Benazir Income Support Programme (BISP) will soon be ranked as the best unconditional cash transfer program in the world through Revised Proxy Means Test (PMT) Formula.
Simulated results show that using the revised PMT formula substantially increases targeting performance and can benefit 60.2% people from the bottom quintile, as compared to 48% in the old formula of 2010 while 87.5% would be from the bottom 2 quintiles as compared to 75% previously.
This is a simulated result but once the National Socio Economic Registry (NSER) update is completed and the administrative data validates this percentage, it would bring BISP to the top rank among globally acclaimed unconditional cash transfer programs.
Chairperson BISP MNA Marvi Memon termed it a great success for BISP. She said, “We’ve been continuously putting efforts to ensure transparency in the programme, and becoming the pride of Pakistan.” She further said, “I am pleased that the efforts have borne fruit and we have moved from being number five (in 2010) to number one (in 2018).” She hoped that the increased targeting performance will lead to enhanced and focused poverty eradication efforts.
In 2016, BISP started an extensive consultative process, with support from global experts, which led to the revision of the PMT formula with several additional features to improve its performance.
These features included Improved Welfare Indicator, Excluding Non-Verifiable Indicators, Location Effect and Interaction Effects.
Secretary BISP, Omar Hamid Khan, said that he considers it yet another success of the BISP team, sharing that “the entire staff and management has continuously put efforts for the betterment of BISP family.”
He further added that this exercise shows how BISP is engaged in testing all its efforts through piloting and simulations before field experience to remove any policy glitches in the future.
The revised PMT formula bases poverty measures on expenditure per adult equivalent (instead of per capita) since it takes into account household demographic structure in the calculation of the welfare aggregate. Moreover, the previous PMT formula included indicators of household head’s educational attainment and children’s enrollment in a school that are not easily observable and verifiable. Hence, the updated formula excludes them and includes an indicator of adults’ literacy, which is less prone to measurement error and misreporting. It has also been observed that geographical location is an important determinant of poverty.
To capture these effects, the PMT formula now includes indicators of urban status, according to the definition used by the Pakistan Bureau of Statistics. The formula also includes indicators of agro-climatic zones of Pakistan. This is expected to reduce the “rural bias” which was observed in the previous formula.
The previous formula was allocating the same weight to demographics, dwelling characteristics, durables and productive assets in the calculation of the PMT score for all households of Pakistan, irrespective of their characteristics or location. The revised formula incorporates interactions between urban status and agro-climatic zones, and these interactions are significantly better predictors of consumption.
This sets BISP as an international best practice in safety nets. She further said, “I am pleased that our endeavor to raise BISP’s credibility to serve the real poor vs. the political poor has been established worldwide with this accomplishment. She hoped that the real poor of Pakistan have finally been recognized.”