Expecting the unexpected
CURRENT government of PTI has presented their economic blueprint in budget 2021-22 by setting the expenditure and revenue based on their priorities.
The main theme of their economic triumph is based on expansion in GDP growth instead of economic development in coming years.
In the budget document and press conferences, Finance Minister has clearly depicted that they are focusing on economic growth for the prosperity of Pakistan in the long run.
The economic team is very assertive that their focus on growth will reap the benefits in the shape of poverty alleviation, employment generation, gender equality and expansion in trade.
Their confidence is based on the “Trickle Down Theory” which explains that due to economic growth, the rich become richer in short run but there is no need to worry because after few years, the impact of inequality will trickle down for the employment generation and poverty alleviation of the poor segments of the society.
In the long run, everyone will be equally beneficial and lead the economy toward prosperity.
The concept of trickle-down theory was introduced by Will Rogers in 1944 with the theme that there is dire need to lower the business restrictions, minimize the tax rate, facilitate the investors in short run and it will be beneficial for the vulnerable groups, unemployed and the socially excluded in the long run.
This idea got prominence in the second half of 20th Century and many countries have followed the philosophy of trickle-down, Pakistan is among one of them.
In 2020, Bloomberg reported the study of Craig Stirling on “50 Years of Tax Cuts for Rich Didn’t Trickle Down” based on 50 year empirics, this study concluded that trickle-down theory does not promote employment, trade and alleviate poverty.
Even the experience of Pakistan in the 1960s was not pro-poor, it has been observed that there was very high economic growth but with increased poverty and inequality, which further leads the economy toward political instability.
If we build the economic growth on the cost of poverty and inequality, it will hurt the sustainability and inclusive growth for the future generations.
PTI government has launched their political campaign named “Naya Pakistan” during the elections 2018 and afterwards.
We have more than 60 per cent population under the age of 30 years and known as a young country.
After 70 years of vulnerable living, people were very motivated that soon we will enjoy the new era of development in Naya Pakistan, where everyone has the inclusive employment, quality education, health facilities, good governance and corruption free country.
No one is even ready to accept this unexpected decision of the current government based on trickle-down philosophy because this thought has failed around the globe and even in Pakistan during the 1960’s.
So, this is very strange for the friends and foes of the government that how they will sell this expired product and convince the masses because they are only concerned with poverty alleviation, employment generation and price control, instead of GDP growth, business development, financial deficits and numbers game.
In the 21st Century, the pattern of governance, politics and global linkages has changed from traditional style because everyone has to compete with the global market based on skill, technology and innovation.
So, this is the appropriate time to settle the priorities in line with international style of development for the sustainability and prosperity.
Our political leadership is humbly requested to consider “Post-2015 Development Agenda” for the prosperity and sustainability of Pakistan.
In this agenda, they have suggested to the institutions and political leadership to focus on poverty alleviation, inclusive education and health, gender equality in all domains, environmental sustainability, productive employment and urban development for the long-term survival and wellbeing of the left behind individuals.
Their priority is to focus on the development and investment in the people because they are the real wealth of any nation.
If we invest in the people, they will contribute in the development and sustainability of the economy.
On the other axes, if only GDP expansion is our target, it will enhance the expenditure on schools, hospitals, roads, dams, etc but this will not contribute in enhancing the literacy rate, health outcome, employment for the poor and vulnerable.
This phenomenon is known as “Growth Without Development” and we have experienced it from last many decades.
Resultantly, we have 25 million out of school children in streets, ranked 154 out 156 countries in gender inequality, only 60 per cent population can read and write, facing worse health facilities and considered in ten fragile states on the globe.
At this stage, we have to set the priorities based on sustainability for the vulnerable and youth of Pakistan, ultimately both can be the strength for economic empowerment.
—The writer is Assistant Professor in Economics, University of Gujrat, Pakistan.
