Economic insight
Formed to improve and protect the lives of down trodden and marginalised community of the sub continent, unfortunately, after the death of great Jinnah, the land of pure went into the hands of opportunists, whose politics of clientelism, borrowed growth and personal interests threw this community into the abyss of economic backwardness.
When Imran Khan came to power the country was facing historical current account deficits, overburdened debts, tax shortfalls and many other economic issues.
Ensnared by his previous political statements, the most trusted and predominant player of Khan’s team marred the skipper’s performance in the beginning.
Moving further, Covid-19 added insult to injury. The already fledgling economic condition became worse and GDP growth reported historical low.
But, the skipper struck back. He took some major economic initiatives, which contributed to bring economy back on the right track. First of all, his laudable step was, ending Dar’s flawed overvalued exchange rate policy.
In their last years according to a member of Economic Advisory Council, PML-N pumped seven billion dollars to keep the value of rupee artificially high.
The nominal exchange rate does harm. It keeps international investors away and balance of payment crisis emerges.
It puts at risk long term prosperity. By bringing back the real exchange rate, the skipper took a bold step for the betterment of the economy.
Furthermore, under the skipper Pakistan’s ranking improved in the global ease of doing business. According to World Bank, Pakistan climbed 28 spots, from 138 to 108.
The policies; online one stop registration system, easy to get construction permit, easy SME financing for women, ease of paying taxes and lowering of taxes contributed in this regard. Moreover, Roshan digital account is also a great initiative.
It is attracting the overseas to invest in their home country. So far, nearly 700 million dollars have been sent through this account in Pakistan. Khan’s another step was to minimise interest rate.
Bringing the interest rate to single digit i.e. 7% also acted as contributor in recovering the economy.
It’s a fact that he performs well under pressure. When the whole world was heading towards complete lockdown, he stood firm on his decision of smart lockdown.
He saved economy and lives by bringing in, eight billion dollars package for the people of Pakistan.
Whereas, beyond border, due to sudden lockdown in the whole country, India lost 4.64 billion dollar each day, and it pushed 75 million more Indians into poverty.
Further, according to Pakistan Bureau of statistics the large scale manufacturing has increased 7.85 per cent in the first seven month of the fiscal year 2021 as compared to last year.
Under Khan, for the first time, after 1990 nearly 50,000 power looms and factories started production.
It happened because of electricity incentive. Another good news was Pakistani rupee emerged as the world’s best currency. Since January 01, rupees strengthened 4.09 per cent against the dollar.
Adding one more point, according to Federal Board of Revenue, the first seven month tax collection target of the budget year 2020-21 exceeded, and from July to January of this fiscal year 2020-21, the FBR collected Rs2.57 trillion higher by Rs158 billion, the same period of the last year. Thus, overall performance of the skipper is satisfactory.
Though there is a public backlash regarding inflation. But inflation was imminent because of bringing real exchange rate back.
Now the government should keep an eye on the hoarders and mafias and must act robustly against them to keep supply of the goods stable in the market.
Although some improvements have been witnessed, there is a lot needed to be done. Following recommendations can be considered to further improve the economy, for the long term.
Firstly, according to a source, 36 per cent economy of Pakistan is undocumented.
It means 36 per cent of the economy is not in the record of the government. Their sale and purchase is beyond government’s estimate. They pay no income tax.
The need of the hour is, the whole of economy must be documented and tax must be collected as per income tax laws. Secondly, tax culture must be promoted in Pakistan.
According to FBR, only one per cent people pay tax in Pakistan, whereas in India the ratio is 4 per cent.
The people must be informed about the benefits to become a filer. They must be taught through media and different other strategies, about filing their tax returns.
Thirdly, most of the people do not become filer because they think it is complicated, and they have to consult lawyers in this regard.
The government should make this procedure simple, and it should also be online. Fourthly, the women are 49 per cent of our population, and constitute only 24 per cent of labour force.
The government must keep in mind without the contribution of the women, it would be difficult to strengthen the economy.
Therefore, the women must be empowered and their contribution must be encouraged in every sector of society.
Fourthly, instead of focusing only on the traditional commodities, the government should also focus on new sectors, which can add a lot into economic progress, for example, the freelance industry of Pakistan is flourishing on its own, and according to Global Payment Platform, Pakistan has ranked as the 8th fastest freelancing economy in the world.
Furthermore, Pakistan ranks among the top 10 halal meat producers of the world, and has only 0.25 share in the world’s halal meat trade. According to an estimate Pakistan can earn nearly PKR 90 billion by exporting halal meat.
Therefore, the government should work to promote these new sectors. Sixthly, the banks in Pakistan provide very less finance to the private citizens.
They feel secure to facilitate the government through loans. In Pakistan the finance to the private people is lowest. It’s also an impediment to the economic development.
This government should encourage the banks to give loans to the people for different kinds of business on easy terms. It would surely uplift the economy.
Lastly, the current century is of trade and investment. The international actors devise their policies keeping in view the economic interests. Pakistan should also follow the suit.
According to a commentator, when a diplomat of another country visit Islamabad, they speak 25 minutes on economy and five minutes on security, whereas Pakistani diplomats spend 25 minutes on security and 5 minutes on economy.
The need of the hour is, economic diplomacy must be improved. Thus, the current government has taken some imitative to improve the economy; but much is needed to be done.
More than half tenure of the government has passed. The skipper must consider the remaining time period as a power-play.
The performance must be improved, and promised change must be brought, otherwise people will bring the change in 2023 elections.
— The writer is practicing senior Lawyer and human rights activist, based in Lahore.
