75 years and not a single successful economic policy. What chaos!
The core inflation rate in Pakistan increased by 18.5 percent in June 2023. The inflation rate rose to 38 percent in May and this was a record-breaking jump. The weekly inflation rate has reached an all-time high 38 percent. We don’t have money to pay for imports stuck at ports. Floods of last year still have their effects on the shaking economy, striving to get back to some stability. We suffered $30 billion financial loss, with 30 million people displaced due to floods. People are afraid of predictions about getting closer and closer to the default situation. Energy crisis is getting horrible. Lawlessness in the country is making things even worse over all.
Things might be new, but looking back at our history we never find such a thing as a stable economic policy in this country. Absence of a sustainable economic policy has always been an unfortunate event for this country. Among many reasons, one is of course no democratic government ever completing its tenure. Every succeeding government replaced the policies of the previous one to prove it wrong. It seemed like their first priority to prove their rivals wrong in every capacity, at the cost of damage to the nation.
Then the ‘new government’ comes up with its ‘new policies’ from the lowest starting point again and the cycle continues. Since 1947, we have experienced a complete roller coaster of policy after policy, but without getting us any long term good, for a long span of time. We did not have a Constitution for the first nine years after the creation of Pakistan.
Whatever the reasons, we were a nation with no future layout, not knowing anything about what we were looking for. Our economy went through different phases back and forth. In phase I 1947-77, we can call it the Era of experimentation. We saw, Ayub Khan came up with the Harvard Trickledown Model, a capitalist model. This model was then replaced by Bhutto’s socialist model that was built on the idea of nationalization.]
Later, we entered the second phase, the Era of twisted economy, lasting from 1979 to 2000. Zia ul Haq followed the footsteps of his ideological father, Ayub, and again revived the capitalist mode of economy in the country. This was the time period of the Soviet war in the region. Pakistan was clearly a queen on the chessboard in the game. Our economy was booming on ‘aid’ from the USA.
Benazir Bhutto then became the Prime inister of Pakistan, saving the pieces of democracy in the country. The war had ended. The aid was cut. Now we were having nothing at hand to run a state on its own. We once again asked for help from the IMF in the form of, of course, loan. The series of changing governments between Benazir and Nawaz Sharif kept on going and so did the seeking of loans from the IMF until 2000.
Here, we entered a new era, Era of Problematic Economy, which started from 2000 and we are still going through its tough times. A big change comes once again, breaking the repeating cycle of Bhutto’s and Sharif’s loan seeking policy, in the form of another military general, Pervez Musharraf. In 2000, Gen Pervaiz Musharraf introduced the Model of the Subsidized Scheme, in which Gen. gave loans to educated youth for small level domestic business or entrepreneurship. It helped the industry to stand again. Energy demand increased, which led to energy shortage in the country and ultimately caused loadshedding. Now Nawaz Sharif came up with a ‘Crony Capitalism’ plan benefiting only favourite industries. CPEC is also product of this era. Our recent economic model is Imran Khan’s ‘Socialist’ model.
There is a long series of problems one can list out, but every problem comes with a solution. FBR decentralization, knowledge economy, strong local government, better tax collection mechanism, digitalization, economic-driven policy, tourism, services lead economy, strong IT sector, CPEC execution, hi-tech manufacturing, education, are still the options helpful for the survival of the economy of Pakistan. It is never too late to mend the ways. We all hope we play our part in a better future
This never-ending search for a stable and strong policy needs many serious initiations towards a strong Pakistan. This is 23rd time since 1947 we have begged the IMF for loans and aid. The IMF, World Bank or whatever the monetary body, gives us loans just for its own benefits. We need to understand the fact that a state can never be run on loan money for a long period. The core issues of Pakistan’s economy mainly include policy framework, inconsistent policy doctrines, agricultural problems, industrial issues, fiscal policy problems, taxation problems, monetary policy problems, neoliberal structural programmes, the Pakistan development paradox, poverty and inequality issues, issues of class policies, bureaucracy issues, bad governance structure, and many others.
One major issue today seems to be wrong investment in the agriculture department and ignoring the space for development in the industrial sector. Pakistan invests 45 percent of its population input in agriculture every year and it yields only 19 percent output in GDP. On the other hand, 19 percent of our population is involved in industry and it yields almost 30 percent output in GDP. It clearly depicts our wrong directions of economic investments towards progress. Moreover, Lack of mechanization, water issues, commercialization of agricultural land, lack of agricultural education, no facilities for labour are also factors deteriorating the agricultural sector.
Pakistan Textile Industry, for example, is one of the largest industries of the country and has been badly ignored for years. Another reason for the worsening economy is the malfunctioning of our state-owned enterprises. These are the companies that are directly owned by the state and they make incentives for the state. PIA, WAPDA, PIA, steel mills, are major among them. According to stats, our state-owned enterprises are losing millions on a daily basis. PIA- has lost 600bn rupees, and steel mills lost 500bn rupees in last 3 years. Steel mills lose Rs five million per hour, when working. Pakistan Railways lose Rs 50 billion a year. PTCL, WAPDA, PTV, and the rest also follow the trend as well.
Reason behind may be lack of technical and professional operating hands in the industrial sector. Technical and professional supervisors are being replaced by politicians, bureaucrats, or retired military officers who have no background knowledge of the subject, causing heavy loss in industries. Brain drain is also the reason we have no competent expertise left behind in the country to boost the economy.
There is a long series of problems one can list out, but every problem comes with a solution. FBR decentralization, knowledge economy, strong local government, better tax collection mechanism, digitalization, economic-driven policy, tourism, services lead economy, strong IT sector, CPEC execution, hi-tech manufacturing, education, are still the options helpful for the survival of the economy of Pakistan. It is never too late to mend the ways. We all hope we play our part in a better future.
