Overcoming dismal state of Pak economy

Dr Muhammad Khan

Economy plays very significant role in the global political standing of nations. Indeed, politics is played on the basis of economy or precisely for the achievement of economic objectives. In the historical perspective, nations with strong and sustained economies subdued the nations, having poor economies. It was strong US economy, which brought it to the level of a global power in WW-I and then a super power at the end of WW-II. Again, it was economy, which ended the centuries old global dominance and colonialism of Britain all over the globe. The former Soviet Union collapsed in 1990/91, owing to its economic crisis. Indeed, while analysing the international structure in the realm of power politics, the economy has been the deciding and decisive factor, which either made or breaks the empires and powers.
In the definition of good economy of any country or a major power, there are some determining factors, which must be kept in view. These factors include; “Are there jobs for everyone who wants one? Can working people afford decent housing and adequate medical care on their salaries? Is the currency maintaining its value so that people can save for their retirement? Are taxes both low and equitable? Are usurious interest rates forbidden? Is the gap between the rich and the poor shrinking instead of expanding?
Unfortunately, in the case of Pakistan, most of the factors, which determine a good economic health are poorly addressed. The most discouraging factor is the poor Human Development Index (HDI), which remain low and consistanntly low for years now. The human development report yearly issued by United Nations Development Programme (UNDP) shows Pakistan at a lower level; 146 out of 187, countries recorded for the calculation of HDI. This is really bad and indeed has fallen over the years, particularly from 2008. HDI ranked countries based on their social and economic development. It has four criteria; life expectancy at birth, means years of schooling, expected years of shooling and gross national income per capita. In fact, “ HDI makes it possible to track changes in development levels over time and to compare development levels in different countries.”
Besides, over years, there has been low income rate in Pakistan. From 2008 to 2015, the average growth has been 3.5 percent, which is quite low. There have been shortages of power, basic health and education facilities and very low employment opportunities. The Government has been depending on borrowing from the banks, excessive printing of currency notes and then heavy loans from IMF. The loans have increased many fold and return or output is almost nil. The areas which really need attention, like having small dams and water reservoirs, poverty eradication, social justice, law and order were ignored, whereas, some the projects which benefits few only were launched excessively. Indeed, there has been imbalance in the socio-economic necessities and Governmental priorities, which benefited few, rather the State and society of Pakistan.
Besides, the factors, mentioned above, it is worth mentioning that, inflation is the greatest factor, which has significantly contributed towards the poverty in Pakistan over the years. Inflation can best be explained; the rate at which, the general of prices of the goods and services rises and consequently the purchasing power of the currency falls. In developed world, the central banks (State Bank in the case of Pakistan) try to limit inflation to avoid deflation for a smooth economic running.
Unfortunately, in Pakistan, there has been less efforts from the Government and even State Bank for the controlling the inflation in the country. “The last five years of Pakistan’s economy were regarded as highly inflationary periods due to expansionary monetary policies” This indeed is a major hurdle in the way of development of Pakistani economy. From 2003 to 2010, Pakistan maintained average inflation rate as 10.15 per cent. However, it was recorded as 13.04 per cent in April 2011.
A major cause for the high inflation in Pakistan is the “excess printing of banknotes, high prices of raw materials and finished products, high taxes, as well as corrupt practices that result in the price level increasing.” Under the heavy flood of inflation, the overall economic growth and financial sectors of Pakistan have suffered badly, which ultimately exposed the people for poverty and poor can easily exploited.
But, the most distressing factor, comes out of the Inflation is an element of uncertainty, which further cause ambiguity among investors. That is why; rather attracting, foreign direct investment (FDI) in Pakistan, the local Pakistani investors left the country for investment elsewhere. This largely a mismanaged system of economic development can be controlled through measures like; providing security to local investors, encouraging domestic products, rather supporting imports. In fact, the interests groups, personal linkages and hold of only few on Pakistani economy and industry has brought the Pakistani economy to this dismal level of economic mismanagement.
This dismal state of Pakistani economy or economic priorities can be put right through a strategic planning, national thinking and indeed, after relegating the personal interests of affluent class, who have made the national economy and vast human resource as its hostage. These are few families, but very powerful and among the decision makers at national level. The question arises, would they ever make decisions for the state of Pakistan and for its over 180 million people too. The media, academia, the scholars and indeed the civil society has to play its part to emphasise the ruling class for a national thinking and setting correct economic priorities for Pakistan.
— The writer is International Relations analyst based in Islamabad.

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