Poverty reduction has been at the centre stage of the policy agenda in Pakistan since the beginning of economic reform in the 1990s. Conversely, poverty indices show that the level of poverty has shown no sign of significant poverty reduction despite numerous policy and institutional initiatives undertaken by the government. The debate on trends in poverty during the 1990s has been wide-ranging in Pakistan. Although there has been a consensus that poverty rose during the 1990s, some controversies emerged on the analysis of poverty based on PSLM 2004-05. The official poverty estimates suggest that poverty declined substantially by 10 percentage points from 34.5 percent in 2001-02 to 23.9 percent in 2004-05. In contrast to this, World Bank (2006) has shown that decline in poverty was by 5 percentage point during the above period.