Averting our potential implosion

While turbulent times have remained the norm ever since Pakistan gained independence, the current situation has becoming unprecedentedly serious. Although the overall economy has growth significantly since the time that Pakistan came into being, the country is now very heavily indebted, its growth rate has slowed down immensely, inflation is increasing and the overall pressure of unsustainable population growth has become immense.

A recently released report by a government-sponsored task force on private sector development has, thus, described the national economy to be at its lowest economic point.

It is rightly feared that this situation will further deteriorate the law and order situation, aggravate the existing deprivations and nudge the overall situation in the country to spiral out of control.

Pakistan’s Planning Commission estimates that the country needs around an eight per cent growth rate per year to create jobs for the currently unemployed and those about to enter into the workforce. The current lacklustre growth rate, hovering below three per cent, along with the persisting double-digit inflation, certainly cannot improve the living standards of a majority of the deprived population.

While poverty estimates vary, 60 million people, comprising over 30 per cent of the country’s entire population, are already poor. If the current economic trends continue, an additional six to seven million people may be driven into poverty each year.

However, growth-led policies are not the answer to the growing deprivation in Pakistan. Several years of impressive national growth has done comparatively little to address inequality within Pakistani society. Exclusive emphasis on boosting yields, exports, or efforts to promote foreign investments, tend to benefit those who are already well-off. The problems facing Pakistan have more deep-rooted causes, and what is needed is a change of outlook, and a move away from top-heavy formulation of priorities.

Pakistan is presently under increasing pressure to cut expenditures and raise more revenues. Rationalisation and expansion of the fiscal base to increase tax-to-GDP ratio is undoubtedly needed. However, instead of making serious efforts to curb unnecessary expenditures or to tax wealthy landlords, who exert a lot of political influence, policymakers in the country tend to pass on the burden of resource constraints to those who have the least ability to offer meaningful opposition.

Despite the enormous cost of the deteriorating security situation in Pakistan since its decision to participate in the ‘war against terrorism’, donor commitment to Pakistan has been wavering. Much of the international aid pledged to the country has not actually materialised.

Given its own strategic compulsions, the US has itself funnelled billions of dollars into Pakistan over the past decade. However, this aid could have been used much more effectively. Instead of giving most priority to directly curbing militancy, greater attention is needed to alleviate the suffering of the deprived masses, their growing desperation and the resulting violence that it breeds.

Published in The Express Tribune, April 11^th,  2011.