Regional distribution of agricultural incomes in Pakistan: an intertemporal analysis.
Chaudhry, M. Ghaffar ; Iqbal, Zafar
1. INTRODUCTION
The stagnant agriculture sector of the Fifties was transformed into
a dynamic one in Pakistan by the technological breakthroughs made in the
early Sixties. The installation of private tubewells, introduction of
high-yielding varieties (HYVs) for various crops, the rising use of
chemical fertilizers and insecticides and the mechanization of tillage
operations have ensured growth rates of agricultural output unknown in
the Indo-Pakistan subcontinent. Although the desirability of these
technological changes in terms of growth cannot be doubted, it was
argued in many studies that the technology would likely lead to
increasing rural income disparities in Pakistan thus thwarting the
desired impact of growth on economic development [Alavi (1976); Falcon
(1970); Gotsch (1976); Gotsch (1976a); Griffin (1974); and Hamid
(1974)].
The conclusion that rural income distribution worsens is attributed
in part to interclass disparities but to a large extent to growing
income differences among the various regions [Alavi (1976); Falcon
0970); Gotsch (1973); and Griffin (1974)]. In making the case for
growing regional income disparities, these studies held the view that
the benefits of the technology, would remain restricted to irrigated
areas alone. Barani areas, with their dependence on natural
precipitation alone, would be severely constrained in the adoption of
high-yielding varieties (HYVs) and the application of chemical
fertilizers (Falcon 1970). These apprehensions led to the conclusion of
rising interprovincial disparities; Punjab with an elaborate system of
canals and private tubewells is likely to make tremendous gains in
agricultural production relative to other provinces especially
Balochistan and NWFP where agricultural production has shown no visible
signs of improvement [Alavi (1976); Falcon (1970); and Griffin (1974)].
The purpose of the present paper is to study the pattern and trends
of regional distribution of agricultural incomes in Pakistan if only to
check the appropriateness or inappropriateness of the technological
breakthroughs on a regional scale. This is of crucial significance as
low agricultural productivity cannot be raised without increasing
dependence on modern agricultural inputs on a Pakistan-wide basis. The
paper is divided into four sections dealing with data sources and
methodology, intertemporal state of regional disparities and conclusions
and policy recommendations.
2. DATA SOURCES AND METHODOLOGY
An empirical investigation of the trend of regional income
distribution in agriculture requires consistent time-series data on
value added by agriculture in various regions. As there is a general
lack of consistent time-series data on national accounts disaggregated by regions, one must look for the alternative sources of data of
regional incomes. (1) Among the most viable of these sources is the
valuation of crop-production data by districts. This adds tremendously
to data requirements and calculation work. Not only does it requires
time-series data on production estimates of each and every agricultural
commodity by districts but also relevant price statistics to arrive at
gross value of agricultural output at the district level. Although
highly laborious, we had no option but to undertake the task of
preparing estimates of gross value of agricultural output for each
district since 1960-61 to 1982-83. As a first measure of regional
disparity, we aggregate the district data into shares of provinces in
gross value of agricultural output.
In order to proceed further, the gross value of output of each
district was divided by its respective population in agriculture to
arrive at per capita incomes. Although agricultural population estimates
for districts are not available other than population census years, they
were interpolated on the basis of inter-censal growth rates of
agricultural population in various districts. The calculation of per
capita incomes was essential to arrange districts from lowest to highest
per capita income and to calculate their income shares. The Gini
coefficients reported in this paper, have been based on cumulative
shares of population and of incomes of the various districts ordered by
the lowest and highest per capita income.
3. THE STATE AND TREND OF REGIONAL DISPARITIES
As should be evident from the methodology, the analysis of regional
income distribution may be based on income shares of various regions or
income concentration ratios. We intend to use both in our paper.
Regional Income Shares
Taking income shares first, the Table 1 presents five-year averages
of income shares of various provinces of Pakistan beginning with the
early Sixties. The data of this table point to the Punjab's
dominant position in agricultural production as it accounted for a large
proportion of 60-65 percent of Pakistan's agricultural output for
the time period under consideration. This is understandable as Punjab
accounts for nearly two-thirds of Pakistan's total cropped land.
The important thing to note, however, is the significant fall in the
Punjab's share of gross value of agricultural output between 1960
and 1980 irrespective of the prices used in the valuation of
agricultural output. The decline in the Punjab's share was
accompanied by the corresponding and almost uniformly distributed
increases in the income shares of other provinces. It may not be without
interest to reiterate two major implications of the rising share of
other provinces in agricultural output. First, contrary to the generally
held view, the increases in agricultural production were not confined to
Punjab alone. They were widely and equally shared by other provinces. In
fact, the rising production shares of other provinces are an indication
of more rapid growth of agricultural production in the provinces of
Sindh, NWFP and Balochistan than that in the Punjab in the post-Green
Revolution period. Second, assuming Punjab is agriculturally the richest
province, the rise in the share of agricultural production of other
provinces implies a reduction in the regional disparity of agricultural
incomes.
The income shares approach to income distribution, while useful in
certain respects, suffers from many limitations. First, it assumes the
constancy of the growth of agricultural population in various regions
and variations in population growth may seriously affect the conclusions
reached above. Second, it does not explicitly incorporate the levels of
per capita income in the various regions. Third, income shares are only
a rough means of pointing to the magnitude and trends of income
distribution and cannot be used to measure the precise degree of income
inequality and its trend. Finally, provincial aggregates of income
shares hide more than they-reveal for they fail to reflect on the
intra-regional variations of income.
Income Concentration Ratios
The income concentration ratios are a useful device to overcome the
limitations of the income shares approach in measuring income
inequalities. Apart from being a precise measure of inequality, (2)
income concentration ratios also allow for incorporation of variations
in population growth and per capita incomes in different regions. In
addition, they can be profitably used to reflect on intra-provincial
variation in income if based on district level data. It, therefore,
seems advisable to supplement the conclusions of income shares approach
by an analysis of income concentration ratios. Table 2 gives the
relevant information in this regard.
The concentration ratios given in the above table point to the
improvement of regional distribution of incomes between 1960-61 and
1982-83 irrespective of the use of current or 1959-60 prices on
Pakistan-wide basis. The fall in concentration of income was most
significant in the NWFP followed by Sindh and the Punjab. Although the
regional distribution of income in Balochistan became less skewed between 1960-61 and 1979-80, it deteriorated since 1979-80 both at
current prices and 1959-60 constant prices. The fall in the
concentration ratio over the period under consideration in Pakistan.
Punjab and Sindh (also in Balochistan) is considerably dampened by use
of 1959-60 constant prices as compared to that of current prices. This
implies that the price policy in Pakistan, Punjab, Sindh and Balochistan
has been more favourable to relatively poorer regions than to well-to-do
regions. In the case of NWFP, however, the reverse seems to be the case.
Looking at Table 2 one may jump to the conclusion that changes in
concentration ratios are at best imperceptible and the decline in them
over a long period of more than 20 years may not be given any value at
all. Our statistical tests prove to the contrary. In separate
regressions for each of the regions at constant and variable prices, the
trend variable turned out to be statistically significant at the 5
percent significance level and only in one case, out of ten regressions,
was the sign of the trend variable positive.
It may not be without interest to note that the empirical results
of this study, like an earlier study covering a limited post-Green
Revolution period by one of the authors (Chaudhry 1982), are in sharp
contrast with the conclusions of most of the studies undertaken during
the late Sixties and early Seventies. The question, then arises, as to
what went wrong with these studies. An attempt is made in the following
subsection to answer this question.
Factors in Regional Distribution of Income
The trend of regional distribution of agricultural incomes is
shaped by the relative pace of adoption of modern inputs and its
implications for growth of productivity of the various regions. The
studies undertaken during the late Sixties and early Seventies involved
a lot of speculation in the prediction of the distribution of benefits
of the Green Revolution technologies. What is more important to note is
the fact that this speculation was based on the regional pattern of
adoption of various technologies in the early stages of the Green
Revolution which ignored the more rapid adoption by the latecomers once
the benefits of the technology were fully demonstrated [Hazell and
Anderson (1984) and Pinstrup-Anderson and Hazell (1985)]. Given this
state of affairs it may be important to analyse the regional pattern of
adoption of the various Green Revolution technologies and changes
therein with possible implications for the relative growth rates of
agricultural production in the various provinces. The data in Table 3
are designed to accomplish this task.
The major conclusions follow from the examination of data in Table
3. First, Punjab played a leading role in the adoption of most of the
Green Revolution technologies with the exception of HYVs of Rice and
continued to maintain its dominant position over the period under
consideration. The implication of this finding is that the Punjab
enjoyed higher levels of agricultural productivity than other provinces.
Second, what is more important from the standpoint of regional
distribution of agricultural incomes is the change in the rates of
adoption of various technologies in the provinces of Pakistan. It may be
remarked that the incremental change in the adoption rates were more
pronounced in other provinces than in the Punjab in the case of almost
all the new technologies. On the basis of this finding it can be said
that the faster rates of adoption of the Green Revolution technologies
in Pakistan's provinces other than the Punjab were responsible for
the rapid growth of agricultural output in Balochistan, NWFP and Sindh
leading to a considerable narrowing of inter-provincial income
disparities. Finally, the rapid rates of diffusion of Green Revolution
technologies in all the provinces irrespective of their proportionate irrigated area point to the fact that the control on irrigation water
has not been a binding constraint in the adoption of various
technologies. In fact, the available evidence suggests that the access
to water even in the non-irrigated areas of Pakistan may not be quite as
precarious as has been portrayed by the studies undertaken during the
late Sixties and early Seventies. For example, while the water
requirements of most of the HYVs of wheat do not exceed 18 inches, the
major Barani areas of Pakistan are endowed with more than 25 inches of
annual rainfall (Muhammad 1970). The water constraints in the arid zones
of Balochistan, NWFP and Sindh are considerably alleviated by the
evolution of drought-resistant HYVs of wheat and the installation of
tubewells. The introduction of tractors by promoting timely, quick and
deep ploughing and levelling of fields greatly increases the water
conservation potential of the rain-fed regions (Chaudhry 1986).
Although the population of tubewells and tractors is sparse in the
arid zones, the two technologies have a far more significant effect on
the agricultural productivity of such regions as compared to that of the
irrigated areas. For example, since the productivity of agriculture in
the rain-fed areas is only one-fourth of that in the irrigated regions,
the installation of tubewells should lead to a three-fold increase in
the income of the region (Johl 1979). This compares favourably with only
a 100 percent increase in the incomes of irrigated regions with the
installation of tubewells. Similarly, it has been shown that a four-fold
increase in wheat yields in arid zones, in contrast with the 10-20
percent increase in the irrigated areas, could be brought about with
proper mechanization of tillage operations [Rana Tractors and Equipment
Ltd. (1974)]. These results have largely been substantiated in recent
years by the on-farm experiments under the Crop-maximization Programme
of the Pakistan Agricultural Research Council which reiterate that the
yields of wheat and maize in the Barani areas could be brought at par
with those of the irrigated areas with deep ploughing and proper use of
fertilizer (Chatta 1987).
In view of the rapid rates of diffusion of Green Revolution
technologies and their significant contribution to agricultural
production it is not difficult to see that the rain-fed regions were
able to compete successfully with irrigated regions in agricultural
productivity growth. It is substantiated by the trend in wheat (a crop
grown under irrigated and unirrigated conditions) yields which have
risen at a faster pace under Barani conditions than under irrigated
agriculture throughout the Sixties, Seventies and the Eighties. In the
recent years, research on evolution of HYVs of groundnut, oil seeds and
blight-resistant gram varieties and Barani wheat and maize varieties
have particularly been helpful in changing the outlook of agriculture in
the poorer rain-fed regions of Pakistan [Pakistan Agriculture Research
Council (1985)]. The outcome of these parallel developments has appeared
in the form of substantial narrowing of the productivity gap between
irrigated and unirrigated areas.
4. CONCLUSIONS AND POLICY RECOMMENDATIONS
The major purpose of this paper has been to study the trend of
regional distribution of agricultural incomes in Pakistan. Taking gross
value of crop output in the various districts from time to time, our
empirical investigation points to a consistent improvement in the
regional distribution of agricultural incomes in Pakistan. The
conclusions of our study challenge the authority of arguments that
anticipated widening income differences among the various regions. The
studies undertaken during the late Sixties and early Seventies were
based on the adoption rates of various technologies immediately after
the inception of the Green Revolution and overplayed the constraint of
irrigation water. Although Punjab with better irrigation facilities
played the leadership role, the Green Revolution technologies were not
restricted to Punjab alone and have been adopted by other provinces at a
later stage. While the adoption rates seem to be a function of time to
establish the profitability of the new inputs, water availability has
not been a critical constraint in regional adoption patterns. In
addition, our analysis shows that some of the Green Revolution
technologies such as tubewells and tractors have a productivity-raising
potential in the Barani areas that is considerably greater than that of
the irrigated areas. Thus the Green Revolution represents an appropriate
set of technologies suited to all regions and perhaps more so to poorer
regions. It is, therefore, in the best interest of Pakistan to
propagate, by deliberate policy action, the use of existing technologies
in all regions and to undertake research on the evolution of new ones
with renewed vigour.
Comments on "Regional Distribution of Agricultural Incomes in
Pakistan" Intertemporal Analysis"
It is a well-known fact that the new technology and the environment
(in which it is adopted) adapt to each other; the question is only of
time that would elapse in this adaption. Intuitively, it is also clear
that with the diffusion of technology income inequalities between the
initial and later adopters will be reduced. There are, however, a few
methodological questions which bother the reader:
(1) Gross Value Product (GVP)is at best a mere proxy for
agricultural income as it ignores the cost of inputs. As different
regions may be using a different input mix for production of the same
crop and paying different prices for the same inputs this would result
in a different net income per unit of output. One cannot blame the
authors for not calculating the net incomes as one realizes the enormity of the task given the data situation in the country.
(2) One may question the utility of calculating 5-year averages for
shares of agricultural incomes (Table 1). Not only that a lot of
information gets lost in these averages but also it makes the comparison
of these shares with the shares of various components of agricultural
technology (Table 3) very difficult. One feels that provision of income
shares for the years corresponding to those given in Table 3 or
alternatively, calculation of 5-year averages for the components of
technology would have been more helpful to determine the correlation
between income shares and the provincial share of a particular component
of new technology.
(3) Table 2 provides the Income Concentration Ratios (ICRs) for the
country as well as for the four provinces. These ICRs are calculated as
substitutes for income shares which, as the authors point out, are not
appropriate measures of income inequality. However, the presentation of
ICRs marks a sudden switch in the emphasis of the paper from
inter-provincial to intra-provincial (i.e., inter-district)
inequalities. As no supporting information about the inter-district
diffusion of new technology is provided one cannot understand the
usefulness of Table 2.
(4) Two crucial factors conspicuous by their absence from the paper
are the 'area cultivated' and 'area irrigated'. The
paper completely ignores that the changes in provincial shares of these
variables could be a possible reason for reduction in inter-provincial
inequalities.
Incorporation of Points (2) and (4)
In order to incorporate points (2) and (4) related to consistency
of data series and the inclusion of cultivated and irrigated areas, data
on area cultivated, area irrigated (by all sources), number of
tubewells, amount of fertilizer used, area under high-yielding varieties
of wheat and rice were obtained from various issues of Agricultural
Statistics of Pakistan. Five-year averages of these variables are given
in Table 1. (1) These averages were used to calculate simple correlation
coefficients (not reported) between income shares and the shares of
various components of technology. These coefficients reveal that, except
for Balochistan, the correlation between income shares and shares of
components of technology is mostly negative.
Hanid Mukhtar
Applied Economics Research Centre, Karachi
(1) As data for fertilizer were available form 1966, therefore,
average for 1961-65 could not be calculated. Data for tubewells and area
on high yielding varieties were available from 1969, hence the first
average for these variable is calculated for two years only. Appropriate
data on number of tractors in each province were not available.
Table 1
Provincial Shares in Income and various Factors
(Averages)
Years Punjab Sindh NWFP Balochistan
Income (in Current Prices)
1961-1965 64.7000 24.1000 8.80000 2.50000
1966-1970 63.0000 25.4000 9.00000 2.60000
1971-1975 64.3000 24.2000 9.00000 2.50000
1976-1980 60.9000 25.7000 9.90000 3.50000
1981-1983 59.3000 25.6000 9.70000 5.40000
Income (in Constant Prices)
1961-1965 63.7000 24.3000 9.40000 2.60000
1966-1970 60.2000 26.5000 10.2000 3.10000
1971-1975 61.2000 25.9000 9.60000 3.40000
1976-1980 60.2000 26.5000 9.60000 3.60000
1981-1983 60.2000 25.8000 9.40000 4.60000
Cultivated Area
1961-1965 55.5700 27.1900 6.95000 10.2900
1966-1970 56.2700 27.3600 7.57000 8.80000
1971-1975 57.6600 27.4500 8.70000 6.19000
1976-1980 56.7000 27.2100 9.46000 6.62000
1981-1983 56.6500 27.0300 9.28000 7.04000
Irrigated Area
1961-1965 65.7800 27.7000 4.82000 2.19000
1966-1970 66.9700 24.9300 4.80000 3.30000
1971-1975 69.6700 21.7100 5.16000 3.16000
1976-1980 69.0300 22.6500 4.91000 3.42000
1981-1983 70.8500 20.4900 5.02000 3.64000
Tubewells
1961-1965 NA NA NA NA
1966-1970 94.8600 2.74000 .370000 2.04000
1971-1975 90.9400 4.73000 1.73000 2.60000
1976-1980 88.8000 5.64000 2.39000 3.16000
1981-1983 84.6400 9.46000 2.49000 3.59000
Fertilizer
1961-1965 NA NA NA NA
1966-1970 70.8800 19.5000 9.43000 .190000
1971-1975 65.6800 27.1400 6.85000 .320000
1976-1980 66.6900 25.5900 7.29000 .430000
1981-1983 65.4000 27.4000 6.65000 .550000
Area Under High Yielding Variety (Wheat)
1961-1965 NA NA NA NA
1966-1970 79.7700 14.1500 5.01000 1.07000
1971-1975 74.5300 16.3700 8.47000 .620000
1976-1980 73.7700 15.9300 9.39000 .910000
1981-1983 73.1900 16.1400 9.83000 1.83000
Area Under High Yielding Variety (Rice)
1961-1965 NA NA NA NA
1966-1970 21.8000 77.3800 .700000 .120000
1971-1975 20.1500 74.8300 1.17000 3.84000
1976-1980 28.3600 68.2700 1.33000 2.04000
1981-1983 22.0800 67.6400 1.60000 8.68000
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(1) Gross Provincial products are available for only a limited
period of the Sixties (Hayed 1974). However, the publication of such
data was discontinued beyond the Sixties due perhaps to the inaccuracies
involved.
(2) The generalization holds true except in the case of
intersecting Lorenz Curves leading to ambiguity of conclusions based on
income concentration ratios.
M. GHAFFAR CHAUDHRY and ZAFAR IQBAL, The authors are Chief of
Research and Staff Economist respectively, at the Pakistan Institute of
Development Economics, Islamabad.
Table 1
Provincial Shares in Gross Value of Agricultural Output of
Pakistan at CurrentPricesand 1959-60 Constant Prices
Percentage Shares in Gross Value of
the Province of
Period
Punjab Sindh NWFP Balochistan
A. At Current Prices
1960-61 to 1964-65 64.7 24.1 8.8 2.5
1965-66 to 1969-70 63.0 25.4 9.0 2.6
1970-71 to 1974-75 64.3 24.2 9.0 2.5
1975-76 to 1979-80 60.9 25.7 9.9 3.5
1980-81 to 1982-83 59.3 25.6 9.7 5.4
B. At 1959-60 Constant Prices
1960-61 to 1964-65 63.7 24.3 9.4 2.6
1965-66 to 1969-70 60.2 26.5 10.2 3.1
1970-71 to 1974-75 61.2 25.9 9.6 3.4
1975-76 to 1979-80 60.2 26.5 9.6 3.6
1980-81 to 1982-83 60.2 25.8 9.4 4.6
Source: Calculations based on crop-production data in the Files of
Planning Unit, Ministry of Food, Agriculture and Cooperatives.
Table 2
Income Concentration Ratios Based on District Data on Gross
Value of Agricultural Output per Capita since 1960-61
Income Concentration
Ratios for
Period Pakistan Punjab Sindh
A. Current Prices
1960-61 to 1964-65 0.23 0.16 0.15
1965-66 to 1969-70 0.22 0.16 0.14
1970-71 to 1974-75 0.21 0.17 0.08
1975-76 to 1979-80 0.19 0.13 0.11
1980-81 to 1982-83 0.19 0.12 0.08
B. At Constant 1959-60 Prices
1960-61 to 1964-65 0.23 0.16 0.16
1965-66 to 1969-70 0.24 0.17 0.17
1970-71 to 1974-75 0.21 0.19 0.09
1975-76 to 1979-80 0.20 0.16 0.12
1980-81 to 1982-83 0.21 0.16 0.11
Income Concentration
Ratios for
Period NWFP Balochistan
A. Current Prices
1960-61 to 1964-65 0.49 0.26
1965-66 to 1969-70 0.49 0.21
1970-71 to 1974-75 0.34 0.18
1975-76 to 1979-80 0.29 0.21
1980-81 to 1982-83 0.26 0.37
B. At Constant 1959-60 Prices
1960-61 to 1964-65 0.48 0.28
1965-66 to 1969-70 0.51 0.27
1970-71 to 1974-75 0.32 0.20
1975-76 to 1979-80 0.23 0.21
1980-81 to 1982-83 0.20 0.31
Source: Calculations based on crop-production data in the Files of
Planning Unit, Ministry of Food, Agriculture and Cooperatives.
Table 3
Provincial Rates of Adoption of various Technologies in Pakistan
for Selected Years
Inputs and Years Punjab Sindh NWFP
A. Tubewells (Number in 000)
1965-66 34.3 1.3 0.5
1970-71 89.5 4.1 1.7
1975-76 144.2 8.4 3.7
1980-81 172.1 15.4 5.0
1984-85 215.5 28.5 5.6
B. Fertilizer (000 Nutrient Tons)
1965-66 52.0 14.0 4.3
1970-71 184.3 81.0 17.2
1975-76 380.5 136.3 31.5
1980-81 697.7 303.3 67.2
1984-85 824.4 342.5 72.7
C. Tractors (Number in 000)
1970-71 26.3 4.0 1.2
1975-76 28.8 3.9 2.4
1980-81 81.0 10.6 4.6
1984-85 127.4 16.1 10.1
D. Dwarf Wheat Adoption Rate
(Defined as Percentage of
Total Wheat Area)
1970-71 53.4 65.2 36.2
1975-76 66.7 71.4 61.4
1980-81 83.1 96.9 67.0
1984-85 93.3 96.1 70.4
E. IRRI Rice Adoption Rate (Defined
as Percentage of Total Rice Area)
1970-71 13.4 63.1 5.3
1975-76 13.2 71.4 19.0
1980-81 18.7 78.5 18.2
1984-85 27.6 83.5 20.8
Punjab as a
Percent of
Baloch- Pakistan's
Inputs and Years istan Total
A. Tubewells (Number in 000)
1965-66 0.6 93.5
1970-71 1.9 92.1
1975-76 4.7 89.6
1980-81 7.2 86.2
1984-85 8.1 83.6
B. Fertilizer (000 Nutrient Tons)
1965-66 0.2 73.8
1970-71 0.7 65.1
1975-76 2.3 69.1
1980-81 5.7 64.5
1984-85 9.7 65.8
C. Tractors (Number in 000)
1970-71 0.4 82.4
1975-76 0.7 80.5
1980-81 1.2 83.2
1984-85 3.1 81.3
D. Dwarf Wheat Adoption Rate
(Defined as Percentage of
Total Wheat Area)
1970-71 15.8 74.9
1975-76 22.4 74.3
1980-81 41.6 73.6
1984-85 66.1 73.6
E. IRRI Rice Adoption Rate (Defined
as Percentage of Total Rice Area)
1970-71 61.6 18.0
1975-76 39.5 17.4
1980-81 75.6 23.7
1984-85 63.8 31.7
Source. Calculations based on data in [Government of Pakistan (1976)
and (1986)].