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This study provides a quantitative assessment of selected fiscal adjustment policies on income distribution in Pakistan. Using a latest social accounting matrix for the year 1989-90 and the static fixed-price model, various simulation exercises have been performed. The results show that reduction in subsidies has more adverse impact •on the incomes of the richest rural and urban households, implying that the richest people In the country are the greater beneficiaries of subsidies provided by the government. The evidence also suggests that a contraction in government current spending appears to have a negative impact on the incomes of all urban and rural household groups but the largest reduction appears in the income of the richest rural, followed by the poorest urban. The simulation results indicate that a decline in public expenditure on education and health affects the poorest urban and poorest rural more than the relatively better-off urban and rural income groups. Further, the estimates of Gini-coefficients show that reduction in consumption subsidies improves income distribution in both rural and urban areas of Pakistan. Conversely, reduction in subsidies on production worsens income distribution both in urban and rural areas, while reducing overall government current expenditure leads to deterioration of income distribution in urban areas but improves it in rural areas marginally. Similarly, reduction in government expenditure on education and health adversely affects income distribution in both urban and rural areas of Pakistan.

In the Third World remittances - defmed as money and goods that are transmitted by migrant workers to their households back home - can have a profound impact upon rural income distribution. This is true for both internal remittances, which are often small but widespread among the rural population, as well as for international remittances, which are typically larger and more concentrated. Despite these considerations, there is still no general consensus about the effect of internal or international remittances on rural income distribution in the Third World. On the one hand, Lipton (1980) argues that in India internal remittances worsen rural inequality because they are earned mainly by upper-income villagers. With respect to international remittances, Gilani, Khan and Iqbal (1981) in Pakistan and Adams in Egypt (1991, 1989) produce similar fmdings. On the other hand, some empirical studies suggest a very different outcome. For example, Stark, Taylor and Yitzhaki (1986) fmd that internal and international remittances in Mexico have an egalitarian effect on rural income distribution.1 Two major reasons appear to account for such lack of consensus on the effect of remittances upon rural income distribution: the use of local-level data collection techniques that preclude making unambiguous empirical judgements about the effects of remittances; and the reluctance or inability to use predicted income functions to accurately estimate income before and after remittances.

The use and adoption of indivisible techndogy are not restricted by ownership or class structure. We have found, however, that in 1972,-and still in 1980, though tubewells were owned by a minor fraction of total farm househdds (and predominan tly by the large and medium farmers), they were used by a substan tial proportion of farm households. Predictably, .the user-owner ratio was the highest in the case of the small farmers in all provinces. The relative importance of the small and medium farmers as owners of this techndogy increased over the period, particularly in the Punjab where tubewells are concen trated. The development of a hire market in tube well services has ~ven birth to a new entrepreneurial class in the rural areas. Inequalities in rural income are dwindling and benefits emanating from n\lW technology are shared. These conclusions are of vital importance because they negate the existing views and show that (i) the indivisibility of technology has not been a barrier to its adoption, and that (ii) the fact that the share of the small and medium farmers in the ownership of tubewells has increased gives support to the thesis that if a technology is profi table, farmers will adopt it where possible. Thus, the view that small farmers are conserva tive and resist change can no longer be sustained Further, it shows that the small and medium farm sector, in particular, holds the potential for investment in techndogy.

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 tube wells, 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 (i974))

This is a remarkable volume. Not so much for what it says as much as for what it never gets around to saying. The introduction states that this is the "first major research study to be published under the rural component" of the World Employment Programme. The volume consists of studies of various aspects of rural income distribution in: Pakistan (S.M. Naseem); Indian Punjab (Indira Rajaraman); Uttar Pradesh (Rohini Nayyor); Bihar (Rohini Nayyor); Tamil Nadu (C.T. Kurien); Bangla¬desh (A.R. Khan); Sri Lanka (E.L.H. Lee); West Malaysia (E.L.H. Lee); Java (Ingrid Palmer); Philippines (A.R. Khan); and China (A.R. Khan). There is also an anonymous introduction which attempts a synthesis and summary.