THE current economic crisis in Pakistan is primarily due to a balance of payments issue. The depreciation of the rupee, declining foreign exchange reserves, high inflation, repeated recourse to the IMF, the State Bank becoming a vassal of the IMF, the IMF’s harsh conditions leading to increased interest rates and the consequences of these interest rates are all consequences of the balance of payment problem.
The current account balance improved significantly in the first half of the current fiscal year. Pakistani imports stood at around $30 billion, while exports and remittances stood at $19 billion and $13 billion respectively, resulting in a current account surplus. However, Pakistan still faces problems due to debt repayments. Since debt instalments have to be paid in the next fiscal year as well, this pressure will continue into the tenure of the next government. Is there any room for improvement in this situation? To understand this, let’s look at the list of Pakistan’s imports.
Milk and milk products: $77 million (PKR 21.7 billion) Wheat: $137 million (PKR 38 billion) Dry fruits: $10 million (PKR 2.8 billion) Tea: $372 million (PKR 104 billion) Spices: $67 million (PKR 19 billion) Soybean oil: $85 million (PKR 24 billion) Palm oil: $1326 million (PKR 371 billion) Sugar: $2.5 million (PKR 0.7 billion) Pulses: $345 million (PKR 96 billion) Other food items: $1059 million (PKR 296 billion) Cotton: $519 million (PKR 145 billion) Synthetic fibres: $293 million (PKR 82 billion) Silk and its products: $384 million (PKR 127 billion) Readymade garments: $36 million (PKR 10 billion) Other textile products: $456 million (PKR 127 billion) Wood products: $64 million (PKR 18 billion) Paper, cardboard, and plywood: $225 million (PKR 63 billion)
The total cost of all these imports is $5.4 billion, or more than PKR 1530 billion. Assuming continuity of this trend, the import of these goods may reach about $11 billion, or PKR 3000 billion by end of fiscal year. Except for palm oil and tea, these commodities are already produced in Pakistan. The necessary skills, technology, suitable land and climate are all available in Pakistan. The suitable climate and land for the palm oil and tea are also available; however, the skills required for these products are not widely available at present.
In fact, all of these commodities, which we have the capacity to produce, are being imported simply means that we have not paid adequate attention to agriculture. If these commodities were not imported, the balance of payments could improve by another $10 billion, and foreign exchange reserves would also improve and we would not have to go to the IMF. Most of the above-mentioned commodities are related to agriculture, and we can not only reduce our imports, but we can also export them so that we do not have to go to the IMF again and again.
Based on the above arguments, I advocate for an agricultural emergency. Immediate actions are crucial to cultivate barren land and enhance per-acre yield. Idle agricultural land should be promptly utilized, and heavy fines imposed on landowners who neglect cultivation despite having resources. To boost production, the plains of Punjab and Sindh should focus on wheat, rice and cotton, while hilly regions like Murree and parts of Khyber Pakhtunkhwa, Gilgit Baltistan and Azad Kashmir should prioritize fruits and vegetables. This strategy aims to decentralize agricultural production, ensuring both northern and southern regions contribute, fostering better distribution of produce.
For this purpose, not only the government, but also individuals can play a significant role. If a farmer cultivates ginger for his personal needs, he is actually creating the means to reduce imports. If a person installs a biogas plant attached to his dairy farm, he is actually creating the means to reduce fuel imports and if someone produces quality tomato ketchup for exports, he is actually creating the means to improve his own personal economy as well as the country’s foreign exchange.
While it’s preferable for the government to provide facilities for these endeavours to increase domestic production, there’s no room for idleness in waiting for this. The situation demands that everyone contributes to improving the economy, starting with simple actions like creating a kitchen garden in their backyard. However, as a nation, one significant problem is our preference for white-collar jobs over farming. This aversion to hard work hampers progress. Until we overcome this mindset and embrace all forms of labour, improvement will remain elusive.
The production of the above-mentioned items can be achieved within months, not years. Crops sown today can yield results in 3 to 6 months, positioning us for exports in the next fiscal year. However, it’s imperative that we acknowledge past shortcomings and commit to eliminating them for the future. Our collective failings have led the nation, including its leaders, to rely on the IMF. Yet, with concerted effort, this dire situation can be reversed within six months. Embracing hard work as our motto will not only enhance our individual economies but also bolster the national economy.
Giving priority to agriculture does not mean that we should reduce our focus on modern sciences like information technology. A person, who is proficient in information technology, or any other modern art, should definitely use his art to participate in the production process. When the Almighty gives you the opportunity to invest in information technology and earn dollars from there, you should definitely go for it. But till the time you don’t have capacity to make your software house, don’t waste your time today. If your time and resources are not being used for the nation, then you are just a consumer and a burden on society.
—The writer is Director, Kashmir Institute of Economics, Azad Jammu and Kashmir University.
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