WHAT AILS PAKISTAN?

  • MUNEEB YOUSUF, ARSHID HUSSAIN PEER
  • Publish Date: Sep 17 2018 2:59AM
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  • Updated Date: Sep 17 2018 2:59AM
WHAT AILS PAKISTAN?Representational Pic

The coming to power of Imran Khan in Pakistan has renewed hopes both at domestic and international fronts. While the PTI government is all set to introduce their vision of Naya Pakistan, it gives an impression that by invoking Islam, religious forces are trying to overshadow measures aimed at stabilizing Pakistan. In the realm of political thought, state craft has to devise policies and chart mechanisms which will keep the state on the path of progress, stability and harmony and religion has nothing to do with it. However, this does not apply to Pakistan

Pakistan state has displayed a monotonous feature all over its political history of its military ruling it for longer period. Though the conventional way of taking power by military is no more possible in present times, it is still the deep state which calls the shots on foreign and security policies. In the recent election which led Imran Khan’s Pakistan Tehreek-e-Insaf to power, the military’s role cannot altogether be negated. Besides military’s dominance, Pakistan state has showed another monotonous feature of historically treating its minorities, particularly Ahmadi community with ignominy.

The Ahmadis believe that their spiritual leader, Mirza Ghulam Ahmed, is their last prophet, which is considered a violation of the fundamental premise of Islam. The majority community declare Ahmadis as non-Muslims, and this has grave implications at the socio-political level. The Imran Khan government was pressurized to reverse its decision of appointing renowned economist Atif Mian in the Economic Advisory Council (EAC). Atif Mian belonged to the minority community of Ahmadis, who have been historically discriminated for their faith. According to Pakistan’s daily newspaper, The Dawn, the pressure for the removal of Mian’s name from the Economic Advisory Council has come from the religious circles. The PTI government quickly succumbed to the pressures from religious right groups as a result of which Atif Mian resigned from EAC. One can clearly draw from the incident that large space has been granted to religious groups on deciding their wish of who to keep in power and who not to be.

Undoubtedly, the members of the religious minorities are numerically represented in the assembly, however, their presence just fulfils the symbolic notion of representation. It doesn’t go beyond that. This is not for the first time that Pakistan state has succumbed to pressure from religious groups and forced to go against the members of Ahmadi community. In 1953, the first Foreign Minister of Pakistan, Chaudhry Zafrullah Khan, was targeted by religious groups when they launched anti-Ahmadi movement and demanded the removal of Khan from foreign ministry. In response to growing agitation from religious groups, Khan resigned from the ministry.The abrasive treatment towards the minorities clearly go against the ideals of the Pakistan’s founder, Mohammad Ali Jinnah, when he said that: “Pakistan is not going to be a theocratic state––to be ruled by priests with a divine mission. We have many non-Muslims–––Hindus, Christians, and Parsis–––but they are all Pakistanis. They will enjoy the same rights and privileges as any other citizens and will play their rightful part in the affairs of Pakistan.”

 

A GLANCE AT PAKISTAN’S ECONOMY

At present, Pakistan’s economy is in shambles. It didn’t happen abruptly and instead is a long overdue phenomenon to which several factors have contributed. In order to overhaul Pakistan’s economy, Imran Khan constituted eighteen-member Economic Advisory Council, which will provide best possible suggestions in the field of economics to Khan, helping him revive the falling economy. The Council and the Pakistan government itself came into bad light after the news of top-notch economist stepping down came to surface, owing to a campaign launched against his faith. The faltering economy is deeply hurting Pakistan and its deep state has reached out to India to resume talks. With upcoming elections, the Indian leadership seems to be hardly interested in Pakistan’s offer of talks. The falling economy in 2001 was also one of the factors which nudged the then General of Pakistan’s army, Pervez Musharraf, to hold peace talks with India. 

Pakistan’s economy is primarily agrarian in nature. Presently, it is under stress due to low performance in three main spheres–––energy, employment and export sector. Though there are problems in other spheres like declining forex reserves, taxation and corruption too but putting these three sectors in order will put Pakistan’s economy in good command. The policy makers in Pakistan must urgently reform these three sectors. Doing that will help the forex starved and aid dependent economy towards sustainable path, which is in the best interest of South Asian region in general and Pakistan in particular. In order to better understand Pakistan’s falling economy, it becomes essential to examine the three sectors individually and how their linkages with other sectors affect the overall macro-economic indicators. 

Energy is the life blood of world economy. It acts as an important input in the production of nearly all goods and services. The role of energy in development and its impact on the creation of jobs, production and provision of goods and services for domestic and global consumption has been documented by various scholars.The developed countries use efficient and mostly clean sources of energy which is one of the reasons for their better performance on various socio-economic indicators. In the case of Pakistan, the per capita consumption of energy is very low. Pakistan ranks in the bottom twenty countries as per the UN report on energy consumption.In order to tackle energy crisis, Pakistan actively uses the method of load-shedding, a short term measure. Employing short term measure of load shedding has serious implications on economy. 

The low per capita energy consumption manifests itself in different problems to the economy and economic development of this young nation. These crises are not divine but due to faulty planning and absence of integrated approach in the energy sector by the planners till now. Every regime embraced the irrational attitude of capacity addition without giving due share of thinking to the reduction of transmission and distribution losses-–which account for more than 25% of total electricity generated. Generation mix which is mostly biased towards thermal sector as almost 65% of energy is coming from these fossil driven plants. This further exacerbates the problem as 85% of oil, 35% of natural gas and 42% of LPG consumption used for these plants to run is met through imports. 

At present the electricity projects coming under the CPEC are mostly thermal. This goes against the logic as global trend is towards sustainable and clean energy. Even the oil rich countries like Kuwait are adopting renewable energy resources but Pakistan is adamant on traditionalist approach. This has serious implications as it drains the hard-earned forex on consumption needs rather than for capital investment, makes per unit of energy expensive, which mostly affects the people from below poverty line. Further, thermal plants are neither sustainable nor clean sources of energy. This leads to increase in pollution, deteriorating health, and importantly global warming. The global warming in turn will decline the agricultural production and this will cause frequent flooding and droughts.

Further there are also issue at institutional level which results in uneven share among its various provinces.

The quote “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime” sums up the importance of being employed. Employment breaks the vicious circle of poverty. Promoting economic growth helps in better services as people employed gainfully aspire for good education of their children, better health services, hygienic environment and in short development of better citizens who focus on future rather than only short sighted present. In the case of employment in Pakistan, most jobs are generated by small manufacturing units which are spread more evenly and are inclusive. They are also good sources of foreign exchange. The sports industry enjoys global reputation as only the footballs made in Pakistan are used in FIFA world cups. However, these industries lack technological push and are capital starved which results in losing sheen of these inclusive units. The unemployment rate in Pakistan is also increasing (in 2017 it was 5.95%) and it is highest in youth (7.68%). This means a lot for a country which has around 65% dependency ratio (people in age group of 0-15 and above 64 years).

Pakistan is moving towards demographic dividend for which it needs to focus on skills, quality education, health and infrastructure development otherwise it can be disaster for the economy which might have global implication. The current scenario of education, health and skill development presents the country in a bad light as 100% enrollment ratio even in single province is a distant dream. Further on the skill development front, only Punjab government has a strong focus on skill development with a vision to train 2 million people in two years. This type of initiative is mostly absent in other provinces or if present, it is supply driven and involves limited interaction with private sector. There is also regulatory cholesterol in the form of labor laws which needs serious overhaul.

The next important sector which holds keys for Pakistan is its export sector. Generally two types of strategies are followed to propel the economic growth of a country. One is to boost domestic consumption and other is having a good export related industries. In the case of Pakistan, unfortunately export basket has not seen much change since the time of partition. The Pakistan export basket at present consists of  raw cotton, cotton fabrics, cotton yarn and thread, bed-wear, knit-wear, woolen carpets and rugs, leather, rice, fish and fish preparation, fruits & vegetables and sports goods. These products are not skill intensive and are also not able to generate decent kind of jobs. On the import front, the main items which are imported include mostly manufactured goods and petroleum products. These goods are capital intensive and hence the price they command is much higher than what they get from exporting mainly primary agricultural products. Besides this the underdevelopment of Pakistan economy can be gauged from the fact that 37% of total tax receipts come from custom duties. The custom duties are levied on both import as well as on export commodities. This huge collection of tax from this sector alone puts it in stress and also impacts other sectors negatively. This argument also supports the Prebisch-Singer hypothesis according to which the terms of trade of primary products deteriorates with respect to manufactured products over a period of time. If the country is not able to change the export basket with the passage of time then it is bound to face secular deterioration of trade and country will remain for infinite time in the vicious trap of underdevelopment where the few privileged will act parasites on the mass who happen to be producers which  in this case are the people engaged in agriculture and related activities.

Having said all this, the future of Pakistan is very bright and to put in James o’Neill terms will find its place in ‘next eleven economies’  that means Pakistan is going to be one of the major powerhouses of world economy which will experience rapid growth in the coming one or two decades provided right policies are put in place. For right policy making, they need an institutional overhaul to make them inclusive, participatory and transparent which will help the politics in power to win trust of people and project the positive image of country (the country is hungry for this) which has unfortunately remained mostly hidden and highly unbranded.

 

 

MUNEEB YOUSUF,

Ph. D. Candidate at MMAJ Academy of International Studies, JMI, New Delhi.

ARSHID HUSSAIN PEER

Ph. D. Candidate, Department of Economics, JMI, New Delhi.