A worrying trend

One hopes that govt would undertake CPEC in the right earnest and link it up with all important cities of Pakistan

Normally an increasing trend in the consumption of petrol, preceded by an equally marked increase in production and sales of two-and four- wheelers in tandem with the noticeable expansion in the physical infrastructure particularly in terms of roads, highways, motorways, bridges and flyovers would be considered a sign of an economy on the upswing. But other more relevant indicators such as the declining trend in the overall rate of investment, extraordinary expansion in the current account deficit, mounting pressures on the balance-of-payments position, swelling budgetary deficit, rising internal and external debt burden and stagnating growth both in the industrial and agricultural sectors indicate that the increasing trend in petrol consumption (681,938 tonnes in August) reflected an extremely worrying sign for the economy rather than a positive one.

This takes one directly to the fundamentals of the country’s economic policy framework which seems to have been based on the inherently defective model of putting the cart before the horse. Physical infrastructure does play a very important role in accelerating economic growth. But when you expand roads, highways and motorways without adding significantly to mass transit facilities such as railways there is no way you can keep a cap on the demand for two-wheelers (the total sales of bikes and three-wheelers surged more than one-fifth to 1.63 million units in 2016-17 from 1.35m units a year ago) and four-wheelers (car sales rose 2.5pc to 185,781 units in 2016-17) that guzzle petrol as if consuming tap water.

The China-Pakistan Economic Corridor (CPEC), the so-called game changer, also envisages a railroad running across the country from Kashgar in western China in the north to Gwadar in Balochistan in the south. One hopes that the government would undertake this project in the right earnest and link it up with all important cities of Pakistan on its way that would bring down considerably the cost of internal goods and passenger transport as at the same time the project curtails drastically goods transportation time from China to world markets.

Published in The Express Tribune, September 24^th, 2017.

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