|
| December 07, 2006 | Thursday | Ziqa'ad 15, 1427 |
Please Visit our Sponsor (Ads open in separate window)
Maternal & child mortalities
Reprieve for Shoaib and Asif
When the saver is the loser
THE saver in the bank in Pakistan is the loser. The return on deposits is so low that the deposit depreciates more than what the earnings compensate. What he gets after paying the 10 per cent withholding tax on the earnings is far less than what he had deposited vaguely hoping to gain by that.
EVEN though India has not reacted positively to the suggestion, President Pervez Musharraf’s four-pint proposal for a solution of the Kashmir dispute should be seen as part of Pakistan’s continuing quest for new ideas for breaking the ice on this issue. It should be noted that it is Pakistan alone which has been coming up with fresh ideas on Kashmir to set the ball rolling. The Indian side has never had the vision or the inclination to come up with any new proposals; to most Pakistani proposals it has either reacted negatively or chosen to keep mum. The suggestions previously made by President Musharraf were unorthodox and included a zone-wise approach and a phased withdrawal of troops. These proposals marked a clear departure from Pakistan’s known position on Kashmir, namely, that a solution of the dispute be sought on the basis of the UN resolutions that called for a plebiscite in Kashmir. India, on the other hand, has so far made no clear proposal that would indicate a departure from its inflexible position that it considered the portion of Kashmir which has been under its military occupation since 1948 is its “integral part”. The president’s latest proposal goes a step further from Islamabad’s known position and seeks to provide India with another opportunity to show flexibility and realism — as Pakistan has done, despite being the aggrieved party — and consider these suggestions as a basis for sincere negotiations.
The four-point proposal, made in an interview with an Indian TV channel, says that Kashmir will have the same borders, but people on both sides will be allowed to move freely; it will have “self-governance or autonomy” but not independence; there will be a phased withdrawal of troops, and a tripartite mechanism for “a joint supervision” of the disputed state. However, all that India’s Junior Foreign Minister Anand Sharma could say in response was that India did not believe in re-drawing borders, that boundaries could be made irrelevant, adding that India stood for peace. This is most unfortunate, since President Musharraf’s reply was in categorical terms when he said, “We will have to, yes, if this solution comes up” when the Indian TV journalist asked him whether he was prepared to give up his country’s claim on Kashmir.
The transcript of the president’s interview with the Indian TV channel NDTV is not yet available, but it is not clear what the interviewer and the president meant when they referred to this country’s “claim” on Kashmir. Equally inexplicable is the president’s reported willingness to withdraw the Kashmir case from the UN. To set the record straight, it is India, not Pakistan, which had gone to the UN as a complainant. Secondly, all along Pakistan’s position has been that it did not consider Kashmir a piece of real estate and that what it wanted was the right of the Kashmiri people to decide their own future. That is the reason why it accepted all UN resolutions that called for a plebiscite in Kashmir. The insurgency that broke out in occupied Kashmir in 1989 and the atrocities committed by Indian troops on the civilian population have only reinforced Pakistan’s stand that it is the people of Kashmir who should be allowed to determine their future destiny. One hopes India will give a more positive response to President Musharraf’s proposal, because only a solution to this issue can ensure a lasting peace in South Asia.
IT is disappointing to note that in the last four years, there has been no improvement in maternal healthcare — this according to a director of the Women’s Health Programme. The maternal mortality rate still stands at 350 to 400 deaths per 100,000 births whereas the infant mortality rate is around 83 per 1,000 births. Under the targets set in the UN’s Millennium Development Goals, Pakistan should have a maternal mortality rate of 140 per 100,000 births and its infant mortality rate should be 40 per 1,000 births by the year 2015. The under-five mortality rate is 103 per 1,000 births, making it the worst in South Asia. How the government plans to meet these targets is hard to tell, especially when a woman today dies every 20 minutes from some pregnancy-related complication. This is a shockingly high statistic, made worse when one realises that many deaths could have been prevented had pregnant women had access to adequate healthcare facilities. Around 80 per cent of pregnancies in the country are delivered by dais (traditional birth attendants) whose skills are insufficient. Many families which want to send their pregnant women to hospitals cannot do so for lack of hospitals in rural areas or that of equipment required to deal with emergencies. Despite government efforts to get fresh medical graduates to serve a compulsory one year or so in public hospitals in rural areas, few are willing to go there; either for monetary reasons or because basic facilities are poor.
If the government is sincere about meeting the MDGs, it will have to turn around its healthcare system. Hospitals need to be upgraded with new equipment. Doctors will have to be given better incentives for serving in rural areas. Other schemes like training dais to better handle births should also be considered; simple steps like teaching them to sterilise birthing equipment can reduce fatalities. Far more needs to be done in educating mothers on proper nutrition, both for her and for her newborn baby for statistics on child malnutrition are no better. The authorities need to start producing better results if they are to address the health concerns of the country’s vast majority.
INZAMAMUL Haq is delighted and understandably so. His two best bowlers have been acquitted by the tribunal hearing their appeals against lengthy bans for doping. They can now be drafted into the Pakistan squad for the World Cup. Both Shoaib Akhtar and Mohammad Asif have been let off the hook on technicalities — or “exceptional circumstances” — and their return to the side will immeasurably improve Pakistan’s prospects in the World Cup. Umar Gul and his recent heroics notwithstanding, the bowling attack that was on display against the West Indies, and for most of the England tour, is unlikely to ruffle the best in the world. In this respect at least, the return of Shoaib and Asif is good news for Pakistan cricket.
That said, it must be remembered that the tribunal’s decision was not unanimous and, significantly, the dissenting vote came from a medical expert. Even the players themselves did not dispute the results of the dope tests, which found excessive levels of nandrolone in their systems. All that has happened is that guilt could not be established because of procedural flaws — a mistrial, if you will — and for this the PCB is largely to blame. As one analyst put it, “one committee has referred to international regulations, claimed ignorance is no excuse, and punished the players. Another committee subsequently claims that ignorance is an excuse and that local regulations should be applied.” As for Shoaib and Asif, the taint will follow them. The team too will remain under intense scrutiny in the foreseeable future. Every match in which Shoaib and Asif feature and which Pakistan wins will be viewed with suspicion abroad. Pakistan cricket has its friends but the detractors may interpret “exceptional circumstances” in other ways — specifically, the World Cup and a weak bowling attack.
On the other hand, the commercial borrowers from the banks are the gainers as the profit rates in Pakistan are high, in fact the highest in South Asia. And that is irrespective of the fact whether the borrower is a small trader or a big businessman. The exporters are, however, handicapped by the rather high export refinance rate as the exports are highly competitive worldwide.
The banking spread which is the difference between the deposit rate and the lending rate is the highest in Pakistan. At 7.5 per cent the bank gains three times more than what the depositor gets and so the banks are flourishing while the depositors are losing and they have few other lucrative options with their hazards.
The State Bank of Pakistan has been conceding that this is highly iniquitous and been appealing to the banks to play fair with the depositors, but the banks have not been responding positively. Dr Ishrat Hussain, the immediate past governor of the State Bank, had repeatedly voiced the hope that the competition between the banks would increase the deposit rate, particularly when the bank is following a rather tight monetary policy. But the banks did not respond to him.
What we have in Pakistan in the commercial sector is lust to maximize profits, not competition. The businessmen follow a strategy of ganging up and prospering. If such a well-organized sector would not respond to the public demand or the State Bank or the call of reason, how can we expect the vegetable sellers, butchers or milkmen to pay heed to the appeals of the government or the protest of the consumers against their profiteering.
The smaller vested interest in Pakistan is behaving no better than the bigger vested interests when it comes to making concessions to the people. It appears more a matter of national psyche which creates shortages of essential items, while there is in fact none in reality. It is a matter of hoarding, price manipulation and profiteering.
The government is not much upset by the high lending rates of the banks. Its own bank borrowing comes cheap. In the past it used to borrow from the State Bank at half a per cent interest, but in recent times it does that at six per cent and the bank’s gain from such borrowing goes to the government as its annual profits. So in reality there is not much difference between then and now except that the format has changed.
The State Bank Governor Dr Shamshad Akhtar wants the government to restrict or reduce its bank borrowing instead of raising it to around Rs150 billion this year. Bank borrowing of the government is inflationary, so the State Bank wants the government to borrow more through the Pakistan Investment Bonds or from commercial banks. That would reduce the money in circulation and ease the inflationary pressure compared to bank borrowing which increases the money in circulation. The governor does not want the government to borrow from the national savings scheme either, as done now, as they represent domestic savings.
In short, the State Bank wants the government to do less of borrowing and manage its finances through larger and better tax collection and promote larger national savings which now stands at a low 16.4 per cent. The bank wants the government to plan its borrowing in consultation with it as done in many countries. The government should respond to this suggestion positively.
Meanwhile, she has cautioned the banks while presenting the comprehensive report of the bank for 2005-06, that she would wait until January to see whether the banks come up with fair returns to the depositors for the second half of the current year. If the half yearly or annual results disappoint her, she may move the State Bank’s regulatory mechanism to raise the rates.
The rate of economic growth can be accelerated and sustained only through the use of more domestic resources in the form of large tax revenues and higher national savings. The World Bank has stressed the importance of domestic savings in a special report on Pakistan. National savings are far more important than the government is able to concede and promote.
The Annual report of the State Bank has identified four areas of concern for the economy. They are a narrow growth base, persistent high inflation, pressures in fiscal deficit in the backdrop of a stagnant tax base and widening of the current account deficit. None of them are truly new problems. They have been there for long because half-hearted attempts were made to tackle them. Meanwhile, the problems became larger, more complex and more difficult to solve.
The growth base has to be narrow as long as the productivity of agriculture is low, the industrial base is small and the variety of exports is limited. The value-added part of the industrial production and exports are low. Persisting high inflation has been a problem since the oil price boom of 1973 and the massive devaluation of the rupee by 58 per cent then. To add to the indigenous inflation is the imported inflation. Agricultural production increases annually through higher support prices, particularly for the food crops. As a result, the State Bank now cautions wheat prices in 2007 maybe higher despite the bumper crop. The soaring world oil price has been aggravating the inflation in a big way, particularly because of the use of oil for thermal power production. World prices of food and metal have also risen substantially.
Food inflation has been high and sustained in recent times. When the State Bank report talks of some of the prices of agricultural products not coming down uniformly, the prices of 13 items led by tomato have shot up. It takes some drops of rain and dislocated traffic to push up vegetable, egg and other food prices.
The third area of concern for the State Bank is the pressures in fiscal deficit in the backdrop of a stagnant tax base. The fiscal deficit rose to 4.2 per cent of the GDP in 2005-06 against three per cent in the preceding year primarily because of the October 2005 earthquake and the far larger Annual Development Plan outlay. The tax base will remain narrow as long as agriculture which contributes to 24 per cent of the GDP is exempt from the federal income tax and so is the large income from the real estate transactions and the bumper profits as capital gains. Industry which contributes 18 per cent of the GDP pays 60 per cent of the taxes.
Political resistance stands in the way of taxing the large agricultural incomes. Rich farmers are given high support prices annually which push up the food prices and aggravate the inflation. In addition, corruption in the taxation system stands in the way of a larger tax collection. Now the National Accountability Bureau and military officers are to be used to prevent tax evasion and claiming large refunds of taxes. And that may give rise to new problems and new allegations and may make the problem of tax evasion worse.
It is time the concept of narrow tax base or fewer people paying taxes was given up in favour of a realistic assessment of the situation. Income tax may be paid by 1.5 million or 1.8 million people but the rest of the taxes which are varied and are directly or indirectly paid by all the people, including sales tax which is the largest single source of revenue. The revenue from General Sales Tax is far larger than the revenue from income tax which has been increasing. The sales tax is paid by every consumer including the poor.
In fact, when the general sales tax was introduced, it was claimed, it could help check tax evasion in a big way. Instead, we have been hearing of very large claims of refund which are not genuine, but are advanced in collusion with taxation officers including senior officials. Can the military officers be recruited to check such large refund claims? The fact is that people pay large number of taxes, but the coffers of the government receive only a part of that. The rest of the amount disappears midway, much of that into the pockets of the taxation officials. Such loopholes had to be checked by rooting out corruption in the Central Board of Revenue staff. Otherwise the tax revenues will remain small, while people complain they are paying too much and too many taxes.
Dealing with the problem of low returns on bank deposits, Dr. Akhtar asks why the people keep their deposits in current or simple saving accounts. Why don’t they keep their money in time deposits which offer better returns? The fact is that the banks which have advertised higher return on time deposits want large sums and for longer periods like 3-5 years. Not everyone can afford to lock up his money for long periods or has that much surplus money. Small amounts for shorter periods should also get fair returns than they do now.
Banks now not only pay very small returns on deposits, but also come up with all kinds of punitive charges. They often behave in an arbitrary manner with the small depositors. One bank charges Rs50 for a brief statement of accounts. Many banks expect a minimum deposit of Rs50,000 to open a savings account. Some have lowered that to 10,000 and a few to 5,000. The State Bank had hoped that competition would iron out many of the anomalies, but that has not come to pass. Instead of competition we have collusion and banks prefer consumer lending at high rates of interest to humouring the average depositor. In such a situation, the banks are able to declare 70 to 100 per cent profit. The government’s National Bank is no exception.
If the banks would not listen to the call of reason, and the pleas of the depositors, the State Bank should not hesitate to protect the interest of the depositors and promote larger national savings which is imperative now.