25 October 2004	Monday	10 Ramazan 1425

On completion of half a decade of the governance, the rulers have started a meticulous campaign in the media, inter alia, issuing special supplements in newspapers telling stories of their successes notwithstanding whether these are real or merely illusionary.

When any of our economic managers goes abroad, he does not fail to seize the opportunity to tell the success stories. The Governor, the State Bank of Pakistan (SBP) has been in the United States recently where he addressed the American think-tank "Centre for Strategic and International Studies (CSIS).

The governor said that elected governments evaded taxing the rich feudals and wherever the subsidies were given by governments, the benefit does not accrue to poor masses but it was usurped by the rich landlords. He said that appointments in key civil service positions were made on the basis of loyalty rather than competence.

According to him, the challenges faced by the country are four-fold: (a)good governance (b) international economic relations at bilateral and multilateral level (c) investment in the human development and (d) development of physical infrastructure.

The charges against the political leadership can hardly be denied. But the question is what improvement has been brought by the present rulers during the past half a decade in ameliorating the condition of the poor sections of the population. The answer is certainly in negative. To ensure justice to the poor people, it is necessary to introduce equitable income distributing system. This is, however, outside the scope of the priorities of the present economic managers.

The SBP governor, while addressing a pre-budget seminar at Lahore on the May 26, had mentioned that the government's first priority was to reduce the poverty level from the existing 33 per cent to 20 per cent through higher economic growth even though he admitted that the higher GDP growth was not the sole factor causing a dent in the poverty level. He had emphasized in the address that, if in the process of higher economic growth, disproportionate benefits accrue to the top income groups, we should not grudge it so long as they are making positive investments, creating jobs and expanding exports.

As per the governor, the turn of removing income inequalities will come when the objective of reducing the poverty was achieved. He has thus deferred the programme of addressing the income inequalities for decades to come as the reduction in the poverty level through higher GDP growth as per the "trickle down" theory may take many decades.

During the half a decade tenure of the present economic managers, there has been a jobless economic growth and it will merely be a wishful thinking to bring down the poverty without creating new jobs for the common man. The policies of the present economic managers did in fact envisage retrenchment of the existing workers instead of creating additional jobs

Sometimes, a person speaks and sometimes his subconscious. It is perhaps the latter case when our prime minister while talking to the Indian journalists mentioned that the poverty can not be alleviated unless the Kashmir dispute is resolved. This assertion is an eye-opener. When poverty can not be alleviated in the coming decades (Kashmir dispute is not expected to be resolved in a foreseeable future), the question of addressing the issue of uneven income distribution will also remain untouched.

The charge sheet against politicians viz-a-viz induction of Officers in the key civil service positions on the basis of loyalty rather than competence equally applies to the present rulers even though the criterion may have shifted from the civilians to the armed personnel and from "loyalty" to "loyalty, and personal likes and dislikes of the appointing authority". Most of the civilian departments are now headed by serving or retired armed personnel irrespective of the experience and the competence of the concerned person for the respective job.

So charge-sheeting politicians will merely be a negative criticism. The present rulers should honestly "profess" and "practice" the criterion of "merit" in providing jobs simultaneously with the efforts to lower poverty level, and should also initiate measures to address the income inequality issue.

As for the challenges ahead, good governance is on the top. The ingredients of the good governance pointed out by the SBP governor, inter alia, are: fiscal discipline, targeting of subsidies to poor and vulnerable people, generation of employment for productive purposes and award thereof on merit, mobilization of revenues by extending tax net to those outside it. As for providing of employment, the current situation has been briefly outlined in the preceding paragraph and the rulers should honestly address the situation.

The economic managers can claim that they have brought more people under the tax net and have improved tax revenues. But the question is who are the new tax-payers: the holders of the Government securities on whom withholding tax has been levied besides drastically curtailing the interest rates or the common man on whom 15 per cent General Sales Tax (GST) - which is the highest in the world- has been levied and about or above half of the tax revenues are now being collected through the GST.

Are these measures based on the law of equity and justice? The efforts made by the present rulers 2-3 years back for expanding the tax net for collection of the direct taxes had utterly failed. The public is hearing for over a decade that the Central Board of Revenue (CBR) is being restructured with a view to plugging the revenue leakage. But the powerful CBR is not allowing any change in the status-quo. Are the rulers in a position to address these issues with strength for bringing a semblance of good governance.?

The largest-ever federal cabinet comprising 69 ministers/ministers of state plus advisors can hardly be regarded as a "show" of good governance. The economic managers are also not in a position to enforce the fiscal discipline. To quote an instance, government borrowings from the banking sector during July-August,2004 are stated to have reached Rs 52 billion as against the target of Rs 45 billion for the entire fiscal 2004-05 amidst claims that revenue collections have exceeded the target.

The second challenge referred to by the SBP governor is in the field of international economic relations at bilateral and multilateral level. In this context, he has mentioned that in case the United States allows Pakistani textiles and clothing to enter the U.S. markets on the same terms and conditions as given to Mexico, Central America, Caribbean and Sub-Saharan Africa, this gesture alone will generate hundreds of thousands of new jobs in the economy, boost our foreign exchange earnings and escalate our economic growth to new horizons.

Luring the foreign direct investment (FDI), he indicated that Pakistan - a country with 30 million strong middle class enjoying per capita incomes ( in purchasing power) of $ 8,000 to $ 10,000 - is an attractive market for the US investors. At $ 8,000 per capita, the income of 30 million people shall work out to $ 240 billion.

The World Trade Organization (WTO) regime is coming into force with effect from the first day of the coming calendar year and with that all quotas will come to an end and every country will have to compete with other countries in the matter of quality and the cost. The wisdom in asking for market access at this stage is not understood.

As per the data furnished in the Table 1.5-page 13 of the Economic Survey for the fiscal year 2003-04 (FY-04) released in June,2004, the population of the country is 149 million while per capita GNP is $ 652 and at that rate total GNP works out to $ 97.148 billion. The GNP in local currency has been put at Rs 5576.307 billion which is equivalent to $ 96.97 billion at $ 1 = Rs 57.50. How can the income of a 1/5th of the population be more than 2 1/2 times of the income of the entire nation? Could such an over-exaggeration can help attract the foreign investment or else make the speaker a laughing stock?

The third and formidable challenge has been stated to be to make investment in human development However, very little is provided in the budget for education and training- much lower than 4 per cent of GDP as required as per the international standard. India is much ahead of Pakistan in the field of Information Technology (IT) and is earning billions of dollars by exporting computer software etc.

When Dr. Ata-ur-Rahman was included in the federal government by the present rulers, great hopes were reposed in him that he will be able to deliver substantially in the field of at least IT. Initially, there were talks of establishment of large IT parks in big cities like Karachi and Lahore etc. and the institutions of the world class to produce and export technicians/ engineers and also to enhance export of computer software. But things hardly moved beyond the spread of internet connections to small and big cities in the country enabling the youths to waste their time in useless "chatting" and at times becoming victims of the blackmail of the cyber-café owners as we read daily in the media.

The quantum of software exports which was around $ 25-30 million annually at the time of take-over by the present rulers remains almost the same. There has also not been progress worth mentioning in the field of vocational training during the past half a decade even though we often talk of the dearth of skilled labour. The prospects of substantial progress in the field of education and training seems to remain an illusion in future too although the authorities will continue give lip-service to the issues while remembering to make a mention about it in their valuable addresses as and when warranted.

The fourth challenge relates to development of physical infrastructure- power, oil and gas pipelines and terminals, ports, railways, roads and airports. We have made some progress in the field of construction of airports. We have wasted a lot of public money -without proper planning -on the "motor-ways" which are not generating income which may suffice to cover the recurring expenditure alone. The Gwadar port project is prima-facie in dilemma because the rulers have utterly failed to resolve the local problems.

There has been a talk of large deposits of coal in Sindh but there has hardly been any progress worth the name in its exploration and utilization in power/industrial projects. It seems that only our Chinese friends are taking interest in the infrastructure projects but if we fail to sort out their security problems- the recent happenings in Balochistan and NWFP are relevant-, they may also be fed up and quit.

We are short in gas. In winter season, we have to curtail gas quota of the fertilizer factories to meet the demand of domestic consumers. At times, we provide gas to electricity producers to save generation cost despite shortage instead of addressing the problem of electricity theft even though the largest power producer, Wapda, was headed by a uniformed general for about a decade while the KESC is under a uniformed brigadier for over half a decade.

We offer and can have dialogue with India to persuade it to agree to the laying down of gas pipeline from Iran to India via Pakistan and are extending all sorts of guarantees for the safety of the pipeline in the greed of earning $500-600 mullion per annum. as a passage cost, when we are experiencing energy shortage.

Why our rulers do not negotiate with Iran for laying a gas pipeline for our own use forgetting India in case it is not interested? Our rulers are showing slackness in the matter of taking the issues relating to Baglihar dam and Wuller Barrage, being built by India in the Indian-occupied Kashmir in contravention of the Indus Basin Treaty, to the World Bank or arbitration reposing hopes in the on-going negotiations between the two countries.

If in a year or two, India completes these two projects, Pakistan will lose its share of water permanently. Any lethargy, on the advice of the Foreign Office, as is usually assumed, taking the issues to the World Bank, arbitration will be fatal and unpardonable.