Chapter 1: Introduction

Background

The Coronavirus pandemic has represented a significant test to the entire world (Toda, 2020). The World
Wellbeing Association (WHO) pronounced the Coronavirus flare-up as the 6th General Strength of Crisis
Administrations (SPHEC) on January 30, 2020 (Waris et al., 2020). Rana et al. (2020) clarify that the
nations lining China were influenced the most, including Pakistan. By June 2020, the quantity of cases in
the nation has been expanding quickly and the circumstance is deteriorating step by step. Notwithstanding
its genuine effect on general wellbeing, Coronavirus an affects the economy, and particularly on SMEs,
which have less assets to keep their organizations running. Pakistan as a developing country is as of now
confronting numerous difficulties including poverty, lack of power, business misfortune, food
uncertainty, and numerous other common and synthetic catastrophes (Cui, 2011; Mind, 2014) in our
view, the supposed unique characterization strategy ought to be supported while deciding the
commitment of private ventures towards work creation. In the first place, it is the lone strategy that
reliably credits work creation or misfortune to the size class in which it really happens. Likewise,
dynamic grouping enjoys two different benefits: (for example the normal of 24% all out populace of the
nation are living beneath the destitution line (Baluchistan, 2019). The lockdown because of Coronavirus
has hit the economy of Pakistan hard and now an enormous number of individuals may confront the threat
of starvation. The emergency specifically influenced little and medium-sized organizations (SMEs),
which are as of now performing underneath the capital organizing (Kabir et al., 2020). The point of this
article is to depict the current circumstance in Pakistan because of Coronavirus with an attention on
SMEs, which are generally influenced by the emergency. It is underscored that the points of interest of
the current emergency are generally identified with the long-standing financial issues of Pakistan as a
developing country.

COVID-19 and the current situation in Pakistan

Pakistan is developing country having loads of other monetary emergency in the country. Generally the
small investors are influenced on the grounds that they acquire every day for their endurance. These small
ventures are more terrible influenced and individuals are in any event, starving to death because of
Coronavirus. Shafi et al. (2020) gathered and broke down online review information from 184 Pakistani
SMEs, which showed that most organizations were seriously influenced by Coronavirus related
prohibitive measures. Among the issues looked by SMEs there are monetary issues, inventory network
disturbance, diminished interest, decreased deals and benefits. Also, over 83% of organizations had no
designs to resolve the monetary issues brought about by the pandemic. Given the disturbing
epidemiological circumstance, we expect that the monetary circumstance of SMEs is for all time
decaying. The quantity of affirmed Coronavirus cases in various territories of Pakistan, as per the report
of the Ministry of Health of the Government of Pakistan (GOP) as of fourteenth June 2020. As the most
cases and passing from Coronavirus were amassed in territories Punjab and Sindh. From this date to
onwards, the quantity of affirmed cases in Pakistan has been developing. Compelling measures taken by
the public authority of Pakistan, notwithstanding, assisted with containing the pandemic. Contrasted with
other developing countries, Pakistan has shown less cases in light of the fact that the public authority has
effectively partaken in the control of the pandemic from the beginning. One more test was that the nation
essentially couldn't bear to shut down the entirety of its business areas for a long time.

Problem statement

The problem of poverty is one of the most serious problems in Pakistan as many people have a low
income and during the COVID-19 pandemic could not afford a long lockdown and risks their own life for
the sake of their families. In Pakistan, it is quite typical that one person provides for the whole family,
which is why he or she often cannot afford to close down the business for even a single day. Therefore,
these small business owners are facing the biggest threat due to COVID-19. In addition to the measures
taken by the government to contain the pandemic, such as opening special hospitals, laboratories,
quarantine facilities or an awareness raising campaign and lockdown measures, health checks of
passengers coming from abroad, it is essential that measures should be taken to support SMEs. The
government’s decision to lift some of the lockdown restrictions was determined by the need to support
low-income people and small businesses. SMEs were, however, required to follow certain procedures, for
example, ensuring that clients wore masks and gloves, using sanitizers at offices and maintaining a
distance of 6 feet (1.8 meters) from other people etc. Moreover, the government has not yet found ways to
provide tangible support for SMEs. The economic recession is defined by the reductions within an
economic cycle, which reduces economic efficiency and is measured by gross domestic product (GDP)
and the unemployment rate of any country. Any changes in the economic cycles lead to a change in the
GDP and unemployment rate (Javed, 2000). Carbó-Valverde et al. (2016) assures destruction leads to
lower GDP and increases the unemployment rate in the country and vice versa. The loss of jobs and a rise
in unemployment have a significant effect on people’s mental state and some studies indicate the positive
association between recession and suicide rates (Info 2020; Rana et al. 2020; Baker et al. 2020b). The
COVID-19 pandemic, SMEs in Pakistan encountered a number of financial and institutional challenges in
addition to those they already had to deal with (Baker et al., 2020a.), such as the lack of innovative
products, high investment in government securities, high transactional costs, lack of satisfactory business
plans, accounting, and other information, insufficient assets for use as security, lack of financial
awareness, limited new or innovative approaches to addressing clients, political instability, energy crisis,
lack of infrastructure, rising unemployment and the lack of new technologies.

Significance of research

Covid-19 has serious repercussions for the whole world. There is a dire need to devise prompt policies to
deal with the crisis to minimize the imminent damages it is bound to cause to the economies, governance
models, politics, and human communities. Thus, it is vital to explore the impacts of this pandemic
comprehensively for devising concise framework to deal with this disaster successfully. This research
study is a first step towards the in-depth exploration of this disaster in terms of its impacts on poverty to
the people of Pakistan. This research has explored the impacts of Covid-19 on citizens of Pakistan which
can help the policy makers in devising policies and strategies to deal with this disaster effectively.

Objective of Research

The objective of this research is to analyze the impact of covid-19 on increase of poverty in Pakistan. In

covid-19 many people lost their jobs and many small and medium enterprises were shutdown. This is also

one of the cause of increase in poverty. Not only the Pakistan economy suffers, every country faced

recession during this pandemic.