Absolute Poverty and Microfinance: A Critical Appraisal of Rural Households in Chakwal, Punjab

Despite the widening of microfinance in Pakistan, poverty alleviation and sustainable development remain unachieved, particularly in rural areas where the lower middle class is moving towards extreme poverty. Poverty alleviation was a key goal of the Millennium Development Goals (MDGs), but the rural population faces socioeconomic marginalization and limited access to necessities and financial services. Resilient and smooth financial linkages between local communities, farmers, and small business entities, combined with private and public financial organizations, are crucial for poverty alleviation. The micro financial sector has been declining in Pakistan for the last four decades, with the majority of rural populations living below the poverty line, especially in rural areas of Punjab, having limited access to financial and banking operations. This study aimed to explore whether microfinance is truly eliminating poverty in rural areas of Punjab, Pakistan. The research used the Before and After approach, Foster, Greer & Thorbecke class of poverty measures, and Alkire et al. (2011) methodology to assess the impact of financial appropriation on living standards and decline of economic poverty, absolute poverty. The results showed a positive interaction between broad finance and living standards, a negative association between financial invasion and socioeconomic catastrophe hazards in rural areas of Punjab like district Chakwal, Pakistan. Financial inclusion was found to be a probable determinant of economic poverty reduction, and the agriculture sector had the upper hand compared to other sectors. These findings can help policymakers and stakeholders understand the dynamics of socioeconomic adversity and the function of financial addition in achieving realistic socioeconomic uplift programs in rural Punjab.