Crafted by technocrats, a five- year development plan 2005-10 is expected to be ready by March next. The draft will be placed before the National Economic Council (NEC) and later before the parliament for its approval.
It would become operational from fiscal 2005-06.
This is the time-frame under which the Planning Commission is working hard to deliver. Thirty odd groups are busy formulating their recommendations with the short deadline set for end-September. Under a mandate from the NEC, the commission has to evolve a comprehensive strategy of stability, high growth and poverty reduction.
To quote the deputy chairman of the commission, Dr Akram Sheikh, the plan would be objective-driven unlike the past when it was triggered by projects that did not complement each other. He wants harmonious inter-sectoral growth with forward and backward linkages integrated into "Pakistan Incorporated."
It would be a signal that short-term policies based on ad hocism, would go. A long- term horizon would shape policies that may be adjusted occasionally, if required, for a smooth sailing.
The governor of the State Bank of Pakistan (SBP), Dr Ishrat Husain who is also associated with the formulation of the plan says that it would be a national plan and not a government document and should be seen as such.
It is quite evident that with national ownership, the plan would have a much greater chance of success than a rubber stamping of the draft plan by a manipulated majority in the National Assembly. It means enlisting bipartisan support in the Parliament or alternatively, the parliament should be the product of a representative democracy.
Currently, the development plans are formulated and executed through annual budgets by finance ministry in consultation with the concerned departments/autonomous bodies.
The finance ministry controls the purse and fixes the financial outlay of the public sector development programme (PSDP) and even changes priorities of projects. Fears are also being expressed that the whole exercise of consultations on formulation of plan may turn out to be a camouflage for pushing macro-economic targets set by the ministry of finance.
If the plan is to become a national document, the commission should be turned into an autonomous institution like the SBP responsible before the parliament and the prime minister.
The central bank submits quarterly and annual reports on the state of the economy to the National Assembly and the Senate. A six monthly progress report on the PSDP submitted to the NEC and an half yearly report on the plan execution could also be submitted by the commission to the Parliament.
It may have been more appropriate to put the commission under the prime minister before handing over the new NEC mandate. Somehow, the data given by the ministry of finance does not stand the critical tests by independent experts and economists.
Involved in this exercise is the underlying idea that economics and politics cannot be separated. At the policy level, it is the political economy that provides the much needed commitment and energy to push things forward.
Political economy is about statesmanship to recognize that different policies affect different people differently and to make the right choices. It requires a strategy for broad basing prosperity through national self-reliance and federal democracy.
Bankers and economists are turning into politicians. It's time that politicians should become political economists. In the past four years or so, macro-economic stability has been achieved and now the national economy is on a growth path.
It is time to evolve a home -grown economic model with a corresponding and harmonized political system which combines democratic values with social justice. In any model, social concern should be a core responsibility of the government.
Pakistan needs a vision of its own national identity and its goals in a global era that can best be described as a transitional journey, of course, towards a better world. Old role models, economic, political and social, have lost their social moorings which explains much of the turbulence in the world today.
Socialism of Russian and Chinese brand has collapsed. The welfare state is withering away. Sophisticated capital-intensive technology is raising productivity with much fewer jobs, forcing firms to trim.
Big corporations and large-scale industries do not offer life-time jobs. A new phenomenon of jobless economic growth is being witnessed in both developed and developing countries.
With assets highly skewed, economic growth does not create prosperity for the poor. Unemployment and poverty is rising. The educated youth are without jobs. These includes MBAs in an emerging and growing markets. It is the failure of the market to cater to the needs of the people.
Dr Ishrat Husain says that, "trickle down" theory is a cliche and believes that the quality of growth has to be biased in favour of the poor.The three year macro-economic strategy (2001-2004) was to address distribution concerns which, over this period, have grown because of a dismal failure.
Neither, the IMF's Poverty Reduction and Growth Facility (PRGF), expiring in November this year nor the Poverty Reduction Strategy Paper prepared by the government has delivered or raised any hopes. Now, it is the five- year plan that would spell out the measures to propel pro-poor growth with focus on employment and income distribution.
In the present conditions, the poor do not have access to assets. In agriculture, the distribution of state land to landless is proceeding on a very slow pace. Millions of acres of cultivable state land which could be developed and allotted to the poor, lie unutilized.
The government has identified 6-7 million acres for corporate farming by foreign investors who are shy to come forward. In Pakistan, there is no subsidized corporate farming like in the USA and Europe and there are no subsidies on agricultural products.
Would crony capitalists from the West venture outside their national frontiers? In Pakistan, there is more intensive cultivation in smaller farms than the large ones.
Mechanization of agriculture and modernization of small and medium sized industries can be better achieved through common technology facility centres, as is the growing practice in the countryside. SMEs and small farmers cannot afford high cost foreign technology.
In the past, the scheme for cattle farming for which lands were allotted to industrial houses in Sindh did not yield any positive outcomes. Local farmers prefer traditional system to corporate farming. The Chinese and Indian economic successes can be explained by a variety of factors but a key element was the land reform.
Any five- year plan that ignores land distribution among the landless cannot hope to either raise productivity ( per acre yield) in agriculture or broad-based prosperity at a rapid pace.State interventions are also needed to provide the poor the access to assets.
Under examination of the commission is the size and the composition of investment in the public and private sector. The PC has also to define sectoral priorities in the public sector development programme (PSDP).
The PSDP has a multiplier effect. The right balance between the state and the market may vary over time though the objective of empowering the people, specially the poor, to improve their livelihood step by step, may remain unchanged.
Here, the policy makers should differentiate between economic growth (that may come predominantly through existing capacities) and economic development by creating new capacities and a diversified economic base, through state interventions like import substitution of capital goods or oil seeds.
The 3-year macroeconomic strategy (2001-04) was supposed to focus on import substitution in respect of edible oil and pulses. No serious effort was made and imports on this count continue to mount.
In strategic terms, there is room both for self-reliance and globalization at the same time. Indigenous resources with appropriate local technology should be used to meet domestic demand whereas sophisticated technology can be employed to boost exports. Local technologies can be upgraded over time. Import-substitution and exports can together contribute to a sustainable economic development.
