Tuesday economics

Economic policy is a matter of political choice and democracy is the means to exercise that choice

Dr Pervez Tahir June 10, 2022
The writer is a senior political economist

It is budget day today. Though an open secret by now thanks to the scoop galore, a comment on its contents will have to wait until next Friday.

In the meantime, Tuesday this week turned out to be the most privileged day. Every year, the period from mid-May till the presentation of the budget in the Parliament is nothing but meetings of various budgetary, planning and economic forums, official, demi-official and nonofficial. The economy is passing through its oft-repeated boom and bust cycle. The ignoble boom happened in FY21 and 22. Looking for ideas to limiting the destructive impact of the certain bust in FY23 is driving the policymakers crazy. No matter how dire the economic straits, prime ministers in this country are expected to act like relief commissioners. With the success of the no-confidence motion against the boom government whose prime minister lived up to the office by providing the petrol relief out of thin air, the next government took over with the unambiguous intent of fully administering the IMF medicine to deal with the bust. As the finance minister left immediately for signalling to the IMF that its programme would be brought back on track, the foreign exchange market and the stock exchange responded positively.

But there was now a new relief commissioner, with fresh ideas. If the poor must be bled, the bleeding should be judicious. ‘Good’ economics, prescribed by the IMF, permits subsidies if these are direct, not across the board. It took what looks like ages in a crisis situation to decide on the BISP mechanism to deliver the subsidy on petrol to the poor and the poor plus. All this while, the markets returned to their chaotic behaviour. The IMF’s petrol bomb was dropped and the electric shock administered only after a consensus was reached among the coalition partners running the bust government. It was too late then. The second petrol bomb was dropped sooner than later, but the IMF had moved on to the budget. In regard to the rising load-shedding in a tortuous summer, the famous Shehbaz warnings failed to work. Realising that it is federal government not Punjab, stupid, the cabinet approved a load-shedding alleviation plan on Tuesday with definite deadlines.

After the 2000-rupee relief came the relief of reliefs, also on Tuesday. A pre-budget meeting on the economy was called by the relief commissioner, with no ‘independent’ economists in attendance. Boom government or bust, there is at the high table an elite group of large beneficiaries of ‘direct’ subsidies. They were all there — textile barons, sugar daddies, independent power tycoons, the not so independent fertiliser giants, the new special interest IT, the oldest special interest landlords and the high interest lenders to the government. Only a day before, some of them were seen announcing donations at the inauguration of a private hospital in Lahore. They were asked to draw up a charter of economy. Export-led growth, revival of agriculture to stop the import of wheat, cotton and edible oils, disallowing the usurpation of fertile lands by real estate thugs, vertical rather than horizontal expansion of cities, increasing the share in the world of IT market are all laudable objectives. This is, however, not the stuff of a charter, which should essentially focus on avoiding the waste of public money on half-way rollback pf projects started by the predecessors. Economic policy is a matter of political choice and democracy is the means to exercise that choice. A charter will also avoid special interests. Would the Tuesday collection of the latter do that?

Published in The Express Tribune, June 10th, 2022.

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