‘Nooneconomy’

Published: March 14, 2013
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pervez.tahir@tribune.com.pk

pervez.tahir@tribune.com.pk

Nawaz Sharif shares Bill Clinton’s adage — “It’s the economy, stupid”, but with a desi touch. In the just released manifesto of his party, as in his past tenures, the economy is priority number one. “Strong economy, strong Pakistan” is the theme song. This is due more to his business background than to any articulate economic thinking. Otherwise, this column would have been on “nooneconomics”, not “nooneconomy”. In his first tenure, he went all out for liberalisation, deregulation and privatisation. The word got around that there was money to be made in Pakistan. The second tenure demonstrated his will to undertake mega projects, despite strong intellectual, bureaucratic and political opposition. And the economy is also in focus in the new manifesto, flavoured though by populism to extend his support base. The minimum wage is to rise from Rs8,000 to Rs15,000. Eight hundred thousand jobs are to be created annually, in the public as well as the private sector. A national manpower plan will match the demand and supply of skills and labour. Infrastructure projects, especially in the top priority sector of energy, will be made labour intensive. Restructuring and revamping rather than outright privatisation are the buzzwords. The railway is described as a favoured mode of transportation for the common man. It will be managed effectively through an independent board. Similar measures will be taken for PIA. Providing housing for all will be a serious pursuit. Salaries and pensions will be protected and subsidies will be more targeted. In an oblique reference to the Benazir Income Support Programme, the manifesto commits to the continuation of cash transfers with greater transparency and a special focus on widows, orphans and female children. Expenditure on social protection will be taken to two per cent of GDP. Education gets four per cent of GDP and an emergency will be declared to achieve targets. A uniform system of education and the declaration of mother tongues as national languages have been promised. Health will claim two per cent of GDP and a national health insurance policy will be launched. Poverty and hunger will be addressed by making access to food a fundamental right. Land reform leads to revitalisation of corporate agriculture via land development corporations and with equity for poor farmers.

All this is to be achieved by raising the investment rate to 20 per cent from the present 12 per cent, and achieving GDP growth of six per cent. No new taxes will be levied and the number of existing taxes will be reduced. There will be no increase in the rates of existing taxes. If anything, these rates will be brought down. As if to reaffirm the populist stance, an exception has been made in the case of regulatory duty on the import of luxury items. Yet, the tax-to-GDP ratio is envisaged to rise from the present low of 9.9 per cent to as high as 15 per cent. With no new measures, this jump requires a GDP growth of at least 10 per cent. Assuming that the desired tax-to-GDP ratio is somehow achieved, the additional 5.1 percentage points will be exhausted by the proposed additions of 1.9, 1.3, 1.5 and (possibly) 0.4 percentage points to education, health, social protection and food security. To keep the fiscal deficit at the promised level of four per cent, infrastructure requirements will have to be financed by cutting expenditure drastically. It is proposed to cut down non-salary and non-pension current expenditure by one-third, forgetting that the untouchable debt servicing constitutes the largest item here.

The numbers don’t add up. They did not, even in the earlier tenures. Let fools contend for macroeconomic consistency. The PML-N will march forward under the Pakistan Business and Economic Council chaired by “Prime Minister” Nawaz Sharif.

Published in The Express Tribune, March 15th, 2013.

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Reader Comments (12)

  • Nadir
    Mar 14, 2013 - 10:25PM

    PML-N’s “manifesto” was no different to other claims and manifestos of other parties. They are not rally manifestos in the sense that the list out aims and are short on actual detailed policy work on how these objectives are to be achieved.

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  • Falcon
    Mar 14, 2013 - 10:47PM

    Ouch….And PMLN has been saying all along it is PTI’s policies that are unrealistic.

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  • sabi
    Mar 14, 2013 - 11:18PM

    Where is the analysis?

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  • meekal a ahmed
    Mar 15, 2013 - 12:21AM

    PT,

    I am surprised you even read this drivel!

    I stopped after the first couple of paragraphs.

    A complete waste of time.

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  • Falcon
    Mar 15, 2013 - 3:30AM

    @meekal a ahmed:
    Good to see you back on ET.

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  • AQEEL
    Mar 15, 2013 - 9:12AM

    1— After 18th amendment and 3 years not a single watt of electricity produce and now say end load shading in 2 years

    2—–5 years no local election in punjab contempt of court (supreme court order) now they in 6 months be done

    3—TAX collection 15% GDP, can a party with 70% leaders TAX CHORS can they realy collect TAX

    4—-No clear policy on stopping terrorism biggest problem in Pakistan ,why would they as they fight election with support of these groups like LeJ

    5—20% investment target ,1st bring back looted money from London/Jeddah

    6—Accountabilty—no accountabilty bill for 5years now they say they will do it

    Ther are so many other contradictions and faulse promise which have not listed

    WAKE UP PAKISTAN PLS DO NOT VOTE FOR THESE CORRUPT FAMILY PARTIES TAX CHORS,DEFAULTERS,FAKE DEGREES

    REMEMER ALLAH SAYS “I WILL NOTE CHANGE YOUR FUTURE UNLESS YOU CHANGE
    YOUR WAYS—PLS VOTE FOR CHANGE

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  • Mar 15, 2013 - 12:31PM

    Thank you for some much needed number crunching. We are up to our noses in talkshow style opinions, but no hard facts. This is a breath of fresh, logical air

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  • Kaleem
    Mar 15, 2013 - 2:24PM

    Numbers dont add up? Which numbers? If we stop corruption and looting, 1300 billion can be generated every years,

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  • Blithe
    Mar 15, 2013 - 5:09PM

    Far too populist for my liking.

    Benazir income needs to be stopped – we need infrastructure projects instead.

    Why take the minimum wage so high ????
    Are we expecting runaway inflation?!?!?

    These policies are not as good as I would expect from PML N.

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  • bball
    Mar 15, 2013 - 8:53PM

    nothing really wrong with the manifesto – what you don’t like liberalization – you don’t want revamped institutions – the numbers are just an estimate – they depend upon increasing the tax net also that you haven’t talked about

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  • Mar 15, 2013 - 10:32PM

    As far as taxes are concerned… I agree no new taxes will be levied and salest ax on exports is going to be reduced. How come tax to GDP ratio is going to increase from 9 percent to 15 percent. No strategy has been given.

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  • Crank Shaft
    Mar 16, 2013 - 2:31AM

    @bball – Nobody disagrees with the manifesto of a better economy and more spending on social welfare.

    The author is just trying to point out the impracticality of these plans. The assumptions and subsequent forecasts are so far out of line with what the real picture of the economy is that the manifesto becomes laughable.

    For Example, increasing the tax-to-GDP ratio the three simplest ways of doing so is a) either increase GDP (as the author points out by 10% which is going to be extremely hard) b) widen the tax net or c) introduce new takes or hike current tax rates both of which are highly unlikely as the PML-N usually gets most of its support from the petty bourgeois class and they would never let this happen.

    You can’t embark on huge infrastructure projects without having money in your wallet.
    And Pakistan doesn’t have any. We would either require foreign loans from WB, IMF or ADB (and a lot of our money ends up servicing foreign debt) or ask the SBP to print loads of cash which would result in severe inflation.

    Would have to make cuts to other programs such as defence etc if we are to spend more on education, health and social welfare. Don’t envisage that happening.
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