Multiple effects of pandemic

Many old techniques of economic management and social organisations will have to be discarded and replaced

The coronavirus pandemic is acting as a double-edged sword in most countries. On the one hand, it has paralysed economic activities and, on the other, it has drastically reduced government revenue collection. There are reports that the Punjab government plans to borrow Rs115 billion from the Centre to pay salaries and pensions and clear many other outstanding bills. The prolonged lockdown to prevent the spread of the coronavirus has resulted in a sharp fall in tax collection, and this together with other factors have resulted in an alarming depletion of the provincial coffers. Informed circles say the Punjab government finances had been in a bad condition even before the Covid-19 crisis, and the pandemic has only exacerbated the situation. The provincial government had already been struggling to manage things after it faced a shortfall of Rs660 billion under the NFC Award. If the Centre clears the arrears amounting to Rs128 billion owed to Punjab, it would help the latter bolster its tottering finances.

The agreement with the IMF bars the provincial governments from seeking overdraft from the central bank. This has left the Buzdar government with no option but to ask for loans from the Centre. The financial stringencies have compelled the Punjab government to delay development projects. Now more than 900 uplift schemes are on hold due to the lack of finances. Moreover, the provincial government owes Rs900 billion to foreign lenders, which has further compounded its financial woes. The multiple effects of the coronavirus pandemic should lead governments to think of new ways to manage their economic affairs in the altered circumstances. All species, including mankind, have to adapt to changes in natural conditions in order to survive. Many old techniques of economic management and social organisations will have to be discarded and they will have to be replaced by new and appropriate ways and means. There is no alternative to adapting to new condition. 

Published in The Express Tribune, May 27^th, 2020.

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