Rizwan Ghani
THE government needs to review its entire
economic policy in which housing sector can
be the silver bullet to revive the struggling economy, reduce poverty, create jobs, generate more revenue, strengthen the Rupee, and get rid of the IMF program. Imran should take the nation into confidence now that his government has failed to recover looted money which he planned to use to build new Pakistan. However, he can still deliver on his anti-corruption promise by seeking joint effort on part of all political parties to support him achieve the above mentioned areas to build Pakistan and provide relief at grassroots. Renters can be given 17 % relief by giving them house building loans for building their own homes. The British government’s 2017 housing survey report shows private renters spend 35% of their income on rent as compared to 18% spent by mortgage payers. Our government should therefore use the city development authorities like CDA, LDA, and MDA to develop affordable plots on mega scale within one year. The loans can be given to people in the same duration so that they can build their homes in next two years on lines of Gurdwara Kartarpur in terms of speed and will of the government.
In this regard, monopoly of private housing mafia will have to be broken as part of anti-corruption drive. It can be done through competition. If these development authorities manage to provide 5 and 8 Marla plots (under 6-8 lacs), government can succeed in building a 750 to 1000 sq ft one/two-bed homes (under 40 lacs) to fulfil home ownership dream of millions of Pakistanis. As per the housing units by number of rooms and types data of Pakistan, 31% percent units are one-room and 32% two-room (Pakistan Bureau of Statistics 2017). If government banks will give house building loans on seven per cent for a maximum of 30 years, the private banks will have to match it or lose business. Government can break the banking sector mafia by adopting traditional banking approach and using public banks and National Saving Centres (NSC) to offer 15-18 percent interest rates on deposits to attract money to national treasury. These funds can then be used to fund public projects, house building loans, support manufacturing and Small and Medium enterprises (SME), boost agri-sector (avert $1.5bn loss predicted by ADB), and IT with focus on sale of agri-products in rural areas. China is using IT, 5G and value addition technologies to help reduce poverty in rural areas, reduce pressure on urban centres, and cut overall cost of living for country.
Government can do all this by separating investment and retail banking similar to the US Glass-Steagall Legislation in 1933. The act protected savers from investors and casino banking after the Wall Street Crash in 1929 – a result of greed and lack of accountability. This legislation was weakened in 1999 Gramm-Leach-Billy Act costing bank bailout of $17tn to taxpayers and UK £1.162tn since financial crisis of 2008 which is also a result of greed, lack of accountability and corruption. By passing legislation, government can control its finances and NSC can play a pivotal role in nation building as their business model can process Rs100.00 for 15pisas compared to Rs3.00 by commercial banks. Then government should end financial aid under different programs and use identity card as sole provider of all services to end corruption and bring transparency. The current state programs have made poverty a state sponsored business and a home of mega corruption. If all political parties fail to take right steps at this time, then they will all be responsible for March 2020 price hike predicted by the Governor SPB and other allied economic woes. The Supreme Court would be justified to hold government of the day accountable for all such economic failures that should have been averted through timely political consensus and legislation under system of checks and balances on government performance.
Now it all depends on today’s government beginning with Imran as the PM. Based on the given facts, it is not rocket science who all should be treated as national criminal and punished like PM of Iceland for wasting almost two years of this government, weakening national economy, increase poverty and unemployment. Along with forcing devaluation of Rupee and incurring trillions of rupees in losses, doubling of national debt and exposing country to fallout of hot money. They are responsible for undermining national strategic interests starting with economic teams, Governor State Bank, Federal Minister for Planning and now Federal Minister for Development and Special Reforms and FBR. Finally, all the given points can help increase 5-6% GDP points within two years and proportionately increase revenue collection, provided any PM is ready to accept the challenge. In 1933, Roosevelt used housing sector with its 17 allied industries, agri-reforms, manufacturing and law to tell the truth to help US become world’s number one economy after the 1929 Wall Street crash. He did not allow the crash to hold him back. It is time Imran brings all political parties on board and bring a strong economy policy. Let accountability take its course as per the law, and all those who think that anti-corruption drive is dead and IMF is here to stay, should think again.
—The writer is senior political analyst based in Islamabad.