‘The crux of the state policy is to tax the poor, and spend on the rich. Almost 80 per cent of the tax revenues come from the poor. The disparity is far too wide,’ says Kaiser Bengali
EVEN after 55 years, there is really nothing to cheer about as you peer closely at Pakistan’s balance sheet. A very dismal picture emerges despite our being a nuclear power and despite having made significant strides towards economic development in the early years of our existence as an independent entity. While we have not heard of the demeaning begging bowl for some time, it has, frankly speaking, more to do with international geo-politics than our own performance.
If human development and social-sector statistics are any indicators to go by, then we are one of the poorest, and getting poorer still, with seven million people living below the poverty line as recently as 1999-2001. Our teeming poor are denied even the most basic essentials like potable water, housing, healthcare and education, what to talk of a dignified existence. The question is, who is to be blamed for perpetuating and accentuating poverty?
In a recent chat with Dawn Magazine, Dr Kaiser Bengali tried to answer the question in his characteristic no-holds-barred manner. A noted independent economist, researcher and social scientist, Dr Bengali, who heads the Social Policy and Development Centre, talked candidly during the chat about Pakistan’s current economic and management mess, our one-sided twisted economic policies that benefit only the rich, the lack of meaningful land reforms, and the infamous Structural Adjustment Programme. Here are the excerpts:
Q. Who is to be blamed for what we have on ground today?
A. All the successive governments and regimes collectively because they never intended to seriously address the issue of poverty. They never had the intention. Even now, while the poor reel under one crisis after another, the elite never suffer. Sick industrial units do close down, but do you ever hear of an industrialist going bankrupt in this country? If there is a crop disaster, for whatever reasons, do you hear of a feudal lord paying the price? On the contrary, they get their loans written off, and more than recover their losses. Besides, they profit from inflation as well.
Q. How do we define and measure poverty?
A. From a purely economic dimension, to be able to have enough income to buy enough food to get enough calories (2,000 calories/day) to survive is generally how we measure poverty. The World Bank uses the dollar-a-day measurement. I would stick to the first one. This does not encompass rights, opportunities and empowerment, and if one did, the number of poor in the country would increase significantly.
In the final analysis, it boils down to lack of resources, or resources that never reach the poor. Take, for example, the denial of access to education, a skill endowment that enables a person to improve his/her standard of living. Poverty is denial of opportunities. When there is equality of opportunities, poverty diminishes. By not investing in the health and education sectors, the state has accentuated poverty.
Q. Why, in your opinion, is social development such a low priority in the country?
A. It is not a low priority for the rich, mind you. They have the best hospitals, the best schools and the best of everything else. They can even afford access to education and health facilities abroad. That America’s Boston University and Britain’s Cromwell Hospital have offices in Pakistan is evidence of a rich clientele in the country.
The poor, however, have to fend for themselves. The crux of the state’s policy is to tax the poor, and spend on the rich. Look at our tax structure. Indirect taxes account for 80 per cent of tax revenues, and squeeze the poor mercilessly, while the rich get away by paying less than 20 per cent. It is this inequality that is bothersome. The disparity is far too wide.
The housing schemes are for the rich, while the poor are condemned to katchi abadis; you have elite English-medium schools for the rich, and Urdu-medium peela schools and madrassahs for the poor. There is a whole road infrastructure for the rich to ply their cars on, but no public transport system worth the name for the poor. We can go on and on, really.
Q. Are we the worst off?
A. No. There must be other countries much worse off than us, but why compare ourselves to them? Why can’t our masses be assured of a minimum of basic services provided by the state? While there has been growth, there has been an unequal distribution of wealth, which is the root cause of rampant poverty.
Q. Looking back, where and when did we first go wrong?
A. From day one, the elitist class has held the nation captive. Interestingly, rather unfortunately, there has now been a new development, that of the military elite, which has taken on a more dominant role. They have created their own Pakistan — they have their cantonments, their Defence Housing Authorities, industries, banks, insurance companies, transport, gas stations, parking lots, home securities ... the list is endless.
For the first four to five decades, there was an alliance between the civilian elite and the military one, but the nexus has now been broken. In 1997, when the army took over WAPDA, they caught Syeda Abida Hussain stealing power, instead of a poor household in a katchi abadi; for corruption they caught chief secretary Khalid Aziz, instead of an income tax clerk; for tax evasion they caught the Lakahnys, instead of some petty shopkeeper. All along, the civilian and the military elite picked the pockets of the poor. Now the latter is picking the pockets of the civilian elite as well!
Q. What about the various poverty reduction programmes? Are their technical failures in the design, or can we blame it on the lack of vision on the part of our policy-makers for the present state of affairs?
A. The fundamental flaw all along has been that the government has always considered poverty to be a sector quite separate from the others like agriculture, trade, etc. The state has actually created unemployment and poverty through its agriculture, industrial and taxation policies, and then tried to offer a sop to the victims in the form of poverty alleviation programmes. And despite all the money put in such programmes — the food support scheme, micro-credit bank, zakat system, the Pakistan Poverty Alleviation Fund, to name a few — poverty has not gone down.
You can gauge the success, or lack of it, of these programmes by the fact that while their CEOs draw six-figure salaries, and the consultants are paid a whopping $100-600 per day, the poor have remained abysmally poor, and becoming poorer still!
Q. Should not the Structural Adjustment Programmes be held directly accountable for the present plight?
A. The basic targets for reducing the budget deficit were not wrong. But it was the approach that was anti-poor. The budget deficit could have been dealt with by raising income tax; instead, indirect taxes were raised. Expenditure reduction could have been achieved through current expenditure; instead, development expenditure was slashed. As a result, the entire cost of adjustment was borne by the poor, instead of being shared by the rich.
Donors are responsible, too. The SAP has officially been buried in the tomes of history as just another mistake. And replaced under a new identity — the Poverty Reduction Growth Fund — as often happens with donor funding programmes. Five years later, we will be discussing the failure of PRFG, and the vicious cycle would continue in that manner.
Q. Is there still a way out of the morass? How do we retrace our steps?
A. You cannot alleviate poverty without asset re-distribution. Only four per cent rural households own half the land, and half the rural families are landless. Such is the extent of inequality. The tax structure also needs to be turned on its head, so as to tax the rich and serve the poor.
Q. If things do not get changed in the misplaced hope of first achieving macro-economic stability, what do you think might happen?
A. A revolution. People need to be mobilized to fight against the existing system, and create a new state based on justice.
Q. Are the masses ready? What about the leadership? There does not appear to be much of a hope on that front.
A. The people are quite ready and the leadership will emerge from within the poor. The rise of the madrassah is an indication, since one can see no mobilization on the liberal and progressive fronts. The latter are mere armchair intellectuals sitting in their drawing rooms who will run away to the US or Canada at the first opportunity. And that just leaves the poor to come up with solutions of their own, and when they do, the rich will be swept away.
‘The crux of the state policy is to tax the poor, and spend on the rich. Almost 80 per cent of the tax revenues come from the poor. The disparity is far too wide,’ says Kaiser Bengali 
