Economic and defence experts have called for a slash in the defence budget and improvement in ties with neighbouring India to capture its huge market, said a press release issued by the IRS.
“Trade with India can multiply five times if Pakistan captures even 1% of the country’s market of 300 million middle class,” former State Bank governor Dr Ishrat Hussain said while speaking at a discussion session organised by Institute of Regional Studies (IRS) on Friday.
According to Dr Ishrat, “Army is onboard regarding trade with India and the weak industries can be protected through negative list.”
Referring to two-year trade waiver for Pakistan by World Trade Organisation (WTO), he said that it would boost trade with the European Union. However with bed linen taken off the list, the 300 million Euros of benefit expected from duty-free access to the European markets will now be reduced 100 million Euros. The waiver was offered to help Pakistan after the devastating 2010 floods.
Dr Hussain, currently Dean and Director of the Institute of Business Administration (IBA) Karachi, strongly believed that Pakistan can turn around its economy if it exercises strict fiscal discipline and plugs gaping holes caused by bad governance in different sectors of the economy.
He argued that energy shortage is crippling production; poor tax base and collection is worsening tax to GDP ratio; sick public sector corporations are becoming a drain on budget; lack of prioritisation in federal and provincial governments development plans is causing delays and increasing cost of the projects; nondevelopment expenditure are eating up meagre resources; after 18th amendment provinces have become richer but are not sharing burden of defence and debt servicing which is the sole responsibility of the federal government; and finally lack of local government system is hurting social sector development.
He said the energy shortage can be managed by resolving the issue of circular debt. A five-year investment bond can be floated to meet the flow cost. Functioning of power companies should be streamlined, private vehicles should be switched over to petrol and industry should be provided with gas.
Government should go ahead with IPI and TAPI gas pipeline projects, he added. He strongly favoured income tax on agriculture produce, and all kind of businesses; he also recommended privatisation of public sector corporations like PIA, steel mill and railway; re-configuring of development projects on priority basis; cutting down of non-development expenditure and creation of conducive environment for private sector.
He suggested integrated budget to be worked out between federal and provincial governments under CCI that would synchronise and prioritise plans and expenditures. Finally he supported a reformed LG system ensuring participation of the local communities in the development plans.
Published in The Express Tribune, February 4th, 2012.
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