 2. Gross Enrollment Ratio – Primary 3. Gross Enrollment Ratio – Middle 4. Gross Enrollment Ratio – High Latest Year 2020-21 2020-21 2020-21 2020-21 2020-21 2018-19 2020-21 Source of Data* LFS LFS LFS LFS LFS LFS LFS 2021 2021 2019-20 2021 2021 NEPRA NEPRA PSY NEPRA NEPRA/PBS 2019-20 2019-20 2019-20 2019-20 2019-20 2019-20 2019-20 2019-20 2019-20 2019-20 PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS 2019-20 2019-20 2019-20 2019-20 PSLSMS PSLSMS PSLSMS PSLSMS 136

The Provincial Human Security Index Table 16.2: List of Indicators Group/Indicator 5. Public Expenditure on Education as% of GRP SOCIAL DEVELOPMENT – HEALTH 1. Hospital Beds per Million Population 2. Doctors per Million Population 3. Public Health Expenditure as% of GRP STATUS OF WOMEN 1. Female Labor Participation Rate 2. Female Unemployment Rate 3.% of Females with Pre-Natal Consultation 4.% of Females with Skilled Birth Attendants 5.% of Females with Post-Natal Consultation 6. Female Literacy Rate STATUS OF CHILDREN 1.% of Out-of-School Children 2.% of Child Labor 3.% of Children(1 to 2 years) Fully Immunized 3. FREEDOM FROM‘INEQUALITY’ INEQUALITY 1. Modified PALMA Ratio of Household Income 2. PASHUM Ratio of Income INTRA-PROVINCIAL DISPARITY 1. Inter-Division Inequality in HDI 2. Income Inequality between Urban and Rural Areas POVERTY AND SOCIAL PROTECTION 1. Level of Poverty 2. Public Expenditure on Social Protection and Anti-Poverty 3.% of Social Insurance and Gifts in Household Income 3. FREEDOM FROM‘INEQUALITY’ Latest Year 2020-21 Source of Data* PRSP 2020 2020 2020-21 PSY PSY PRSP 2020 2020 2020 2020 2020 2020 2020 2020 2020 LFS LFS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS LFS LFS 2018-19 HIES 2018-19 HIES 2019-20 2018-19 Pasha(2022) HIES 2015 2021 2019 UNDP PRSP HIES 137

Human Security in Pakistan Table 16.2: List of Indicators Group/Indicator GENDER INEQUALITY 1. Relative Labor Force Participation Rate 2. Relative Unemployment Rate 3. Relative Literacy Rate 4. Relative Primary Enrollment Rate 5. Relative Middle Level Enrollment Rate 6. Relative Matric Enrollment Rate 7. Relative Wage 4. GOVERNANCE GOVERNANCE 1. Public Admin& Defence Sector as% of GDP 2. Appeals Pending in High Court per 1 million population 3. Coverage of Police Stations *Inclusive of remittances inflows Latest Year Source of Data* 2020 2020 2020 2020 2020 2020 2020 LFS LFS PSLSMS PSLSMS PSLSMS PSLSMS LFS 2016 2020 2020 Pasha(2018) PSY PSY The values of the indicators and their conversion into indices are presented in the Statistical Appendix. Highlighted next are some areas of regional disparity. 16.2 Extent of Regional Disparity The UNDP, in its National Human Development Report of 2020 for Pakistan, has quantified the Human Development Index of each Province. The estimates are given in Table 16.3 below. Table 16.3: Human Development Index of the Provinces of Pakistan 2006-07% Deviation from National HDI 2018-19% Deviation from National HDI Punjab 0.527 1.3 0.572 0.4 Sindh 0.529 1.7 0.574 0.7 Khyber-Pakhtunkhwa 0.491-5.6 0.546-4.2 Balochistan 0.470-9.6 0.473-17.0 Pakistan 0.520 0.570 Source: UNDP[2020] Cumulative Growth Rate (%) 8.5 8.5 11.2 0.6 9.6 138

The Provincial Human Security Index Table 16.3 highlights the following: i. There are significant differences in the HDI of the four Provinces. While the two more developed provinces, Sindh and Punjab, are close to each other, the two smaller provinces are relatively underdeveloped, especially Balochistan. ii. Khyber-Pakhtunkhwa has shown a faster rate of improvement and is beginning to catch up. However, Balochistan is falling further behind. There is a need to find the indicators in which it is more backward. Turning to the HSI, the first key indicator is the level of per capita income of each Province, shown in Chart 16.1. This is the first-time regional disparities have been estimated in the context of Pakistan after the late 90s. Chart 16.1: Per Capita Gross Regional Income by Province, 2020-21 (Rs in‘000) The estimated national average per capita income is Rs 264,000. Therefore, three provinces are below the national average, as shown below, while Sindh has a significantly higher per capita income. Province Punjab Sindh Khyber-Pakhtunkhwa Balochistan % Deviation from National Average -4.2 23.9 -21.6 -31.4 This confirms the existence of major regional disparities in Pakistan. 139

Human Security in Pakistan From the viewpoint of the regional disparities, another key indicator is the variation in the incidence of poverty among the provinces. The last reliable estimate is for 2014-15, also by UNDP. The poverty measure used is multi-dimensional poverty. The province-wise estimates are given below in Chart 16.2. Chart 16.2: Incidence of Poverty in Each Province, 2014-15 (% of the population) Here, the findings are somewhat different than the disparities in per capita income. Sindh has a higher per capita income but has a higher incidence of poverty. This is consistent with the dualistic nature of its regional economy, where at one extreme is the highly developed primate city of Karachi and at the other extreme some very underdeveloped rural areas. Balochistan, consistent with its relatively low per capita income, had a very high incidence of poverty of over 71%. Clearly, this province faces the biggest challenge of providing the basic rudiments of human security to its people. 16.3 The Provincial HSI The derived provincial HSI is presented overall and by component in Table 16.4. 140

The Provincial Human Security Index Table 16.4: The Provincial Human Security Index* Punjab Sindh Khyber- Balochistan Pakhtunkhwa 1. FREEDOM FROM‘FEAR’ • Extent of Self-Reliance • Personal Safety • Environmental Protection 2. FREEDOM FROM‘WANT’ • Income • Food Security • Employment and Wages • Energy Security • Shelter • Education • Health • Women • Children 3. FREEDOM FROM‘INEQUALITY’ • Income Inequality • Intra-Provincial Disparity • Poverty and Social Protection • Gender Inequality 4. GOVERNANCE OVERALL HSI 0.406 0.314 0.523 0.405 0.470 0.508 0.612 0.494 0.304 0.373 0.492 0.281 0.662 0.700 0.686 0.618 0.704 0.707 0.721 0.371 0.469 0.623 0.777 0.673 0.461 0.472 0.589 0.439 0.555 0.362 0.613 0.319 0.449 0.519 0.485 0.401 0.393 0.316 0.458 0.456 0.472 0.485 0.363 0.284 0.425 0.397 0.386 0.339 0.296 0.332 0.254 0.404 0.578 0.443 0.345 0.621 0.608 0.708 0.757 0.654 0.392 0.402 0.430 0.343 0.227 0.255 0.390 0.272 0.200 0.414 0.306 0.211 0.299 0.313 0.211 0.290 0.266 0.392 0.576 0.784 0.151 0.347 0.243 0.307 *Due to the non-linear technique adopted for aggregation of indicators, they cannot be aggregated by using population weights. We are also now in a position to highlight the regional disparity in each dimension of human security among the four Provinces of Pakistan. The indices for different dimensions are presented in Chart 16.3. 141

Human Security in Pakistan Chart 16.3: Provincial Indices in the Four Dimensions the HSI FREEDOM FROM ‘FEAR’ FREEDOM FROM ‘WANT’ P= Punjab; S= Sindh; K= Khyber-Pakhtunkhwa; B= Balochistan FREEDOM FROM ‘INEQUALITY’ GOVERNANCE Some important conclusions emerge from the above charts as follows: i. The Province of Punjab has to focus especially on freedom from‘fear’ and‘want’. It performs well in the index of inequality. ii. Sindh performs well in freedom from‘want’ because of its greater self-reliance and better balance of trade. However, inequality is at a peak in this province, and fiscal policies, in particular, will have to be very progressive. 142

The Provincial Human Security Index iii. Khyber-Pakhtunkhwa is also characterized by a relatively low level of inequality, but it has to work strongly towards achieving greater freedom from‘fear’ and‘want’. iv. Balochistan does poorly in all dimensions. As highlighted earlier, this province faces the biggest challenge to raise the HSI for its people. v. The performance of all Provincial governments is generally poor in the area of governance. The final HSI value, inclusive of all the dimensions, is shown in, the chart 16.4 below. Chart 16.4: The Overall HSI of each Province All four HSI are low at below 0.5. Sindh, as expected, has the highest HSI, followed closely by Punjab and Khyber-Pakhtunkhwa. Balochistan remains with a low HSI and will need the greatest support to improve its HSI. 16.4 Strategy for Increasing the Provincial HSI The six most backward components in the HSI of each Province are shown in Table 16.5. It provides insights into the appropriate strategy of each Provincial Government to raise the HSI of its Province. 143

Human Security in Pakistan Table 16.5: Six Relatively Low* Components of the HSI by Province PUNJAB SINDH Components Index Value Components • Health 0.281• Intra-Provincial Disparity • Energy Security 0.304• Education • Extent of Self-Reliance 0.314• Income Inequality • Governance 0.371• Energy Security • Shelter 0.373• Food Security • Environmental Protection 0.405• Health PROVINCIAL HSI 0.469 PROVINCIAL HSI KHYBER-PAKHTUNKHWA BALOCHISTAN • Energy Security 0.254• Poverty • Extent of Self-Reliance 0.284• Income • Food Security 0.296• Energy Security • Employment and Wages 0.332• Health • Income 0.339• Extent of Self-Reliance • Women 0.345• Governance PROVINCIAL HSI 0.430 PROVINCIAL HSI *Below the Provincial HSI Index Value 0.316 0.319 0.393 0.362 0.439 0.449 0.485 0.151 0.200 0.211 0.211 0.227 0.243 0.307 The six relatively low components of the HSI of each Province are shown in a ranked order by size of the gap with respect to the overall HSI of the Province in Table 16.5. Some key conclusions emerge from the table, as follows: The most backward component varies among the four Provinces. It is health in Punjab, inter-provincial disparity in Sindh, energy security in Khyber-Pakhtunkhwa and poverty in Balochistan. Therefore, the strategy for raising the HSI will vary among the provinces. i. Punjab Government will need to find more resources and allocate them for expanding the curative health network in the province, especially in light of its large population. ii. Sindh is a truly‘dual’ economy. At one extreme is the national primate city of Karachi, and at the other extreme are very underdeveloped rural areas. There will have to be a transfer of resources to the more backward districts through equalizing Provincial Finance Commission Awards. iii. Khyber-Pakhtunkhwa is energy insecure, despite large hydel power generation. It experiences, by far, the highest incidence of power outages. There is a dire need for improvement in its power distribution network. Also, there are no gas resources in the province. Consequently, it has relatively low gas consumption. 144

The Provincial Human Security Index iv. As expected, Balochistan has the lowest value in the index of poverty. It has by far the highest incidence of poverty at 71% of the population. Not only will the sources of poverty have to be tackled, but a greatly expanded poverty alleviation program is required, supported by both the Federal and Provincial Governments. 145

The Human Security Index at the Divisional Level of the Provinces Chapter: 17 THE HUMAN SECURITY INDEX AT THE DIVISIONAL LEVEL OF THE PROVINCES !"#$%&% %(%" *'),4+&(.') % 0$ F)$ 1-2.,(-)9$("#$.)*'+#$#3-,(.*.(5$'=$-*(4-3$'%$.+&4(#8$ ,&#)8.)/$')$ "'4,.)/$.,$*3',#$('$4).(50$!"#%#='%#9$(".,$.,$("#$-&&%'&%.-(#$.)8.*-('%0$ $ The provinces of Pakistan are large regional entities. For example, the population of Punjab !"#$>-%.-63#,$4,#8$='%$8#%.>.)/$("#$IKF$-($("#$8.,(%.*($3#>#3$-%#$&%#,#)(#8$.)$A"-%($DH0D0$ at the time of the latest population census in 2017 was over 110 million. Therefore, from !"#$8-(-6-,#$.,$/.>#)$.)$K(-(.,(.*-3$O))#74%#EFV0$ the viewpoint of targeting initiatives for raising the level of the human sector, there is a need for disagg 7 re 8 g 9 a :; t % i < n '= g <% regionally the geographical area and population within provinces. .?@AH>J%CJ>@%FE:%7E?J;:CH;AE?%EF%;8>%0/.% The pr 9 o ? p @ o %; s 8 e >% d 0d .% i 9 s ; a %; g 8 g >% r / e AB g A a JA t E i ? o % n $> i B s >D% to take the construction of the HSI down to the division level. This is the highest administrative unit after the Provincial government, headed usually by a Commissioner. There are 30 divisions in Pakistan, with 9 divisions in Punjab and 7 divisions each in the other three provinces. On average, the current size of the population is about 7.5 million. The analysis was not carried down one step further to the district level because there are over 170 districts in Pakistan, with only 1.3 million on average in each district. This would have made it difficult to identify the regional patterns and clustering in terms of the magnitude of the HSI. 17.1 Construction of the HSI The first step has been to estimate the HDI of each Division. Data is generally available at the district level and is aggregated to the division level. " The basic problem is the estimation of the per capita income at the division or district level U>$!F&4#;$!&(!A*0*!(&#!*55!0>$!Q*#6*R5$Bb2/%6;$B!6B!0>$! 2 in Pakistan. The proxy used for deriving the per capita income is housing consumption . In ./0'-,/*%1'2'*3%4,/*5/65-%/*5%4)7'/(%89/-:69;9*,%4:629<=%.>4% Pakistan, the income elasticity of actual or imputed spending on housing is close to unity. $ Therefore, this is the appropriate indicator. % 2 Th $ is is constructed as follows: %\9)(%)(%7-+(*'17*$5%"(%:-33-;(^% !"#$%&'()$ ( ,-$.& )-$./01 % *++ ! a9$'$%M%p%4.$'"#$%+126$'%W :%'h e 2 re (%, R $'% = 9A 1( v )+ e # r % a 1 g +) e *0%! n M u % m p%m be %r :% o 9f 1 r ( o )+ o #% m 1+ s )*( p %; e ) r *9 h %, o 1 u 77 s " in %'g -: u 0% nit, PR=% of housing units with pucca roof, !a%p%m%-:%9-1()+#%1+)*(%;)*9 P %, W 177 = "% % ;" o 33( f @% housing units with pucca walls. ! !-*./0+'1M2'$-0'9()*7'&0:(+4/,'D7E0F'*/'/-0'<4=45467*>'O0=0>'68'/-0'A+6=47:05' ! 147

Human Security in Pakistan The variables used for deriving the HSI at the district level are presented in Chart 17.1. The database is given in Statistical Annexure-IV. Chart 17.1: Indices used for Construction of the HDI and the HSI at the Division Level INDICES USED FOR CONSTRUCTING HDI AND HSI HUMAN DEVELOPMENT INDEX HUMAN SECURITY INDEX INCOME EDUCATION HEALTH Proxy of Housing Standard: Number of Rooms per Housing Unit % Pucca Roofs and Walls Literacy Rate School Enrollment Primary Middle High Ratio of female to male literacy % of children immunized fully % of disabled % falling sick The Source of Data for all the Variables/Indices is the Pakistan Living Standards and Social Measurement Survey, PBS OTHER INDICATORS % of population that is food insecure % of households with access to gas, electricity, tap water and flush toilet 17.2 The HSI at the Division Level The estimates are very revealing. First, there are very large differences in the HSI of divisions within a Province. An extreme example is Sindh. Karachi division, with the primate city, Karachi, Pakistan, has a HSI value of 0.689. the most insecure division in the province is Bhanbhore, with an HSI value of 0.256, lower by 63% than the Karachi division. The distribution of divisions by level of HSI is given in Chart 17.2. 148

The Human Security Index at the Divisional Level of the Provinces Chart 17.2: Distribution within Provinces of HSI of the Divisions HSI<0.4 0.4 £ HSI< 0.5 P U N J A B Red Yellow • Bahawalpur 0.366• Sargodha 0.484• • D.G. Khan 0.334• Multan 0.423• • • • • Hyderabad • Sukkur SINDH 0.389• Shaheed Benazirabad 0.410• 0.361 • Larkana 0.356 • Mirpurkhas 0.303 • Bhanbhore 0.256 • Kohat 0.388 KHYBER-PAKHTUNKHWA • Peshawar 0.511 • Bannu 0.380• Hazara 0.454 • D.I. Khan 0.326• Mardan 0.416 • Malakand 0.401 • Sibi 0.327 BALOCHISTAN • Makran 0.470 • Kalat 0.315• Quetta 0.402 • Rakshan 0.312 • Zhob 0.192 • Naseerabad 0.192 TOTAL 15 9 0. 5 £ HSI Green Gujranwala Rawalpindi Faisalabad Lahore Sahiwal Karachi 6 0.580 0.570 0.515 0.517 0.515 0.689 149

Human Security in Pakistan Therefore, 15 of the divisions have a HSI of below 0.4. Karachi is the only division with an HSI above 0.6. 8 divisions have an HSI between 0.4 and 0.5, and 6 above 0.5 and below 0.6. The distribution of population by level of HSI is given in Table 17.1. Table 17.1: Share of Population on the Provinces in Different Levels of HSI HSI Punjab Sindh Khyber- Balochistan Pakhtunkhwa > 0.6 0.0 32.6 0.0 0.0 > 0.5 £ 0.6 61.0 0.0 24.3 0.0 > 0.4 £ 0.5 18.6 10.8 55.3 42.7 £ 0.4 20.4 56.6 20.4 57.3 TOTAL 100.0 100.0 100.0 100.0 (%) Pakistan 7.9 36.9 23.6 31.5 100.0 There are big differences in the distribution of population by level of HSI among the Provinces. Punjab has 61% of the population with HSI in the range of 0.5 to 0.6. The distribution is very skewed in Sindh. Almost 33% of the population of the Province, which is in Karachi, has a HSI above 0.6, and the majority with a low HSI below 0.4. Khyber-Pakhtunkhwa has the majority of the population with a moderate level of HSI between 0.4 to 0.5. Balochistan has the lowest HSI, and over 57% of its population has a very low HSI below 0.4. The relationship between the HDI and the HSI at the Divisional level in Pakistan is shown in Chart 17.3. Despite the presence of some outliers, the overall rank correlation coefficient between HDI and HSI of the 30 divisions is high at 0.815. The magnitude of intra-provincial inequality in the HSI is presented in Table 17.2. two measures have been used. The first is the modified PALMA ratio, which is the ratio of the HSI of the top and the bottom division in the province. The second is the PASHUM ratio. This is a new measure of inequality, first developed by UNDP[2020]. 150

The Human Security Index at the Divisional Level of the Provinces Chart 17.3: Relationship between HDI and HSI at the Division Level HSI Ranking Divisions: l Punjab l Sindh l Khyber-Pakhtunkhwa l Balochistan Table 17.2: Level of Inequality in each Province PALMA RATIO Ranking Punjab 1.7365 3 Sindh 2.6914 1 Khyber-Pakhtunkhwa 1.5674 4 Balochistan 2.4481 2 PASHUM RATIO 0.0654 0.3097 0.0734 0.1618 Ranking 4 1 3 2 Sindh has the highest regional inequality, followed by Balochistan. According to the PASHUM ratio, Khyber-Pakhtunkhwa has the third highest level of inequality, and Punjab has the lowest inequality. This is in contrast to the result obtained with the PALMA ratio. This chapter closes with five charts. The first chart presents the regional distribution of the HSI in Pakistan. The next four charts show the location of divisions along with the magnitude of the HSI in each Province. 151

Human Security in Pakistan In particular, the backwardness criteria in terms of the HSI magnitude can be used for distribution within a province of resources under the Provincial Finance Commission Awards. The allocation will initially be at the division level, followed by eq ! u " a # l $ p % e &% % r ( c * a " pita distribution to districts within a division. $ O = V D E 8 R . A * L B L B N !7 A * T / I 1 O = N 7* A B L !. R * A 7 N G K 17 IN E G ! O = F > H !% S 4 I 1 B !_ Y :! D " I 1 V D I 1 S 41 I = O 7 N !1 I 7 N !+ P * A G K 14 I / ST * A 7 N ! ' $ $$ !-*./0+'1M2'$-0'9()*7'&0:(+4/,'D7E0F'*/'/-0'<4=45467*>'O0=0>'68'/-0'A+6=47:05' ! 152

The Human Security Index at the Divisional Level of the Provinces DISTRIBUTION WITHIN PROVINCES OF HSI OF THE DIVISIONS P U N J A B 153

Human Security in Pakistan $ "14/.1_5/1=7!31/%17!+.=D17984! DISTRIBUTION WI = TH >! IN PROVINCES OF % H 4 S 1 I != O > F !/ T % H 8 E ! D " I 1 V D I 1 S 4 I 1 O = N 7 S 4! "!9 S ! I : ND !? H !6! !"#$%&% %(F" % $ !-*./0+'1M2'$-0'9()*7'&0:(+4/,'D7E0F'*/'/-0'<4=45467*>'O0=0>'68'/-0'A+6=47:05' ! 154

!"#$%&% %(G" The Human Security Index at the Divisional Level of the Provinces $ "14/.1_5/1=7!31/%17!+.=D17984! =>! DISTRIBUTION WITHIN PROVINCES %41!=>!/%8!"1D141=74! OF HSI OF THE DIVISIONS C6'W7&dA%C65#:C6O%! KHYBER-PAKHTUNKHWA % $ !-*./0+'1M2'$-0'9()*7'&0:(+4/,'D7E0F'*/'/-0'<4=45467*>'O0=0>'68'/-0'A+6=47:05' ! 155

Human Security in Pakistan $ "14/.1_5/1=7!31/%17!+.=D17984! DISTRIBUTION W = I > T ! HIN PROVINCES O % F 4 H 1! S = I > O !/ F % T 8 H ! E "1 D D IV 14 I 1 S = IO 7 N 4! S W% B @ A 2 LO + C 6 HIS 9 T " A 5 N %:! !"#$%&% %)H" % $ !"#$-6'>#$=.)8.)/,$,"'438$6#$4,#=43$('$1%'>.)*.-3$`'>#%)+#)(,$.)$(-%/#(.)/$%#/.')-335$ ("#.%$"4+-)$,#*4%.(5$.)(#%>#)(.'),0$ $ The above findings should be useful to Provincial Governments in targeting their human security interventions regionally. !-*./0+'1M2'$-0'9()*7'&0:(+4/,'D7E0F'*/'/-0'<4=45467*>'O0=0>'68'/-0'A+6=47:05' ! 156

The Human Security Index at the Divisional Level of the Provinces TECHNICAL ANNEXURE 157

The Balance of Payments Module of the Macro Econometric Model Technical !"#$%&% %)&" !"#$%&% %)&" $ !"#$%&% %)&" $ Annexure-I The Balance of $ +&M"*@M#H(+"&(O#H#*M&(9K( +&M"*@M#H(+"& P ( a O y # m H e # n * t M s & M (9 o K d ( ule of the +&M"*@M#H(+"&(O#H#*M&(9K( 5**&C>'&N/(<#P M Q a & cr * o %R E ( c 4 on 9 o S m > e H t & r ( ic 9K M (% o " d & e ( l 5**&C>'&N/(<#PQ&*%R(49S>H&(9K(%"&( 5**&C>'&N/(<#PQ&*%R(49S>H&(9K(%"&( 4#M'9(-M9*9Q&%'@M(49S&H ' 4#M'9(-M9*9Q&%'@M(49S&H ' 4#M'9(% M9*9Q&%'@M(49S&H ' EQUATIONS % % % 7S#%592:"! % 7S#%592:"! 7S#%592:"! D 1 ( . !9 Im Y p . o > r 1 t /! V 8 o > l U u F m Y e 0! D ? e 0 m Y a n 3 d _! o > f \! G J o > o > d _ s X! a n 3 d _! S " e 0 r 1 v I ic *Z e 0 s X! D(!9Y.>1/!8>UFY0!?0Y-3_!>\!J>>_X!-3_!"01I*Z0X! D(!9Y.>1/!8>UFY0!?0Y-3_!>\!J>>_X!-3_!"01I*Z0X! ! ! "#$%&'(! " )*$#+(,-./)#$ 0#&(1! #$%!& 2(! ' 3 ! #!#!#!#!#!c"d! $ ! ! ! " " #$ #$ % % & & ' ' ( ( ! ! " ) ) *$ *$ # # + + ( ( , , . . / / ) ) #$ #$ 0 0 # # & & ( ( 1 1 ! ! #$%!& 2 2 ( ( ! ! 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The Vision of Human Security STATISTICAL ANNEXURE 161

The Actual Values of Indicators of HSI Statistical Annexure-I The Actual Values of Indicators of HSI Table A-1.1: Territorial Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Total Defence Expenditure as% of GDP Actual 3.6 3.6 3.2 3.5 4.0 4.2 2. Real Defence Expenditure per Capita(Rs, at 2005-06 prices) Actual 1583 1869 1887 2070 2499 2614 3.% of Defence Expenditure financed by Federal Net Revenues after Debt Servicing Actual 100.0 100.0 85.1 100.0 77.4 34.5 4. The ratio of Defence Expenditure to health and education expenditure Actual 2.105 1.613 1.376 1.084 1.110 1.234 Latest Year 3.3 2179 29.2 1.068 Table A-1.2: External Financial Vulnerability 2001-02 2005-06 2010-11 1. Real Effective Exchange Rate 2015-16 2017-18 Actual 101.6 103.8 102.4 119.3 107.1 2. External Debt(as% of GDP) Actual 43.8 27.8 30.7 26.7 30.3 3. Foreign Exchange Reserves(in months of imports) Actual 7.0 4.0 4.2 4.6 1.9 4. Reserves as% of External Debt Actual 25.9 34.4 27.3 30.2 12.7 5. Current Account Deficit(as% of GDP) Actual 4.8-4.9-1.0-2.6-6.0 6. Foreign Exchange Reserves as% of External Financing Requirements Actual 25.5 147.0 344.5 154.5 66.9 *as of end-December 2022 2018-19 97.2 37.0 3.1 16.4 -3.1 45.3 Latest Year 96.2 38.9 1.2 4.4 -2.1* 37.2 163

Human Security in Pakistan Table A-1.3: Personal Safety 2001- 2005- 2010- 201502 06 11 16 INCIDENCE OF CRIME 1. Expenditure on Law and Order as% of GDP Value 0.651 0.84 0.597 0.419 2. Weighted Crimes per 10,000 population(Index 2001-02= 100) Value 100.0 114.7 118.8 121.9 INCIDENCE OF INJURIES/FATALITIES 3.% of Workers Injured or Getting Diseases in the Workplace Value 3.59 2.93 3.49 4.00 4. Number of Traffic Accidents Value 10,033 9,492 9,723 9,100 5. Number of Fatalities Value 5,532 4,868 5,271 4,448 INCIDENCE OF TERRORISM 6. Number of Terrorist Attacks Value 0 675 2,985 749 7. Number Killed Value 0 907 7,107 1,956 201718 0.548 122.4 3.78 11,121 5,948 497 1,516 201819 0.651 122.9 3.30 10,799 5,932 433 1,030 Latest Year 0.662 145.8 2.69 9,709 5,436 207 335 Table A-1.4: Health Hazards and Diseases 2001- 200502 06 1. Life Expectancy(Years) Value 63.35 64.20 2.% of Deaths from Communicable Diseases* Value 44.4 42.2 3.% of births with Female Attendant Value 23.0 31.0 4. Infant Mortality(per 1000 births) Value 80.90 76.60 5. Incidence of Child Wasting or Stunting Value 50.9 50.5 *Including the deaths from COVID-19 201011 65.60 39.2 43.0 70.10 52.4 201516 66.80 35.9 56.1 32.10 48.3 201718 67.10 34.5 69.3 58.90 44.7 201819 67.40 35.2 72.0 57.30 40.0 Latest Year 67.70 73.2* 74.7 54.20 39.2 164

The Actual Values of Indicators of HSI Table A-1.5: Environmental Protection and Natural Disasters 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Incidence and Cost of Natural Disasters Value 0.00 0.25 0.50 0.00 0.00 2. CO 2 Emission(Kg per 201 US$ of GDP) Value 0.66 0.65 0.62 0.63 0.67 3. Forest Area(% of land area) Value 5.7 5.5 5.3 5.0 4.9 4. Level of Water Stress(Fresh Water Withdrawal as% of Available Resources) Value 107.4 110.9 113.7 122.6 122.7 5. Renewable Internal Water Resource per Capita(Cu Meters) Value 345.4 308.9 276.9 257.6 250.3 0.00 0.59 4.8 118.2 246.3 Latest Year 1.00 0.58 4.7 108.6 243.3 Table A-1.6: Real Per Capita Income 2001-02 2005-06 2010-11 Value* 44,796 (at 2005-06 prices) 53,846 55,769 2015-16 64,223 2017-18 67,646 2018-19 68,700 2022 (Latest Year) 69,387 Table A-1.7: Food Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Per capita food Consumption(Calories per day) Actual 2361 2386 2420 2. Share of Domestic Production in food consumption Actual 92.5 88.1 88 3. Relative Price of food Actual 99 102.1 117.2 4. Cereal consumption per capita Actual 10.11 9.18 8.98 5. Wheat stocks per capita Actual 25.9 13.5 18.1 2473 89.5 116.3 8.24 31.7 2480 89 115.9 8.15 21.8 2410 88.1 116.8 8.06 17.7 Latest Year 2430 88.7 135.3 8.97 36.3 165

Human Security in Pakistan Table A-1.8: Employment and Wages 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Unemployment Rate(%) Actual 10.1 5.9 2. Labor Force Participation Rate(%) Actual 43.3 46 3.% Marginal Workers in Labor Force Actual 20.8 19.4 4.% employment in the Informal Sector Actual 38.0 41.3 5. Average Real Wage Actual 11875 12731 6. Skill Premium Actual 3.42 3.48 7.6 45.7 14.6 40.5 11046 3.51 7.5 45.2 10.4 42.0 13060 3.56 6.8 44.2 14.1 44.3 14017 5.44 8.1 44.8 13.5 44.0 13562 4.46 2020-21 Latest Year 9.5 44.8 14.0 45.3 12657 4.21 Table A-1.9: Shelter 2001-02 2005-06 2010-11 1. Percentage of housing units owned Actual 87.61 86.22 85.92 2. Percentage of units with pucca roof Actual 28.01 31.25 27.80 3. Percentage of units with pucca walls Actual 57.20 66.50 72.21 4. Percentage of housing units with only one room Actual 23.85 24.26 24.83 5. Percentage of units with electricity Actual 79.95 85.23 91.37 6. Percentage of units with access to tap water Actual 44.37 37.34 32.00 7. Percentage of units with flush toilet Actual 50.00 56.18 66.00 2015-16 84.07 30.89 80.65 28.47 92.79 26.00 74.00 2017-18 84.02 32.73 83.74 30.17 91.63 24.00 78.00 2018-19 84.00 33.72 85.33 31.07 91.00 18.00 80.00 2020-21 81.78 33.31 79.84 25.17 90.91 22.34 80.00 166

The Actual Values of Indicators of HSI Table A-1.10: Energy Security 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 2020-21 1. Gas consumption per capita(mfct) Actual 5.81 7.82 7.05 6.59 7.00 6.53 6.26 2. Electricity consumption per capita(kWh) Actual 356.5 432.8 438.3 433.4 514.8 514.6 523.0 3. Petroleum consumption per capita Actual 11.94 9.36 10.74 11.76 11.88 9.48 9.38 4. Domestic gas production as% of consumption Actual 100 100 100 93.5 80 79 88.3 5. Percentage of electricity generation from renewable sources Actual 26.2 32.9 33.6 34.6 24.2 24.9 27.1 6. Relative price index of energy Actual 97.2 92.6 88.2 100 86.3 83.3 95.7 Table A-1.11: Health 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 2020-21 1. Health Expenditures as% of GDP Actual 1.1 0.5 0.6 0.8 1.1 1.0 1.4 2. Hospital beds per 1000 people Actual 0.7 1.3 0.6 0.6 0.6 0.6 0.6 3. Physicians per 1000 people Actual 0.7 0.8 0.8 1 1 1.1 1.1 4. Nurses and Midwives per 1000 people Actual 0.5 0.5 0.6 0.5 0.6 0.5 0.5 167

Human Security in Pakistan Table A-1.12: Access to Education 2001-02 2005-06 2010-11 2015-16 1. Literacy rate(%) Actual 45 53 58 60 2. Government Expenditures on Education(% of GDP) Actual 1.8 2.4 2.2 3.0 3. Share of Expenditure on Primary Education Actual 52.0 46.2 39.0 31.7 Net Enrollment Rate 4. Primary Actual 41 53 56 67 5. Middle Actual 16 18 20 37 6. High Actual 9 11 12 27 7. Percentage of Government Enrollment Actual 74 72 68 62.0 2017-18 60 2.9 30.9 67 37 27 61 2018-19 60 2.7 30.0 66 38 27 60 2020-21 60 2.1 32.4 64 39 27 64 Table A-1.13: Women 2001-02 2005-06 2010-11 1. School enrollment, primary(% net) Actual 44.57 54.87 60.56 2. School enrollment, secondary(% net) Actual 25.0 26.53 28.64 3. Unemployment rate Actual 15.5 12.1 0.64 4. Female Employment to population rate(%) Actual 14.7 19 21.9 5. Literacy Rate Actual 32 35.6 41 6. Life Expectancy Actual 63.6 64 66.9 2015-16 55.95 30.44 6.11 22.7 44.3 68.2 2017-18 59.85 31.63 4.55 21.8 46.5 68.8 2018-19 61.57 34.18 6.26 20.9 45.4 69 2020-21 61.75 35.5 6.31 22.1 46.5 69.1 168

The Actual Values of Indicators of HSI Table A-1.14: Children 2001-02 2005-06 1. Percentage of children out of school Actual 46.5 45.2 2. Percentage of Children in the Labor Force Actual 12.04 15.23 2010-11 43.2 11.75 2015-16 40.6 9.58 2017-18 39.9 8.23 2018-19 40.6 7.30 2020-21 39.8 4.90 Table A-1.15: Income Inequality 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Income Inequality Value 4.32 5.90 5.41 5.10 5.07 5.04 2. Inequality in Food Expenditure Value 2.83 2.81 2.70 3.01 3.02 3.03 Latest Year 5.29 3.15 Table A-1.16: Regional Disparities 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Ratio of Urban to Rural Income Per Capita Value 1.672 1.427 1.550 2. Ratio of Provincial* per capita Income Value 1.202 1.618 0.420 *Highest to Lowest Provincial per capita income 1.613 0.565 1.630 0.609 1.646 0.654 Latest Year 1.640 0.715 Table A-1.17: Poverty 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 Incidence of Poverty Value 30.61 29.80 35.01 34.20 31.01 34.22 Latest Year 40.00 169

Human Security in Pakistan Table A-1.18: Gender Inequality Ratio of Females to Males 2001-02 2005-06 2010-11 2015-16 2017-18 2018-19 1. Primary Education Value 0.681 2. Secondary Education Value 0.756 3. Literacy Rate Value 0.512 4. Labor Force Participation Rate Value 0.205 5. Unemployment Rate Value 2.47 6. Relative Wage Value 0.592 0.778 0.774 0.552 0.263 1.72 0.574 0.853 0.792 0.595 0.315 1.75 0.558 0.831 0.792 0.641 0.324 1.80 0.540 0.858 0.812 0.653 0.296 1.63 0.503 0.840 0.846 0.655 0.317 1.71 0.498 Latest Year 0.833 0.852 0.670 0.313 1.63 0.492 170

The HSI Indicators of Selected Countries Statistical Annexure-II The HSI Indicators of Selected Countries Table A-2.1: Indices of Human Security Freedom from‘Fear’ Territorial Security Rank External Financial Vulnerability Rank Environment Rank Overall Protection Index Rank SOUTH ASIA Bangladesh 0.125 8 0.628 6 0.356 7 0.304 9 India 0.299 3 0.835 1 0.290 11 0.417 3 Nepal 0.063 12 0.174 12 0.244 12 0.139 12 Pakistan 0.348 2 0.384 10 0.430 4 0.386 4 Sri Lanka 0.282 5 0.294 11 0.499 3 0.346 6 EAST ASIA Thailand 0.254 6 0.691 3 0.737 1 0.506 1 Vietnam 0.284 4 0.436 8 0.316 10 0.339 7 Indonesia 0.065 11 0.661 4 0.391 6 0.256 10 Philippines 0.117 9 0.796 2 0.321 9 0.310 8 OTHERS Egypt 0.169 7 0.649 7 0.687 2 0.379 5 Nigeria 0.071 10 0.650 5 0.349 8 0.253 11 Türkiye 0.504 1 0.435 9 0.430 4 0.453 2 171

Human Security in Pakistan 172 Table A-2.2: Indices of Human Security Freedom from ‘Want’ Income per Capita Rank Employment Rank Energy Security SOUTH ASIA Bangladesh 0.108 9 0.552 6 0.199 India 0.116 8 0.410 10 0.380 Nepal 0.038 11 0.392 12 0.474 Pakistan 0.077 10 0.510 7 0.377 Sri Lanka 0.310 3 0.710 5 0.383 EAST ASIA Thailand 0.412 2 0.740 2 0.499 Vietnam 0.222 6 0.753 1 0.447 Indonesia 0.265 4 0.670 4 0.451 Philippines 0.172 7 0.709 3 0.306 OTHERS Egypt 0.256 5 0.486 8 0.181 Nigeria 0.064 12 0..92 11 0.618 Türkiye 0.731 1 0.441 9 0.272 Rank 11 7 3 8 6 2 5 4 9 12 1 10 Food Security 0.541 0.575 0.517 0.569 0.744 0.423 0.625 0.690 0.408 0.489 0.330 0.659 Rank 7 5 8 6 1 10 4 2 11 9 12 3 Education and Health 0.537 0.457 0.351 0.287 0.753 0.661 0.605 0.566 0.601 0.638 0.361 0.634 Rank Overall Rank Index 8 0.321 9 9 0.343 8 11 0.264 12 12 0.300 10 1 0.543 1 2 0.532 2 5 0.490 5 7 0.500 4 6 0.391 6 3 0.371 7 10 0.284 11 4 0.516 3

The HSI Indicators of Selected Countries Table A-2.3:Indices of Human Security Freedom from‘Inequality’ Income Inequality (Gini) Rank Incidence of Poverty Rank Gender Inequality SOUTH ASIA Bangladesh 0.654 4 0.391 10 0.496 India 0.654 7 0.472 9 0.549 Nepal 0.698 2 0.341 11 0.599 Pakistan 0.730 1 0.532 8 0.491 Sri Lanka 0.465 10 0.841 4 0.690 EAST ASIA Thailand 0.583 5 0.997 1 0.756 Vietnam 0.564 7 0.942 3 0.805 Indonesia 0.504 9 0.739 7 0.609 Philippines 0.384 12 0.787 5 0.642 OTHERS Egypt 0.678 3 0.744 6 0.611 Nigeria 0.580 6 0.249 12 0.298 Türkiye 0.395 11 0.979 2 0.902 Rank Overall Rank Index 10 0.503 11 9 0.527 9 8 0.522 10 11 0.575 8 4 0.646 4 3 0.760 1 2 0.645 5 7 0.610 6 5 0.579 7 6 0.676 3 12 0.351 12 1 0.704 2 173

Human Security in Pakistan 174 Table A-2.4: Indices of Human SecurityGovernance Score Transparency International Index WJP Rule of Law Index SOUTH ASIA Bangladesh 26 India 40 Nepal 33 Pakistan 28 Sri Lanka 37 EAST ASIA Thailand 35 Vietnam 39 Indonesia 38 Philippines 33 OTHERS Egypt 33 Nigeria 24 Türkiye 38 0.268 0.39 0.643 0.50 0.456 0.52 0.321 0.39 0.563 0.50 0.509 0.50 0.617 0.49 0.590 0.53 0.456 0.47 0.456 0.35 0.24 0.41 0.590 0.42 Index 0.332 0.564 0.507 0.332 0.564 0.564 0.543 0.628 0.501 0.248 0.374 0395 Governance Matters Index Index of Economic Freedom Index 0.302 0.929 0.602 0.226 0.859 0.826 0.782 0.983 0.715 0.363 0.075 0.583 54.4 0.416 52.9 0.386 51.4 0.358 49.4 0.319 52.2 0.373 60.6 0.536 61.8 0.559 63.5 0.592 59.3 0.511 49.6 0.323 53.9 0.406 56.9 0.464 Overall Index Rank 0.325 18 0.600 3 0.472 8 0.296 11 0.563 5 0.597 4 0.619 2 0.681 1 0.538 6 0.339 9 0.222 12 0.501 7

The HSI Indicators of the Provinces Statistical Annexure-III The HSI Indicators of the Provinces Table A-3.1: The Provincial HSI Indicators: Extent of Self-Reliance Indicator Unit Year Punjab Sindh K-PK 1 EXTENT OF SELF-RELIANCE 1. Provincial Own-Revenues as% of GRP Value% of GDP 2021- 1.0 22 2.0 1.5 Index 0.165 0.665 0.415 2. Extent of Self-Financing of Provincial Expenditure Value% 2021- 20.0 35.7 15.0 22 Index 0.335 0.713 0.214 3. Trade Deficit* as% of GRP Value% 2019- 13.8 1.0 22.7 20 Index 0.557 0.990 0.257 OVERALL INDEX 0.314 0.777 0.284 Ranking 2 1 3 Balochistan 1.2 0.265 9.2 0.074 12.8 0.591 0.227 4 Source MOF, FO MOF, FO Pasha (2022) Table A-3.2: The Provincial HSI Indicators: Personal Safety Indicator Unit Year Punjab Sindh 2. PERSONAL SAFETY 1. Law and Order Expenditure as% of GDP Value% of 2020-21 0.45 0.54 GDP Index 0.158 0.253 2. Per Capita Expenditure on Law& Order Value Rs 2020-21 1132 1751 Index 0.310 0.604 K-PK 0.94 0.674 1940 0.693 Balochistan 0.77 0.495 718 0.113 Source MOF, PRSP MOF, PRSP 175

Human Security in Pakistan 3. Number of Terrorist Attacks Value Number 2020-21 5 Index 0.975 4. Number of Killed in Terrorist Attacks Value Number 2020-21 14 Index 0.792 5. Incidence of Crimes per 1000 population Value Number 2019-20 3.51 Index 0.546 6. Number of Accidents per million Population Value 41.2 Index 0.823 OVERALL INDEX 0.523 Ranking 2 2 0.995 111 0.252 12 0.982 169 0.259 1.62 0.656 5.42 0.196 18.9 0.961 0.673 1 131.0 0.269 0.425 3 81 0.456 136 0.410 0.65 0.967 30.3 0.890 0.455 4 PIPS PIPS SYB, PBS Table A-3.3: The Provincial HSI Indicators: Environmental Protection Indicator Unit Year Punjab Sindh K-PK 3. ENVIRONMENT PROTECTION 1. Extent of Forest Area Value% 2020 0.48 1.04 1.24 Index 0.120 0.541 0.691 2. Growth Rate of Forest Area Value% 2020-0.45 0.10-0.69 Index 0.805 0.989 0.725 3. Irrigated Area as% of Cultivated Area Value% 2020 50.3 23.3 20.2 Index 0.688 0.183 0.125 OVERALL INDEX 0.405 0.461 0.397 Ranking 2 1 3 Balochistan 0.16 0.631 -2.16 0.236 34.8 0.398 0.390 4 Source PSY PSY SYB 176

The HSI Indicators of the Provinces Table A-3.4: The Provincial HSI Indicators: Income Indicator Unit Year Punjab 4. INCOME 1. Per Capita Gross Regional Product(GRP) Value Rs‘000’ 2020- 253 21 Index 0.421 2. Per Capita Gross Regional Income Value Rs‘000’ 2020- 276 21 Index 0.485 3. Per Capita Household Income Value Rs‘000’ 2018- 89 19 Index 0.642 OVERALL INDEX 0.508 Ranking 2 Sindh 327 0.654 329 0.654 75 0.476 0.589 1 K-PK 207 0.274 243 0.380 67 0.373 0.339 3 Balochistan 181 0.192 183 0.191 54 0.216 0.200 4 Source Pasha (2021) Pasha (2021), HIES HIES Table A-3.5: The Provincial HSI Indicators: Food Security Indicator Unit Year Punjab Sindh K-PK Balochistan 5. FOOD SECURITY 1. Per Capita Food Crop Production Value Index Rs‘000’ 201516 15.05 0.683 8.50 6.37 0.275 0.134 14.74 0.663 2. Per Capita Livestock Production Value Index Rs‘000’ 201516 7.31 0.633 6.73 5.62 0.544 0.378 4.60 0.227 3. Food Expenditure per Adult Equivalent Value Rs/Month 2019 2910 2818 2641 2587 Index 0.550 0.507 0.425 0.400 4. Relative Prices of Basic Food Items Value Index 2022 93.7 111.4 103.4 103.3 Index 0.637 0.432 0.525 0.524 Source Pasha (2018) Pasha (2018) HIES PBS 177

Human Security in Pakistan 5. Production/ Consumption of Basic Food Items Value 2020 92.1 Index 0.486 6.% of Very Food Insecure Population Value% 2020 15.66 Index 0.720 OVERALL INDEX 0.612 Ranking 1 83.2 0.348 52.1 0.078 17.52 0.633 0.439 2 14.44 0.776 0.296 4 85.2 0.448 23.36 0.361 0.414 3 PBS/ HIES PSLSMS Table A-3.6: The Provincial HSI Indicators: Employment and Wages Indicator Unit Year Punjab Sindh K-PK Balochistan 6. EMPLOYMENT AND WAGES 1. Labor Force Participation Rate Value% 2020 47.38 43.83 39.51 40.39 Index 0.571 0.475 0.358 0.382 2. Unemployment Rate Value% 2020 6.76 3.86 3.83 4.33 Index 0.545 0.860 0.320 0.808 3.% Employment in the Informal Sector Value% 2020 44.29 44.46 51.70 43.86 Index 0.621 0.646 0.434 0.631 4.% Employees Value% 2020 40.02 47.03 41.96 41.42 Index 0.370 0.565 0.424 0.409 5. Skill Premium Value Ratio 2020 2.489 3.222 2.085 2.467 Index 0.318 0.595 0.166 0.310 6.% of Marginal Workers in the Augmented Labor Force Value% 2020 8.17 15.59 28.24 18.89 Index 0.915 0.685 0.292 0.582 7. Relative Wage Value Index 2020 0.969 1.009 1.040 1.202 Index 0.338 0.379 0.412 0.581 OVERALL INDEX 0.494 0.585 0.332 0.506 Ranking 3 1 4 2 Source LFS LFS LFS LFS LFS LFS 178

The HSI Indicators of the Provinces Table A-3.7: The Provincial HSI Indicators: Energy Security Indicator Unit Year Punjab Sindh 7. ENERGY SECURITY 1. Per Capita Electricity Value Kwh 2021 635 445 Index 0.672 0.378 2. Incidence of Power Outages Value Per Gwh 2021 6.69 48.20 Index 0.993 0.876 3. Per Capita Gas Consumption Value Ratio 2020 0.79 1.70 Index 0.365 0.722 4. Electricity Generation/ Consumption Value Ratio 2021 0.681 1.545 Index 0.073 0.322 5.% of Electricity from Renewable Sources Value% 14.7 8.1 K-PK 301 0.155 268.41 0.252 0.40 0.083 1.500 0.337 96.9 Index OVERALL INDEX Ranking 0.147 0.304 2 0.081 0.362 1 0.969 0.254 3 Balochistan 351 0.233 14.86 0.970 0.35 0.053 2.667 0.713 5.0 0.050 0.211 4 Source NEPRA NEPRA PSY NEPRA NEPRA/ PBS 179

Human Security in Pakistan Table A-3.8: The Provincial HSI Indicators: Shelter Indicator Unit Year Punjab 8. SHELTER 1.% of Household with Pucca Roofs Value% 2020 35.6 Index 0.717 2. Pucca Walls Value% 2020 91.7 Index 0.888 3. One Room Only Value% 2020 22.6 Index 0.679 4. Tap Water Value% 2020 12 Index 0.119 5. Electricity Value% 2020 96 Index 0.918 6. Gas Value% 2020 50 Index 0.512 7. Clean Fuel Value% 2020 39 Index 0.508 8. Flush Toilet Value% 2020 89 Index 0.844 9. Solid Waste Management Value% 2020 17.5 Index 0.543 10.% Owner-Occupied Value% 2020 84 Index 0.675 OVERALL INDEX 0.573 Ranking 2 Sindh 32.9 0.652 74.2 0.653 35.6 0.323 35 0.698 87 0.732 57 0.637 49 0.695 76 0.660 22.0 0.717 76 0.513 0.613 1 K-PK 35.1 0.705 62.8 0.499 16.3 0.852 30 0.568 90 0.794 34 0.212 18 0.113 84 0.774 5.3 0.070 84 0.675 0.404 3 Balochistan 8.5 0.067 38.6 0.174 23.3 0.660 32 0.620 77 0.526 35 0.231 26 0.263 44 0.208 10.5 0.271 83 0.655 0.299 4 Source PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS PSLSMS 180

The HSI Indicators of the Provinces Table A-3.9: The Provincial HSI Indicators: Education Indicator Unit Year Punjab 9. SOCIAL DEVELOPMENT – EDUCATION 1. Literacy Rate Value% 2020 64 Index 0.610 2. Gross Enrollment Ratio- Primary Value% 2020 90 Index 0.823 3. Gross Enrollment Ratio – Middle Value% 2020 67 Index 0.615 4. Gross Enrollment Ratio – Matric Value% 2020 65 Index 0.654 5. Public Expenditure on Education as% of GRP Value% of GRP 2020 1.3 Index 0.144 OVERALL INDEX 0.492 Ranking 2 Sindh K-PK 58 0.500 55 0.445 67 0.417 85 0.734 53 0.374 67 0.615 47 0.367 53 0.463 1.2 0.115 0.319 1 3.2 0.692 0.578 3 Balochistan Source 46 0.280 PSLSMS 65 0.382 PSLSMS 47 0.271 PSLSMS 36 0.192 PSLSMS 2.7 0.547 0.313 4 PRSP Table A-3.10: The Provincial HSI Indicators: Health Indicator Unit Year Punjab 10. SOCIAL DEVELOPMENT – HEALTH 1. Hospitals per Million Population Value Number 2020 616 Index 0.352 2. Doctors per Million Population Value Number 2020 477 Index 0.225 3. Public Health Expenditure as% of GRP Value% of GDP 2021 1.03 Index 0.280 OVERALL INDEX 0.281 Ranking 3 Sindh K-PK 770 0.595 750 0.562 1090 0.711 500 0.242 0.94 0.214 00449 1 1.56 0.641 0.443 2 Balochistan 590 0.310 292 0.077 1.20 0.393 0.211 4 Source PSY PSY PRSP 181

Human Security in Pakistan Table A-3.11: The Provincial HSI Indicators: Women Indicator Unit Year Punjab 11. WOMEN 1. Female Labor Participation Rate Value% 2020 26.26 Index 0.677 2. Female Unemployment Rate Value% 2020 8.44 Index 0.708 3.% of Females with Pre-Natal Consultation Value% 2020 83 Index 0.707 4.% of Females with Skilled Birth Attendants Value% 2020 70 Index 0.602 5.% of Females with Post-Nata Consultation Value% 2020 42 Index 0.624 6. Female Literacy Rate Value% 2020 57 Index 0.665 OVERALL INDEX 0.662 Ranking 1 Sindh 15.23 0.269 6.59 0.813 73 0.534 70 0.602 40 0.571 47 0.489 0.519 2 K-PK 15.75 0.288 15.65 0.297 69 0.446 66 0.534 30 0.302 85 0.277 0.345 3 Balochistan 11.93 0.147 4.96 0.906 63 0.362 52 0.295 28 0.249 29 0.171 0.290 4 Source LFS LFS PSLSMS PSLSMS PSLSMS PSLSMS Table A-3.12: The Provincial HSI Indicators: Children Indicator Unit Year Punjab 12. CHILDREN 1.% of Out-of-Scholl Children Value% 2020 24 Index 0.677 2.% of Child Labor Value% 2020 5.12 Index 0.552 3.% of Children(1 to 2 years) Fully Immunized Value% 2020 81 Index 0.752 OVERALL INDEX 0.700 Ranking 1 Sindh 44 0.269 3.97 0.761 52 0.374 0.485 3 K-PK 30 0.288 5.00 0.574 69 0.595 0.621 2 Balochistan 47 0.147 6.13 0.370 35 0.152 0.266 4 Source PSLSMS LFS PSLSMS 182

The HSI Indicators of the Provinces Table A-3.13: The Provincial HSI Indicators: Income Inequality Indicator Unit Year Punjab Sindh K-PK 13. INCOME INEQUALITY 1. Modified* PALMA Ratio of Income Index 2018-19 0.588 0.386 0.721 2. PASHUM Ratio of Income Index 2018-19 0.649 0.400 0.696 OVERALL INDEX 0.618 0.393 0.708 Ranking 2 4 1 Balochistan 0.576 0.577 0.576 3 Source HIES HIES Table A-3.14: The Provincial HSI Indicators: Intra-Provincial Disparity Indicator Unit Year Punjab Sindh K-PK Balochistan 14. INTRA-PROVINCIAL DISPARITY 1. Inter-Division Inequality in HDI Index 0.922 0.308 0.922 0.724 2. Income Inequality between Urban and Rural Areas Index 2018-19 0.537 0.325 0.662 OVERALL INDEX 0.704 0.3016 0.757 0.784 Ranking 3 4 2 1 0.850 Source Pasha (2020) HIES Table A-3.15: The Provincial HSI Indicators: Poverty and Social Protection Indicator Unit Year Punjab Sindh K-PK Balochistan 15. POVERTY AND SOCIAL PROTECTION 1. Level of Poverty Value% 2015 31.4 43.1 49.2 71.2 Index 0.858 0.700 0.617 0.320 2. Public Expenditure on Social Protection and Anti-Poverty Value% of GDP 2021 0.99 0.74 1.11 0.46 Index 0.581 0.368 0.684 0.128 3.% of Social Insurance and Gifts in Household Income Value Rs/Month 2019 397 245 376 116 Index 0.707 0.371 0.661 0.085 OVERALL INDEX 0.707 0.458 0.654 0.151 Ranking 1 3 2 4 Source UNDP PRSP HIES 183

Human Security in Pakistan Table A-3.16: The Provincial HSI Indicators: Gender Inequality Indicator Unit Year Punjab Sindh K-PK 16. GENDER INEQUALITY Balochistan 1. Relative Labor Force Participation Rate Value Ratio 2020 38.26 21.69 24.92 18.54 Index 0.670 0.241 0.325 0.160 2. Relative Unemployment Rate Value Ratio 2020 1.38 1.99 2.19 0.96 Index 0.676 0.409 0.320 0.860 3. Relative Literacy Rate Value Ratio 2020 0.791 0.691 0.513 0.475 Index 0.693 0.547 0.287 0.231 4. Relative Primary Enrollment Rate Value Ratio 2020 0.967 0.795 0.806 0.600 Index 0.945 0.658 0.676 0.300 5. Relative Middle-Level Enrollment Rate Value Ratio 2020 0.971 0.716 0.631 0.607 Index 0.951 0.523 0.380 0.339 6. Relative Matric Enrollment Rate Value Ratio 0.912 0.720 0.549 0.447 Index 0.875 0.601 0.358 0.212 7. Relative Wage Value Ratio 2020 0.652 0.622 0.708 0.919 Index 0.405 0.354 0.501 0.862 OVERALL INDEX Ranking 0.721 0.456 0.392 1 2 3 0.347 4 Source LFS LFS PSLSMS PSLSMS PSLSMS PSLSMS LFS 184

The HSI Indicators of the Provinces Table A-3.17: The Provincial HSI Indicators: Governance Indicator Unit Year Punjab Sindh K-PK 17. GOVERNANCE 1. Public Admin& Defence Sector as% of GDP Value% 2016 7.71 6.95 6.83 Balochistan 11.74 Index 0.284 0.215 0.205 2. Share of Public Admin Sector in Total Employment Value% 2020 2.92 4.81 4.43 Index 0.140 0.412 0.357 3. Appeals Pending in High Court per 1 million population Value Number 2020 1554 823 1263 Index 0.276 0.666 0.431 4. Number of Police Stations per 1 million Population Value Number 2020 6.15 10.80 8.97 Index 0.199 0.650 0.473 OVERALL INDEX 0.216 0.442 0.349 Ranking 4 2 3 0.604 6.67 0.680 295 0.948 9.62 0.535 0.675 1 Source Pasha (2018) LFS PSY PSY 185

Indicators of the Components of the HSI of the Divisions in the Provinces Statistical Annexure-IV Indicators of the Components of the HSI of the Divisions in the Provinces Table A-4.1: Index of the Components of the HSI of the Division Human Development Index Poverty Index Access to Services Index PUNJAB Gujranwala 0.530 0.744 0.496 Rawalpindi 0.574 0.680 0.474 Lahore 0.617 0.425 0.524 Sahiwal 0.399 0.786 0.435 Faisalabad 0.500 0.590 0.464 Sargodha 0.467 0.570 0.426 Multan 0.419 0.449 0.400 Bahawalpur 0.346 0.362 0.391 D.G. Khan 0.357 0.337 0.308 SINDH Karachi 0.738 0.720 0.617 S. Benazirabad 0.427 0.452 0.360 Hyderabad 0.467 0.306 0.411 Sukkur 0.421 0.343 0.326 Larkana 0.326 0.385 0.359 Mirpurkhas 0.352 0.465 0.171 Bhanbore 0.308 0.250 0.216 Human Security Index 0.580 0.570 0.517 0.515 0.515 0.484 0.423 0.366 0.334 0.689 0.410 0.389 0.361 0.356 0.303 0.256 187

Human Security in Pakistan Table A-4.2: Index of the Components of the HSI of the Divisions Human Development Index Poverty Index Access to Services Index KHYBER-PAKHTUNKHWA Peshawar 0.556 0.605 0.397 Hazara 0.542 0.493 0.350 Mardan 0.400 0.476 0.377 Malakand 0.452 0.574 0.249 Kohat 0.364 0.590 0.271 Bannu 0.401 0.541 0.252 D.I. Khan 0.278 0.569 0.218 BALOCHISTAN Makran 0.543 0.708 0.270 Quetta 0.490 0.339 0.391 Sibi 0.398 0.345 0.255 Kalat 0.420 0.391 0.190 Rakshan 0.426 0.609 0.117 Nasirabad 0.299 0.351 0.068 Zhob 0.256 0.288 0.096 Human Security Index 0.511 0.454 0.416 0.401 0.388 0.380 0.326 0.470 0.402 0.327 0.315 0.312 0.192 0.192 188

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List of Tables List of Tables Table 2.1: Table 4.1: Table 6.1: Table 6.2: Table 6.3: Table 6.4: Table 6.5: Table 6.6: Table 7.1: Table 7.2: Table 7.3: Table 7.4: Table 7.5: Table 7.6: Table 7.7: Table 7.8: Table 7.9: Table 7.10: Table 7.11: Table 8.1: Table 8.2: Table 8.3: Table 8.4: Table 8.5: Table 8.6: Table 9.1: Table 9.2: Table 9.3: Table 9.4: Table 10.1: Table 10.2: Table 10.3: Index Value of Pakistan in Different Components of the Human Security Index(HSI), 10 Number of 29 Trend in Index of Territorial 37 External Financial 38 Indicators of Personal 41 Index of Health Hazards and 42 Environmental Protection and Natural 44 Trend in the Overall Index of Freedom from‘Fear’ and its 45 Trend in Real Per Capita 49 Trend in the Index of Food 52 Trend in the Index of Employment and 54  56 Energy 58  59 Access to 60  63  64 Index of Freedom from 65 Rank Correlation of Trends of the Components with the Overall Index of Freedom from 67 Indicators of Income 72 Indicators of Regional 73 Indicator of 74 Gender Inequality Ratio of Females to 75 Indicators of and the Index of 76 Rank Correlation of Trends of the Components with the Overall Index of 76 World Bank, CPIA 80 Index of Economic 81 World Bank, Governance Matters – 81 Index of 82 Estimates of National Human Security 85 Rank Correlation 87 The Human Development Index and Human Security Index of 88 197

Human Security in Pakistan Table 10.4: Extent of Change in Components and Sub-Components of HSI from 2015-16 to the latest 88 Table 10.5: Major Sub-Components contributing to the Decline in the HSI after 89 Table 11.1: Pakistan’s HDI and Ranking, 1999 to 91 Table 11.2: Indices of Human Security 95 Table 11.3: Relative Position of Countries in Different 96 Table 11.4: Pakistan’s Index Values at the Sub-Component 97 Table 13.1: Level of MFN Import Tariffs in Pakistan, India and Bangladesh 108 Table 13.2: Balance of Payments Scenarios for the Second half of 2022-23 and 110 Table 14.1: Trend in the Tax-to-GDP 111 Table 14.2: Target Tax-to-GDP 112 Table 14.3: Level and Composition of Public Expenditure by the Federal and Provincial 115 Table 16.1: Indicators in the Provincial 134 Table 16.2: List of 135 Table 16.3: Human Development Index of the Provinces of 138 Table 16.4: The Provincial Human Security 141 Table 16.5: Six Relatively Low* Components of the HSI by 144 Table 17.1: Share of Population on the Provinces in Different Levels of 150 Table 17.2: Level of Inequality in each 151 Table A-1.1: Territorial 163 Table A-1.2: External Financial 163 Table A-1.3: Personal 164 Table A-1.4: Health Hazards and 164 Table A-1.5: Environmental Protection and Natural 165 Table A-1.6: Real Per Capita 165 Table A-1.7: Food 165 Table A-1.8: Employment and 166 Table A-1.9: 166 Table A-1.10: Energy 167 Table A-1.11: 167 Table A-1.12: Access to 168 Table A-1.13: 168 Table A-1.14: 169 Table A-1.15: Income 169 Table A-1.16: Regional 169 Table A-1.17: 169 Table A-1.18: Gender Inequality Ratio of Females to 170 Table A-2.1: Indices of Human Security Freedom from 171 198

List of Tables Table A-2.2: Indices of Human Security Freedom from 172 Table A-2.3: Indices of Human Security Freedom from 173 Table A-2.4: Indices of Human 174 Table A-3.1: The Provincial HSI Indicators: Extent of 175 Table A-3.2: The Provincial HSI Indicators: Personal 175 Table A-3.3: The Provincial HSI Indicators: Environmental 176 Table A-3.4: The Provincial HSI Indicators: 177 Table A-3.5: The Provincial HSI Indicators: Food 177 Table A-3.6: The Provincial HSI Indicators: Employment and 178 Table A-3.7: The Provincial HSI Indicators: Energy 179 Table A-3.8: The Provincial HSI Indicators: 180 Table A-3.9: The Provincial HSI Indicators: 181 Table A-3.10: The Provincial HSI Indicators: 181 Table A-3.11: The Provincial HSI Indicators: 182 Table A-3.12: The Provincial HSI Indicators: 182 Table A-3.13: The Provincial HSI Indicators: Income 183 Table A-3.14: The Provincial HSI Indicators: Intra-Provincial 183 Table A-3.15: The Provincial HSI Indicators: Poverty and Social 183 Table A-3.16: The Provincial HSI Indicators: Gender 184 Table A-3.17: The Provincial HSI Indicators: 185 Table A-4.1: Index of the Components of the HSI of the 187 Table A-4.2: Index of the Components of the HSI of the 188 199

Human Security in Pakistan List of Boxes Box 6.1: Financing of Defence Expenditure solely by 36 Box 6.2: The External Vulnerability 39 Box 6.3: Incidence of Crime in South Asian 42 Box 7.1: Impact of the 49 Box 7.2: Nutrition Intake in the Bottom Two Income 50 Box 7.3: The High Rate of Inflation in Food 51 Box 7.4: Big Increase in Unemployment in 54 Box 8.1: The‘True’ Level of Inequality in 72 Box 8.2: Trend in Regional Disparities: Balochistan Falls 73 Box 8.3: Conflicting Estimates of the Incidence of 74 Box 14.1: The Incidence of Taxes in 112 Box 14.2: Level of Pro-Poor 118 Box 15.1: Size of the Poverty 119 Box 15.2: The Youth Bulge: Blessing or 121 Box 15.3: Cost and Federal PSDP Allocations to Major Dam 122 Box 15.4: Changing Priorities in Education and Health 123 Box 15.5: The NFC 127 200

List of Charts List of Charts Chart 1.1: Chart 2.1: Chart 2.2: Chart 4.1: Chart 4.2: Chart 6.1: Chart 6.2: Chart 6.3: Chart 6.4: Chart 6.5: Chart 6.6: Chart 6.7: Chart 6.8: Chart 6.9: Chart 7.1: Chart 7.2: Chart 7.3: Chart 7.4: Chart 7.5: Chart 7.6: Chart 7.7: Chart 7.8: Chart 7.9: Chart 7.10: Chart 7.11: Chart 7.12: Chart 7.13: Chart 8.1: Chart 8.2: The Individual Set of Human Security 7 Human Insecurity Indicators and 12 Components of the African 13 Components of Human 24 List of Individual Human Security 25 Defence Spending as% of GDP* and Real Defence Expenditure per 35 Indicators of Financial Vulnerability: Level of External Debt as% of GDP and Foreign Exchange Cover of Imports(in 37 Current Account Deficit/ Surplus as% of 38 The External Financial Vulnerability Index, 2001-02 to(December) 39 Trend in Number of Terrorist Attacks and Lives 40 Incidence and Costs of Major Natural 43 Trends in the Environmental Protection and Natural Disasters 44 Trends of 46 Recent Trends in 47 Per capita food consumption(calories per day) and Share of domestic production in food 51 Labor force participation rate and Unemployment 53 Percentage of housing units owned and percentage of units with pucca  55 Percentage of units with access to tap 56 Electricity consumption per capita and gas consumption per 57 Health expenditure as a percentage of 59 Government Expenditures on Education and share of expenditure on Primary 61 Net Enrolment Rate Primary, Middle, and 61 Female School Enrollment, Primary and 62 Literacy 63 Percentage of children out of school and the Percentage of children in the labor 64 Trends of 65 Trends in 68 Inequality in Income and Food 71 Cyclical Pattern of the Level of Poverty in 75 201

Human Security in Pakistan Chart 8.3: Chart 8.4: Chart 9.1: Chart 10.1: Chart 10.2: Chart 11.1: Chart 11.2: Chart 11.3: Chart 12.1: Chart 12.2: Chart 12.3: Chart 13.1: Chart 13.2: Chart 14.1: Chart 14.2: Chart 14.3: Chart 14.4: Chart 14.5: Chart 15.1: Chart 16.1: Chart 16.2: Chart 16.3: Chart 16.4: Chart 17.1: Chart 17.2: Chart 17.3: Index of 76 Trends in 77 Index of 83 The Trend in the HSI and in the Components 86 Contribution of the Change in Component Indices to the Change in the Overall Human Security 87 Selected Countries and their HDI in 92 Grouping and Number of HSI 93 List of Human Security 93 The HSI 101 List of Sub-Components Which Need Greater 102 Focus Areas for Improving Human Security in the National Security Policy, 2022-23 103 Economy of Countries After 106 Consequences of Move towards 107 Tax Reforms by the Federal and Provincial Governments as part of the Financing 113 Indirect Tax Reforms by the Federal and Provincial Governments as part of the Financing 114 Steps for Additional Revenues from Non-Tax Revenue Sources of the Federal and Provincial 114 Proposals for Expenditure 116 Salient Features of the Financing Plan for the Charter of the Economy 117 The Under-Privileged in Pakistan and Policies/Program/New Laws for 120 Per Capita Gross Regional Income by Province, 139 Incidence of Poverty in Each Province, 140 Provincial Indices in the Four Dimensions the 142 The Overall HSI of each 143 Indices used for Construction of the HDI and the HSI at the Division 148 Distribution within Provinces of HSI of the 149 Relationship between HDI and HSI at the Division 151 202

List of Acronyms List of Acronyms AEPAM AHSI BD BISP BNU BTI CCI CIRI CPI CPI CPIA CROP DISCOs EIU EOBI FLL FO GARVs GNH HDI HIES HISI HSI IMF IT LFS LNG Academy of Educational Planning and Management African Human Security Index Budget Documents Benazir Income Support Programme Beaconhouse National University Bertelsmann Stiftung’s Transformation Index Council of Common Interests Cingranelli-Richards (Human Rights Data Project) Consumer Price Index Corruption Perceptions Index Country Policy and Institutional Assessment Critical Research on Poverty Power Distribution Companies Economist Intelligence Unit Employees’ Old-Age Benefits Institution Federal Legislative List Financial Order Gross Annual Rental Values Gross National Happiness Index Human Development Index Household Integrated Economic Survey Human Insecurity Index Human Security Index International Monetary Fund Information Technology Labor Force Survey Liquefied natural gas 203

Human Security in Pakistan MFN MOE MOF NEC NEPRA NFC NSP NTDC OPEC PBM PBS PC PES PIPS POL PPP PRSP PRSP PSDP PSLSMS PSY SBP SMEDA SMEs SOEs SOI SPDC SYB TB TOR UNDP UNESCAP Most Favoured Nation Ministry of Education Ministry of Finance National Economic Council National Electric Power Regulatory Authority National Finance Commission National Security Policy National Transmission& Dispatch Company Organization of the Petroleum Exporting Countries Pakistan Bait-ul-Mal Pakistan Bureau of Statistics Planning Commission Pakistan Economic Survey Research Institute for Peace and Security Pakistan Oilfields Limited Purchasing power parity Poverty Reduction Data Base Poverty Reduction Strategy Paper Public Sector Development Programme Pakistan Social and Living Standards Measurement Survey Pakistan Statistical Yearbook State Bank of Pakistan Small and Medium Enterprises Development Authority Small and medium-sized enterprises State-Owned Enterprises State of Industry Report Social Policy and Development Centre Statistical Year Book Tuberculosis Terms of Reference United Nations Development Programme United Nations Economic& Social Commission for Asia& the Pacific 204

UNFPA UNHCR UNSC USC WB WDI WHO WTO WWF List of Acronyms United Nations Population Fund United Nations High Commissioner for Refugees United Nations Security Council Utility Stores Corporation World Bank World Development Indicators World Health Organization World Trade Organization Workers’ Welfare Fund 205

Human Security in Pakistan 206