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This report shows that after a decade of moderate growth but little or no long term change in rural poverty in Pakistan, agricultural output, rural incomes, rural poverty and social welfare indicators all showed marked improvements between 2001-02 and 2004-05. However, longer term trends suggest there is little reason for complacency. The agricultural GDP per capita growth rate (1999- 2000 to 2004-05) was only 0.3 percent per year; rural poverty rates in 2004-05 are still at levels that approximate those of the 1990s; and social welfare indicators in Pakistan remain significantly below those of other countries in south Asia. Moreover, problems related to timing and availability of water for irrigation, inadequate rural infrastructure, a skewed distribution of assets, and low levels of health and education continue to slow the progress of economic growth and poverty reduction. Nonetheless, Pakistan has made important strides in the last several years to promote rural growth and poverty reduction. The study concludes that a comprehensive rural growth and poverty reduction strategy is needed, predicated on four main pillars: 1) Promoting efficient and sustainable agricultural growth to raise incomes of small farmers and to generate growth linkages in the rural non-farm economy; 2) Creating an enabling environment for the rural non-farm sector to enhance employment and incomes, and improving rural public-service delivery in infrastructure, health, education and population to serve as a foundation for growth and to increase household welfare; 3) Improving the effectiveness and governance of rural institutions through the decentralization and strengthening of local demand for enhanced accountability as well as through more proactive use of public-private partnerships; 4) Empowering the poor and protecting the most vulnerable through social mobilization, safety nets and facilitating access to productive assets for income generating activities.
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