AN unprecedented cacophony of discordant economic notes is preceding the announcement of the budget for 2005-06 with a spate of statements and reports from the leaders of the country and managers of the economy that leaves one wondering about the directions in which the economy is moving.
The President and Prime Minister of Pakistan have placed the GDP growth rate at over eight percent; the two highest decision making personalities of the country are confident that the bandwagon of progress is in top gear and that golden days are within touching distance of the people. Who would not be pleased with such happy tidings? But their declarations are contradicted by organizations and agencies that are supposed to keep a tab on the performance of difference components of the economic structure.
There is no disagreement about agriculture bring the backbone of the economy. The top men inform of 7.5 growth in the sector. That is music-well composed and expected considering that the farmers have never let the country down and have put in their best even against tough odds like unsympathetic nature, shortage of water, cost of labour and inputs totalling higher than income, non availability of vital inputs at crucial juncture and inequity in their distribution. Small farmers forming the bulk of the farming sector invariably remained deprived of their needs and rights. But they have delivered time and time and time again and if they have done this the last year too, it is a matter of routine.
But their figures have not been authenticated by relevant quarters. The Prime Minister’s report on the economic health of the country came during his address of the Annual Plan Coordination Committee (APCC). He declared that the country had achieved an “impressive growth of 8.35 during the current fiscal year owing to a 7.5 percent growth in the agriculture sector, 15.4 percent in large scale manufacturing (LSM) and 7.9 percent in the services sector”-statistics to fill the heat of any compatriot with joy.
However, the officials organizing the inaugural session of APCC had prepared a different information kit of achievements that put the overall growth rate at seven percent and scuttled the performance of the agriculture sector to 4.8 per cent, that of LSM to 12.6 per cent and reduced the services sector’s contribution to 6.2 per cent. It is likely and heartening that the GDP has picked up but where does one go from there?
One assumes that the most reliable source for agriculture sector’s performance is the Ministry of Food, Agriculture and Livestock (MINFAL) and that ministry, even though it is given more to optimism than realistic assessments, stated that the growth rate of the sector would remain under five per cent because high expectations from the wheat crop are unlikely to be fulfilled.
No fault of MINFAL because weather changed course from positive to negative around the time of harvesting and that is an area outside the purview of management. But its figures put a question mark against the state of the economy as depicted by the President and the PM.
One piece of information is featuring in all dispatches. Only on four occasions in the past has Pakistan has crossed the eight per cent mark for GDP growth rate. This is an important development but the previous points in progress were years 1953-54, 1964-65, 1969-70 and 1984-85. An interesting aspect of these periods is that except for 1953-54, other years were during times when military presided over Pakistan.
The factors that placed national economy in a buoyant stretched have never been identified or analyzed. Pakistan was then passing through teething troubles in every respect and if the managers of the country succeeded in obtaining good economic results, that must have been due either to nature’s help or to the spirit and commitment of the people who were at the helm of affairs at that stage. Chances are that high growth rate was the result of these two factors synchronizing for the welfare of the new nation.
But other years were of military rule and they are surprising points for economic progress. In fact 64-65 and 69-70 were troubled times under Ayub Khan, the first represented war and the second marked the only incident of a general forcing another general, to exact Field Marshal, to hand over power at gun point. The next step was defeat on the military front and division of the country. How can progress take place in these circumstances is not easy to imagine. The last time the eight percent growth figure was achieved was during the government of General Zia with Mohammad Khan Junejo as Prime Minister of Pakistan.
Junejo was at the start of his prime ministership and although his government was one of the better times for Pakistan, the statistics represent a period when he was not in command. This means that the progress was under Zia. Now, even the most ardent supporters and followers of the late general would not say that economic management under him could lead the country to progress. One is consequently constrained to conclude that certain external elements come to the aid of Pakistan at certain junctures.
While all this is confusing, the State Bank of Pakistan never misses a chance to add a confounding dimension to the proceedings. One can grudge that to SBP because it has to balance out things but its warnings, which are based on facts, are making things more complicated.
Its report for the third quarter of the current year states that inflationary pressures that had been building up in the preceding year had remained unexpectedly strong in 2004-05 with consumer price index inflation persisting in the range from 9 to 10 per cent through most of July-March period. It boils to inflation eating up for the common man whatever growth is achieved. Where exactly does that leave economy?
