The Human Development Index (HDI) is considered as a better measure of development than just per capita Gross Domestic Product (GDP). The HDI has three components – measures of health, education and per capita income (in purchasing power parity terms) respectively. It is computed annually for 188 countries by the United Nations Development Program (UNDP). Pakistan currently stands at 147 with a medium-level of human development.
There have been occasional attempts at obtaining the HDI at the Provincial level in Pakistan. This was first done for the Pakistan Human Development Report of the UNDP for 2003.
In 2008, the Pakistan Bureau of Statistics (PBS) estimated the HDI for each province. However, there has been no attempt to update the index values for recent years. Also, the findings were defective as they substantially understated the per capita income of Sindh relative to the other provinces. This was also the first attempt at estimating the HDI at the district level.
The need for this research arose following the setting up of the 9th National Finance Commission (NFC) Award. In the last NFC award, multiple criteria were used for the first time for the distribution of transfers from the divisible pool to the provinces. One criterion was the level of backwardness. The HDI was used as one measure of backwardness of a province, along with the incidence of poverty.
The following measures have been used to construct the HDI; life expectancy in years for health, mean years of schooling of population aged ten years and above for education and income per capita. The methodology for deriving the value of HDI is the same as that used by the UNDP.
The relatively small increment of HDI in Sindh is due to the poor performance of the regional economy, especially of Karachi, after 2008
Diverse sources of data have been used. Estimates of the HDI are for the period, 2013-14 to 2015-16. The HDI ranges from zero to one. The larger the value, the higher is the level of human development. The research has been undertaken with the help of three M.Phil /Ph.D students.
The provincial rankings are as follows: Sindh is ranked first with HDI of 0.565, followed by Punjab at 0.542, Khyber Pakhtunkhwa (KPK) at 0.512 and Balochistan at 0.462. Sindh gets the highest ranking primarily because of a per capita income 22 percent higher than the national average, thanks to Karachi. Punjab and KPK are at the medium level of human development, while Balochistan is at the low level.
HDI values have also been derived at the provincial level for 2008 to determine the annual rate of improvement. For the country as a whole, the HDI has risen at the rate of only one percent over the last six to seven years. The fastest rate of growth was observed in KPK, followed by Punjab, Balochistan and Sindh.
The two basic questions at this stage are as follows: How has KPK put in the best performance since 2008? Why has the HDI of Sindh been relatively slow-moving over the last seven to eight years?
The primary reason for the divergence is the difference in the growth rate of per capita income. Contrary to expectations, KPK has been the most dynamic regional economy, despite being affected most by terrorism.
The main explanation for this is that as much as 30 percent of the domestic and international remittances have been destined for KPK, while the corresponding share of the population of the province is much smaller at 14 percent. These remittances have shown extremely rapid growth since 2008. Beyond this, the many families receiving remittances have shown a strong demand for health and education services.
For the country as a whole, the HDI has risen at the rate of only one percent over the last six to seven years
The relatively small increment of HDI in Sindh is due to the poor performance of the regional economy, especially of Karachi, after 2008. The breakdown of law and order in the city has contributed to the slow growth in income. However, there is some evidence of revival after 2012.
The consequence of the faster improvement in the HDI of KPK versus Sindh and Punjab is that regional disparities in the HDI among different regions of Pakistan have narrowed somewhat in recent years. However, there is need to push more strongly for a higher HDI of Balochistan. Punjab – being the largest Province – continues to show a performance close to the national average.
HDI at District Level
We turn now to the HDI at the district level. The findings are extremely rich and useful in character and provide valuable insights for regional planning. Estimation of the per capita income at the district level is based on quantifying the value added in agriculture and manufacturing. The services sector is assumed to be linked in size and growth to the commodity-producing sector. The distribution of districts in a province by level of HDI is given in Table 1.
We focus first on the higher end of the regional distribution of the HDI. Which districts achieved a high level of human development? This requires a particular district to have an HDI value of above 0.7, as specified by the UNDP.
There are four locations in the country characterised by a high level of human development. These include the Federal capital Islamabad, Karachi, Lahore and Rawalpindi districts. It is significant that this list does not include the other two provincial capitals and the third largest city of Pakistan, Faisalabad.
Almost 54 percent of the population resides in districts characterised by low level of human development (HDI less than 0.50)
The districts with a medium level of human development are those with an HDI-value of 0.50 to 0.70. Pakistan’s 20 districts fall into this category. Twelve districts are from Punjab – Chakwal, Sialkot, Jhelum, Gujranwala, Gujrat, Faisalabad, Attock, Multan, Sargodha, Mianwali, Sheikhupura, Mandi Bahauddin and Toba Tek Singh. The six districts from KPK with medium level of HDI are Peshawar, Abbottabad, Haripur, Nowshera, Malakand and Mansehra.
Two districts of Sindh, Hyderabad and Sukkur, are at the medium level of human development, and Quetta district in Balochistan is still at the low level of HDI, despite being a provincial capital.
Overall, for Pakistan as a whole, 18 percent of the population lives in locations with high level of development and 28 percent in districts with medium level of development. Almost 54 percent of the population resides in districts characterised by low level of human development (HDI less than 0.50). The number of such districts is 96 out of the total of 119 districts in Pakistan.
The three districts in each Province with the lowest HDI can also be identified. In Punjab, these districts are Layyah, Muzaffargarh and Rajanpur, all in South Punjab. In Sindh, it is two districts in the South, namely Tharparkar and Badin, with one district in the North, Jacobabad.
The three most backward districts in KPK are Batagram, Kohistan and Upper Dir. In Balochistan, the districts at the bottom are Qila Saifullah, Barkhan and Musakhel.
The distribution of the population of each province by level of HDI is given in Chart 1.
The extent of inequality in the HDI is most pronounced among the districts of Sindh. This province is effectively a ‘dual economy,’ with a highly developed city, Karachi, and a relatively underdeveloped hinterland. Inequality is, more or less, the same in KPK and Punjab.
Balochistan has the least inequality, as all districts are at the low level of development. The results of the research on the HDI of provinces and districts of Pakistan should prove useful. They will help in identifying the right regional development strategy in each province.
Also, they can be used as criteria for horizontal sharing by the National Finance Commission and the provincial finance commissions.