“Public sector intervention stands at 60% of GDP and there are signs that the intervention is increasing further,” said Haque while delivering a Quaid-e-Azam memorial lecture titled “Why Pakistan does not grow”, organised by Pakistan Institute of Development Economics (PIDE) here on Thursday.
He said the bureaucracy always strikes back for obtaining perks, plots, projects, slots on boards of corporate giants, controlling all forms of distribution, market and cities.
According to statistics given by Haque, the government’s intervention in the agricultural sector has expanded to 43% of the sector. In manufacturing, the ratio remains at around 12%, in transport and communications 77.38%, electricity and gas 77.63%, wholesale and retail trade 7.9%, health and education 42.3%, public administration and defence 100%, finance and insurance 45.5%, construction 75%, ownership and dwellings 100% and mining and quarrying 79.6%.
Haque blamed the plot culture in bureaucracy for being the force behind policymaking and said bureaucrats, vying for perks, have an inbuilt desire to expand the role of the government.
“Land is the most expensive asset in Pakistan so the whole desire of the bureaucracy is to get prime land in major cities,” he added.
“The government is doing too much badly with its increasing role,” he said and argued that without giving major space to the private sector along with an improved regulatory regime the country could not make progress.
Comparing economic performances of Pakistan and India, Haque said New Delhi’s per capita income was 30% below that of Islamabad few decades ago, but now it has gone up by 30%.
“Pakistan’s economy recorded a boom-bust cycle as it grew at the rate of 4.9% on average from 1971 to 2009 because of low investment and savings ratio as the growth remained the lowest in the region while growth of India and China was 5.3% and 9.1% respectively on average,” he added.
However, he cautioned that politicians alone should not be blamed for the problems as “we all are responsible for the existing situation.”
Industrialists are vying for protective tariffs and not ready to compete with the rest of the world, he said, adding they in this modern world are operating through licences while feudal lords are interested in politics to protect their vested interests.
According to Haque, cities should be developed by ensuring deregulation as these are considered an engine of growth. Around 60% of population is urbanised so cities can become a source of achieving growth on a sustained basis, he pointed out.
Published in The Express Tribune, April 6th, 2012.
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