THE constitutional provision that the Senate shall not be subject to dissolution (Article 59(3)) has in practice been more a wish than a reality in our country. Political circles are proposing broadening of the powers of the Senate especially in respect of monetary matters. And now the National Reconstruction Bureau has announced a number of proposals which also relate to the restructuring of the Senate.

Some politicians, including heavyweights like former foreign and finance minister Sartaj Aziz, suggest direct election to the Senate to enable it “to play a more active role in strengthening the federation by protecting the rights of the smaller provinces”.

In fact it is not the exclusion of financial matters or the mode of elections that the woes of the Senate are all about. Compared with the upper houses in some federal parliamentary governments our Senate enjoys marginal powers especially in areas where its role should be crucial such as amendments to the Constitution impinging on financial and administrative powers of the provinces. The role of our Senate is under further threat of erosion from constitutional changes necessitated by fiscal developments around the world and by the political exigencies of uniform living conditions in the country.

An upper house in a federal parliamentary system is designed to act as a brake on hasty legislation by the lower house and protect the vital interests of the federating units. Our predicament has been that the drawing of a political structure on the models of the American presidential and the British parliamentary forms ends up distorting the basic features of both. However, our rulers had made the most of the benefits available in both systems.

For example the American president appoints his cabinet members, ambassadors and some other high level posts on taking over the presidency but these are subject to confirmation by the US Senate after proper hearings. Our prime ministers make such appointments in substantial numbers, and these are not liable to confirmation by the Senate. This practice has only proliferated nepotism and politicization of the services.

The proposals to increase the number of seats of the Senate will prove inconsequential, since its present strength of 87 is reasonable when compared with most of other countries. The upper house of Germany (Bundesrat) has 69 seats, the Russian federal council has 178 and the Indian Rajya Sabha 250. There is no uniformity of principles in the composition of the upper house in a federal system of government. In Germany, depending on the population, the 16 states have three, four, five or six nominated members, who cast votes only as a block under instructions of their provincial governments. The federating units in Pakistan and Russia have equal representation. In India, in addition to nominations on 12 seats by the president, the state-wise representation on remaining seats varies from a maximum of 22 seats (Bihar) to a minimum of one seat (in the case of eight states).

While ministers are not chosen from the upper house of Germany, and perhaps from the federal council of Russia, a number of cabinet ministers are taken from the upper houses of Pakistan and India. In Pakistan up to one-fourth of total cabinet members can be appointed from the Senate. But as cabinet ministers they remain collectively responsible to the national assembly.

In Britain, there have even been, in the past, prime ministers from the House of Lords. For instance Lord Salisbury was a member of the House of Lords in 1878 and later became prime minister three times. Over the years things had changed. Now a prime minister can pick up ministers from the upper house but normally these are junior ministers. At present in addition to the Lord Chancellor, there are only two ministers in the House of Lords. They do not sit in the House of Commons and are not accountable to it.

Elections to our Senate are held indirectly like all upper houses in federal parliamentary governments. Unlike the advisory role exercised by the upper houses in some countries in respect of money bills, our Senate has no say whatsoever in this respect. Under Article 73 of the Constitution, a money bill originates in the national assembly and is passed by it without getting approval from the Senate. Compared to this, a money bill passed by the Commons in Britain and the Lok Sabha in India goes to the upper houses for consideration. In Britain, a money bill will become law if not passed by the lords within a month. And, the Commons is not obliged to consider any amendments made by the Lords to the bill. In India if the upper house amends or rejects the bill within 14 days it again goes to the lower house where it is reconsidered and voted upon by a simple majority.

Our Senate’s role is excluded in respect of monetary matters and is marginalized in other legislation. It may exercise restraint on the national assembly by rejecting certain routine legislation passed by it but its vote can always be over-ruled by a simple majority in a joint sitting of parliament. The upper houses of Germany and India enjoy identical powers in routine legislation but their consent is essential in some specific matters.

In Germany more than half of all bills require the formal approval of the Bundesrat which means that they cannot pass into law without its assent. This applies especially to legislation that concerns vital interests of the states, for instance their financial affairs or their administrative powers. No amendments to the German constitution can be made without the Bundesrat’s consent and a with two-thirds majority. India’s upper house enjoys certain powers to the exclusion of the lower house. Under article 249 of Indian constitution the upper house with a two-thirds majority of its members can recommend to the parliament to make laws on matters included in the state legislative list. The second exclusive power of the upper house relates to the setting up of the all-India services that are common to the union and the states and it is only through the passage of a resolution in this regard that the lower house makes any laws concerning such a service.

If anything, the role of our Senate needs to be redefined in making amendments to the Constitution especially provisions impinging on vital interests of the provinces like provincial autonomy, economic interests and creation of the all-Pakistan services that are common to the federation and provinces. Legislation concerning these areas should be undertaken only after approval of the Senate by a two-thirds majority. The Senate needs to be empowered to exercise some control over the cabinet ministers drawn from it. In fact, such ministers should sit in the Senate and remain answerable to it. Money bills need to be transmitted to the Senate for seeking advice. It matters little whether any amendments made by the Senate are accepted or not by the national assembly. This practice will help remove the present sense of alienation in the Senate.

The idea being mooted by certain quarters for holding direct elections to the Senate is not only contrary to the universally accepted features of a federal parliamentary system of government but also impracticable on the ground in our country. About 100 Senate seats for an estimated population of close to 150 million means one seat for around one and a half million people or about one million voters. This will amount to making the Senate election as preserve of multi-millionaires only. Politics is not for the rich alone.

THE government’s announcement to allow foreigners to buy shares in newspapers and journals is indeed a surprise. There was no debate in the country, much less in parliament. The standing committee of the two houses has rejected the proposal. Twice the Editors’ Guild of India passed a unanimous resolution against the proposal; the third time it was divided in its opinion, more opposing it.

Many bodies of journalists also opposed the proposal. And at least 95 per cent of papers in the country do not want any foreign competition. Still, the government has gone ahead with it.

What could be the reasons? They must be pressing ones. One reason could be the pressure of the World Bank, which is guiding globalization without bothering about the harm it is causing to the developing and underdeveloped countries. It is not surprising that Disinvestment Minister Arun Shourie, once a World Bank employee, is said to have favoured 100 per cent foreign equity in the print media. He probably knows what will happen gradually: the 26 per cent will become 50 per cent and eventually 100 per cent. This is what has happened in the case of foreign banks. Now the foreigners own 100 per cent. The 26 per cent may prove a Trojan horse. It is an open secret that the establishment can be controlled with as little as a 10 per cent equity.

Still more disconcerting is the “anxiety” of the NRIs to own shares in Indian newspapers. Lately, many among them are parading their “Hindutva” identities chauvinistically.

It is more than a coincidence that the Vajpayee-headed government issued the order after the Gujarat carnage, which was vehemently condemned by the press. With 26 per cent share, the NRIs will have a veto power on the board of a newspaper and can influence it. Maybe, the Vajpayee government feels that this is one way to chastise the press, which is against it.

The argument that the induction of foreign capital will not affect the functioning of journalists may be correct. But what happened to them during the emergency is a case in point. As L.K. Advani, then information minister, aptly said after the emergency: “You were asked to bend but you began to crawl.” This may happen again after the government order. Information Minister Sushma Swaraj says: “We have made sure that the editors will be Indians and that the management will continue to remain in their hands.” Is it that difficult to find dummy editors? The same thing applies to the management. The entire ownership can be fictitious.

Suppose some terrorists from abroad acquire shares in a newspaper under false names and have Indians as their editors and managers. The country has known how the Hawala case had an Indian as the kingpin. He was the one who was behind financing terrorists in Kashmir and in some parts of India. The government’s decision is fraught with dangers, the consequences of which may harm the nation. Information Minister Sushma Swaraj, in her anxiety to do something new, has not considered the disturbing implications for the quality of democratic discourses in the country.

I may not like it, but I can understand the government bringing foreign capital in a field which requires high-grade technology. The Indian press has the best of machines as good as anywhere else in the world. Our journalists are inferior to none. What foreign capital is supposed to do except interfering in the running of newspapers? It looks as if the government’s agenda is different. Those who invest in the print media from abroad will be its stalking horse. The whole operation has been hush-hush from the very beginning. Not surprisingly, the ministry of information and broadcasting has been made the authority to permit investments in the print media.

When India became independent, its first prime minister, Jawaharlal Nehru, saw to it that all foreign-owned newspapers were transferred to Indian hands. Not only that. He even had the cabinet pass a resolution in 1955 banning foreign participation in the print media. It is comical that the Congress was the first party to try and change the resolution. Some ten years ago, the P.V. Narasimha Rao government set up a committee to go into the question of foreign participation. Congress ministers Manmohan Singh, Pranab Mukherjee and N.K.P. Salve were members of the committee which decided to allow foreign investment in the print media and undo what Nehru had done.

I remember I met Salve on behalf of the Editors Guild of India. With great difficulty I persuaded him to postpone the implementation of the committee’s decision till after the election, which were a few months from then. The Congress never returned to power to implement the decision.

It is, however, ironical that the decision to open the door to foreign investment came on June 25-26, the dates when the emergency was announced 27 years ago. The people now in power then suffered the rigours of the emergency.

Strange, they are following in the footsteps of Mrs Indira Gandhi. She had introduced her own rule and reduced parliament to a mere body to endorse her authoritarian ways. She is remembered for press censorship and all that she did to make a mockery of democracy. Even now the writing is very much on the wall. The National Democratic Alliance may also go the same way and come to be remembered for exposing the Indian press to the dangers of foreigners who may have other axes to grind.

Foreign newspapers will benefit the most. They have already said that they will be bringing out Indian editions of their publications. Nehru was so particular that he did not allow the New York Times to print its paper in the country.

Not only that. They can print and also have their editorial content. They have their own agenda or politics and are diametrically opposed to ours. In fact, some foreign papers have said that they may bring out their own publications.

Not in Indian languages, I hope.

When the TV channels have not been stopped from having foreign investment, why should the print media be?

Newspapers fall in a different category. TV discussions have a fleeting impression like fleeting pictures. But the printed word is what people take seriously. They sit and digest articles to mull over the problems discussed and make up their minds. In India, the printed word is sacrosanct. People still say: Woh akhbar mein nikla tha (it appeared in the newspaper). Their faith in what appears in print is overwhelming. So the TV and newspapers cannot be compared.

I also believe that the press is a profession, not an industry. It is an interplay of ideas. Some newspaper magnates have spoilt it by reducing a newspaper to a commodity like soap or talcum powder.

To them, marketing is more important than editing or giving news. But I am sure in the long run they will be forced by discriminating readers to correct themselves.

The government has probably changed the nation’s priority by bringing in foreign investment. Now people would be more concerned about saving India’s unity and cohesion than about the shoddy professional job that the market-oriented newspaper will continue to do.

The writer is a freelance columnist based in New Delhi.

DAWN in its June 24 issue published an article entitled “Budget and the economy” by Mr. Sartaj Aziz, former finance minister of Pakistan. There are two parts to his article. In the first part, he has compared the performance of key economic indicators over the last three years of the present government with that of governments in the 1990s. In the second part, he has commented on the Budget 2002-03.

The purpose of this article is not to indulge in the numbers game but to focus on issues which were pertinent some three years ago, the measures taken by the present government, and the results achieved so far. Some of the points raised regarding the Budget 2002-03 will also be addressed in this article.

It is a well-established fact that the decade of the 1990s was a decade of lost opportunities for Pakistan. While many nations made progress, Pakistan lurched from one crisis to another mainly of its own making. Weak macroeconomic management, lack of commitment and courage to undertake difficult structural reform, the deteriorating state of decision-making and rising levels of corruption were typical of the quality of governance in Pakistan. Appalling economic decisions like those relating to the M-2 motorway, the Saindak Project or the construction of expensive air terminals were symbolic of the free-wheeling decision-making which led to the incurring of huge debts.

Such a state of affairs had a far-reaching impact on the country’s economic well-being. Indeed, we witnessed economic growth slowing down, investment rates decelerating, the country’s debt burden reaching alarming proportions, foreign exchange reserves poised on a knife’s edge, poverty increasing and poor governance beginning to be the norm.

The daunting task of addressing these multi-dimensional challenges fell on the shoulders of the present government. The government accepted the challenge and set four major policy objectives. First, to stabilize the country’s debt situation; second, to revive economic growth; third, to reverse the trend of increasing poverty; and fourth, to improve governance. Poor governance also contributed in slowing Pakistan’s economic growth and raising the levels of poverty.

Let me now turn to review the developments that have taken place on the four major policy objectives. In the process, it will become evident that the principal reasons for deceleration in investment and growth and the concomitant rise in poverty in Pakistan were the poor policies followed in the 1990s.

Pakistan’s debt situation had reached unsustainable levels by 1999 because of the persistence of large fiscal and current account deficits during the 1990s. These twin deficits resulted in an explosive accumulation of both domestic and external debt. Domestic debt was growing at an annual average rate of 16 per cent and reached 52.2 per cent of GDP by 1999-2000 from 44.1 per cent in 1990-91. In other words, domestic debt grew fourfold — rising from Rs 448 billion to Rs 1642 billion in one decade. Pakistan’s total external debt during the 1990s grew by 6 per cent per annum. It stood at $22 billion in 1990 and reached $38 billion by 1999.

As a result of sharp accumulation of both domestic and external debt, the debt servicing liability continued to rise in the 1990s. In 1990-91, almost 43 per cent of total revenues was consumed by debt servicing and by 1998-99, it reached 73 per cent. No wonder the development budget continued to shrink from 6.4 per cent of GDP to 3.3 per cent during the same period.

The root cause of rising debt burden has been the persistence of large fiscal and current account deficits. Pakistan, on average, sustained fiscal and current account deficits of almost 7 per cent and 5 per cent of the GDP, respectively during 1990-99.

The links between large fiscal deficits and low and declining economic growth are based on empirical evidence. Comparing growth numbers for the odd year is immaterial. It is in this background that the first and foremost challenge for the government has been to arrest the rising trends of debt. The present government had set-up a high level Debt Committee which examined the root cause of the rising debt burden and suggested a strategy to stabilize the situation.

After two and a half years of concerted effort domestic debt has declined from 52.2 per cent of the GDP in 1999-2000 to 44.3 per cent in 2001-02 — a reduction of almost 8 percentage points of GDP. External debt and foreign exchange liabilities now stand at $36 billion, down from approximately $38 billion in 1999-2000 — a reduction of $2 billion or from 62.3 per cent of GDP to 58.1 per cent (a reduction of 4.2 percentage points in two years). Such a sharp reduction in domestic and external debt in two and a half years is not a mean achievement. The fruits of reduction in debt are quite visible in 2002-03’s budget where debt servicing has declined by almost Rs 40 billion. Debt servicing as a percentage of total revenue, which stood at 73.2 per cent in 1998-99, declined to 62 per cent in 2000-01, and likely to fall below 50 per cent in 2002-03. Debt rescheduling with the Paris Club has opened up yet another avenue to achieve overall debt sustainability.

The second most important challenge for the present government has been to revive economic growth. The growing debt burden of the 1990s as stated above, not only slowed private sector investment but also forced public sector investment to decline.

To revive economic growth on a sustained basis, the present government has identified four major drivers of growth. These include: agriculture, small and medium enterprises (SMEs), the oil and gas sector, and information technology. During 2001-02, economic growth staged a modest recovery to 3.6 per cent despite crippling drought. Next year, real GDP growth has been targeted at 4.5 per cent.

The third most important challenge for the present government has been to reverse the trend of increasing poverty. It is well-known that the natural outcome of declining economic growth is the shrinking employment opportunities and a concomitant rise in poverty.

Growth is critical for poverty reduction because higher economic growth will lead to a greater absorption of labour, thereby increasing income levels. It is in this background that the government has identified agriculture and SMEs as major drivers of growth along with the energy and IT sectors. While growth is critical for poverty reduction, focus on it alone was not enough. A high economic growth policy was to be accompanied by direct poverty alleviation measures.

Weak governance has been an important source of macroeconomic difficulties, particularly in the 1990s. It has contributed in slowing Pakistan’s economic growth. Weak governance has also severely reduced the effectiveness of public expenditures; weakened the overall macroeconomic management; undermined investors’ confidence; encouraged tax evasion, loan defaults, non-payment of utility bills; and corruption.

Let me now turn to the second part of Mr. Sartaj Aziz’s article where he commented on the budget for 2002-03.

As stated earlier, the fiscal deficit has averaged almost 7.0 per cent of GDP in the 1990s. It was reduced to 5.3 per cent in 2000-01 and was targeted at 4.9 per cent of GDP in 2001-02, a target that has been achieved. The underlying fiscal deficit of 4.9 per cent is consistent with the 5.3 per cent figure of last year. The additional 2.1 percentage points of GDP expenditure is a one-time spending to clear backlogs of last decade as well as additional defence spending necessitated by the events of December 13, leading to unprecedented massing of troops by India on Pakistan’s borders. These additional expenditures include the KESC equity injection of Rs 30 billion, income tax refunds to banks of Rs 22 billion, and additional defence spending of Rs 17 billion. The next year’s budget deficit target is set at 4.0 per cent of GDP. If the underlying budget deficit is 7 per cent of GDP in 2001-02, would it be possible to bring it down to 4 per cent in 2002-03? The answer is a big NO.

As regards the fixing of tax revenue targets for the CBR, this was also explained by Mr. Shaukat Aziz. The tax revenue target is not ambitious. Assuming Rs 400 billion is collected in 2001-02, it is well-known that the CBR has given Rs 15 billion extra refund/rebate to clear backlogs. Furthermore, a revenue loss of Rs 6-8 billion is assumed on account of September 11 events, therefore, the corrected base is Rs 423 billion. To reach Rs 460 billion, we need revenue to grow by 8.7 per cent against the nominal GDP growth of 9.3 per cent. Is 8.7 per cent normal growth in revenue an ambitious target?

Finally, the size of the PSDP for 2002-03 has been fixed at Rs 134 billion or 3.3 per cent of GDP (not 2.8 per cent as mentioned in the article) with the possible provision of additional Rs 10 billion depending on the availability of adequate resources. There are indications that the additional Rs. 10 billion could be available. Instead of customary budgetary cuts we could witness a budgetary augmentation next year.

Pakistan’s economy has made significant progress over the last two and a half years. The government has succeeded, to a lager extent, in restoring macroeconomic stability; the current account of the balance of payments has never been in such a comfortable position; foreign exchange reserves have crossed $6 billion; the exchange rate is stable, external debt is moving towards a sustainable level; domestic debt is declining; inflation is low; the interest rate is declining; and above all, Pakistan has restored its credibility with the international financial institutions and the markets. Despite these improvements there is no room for complacency. Much more needs to be done to sustain the momentum.

The writer is Economic Adviser in the ministry of finance.