he average monthly household (not per capita) income in Pakistan rose from Rs 41,545 in 2018-2019 to Rs 82,179 in 2024-2025. Inflation erased that nominal gain and real household income fell by 12.7 percent. Over the same period, more than 25 million people fell below the official poverty line. Their number rose from 47.1 million to 72.5 million—the poverty rate rose from 21.9 to 28.9 percent.

According to the National Poverty and Inequality report, poverty spread and deepened. The combined share of the extreme- and ultra-poor more than doubled, from 5.6 percent to 12 percent. Around 30 million people now live in these two bands. The average shortfall of poor households from the poverty line (poverty gap) widened by 83 percent. The poverty severity index that gives greater weight to the poorest households rose by 148 percent. The national Gini coefficient (measure of inequality) increased from 28.4 to 32.7, a rise of 4.3 points. More Pakistanis became poor and the poorest fell further behind.

In an earlier article, Why the Poor Don’t Kill Us, a review of Manu Joseph’s book, I asked why Pakistan’s poor do not turn against those who hoard privilege. The new numbers led me to think: how does poverty reproduce itself, and why do privileges survive?

Generational poverty begins before a child makes a choice. More than 36 million Pakistanis under 18 now live below the poverty line. A poor household has less money than what can buy nutritious food, pay school fees and ensure medical treatment. This impairs both health and learning. Lower capabilities turn many young people uncompetitive in the job market. Volatile earnings leave little room for savings or productive assets.

A shock then forces choices that may protect the family today but reduce its earning capacity tomorrow. Parents borrow, sell livestock, reduce meals, delay medical care or withdraw a child from school. The family enters the next crisis with fewer assets and weaker skills. This vicious cycle continues, carrying deprivation across generations and reproducing poverty even when parents work hard and seek better lives for their children.

Pakistan faced Covid-19, a global commodity surge, a balance of payments crisis, severe inflation and two floods (2022 and 2025) in quick succession. One can argue that Pakistani governments did not create every shock. Yet, taxes, tariffs, social protection, public services and relief determine who is exposed, how large the loss becomes and how quickly a household recovers. The poverty report (compiled before the 2025 floods) found that each crisis arrived before many families had rebuilt their savings or assets.

The UNDP Pakistan National Human Development Report 2020, produced by a team led by Dr Hafiz Pasha, offers a framework for explaining both outcomes. It identifies three drivers of inequality: power, people and policy. Power covers privileged groups that use networks, loopholes and public policy for their benefit. People cover beliefs that legitimise unequal treatment by class, gender, religion, caste or other identities. Policy covers systems that fail to correct these disparities or reinforce them.

Power explains how organised groups secure privileged access to the state. The NHDR estimated elite privileges at Rs 2.66 trillion in 2017-2018, about 8 percent of GDP at the time. The figure is dated but the nature of privilege is constant. Tax concessions, subsidies, protected markets, favourable prices, concessional credit and preferential access to public land or capital reward groups that can shape policy. Poor households have far less organised access to decision makers. Their income is not taxable but they pay indirect taxes through consumption and absorb higher electricity, gas and transport costs during fiscal adjustment. The recent poverty report links indirect taxes, tariff increases and lower development spending with further losses in household welfare.

Privilege survives because its benefits are concentrated and its costs are dispersed. A tax exemption or insider’s information may deliver billions of rupees to a small group. Millions of taxpayers and consumers share the cost. Each beneficiary has a strong incentive to defend the advantage. Each citizen bears only part of the cost and has less time, information and organisational capacity to resist it. Wealth provides access to policy. Policy protects wealth, and protected wealth finances further access. This feedback loop explains why some groups remain extraordinarily privileged.

The second ‘p,’ people, explains how unequal treatment becomes routine. Affluent families can afford better teaching, English fluency, healthcare, security and professional networks. Poor families depend on public systems that frequently fail them. A jobseeker who sees contacts defeat credentials learns to value a patron over qualifications. A tenant who needs a landlord’s intervention at the police station or revenue office learns dependence. Repeated experience changes expectation. Fate and destiny, then, provide a language for outcomes produced by unequal access.

Institutions reinforce this psychology through discretionary favours. A Ramazan ration, a job recommendation or a telephone call to an official may solve an urgent problem. It also reinforces the importance of a benefactor. The BISP covers about 10 million households, yet many families that recently became poor remained outside formal protection. When social protection cannot respond automatically to a shock, the newly poor seek an intermediary and may remain obliged to that person. Many patrons come from the privileged class, and patronage turns a public entitlement into a personal debt.

Policy converts power and social hierarchy into taxes, budgets, regulations and public services. Parliament and finance ministries decide whose income, property and consumption carry the tax burden. Provincial cabinets determine whether a poor child finds a teacher at school and medicine at a basic health unit. Regulators decide whether firms overcome inefficiency or pass its cost to consumers. More than 80 percent of Pakistan’s workers remain in informal employment—most have to accept lower wages or loose work without unemployment insurance.

Breaking the cycle requires policy to increase agency as well as income. Cash support and risk transfer mechanisms should prevent families from selling assets, cutting food or withdrawing children from school. Public spending should narrow inherited gaps in nutrition, learning, healthcare and women’s access to paid work. Portable social insurance can protect informal workers across jobs and provinces. Functional local governments can deliver basic services through rules that apply equally to every citizen.

Birth confers neither virtue nor blame, yet societies attach moral meaning to its consequences. A life constrained by deprivation becomes evidence of limited ability and is termed ‘ill fate.’ Success supported by inherited advantage becomes evidence of superior effort and is recognised as ‘merit.’ This vocabulary shifts attention from institutions and policies to character. It asks the excluded to account for failure and allows beneficiaries to treat advantage as achievement. Poverty will stop reproducing when a child is enabled to use their fullest potential through equitable opportunities irrespective of their household, district and social class into which they were born.

The writer heads the Sustainable Development Policy Institute and is a member of the Asian Development Bank Institute’s Advisory Board. His LinkedIn handle is Abidsuleri.