Interim govt moves to scrap economic growth framework

Decision purportedly rooted in feud between former Planning Commission deputy chairman and finance adviser’s brother.

ISLAMABAD:

The caretaker government has ordered the reintroduction of the 10th Five-Year Economic Plan, thereby moving away from the Planning Commission’s Framework for Economic Growth. The decision is allegedly rooted in a feud between two senior economists and has little to do with the country’s development plans, sources say.

While chairing a meeting here on Wednesday, Prime Minister’s Finance Adviser Dr Shahid Amjad Chaudhry asked the Planning Commission to present the 10th Five-Year Plan to him by next week. The plan had earlier been shelved by the last government, officials said.

They added that the adviser said his government wanted to leave the 10th Plan (2013-18) for the next government for consideration, in place of the Planning Commission’s Framework for Economic Growth (FEG). During the meeting, Dr Chaudhry asked officials if necessary chapters from the FEG should be merged in the plan.

The FEG had been prepared by former Planning Commission deputy chairman Dr Nadeemul Haque, who was recently dismissed from his post by the caretaker government.

When Dr Haque became the deputy chairman, the Planning Commission had been preparing the 10th Plan for 2010-15, which he ordered shelved. In its place, he had provided his own strategies for economic development. The FEG was later approved by the National Economic Council, the country’s highest economic decision-making body. However, the FEG was never implemented and lacked broader acceptance.

Differences between the Plan and the FEG

The 10th Five-Year Plan (2010-15) was in tandem with the growth models the country was implementing, but was advocating the status quo. It had envisaged 7% growth, increasing literacy to 65% and reducing the incidence of poverty.

The main focus of the Plan was to move gradually towards increasing investment in education and health and to improve living standards. The Plan had also promised to usher in an era of development in parts of the country that had remained underdeveloped thus far.

Some other targets under the Plan included the reduction of infant and maternal mortality rates, mobilising resources, improving the security situation, addressing the energy crisis and improving management of the public sector enterprises.

On the other hand, Dr Haque had presented the FEG as a new approach towards accelerating and sustaining economic growth. The strategy was based on sustained reforms that would build an efficient and knowledgeable governance structure, and create markets in desirable and well-connected locations.

It recognised the severe resource constraint that the country faced and therefore focused on productivity. The thrust of the strategy was focused on the software of economic growth: through addressing issues of economic governance, institutions, incentives and human resources.

“The country will look terrible if we do this,” Dr Haque responded when told the FEG may be scrapped. He said the FEG had been approved by the National Economic Council, while the 10th Five-Year Plan was merely a draft document put together by the current finance adviser’s brother, Dr Rashid Amjad, in the latter’s capacity as acting chief economist at that time.

Dr Haque had withdrawn the title of acting chief economist from Dr Rashid Amjad, restricting him to the Pakistan Institute of Development Economics as vice chancellor of the institution, when the former assumed charge as deputy chairman of the Planning Commission.

Dr Haque said the interim government should not overturn the National Economic Council’s decisions, especially when a new government is about to be formed. He said only the National Economic Council can reject the FEG, and there must be a discussion prior to such a decision. He said the finance adviser was not above the National Economic Council, and the apex body had not approved the draft of the 10th Five-Year Plan. He further said that the law and rules must be followed before the government takes any decision on the FEG and the 10th Plan.

“Is the future of the economy a family game limited to only the privileged few?” Dr Haque asked, alleging nepotism behind the decision.

Published in The Express Tribune, May 16^th, 2013.

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