Elections 2018 special report: Demystifying political manifestos through a business lens

Politicians may promise us the moon and stars, but will they deliver? Dawn Business and Finance breaks it down for you.
Published July 9, 2018

With the future of democracy apparently fairly secure in Pakistan, the young electorate is learning to focus on the quality of the exercise.

The growing awareness and citizen activism in an age of vibrant social media mean political parties can no more treat the election agenda as a ritual.

Despite efforts by all parties to articulate a distinct position, the similarities remain striking. In what will likely be a trilateral contest, the three parties are promising the moon — once again — while underplaying the failings in their performance delivery.

Long-delayed manifestos seem to be little more than a result of internal contests, pitching populism versus pragmatism.

In this special report, the Dawn Business & Finance team tries to demystify electoral promises and seeks the opinion of stakeholders for a more informed debate on future options

Populism versus pragmatism

By Afshan Subohi

Democracy in Pakistan is moving from strength to strength.

As 106 million get a chance to cast their ballot on July 25, for a record third time, the perception and electioneering skills of political parties, more than their actual election platforms will decide the final outcome.

The late announcement of manifestos by major parties, (the PPP and the PML-N last week and the PTI in the week ahead) days before the general elections lends credence to the assumption that the leadership perceives the election agenda to be one of limited appeal for voters.

They know that as democracy stabilises, voters are going to judge them on their performance more than promises. PTI gave Imran Khan’s 11-point agenda for the reference for this report.

Political parties in this nascent democracy are still struggling with articulating their distinct vision and translating it into a future strategy.

They do not appear to be too keen to draw public attention to their manifestos. In the election campaign the leadership seems to be consumed in excelling in the ‘science of winning’, and the ‘art of making and breaking deals’ in constituencies to bag maximum seats.

Recognising the value of instant information dissemination with ever deeper penetration of smart phones in the country, each party has put in place a social media cell besides a regular point person for image building and coverage.

The weak internal structures of parties mean additional burden on political hierarchy of dealing with intra-party conflicts. From the sit-in at Bani Gala to protests and news conferences, the competing groups and disgruntled elements gave leaders a bitter taste of their own medicine.

A close inspection of manifestos, summarised in five points for the readers’ benefit in this report, revealed some interesting facts. Generally, they are reflective of a transformational society where conflicting trends coexist and look more like a work in progress.

The PPP, on the basis of its past positioning and the current manifesto, on paper appears to be the left of the centre but its performance has been dismal and the approach comparatively conservative of all the three leading parties.

Sindh, the province under its rule for the past decade, trails behind others but Balochistan in terms of all indicators on the current human development index.

The PTI is the most visible on social media with eradication of corruption as its theme. It has also been focusing on prompt delivery of justice and social services.

However the party is perceived to be soft on religious militancy, archaic customs, the civil-military power balance and regional trade.

Ideologically PTI seems to be on the right of both PPP and PML-N.

However, with a youthful following it conducts itself as a 21st century party capitalising technology to its hilt. It did not announce its manifesto till filing of this report.

PML-N has evolved in terms of its orientation and approach over the past three decades. From a pro-establishment conservative party of the 1980s, it has morphed into a party striving to claim more space for political elements and civil society.

It is hard to say how much of the shift was planed. Its current manifesto plays up the content on the social sector but seems to be most confident of inherent strength of the country and its potential of capital formation at a rapid pace.

With greater focus on the social content in the election agenda of all parties, a consensus seems to be emerging across the political divide in this area.

Each party pledged multiple schemes to address the issues of food, health, education, environment and employment security.

All major parties of Pakistan embrace a market economy and generally support deregulation, privatisation and liberalisation at the basic level, but the conversion ends here. They differ on sequencing and specifics. The divergence is most stark in the proposed economic strategies in the short run.

“Good economics almost always makes good sense.

The health of the economy decides the political future of the incumbent. Is Pakistan an outlier where growth rate does not necessarily generate political capital?” asked a political observer.

“On the face of it, for the electorate in Pakistan, political context precedes everything else. They instinctively side with an anti-establishment party.

But they are not stupid. For them the litmus test of economic success is their own life.

If the people opposed undemocratic regimes it was also because they were excluded from the benefits of higher growth,” remarked another commentator.

Manifestos duck the IMF question, silent on external account challenges

By Khaleeq Kiyani

Apparently, whichever party comes into power will have to bank solely on the eternal wisdom of the bureaucracy to secure more and more external loans

Despite a record external account deficit of $17-18 billion and official central bank reserves of less than $10b at the

close of the fiscal year, one of Pakistan’s biggest economic challenges appears to be absent from the radar of mainstream parties vying to take up the reins of power later this month.

The PML-N that ruled the nation until May 31 and the PPP that was in power until 2013 have unveiled their manifestos while the Pakistan Tehreek-i-Insaf (PTI) has announced its agenda for the first 100 days in power.

Illustration by Rahada Tajwer.
Illustration by Rahada Tajwer.

Apparently, whichever party comes into power will have to bank solely on the eternal wisdom of the bureaucracy to secure more and more external loans — some of them being part of the published budget documents — to meet international obligations.

These documents project inflows of foreign loans, bonds and grants close to $10b for the current year that seem highly insufficient and will inevitably need support from the International Monetary Fund (IMF) that no party wants to talk about for political reasons. The PPP gives some hints though.

Strangely, the PML-N manifesto is almost silent about external account challenges. It does not say how it plans to address them even though it states in details its economic achievements of five years and promises for the next term. No party could have had a better idea about the actual situation on the ground than the PML-N because of incumbency.

Nevertheless, it has explained its long-term plans for the external sector. For example, it plans to reduce input costs and rationalise import tariffs for industrial raw material, develop special economic zones to boost industrial production and grow exports by 15 per cent every year, rationalise the tariff structure to remove the anti-export bias and harness the potential of the China-Pakistan Economic Corridor (CPEC) to access international markets.

Conceptually, the PML-N is reviving its intentions to open debt markets for foreign remittances to increase returns on savings for over-seas Pakistanis that it could not do in the last five years, but it has no plan to address immediate financing needs.

It also aspires to market abroad tourist destinations as hotspots for foreign direct investment (FDI) and convert Pakistan’s tourism industry into a $10b one in five years to fuel economic growth and generate the much-needed foreign exchange.

The PTI’s agenda for the first 100 days refers to the subject as a critical challenge. But it does so in a passing remark without envisioned solutions while talking about all-time low exports, dangerously low reserves and an all-time high foreign debt. That’s all, no way-out proposed.

PML-N offers no plan to address immediate financing needs despite fully knowing the gravity of the crisis. The PPP gives some hints.

While a request to PTI’s economic tsar Asad Umar could not materialise, another senior member explained that the party would come out with a comprehensive plan of action for every sector within its first 100 days in power. Some of its senators are already working closely with the ministries of commerce and finance to under-stand the actual challenges and how the bureaucracy wants to lead their way in case the party gets a leading role in the next government.

The PPP appears to be taking a mature line albeit with its inherent political approach over the longer term. Blaming the previous government for leaving the country saddled with copious debt, alarming external trade and balance positions and a fictitious growth story pegged entirely on external investment coupled with white-elephant projects, the PPP sees no choice for the incoming government but to deal with the crisis.

It promises to remain cool-headed and credible if voted to power so as to take painful measures while protecting the vulnerable from the fallout.

It vouches to conduct an immediate, independent and rigorous assessment of the macroeconomic situation, including debt and external imbalances.

It promises to create a working group of Pakistani experts and initiate contacts with key global economic players for the agreement on a home-grown plan for stabilisation.

The PPP also promises to seek out a basic national economic reform agenda for the medium term — a demand former finance minister Ishaq Dar kept making without any support from other parties, including the PPP. The PPP now also calls for reviewing all free trade agreements to secure a level playing field for Pakistani exports.

This state of affairs exists despite the fact that international rating agencies have already started looking at Pakistan’s fragile external and fiscal accounts negatively.

Last week, New York-based Fitch Ratings noted increasing risks to Pakistan’s external financing risks due to declining foreign exchange reserves and a widening current account deficit. The country is already on Fitch’s negative out-look since January.

“Further and considerable policy efforts would be required to stabilise the external position, and a new government has limited time to act after the July 25 elections as external debt obligations will pick up more rapidly in 2019,” it noted.

Earlier, Moody’s had downgraded Pakistan’s rating from stable to negative on June 20 on similar considerations of a heightened external vulnerability risk.

It said reserves had fallen to low levels and would not be replenished over the next 12-18 months in the absence of significant capital inflows.

“Low reserve adequacy threat-ens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks,” it said.

Leaders' opinions on the economy

Shahbaz Sharif

The PML-N firmly believes Pakistan is heading towards a bright future as the nation is blessed with all that is needed to earn a place in the league of responsible emerging nations on the global stage. The PML-N’s last government has already carved the path. The real challenge is to address the public trust deficit on the government and the continuity of key economic policies.

We believe there is enough wealth in this country to sustain the growth trajectory. To channelise a fair portion of the private wealth for public good we reduced the depth of taxation to achieve required breadth.

According to our assessments chopped tax rates will benefit 1.2 million tax payers in the country. Earlier the high tax regime exerted a debilitating burden on professionals such as doctors, dentists, architects and other self employed service provid-ers. Small and medium enterprises, the backbone of a country’s industrial base, also preferred to stay out of the tax net because of high incidence of gov-ernment levies.

The simpler and rationalised tax regime, we believe will motivate more people to legalise their earnings and increase public resource mobilisation.

We think this is a nation of responsible people who would like to chip in their share in nation build-ing if they know that their contribution will not be wasted and instead be utilised efficiently.

There is no question of backtracking on our taxa-tion policies. If voted to power we will encourage people to partake in economic development both individually and collectively.

We are perfectly aware of the challenges on the external front but are confident that stability is achievable without compromising growth.

People who dismissed the tax amnesty scheme as bogus and predicted its failure were proved wrong. The final count of resources mobilised under the scheme is not out yet but it is public knowledge that it worked or it wouldn’t have been extended by the Caretaker setup through a Presidential Ordinance. We expect that declaration of assets abroad will partially ease the pressure on foreign exchange reserves in the short run.

The export promotion schemes of PML-N’s last government are also delivering as the country’s export earnings have been increasing slowly but consistently over the last three quarters. To contain the import bill we have increased regulatory duties on luxury items. The devaluation also served the dual purpose of dis-couraging imports and encouraging exports.

And to top everything else is CPEC. Yes we mobilised investment and facilitated funding from Chinese lenders but these loans are not booked on the government’s accounts. Under our watch capital formation not just restarted but is picking up pace in Pakistan. Do you think all this investment in power, roads, railways, bridges and ports will go waste?

We trust the youth and our entrepreneurs. If busi-ness facilitation works anywhere there is no reason for it not to work here. The rapid pace of industriali-sation will lead to exportable surpluses produced competitively. We hope to narrow down trade deficit by encouraging trade in new products and new markets in the medium term.

The question of compromising growth doesn’t arise; we will brave all challenges on the strength of spectacular growth.

Bilawal Bhutto-Zardari

First of all, the PPP runs an internal policy conversation all year round as part of our core organisational dynamic. We work with development economists, like we have through the last several manifestos to flesh out our public spending and policy costing proposals.

Pie in the sky is not encouraged beyond ten minutes, because frankly, people want delivery from democracy now, and we can’t promise what we can’t cost, plan or resource.

There are several targeted poverty alleviation and social welfare proposals in our manifesto. We are acutely aware that many of these proposals are parked in sectors which already make demands on public spending, but as I said, like the successful Benazir Income Support Programme which we launched, none were un-costed.

Public expenditure on education, for instance, which is critical and should rise to match rising higher capacity to use it, is already above two per cent of GDP, but without the critical link between education and the world of work, educated young people are left without prospects.

Secondly, our manifesto pledges for the expansion of welfare measures are built on the following principles: cost effectiveness, reprioritisation, tar-geting, and a wide usage of information technology for management and targeting.

We have carefully costed all of our proposals using existing cost structures and various scenari-os. The cost of our social policy proposals ranges from between 1.1-1.8pc of GDP depending on the policy options and spending chosen.

Thirdly, our manifesto also plans for a critical increase in the tax base. So instead of constant ad hoc borrowing to feed our spending, we must strive to ideally reach a tax to GDP ratio from 12.5pc to around 15pc over the term of the next parliament.

Additionally, we have proposed cost savings measures in sectors such as energy.

There are revenue proposals for provincial and local governments too in our manifesto. But our main thrust at the federal level will be to utilise our experience in Sindh, particularly with the revenue board, for expanding tax compliance and collection.

The most buoyant source of tax revenue increas-es in the recent years has been the increase in GST revenues on services collected by provinces.

Unfortunately, the previous government, despite a favourable external environment, such as historically low global oil prices, has left our economy in a precarious situation. Exports are down from the historic highs reached in our previous tenure.

When external balances become precarious, stabilisation is not an option but a necessary measure, whether we like it or not. But we do have some options within stabilisation of ensuring that as little of the penalty is paid by the poorest, who contributed nothing to the crisis.

Also, there are options, if exercised carefully, for resumption of growth along a more sustainable path.

In our 2008 tenure, we ensured that the poorest be protected through the establishment of the first large-scale social protection programme (BISP) in the country. In fact, as everyone knows, this programme helped Pakistan in negotiations with the IMF in the subsequent stabilisation programme.

While it is not prudent to either talk up a crisis, or to give away too many of our negotiating points at this stage, our party is of the view that we are uniquely placed to deliver a stabilisation programme that will protect the poorest and most vulnerable, return to growth responsibly and quickly, and set us on the path to sustainable growth rather than another stop-start-stop cycle.

Our manifesto specifically addresses the problem of how our economy typically moves in depressingly predictable stop-start-stop cycles because major structural reforms needed to put our economy on an inclusive growth path have not been given sustain-ability. We believe that structural reforms which we have outlined are essential for breaking this cycle.

Imran Khan

We are clear and committed towards undertaking a comprehensive package of reforms, once voted into power. The economy, with all emphasis, is one of the prime areas of focus. We believe that Pakistan is blessed with the treasures of both resources and potential; however the most devastating issue is the absence of true spirit and political will.

Rulers, one after the other have compromised the interests of the nation and treated the economy as an instrument to accumulate wealth for them-selves or facilitate the corrupt, wealthy elite that invests heavily to bring them into power.

Details of our plan to reform the economy can be found both in my “hundred-day plan” and “PTI’s mani-festo” however, I would specifically like to mention that my government will go to every possible extent to exploit our own resources to generate capital and fix our tax administration to ensure minimum leakages.

Comprehensive overhauling of the tax system to enhance the tax base without hurting production forces (both industrial and agricultural), too is a part of the priority agenda we would like to implement.

Pakistan’s economy is mostly based on indirect taxation and means of resources collection. The society by large lacks confidence in successive governments, thus the tax base and tax collection has constantly been declining. PTI will restore the confidence of the tax payers, reduce indirect taxa-tion and rationalise taxes.

Our government will seek the support from over-seas Pakistanis in the form of FDI and remittances.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018

Banks don’t easily buy into political promises

By Mohiuddin Aazim

Whether the next government will be able to fix critical economic issues and accelerate growth is something that analysts will continue to debate.

Much would depend on whether a better version of the democratic system built upon the strength of institutions emerges after the upcoming elections.

Apart from confronting domestic challenges of governance and civil-military relationship, tackling regional and global powers that are hostile to the China-Pakistan Economic Corridor (CPEC) and adjusting the national position vis-à-vis the US-China trade war will require both wisdom and nerves to boost the economy.

Laced with promises of building the economy, manifestos of the two major political parties — the PPP and the PML-N — are out now. Imran Khan of the Pakistan Tehreek-i-Insaf (PTI) has outlined an ambitious 11-point plan for reforming the economy. But a formal party manifesto was not launched until July 6.

Even a cursory look at the 2018 manifestos of the PPP and the PML-N is enough to make one believe that economic progress will accelerate if either of them comes into power. The same can-not be said about the PTI as the party has yet to present before the nation its detailed economic programme.

In general terms though, the PTI has talked about boosting the economy in multiple ways. It has put more emphasis on fighting corruption.

From initiating mega housing schemes to bring-ing about an agricultural revolution, pursuing energy sector reforms, restructuring state-owned enterprises, reinvigorating trade and industry and developing natural resources, there is a long list of promises in the manifestos of the PPP and the PML-N.

Some of these promises are also included in Mr Khan’s 11-point agenda.

It is of immense interest for banks to know which political party would tighten the fiscal belt quicker than others because that would have a direct bearing on their business

Each one of these promises is lucrative enough from the bankers’ point of view.

After all, delivering on every promise should require banks to play a proactive role. That certainly means more business opportunities, higher revenues and fatter bank profits.

The PML-N manifesto even talks about “providing financial markets a boost” and “fostering a culture of innovation and competitive advantage”.

“Our government would actively facilitate business-to-business linkages between the Chinese financial sector, Chinese industries and Pakistani entrepreneurs,” boasts the party manifesto, adding that “The availability of risk capital for new businesses creation would be assured in coordination with the Chinese government and banks.”

These are big promises capable of creating lots of opportunities for banks and development finance companies.

But bankers are very practical, pragmatic people.

They keep their eyes fixed on the bottom line. They know that words, however fanciful and promising, cannot help them do better and make more money.

“It is the fulfilment of those words and fuller implementation of the given programmes that can impact the overall economy and the banking sector,” said the head of one of the top five banks.

For banks, perhaps the most essential question is which party has the finest plan for improving fiscal management and whether it has the spine to implement that plan.

Most economic ills originate from fiscal mismanagement. Once fiscal imbalances start taking a toll on the economy, banking institutions also feel the heat.

Similarly, a slower pace and the poorer quality of economic growth have a negative effect on sustainable growth of the financial sector.

Another important thing for banks is to know which political party can be expected to give more autonomy to the central bank and spare the financial system unnecessary involvement of fiscal authorities in monetary matters.

But sadly, the manifestos don’t offer substantial hints about it.

Similarly, it is of immense interest for banks to know which political party would tighten the fiscal belt quicker than others because that would have a direct bearing on their business.

During the past decade, excessive government borrowing from banks has perhaps done more harm than good to the economy by crowding out the private sector.

But it has also remained a constant source of interest income for banks via zero-risk investment in government securities.

Keeping these points in mind, scanning the economic sections of the manifestos of the PPP and the PML-N as well as broader economic uplift promises by the PTI can be very helpful.

All these parties, for example, have talked about launching big housing schemes and revolutionising agriculture.

“Unless the next government delivers on these two promises, how can banks benefit by lending more to housing and agriculture sectors?” said a senior executive of Habib Bank.

“If the party in power can honestly pursue its manifesto plans, banks happily cooperate with it as long as their participation in the implementation of those plans makes sense.”

Sensing a growing demand for qualitative improvement in public life, political parties have also incorporated in their manifestos new plans for enhanced service delivery in social sectors, like health, education and women and youth empowerment.

Combine this with the talks about promoting small and medium enterprises (SMEs) and exploiting economic potential of the CPEC, and you get a picture of how banks can benefit in many ways if the next government fulfils its electoral promises.

All this means banks will have enough opportunities for new and possibly huge project and trade financing, consumer lending and investment and banking advisory businesses, senior bankers say.

But many of them doubt the ability of the three key political parties when it comes to fulfilling their promises.

After the elections are over, top bankers will be analysing the post-poll political situation for forecasting various scenarios that can emerge following the rise to power of a particular party or the formation of a coalition government.

Bankers say the purpose of conducting such in-house exercises is to perceive the economic and market environment, assess peculiar risks and position their institutions accordingly.

Stockbrokers eye the new kid on the block

By Dilawar Hussain

A split mandate remains a cause for market concern.

Perception is stronger than reality. But between the Pakistan Peoples Party and the PML-Nawaz, the investor community has forever favoured the latter.

The fear of PPP policies struck in the hearts of the industrial and investor classes remains rooted since its founder, Zulfikar Ali Bhutto, released its first manifesto in 1970.

Under the populist slogan of “Socialism is our economy,” Mr Bhutto vowed in the 1970 manifesto to nationalise all major industries.

He affirmed that under private ownership those were the sources of excess profits, inefficient production, wastage of resources and unhindered exploitation of workers.

“Public sector will include not only large-scale production of gas, oil and coal but transport, railways, shipping and airways.”

In the party’s 1977 manifesto, the PPP recalled that 10 basic industries, including life insurance and banking, were nationalised on Jan 2, 1972.

Although nationalisation has been rolled back slowly over the years, the damage was irrepara-ble and so was the loss of confidence by the business and industrial classes in the party’s economic policies.

But it was during the first Benazir Bhutto govern-ment that the doors of the stock market were thrown open to foreigners and fund managers in major international capital markets.

They rushed in to lap up low-value and high-growth Pakistani stocks,

enriching the broker community in the process. Yet it did nothing to restore investor confidence in the party’s long-term economic policies.

A week earlier, PPP Chairman Bilawal Bhutto-Zardari released the party’s manifesto that pledged to “curtail hunger, rebuild the country’s economy and foster harmony between different institutions of the state”.

By contrast, industrial, business and investment classes have generally favoured the PML-N.

It is because of the people’s perception that the party is more aware of the problems and needs of the economy since its leadership, the Sharif family, belongs to the business class.

The perception is that their policies help improve corporate profitability, which reflects in the escalation of stock prices.

To be fair, the PML-N government in its first term came up to some expectations with regard to its business- friendly image. But history did not repeat itself when the party was again voted to power in 2013. The earliest disappointment was the anti-stock market budget.

While setting all demands of the bourse aside, investors were saddled with the burden of more taxes.

It was followed by the government’s inability to attract foreign fund managers to the Pakistan equities despite its status upgrade to the emerging market from the frontier market by MSCI.

That episode in May 2017 has since cast a pall of gloom over the country’s capital market, which posted a negative return of 10 per cent in 2017-18.

It became the worst-performing emerging market from being the best-performing one a year earlier when it gave out a fabulous return of 44pc.

The PML-N government under the stubborn Finance Minister Ishaq Dar did nothing to bail out the market.

The regulators he appointed were more interested in framing rules and regulations than taking steps to improve the country’s ranking in the Ease of Doing Business Index, resulting in smaller profits and nil dividends.

On July 5, PML-N President Shehbaz Sharif unveiled the party’s manifesto for 2018. He did not dwell upon any economic and industrial issues, but highlighted the supposed end to loadshedding and the improvement in the security situation.

Of the five major points in the latest manifesto, two seem to be dedicated to the economy: “Consolidating growth by expanding industrial base, capitalising on CPEC” and promoting regional trade. But it is the new kid on the block that most polls suggest.

Experts weigh in

Salim Raza

Former governor of the State Bank of Pakistan

The exchange rate should be left to find its own level, so that central bank reserves are used only to smooth daily fluctuations rather than to defend a particular rate.

Tandem adjustment in interest rates will be warranted to counter the inflationary impact of rising international energy prices and a weaker rupee.

Talks with the IMF must commence post-haste; anticipated withdrawal of quantitative easing has already led to rising costs for emerging-market sovereign debt, and further commercial debt is undesirable.

Administered prices have led to excess wheat and sugar stocks. These must be offloaded at current world prices. The holding cost of these stocks simply adds to the eventual loss the country will have to absorb.

Saeed Ahmad

CEO of National Bank of Pakistan

There are export promotion incentive schemes, which have not been fully implemented. These should be implemented.

The refund of dues from the FBR and other government entities to export houses should be ensured.

The government should diversify exports by including items such as halal food, mining and medical research services. IT services should be streamlined for exports.

The export of value-added goods, rather than just raw material, should be promoted.

It should encourage export industries and import substitute items. The emphasis should be on export-driven growth prospects rather than domestic consumption-led growth.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018

Being the hand that guides industrial growth

By Nasir Jamal

Illustration by Rahada Tajwer.
Illustration by Rahada Tajwer.

“When it comes to the industry, it doesn’t really matter if a party has a better plan than the others,” says a former president of the Lahore Chamber of Commerce and Industry.

In Pakistan, election manifestos mostly employ political sloganeering and rhetoric to solicit votes on the polling day rather than laying out carefully planned strategies to address the political, social and economic challenges facing the people.

As we head for another election later this month, the question is if any of the three main contenders for power — Pakistan Muslim League-Nawaz, Pakistan Tehrik-i-Insaf or the Pakistan People’s Party — has a real plan to attract new investments and revive the export-oriented manufacturing that has been declining for the last many years.

A cursory study of the election manifesto of the PML-N as well as the “plan” the PTI intends to implement during the first 100 days if voted into power shows that these parties may have economic targets they want to achieve over the next 5 years, but not a strategy to pull it off.

The PPP, which is often considered cut-off from the country’s new economic realities with anti-business bias due to its nationalisation policy of the 1970s, on the other hand has briefly laid out a combination of its targets for the manufacturing and export indus try and strategy to meet them.

The PPP manifesto for election 2018, for example, talks of building a national consensus for what it calls a basic national economic reforms agenda to be prepared by a joint parliamentary committee to ensure a cross-party commitment to broader macroeconomic reforms.

It then moves on to specific actions it intends to take to improve industry’s competitiveness and boost dwindling exports.

These include rationalisation of surcharges on five major manufactured exports, including textiles, a review of all free trade agreements, transfer of control over Export Development Fund (EDF) to exporters for better management, establishment of exclusive economic zones for foreign companies that will be required to export half of their production, agreements of currency swaps with Pakistan’s trading partners and encouragement of foreign buyers and brands to open their buying houses in major cities.

Moving on the PPP also has a plan for closed factories and intends to rehabilitate sick industry through a scheme to be formulated with the help of the central bank. It promises to ensure availability of energy at affordable prices to ensure the industry’s competitiveness in the world markets and prevent future mass industrial closures.

The PPP that saw exports peak to $25 billion from $20bn under its five year term between 2008 and 2013 is also aware of the narrow product and market base of the country’s exports and plans to work on these issues to reduce dependence on textiles, which form 55-60 per cent of export shipments.

The party isn’t averse to subsidising existing export industries to sustain them and encourage new industries to push exports for a limited time.

The plan promises industrial restructuring to increase the value added intermediate and capital goods industry by ensuring financing and finding niche markets outside the county.

As we head for another election later this month, the question is if any of the three main contenders for power has a real plan to attract new investments and revive the export-oriented manufacturing that has been declining for the last many years

Interestingly, the PPP is the only party that speaks about greater regional economic and trade integration by separating trade from other geopolitical issues.

The PML-N that launched its manifesto for the next election last week also talks about boosting industry and exports but in far less clear terms than the PPP. It vows to grow exports by 15pc annually if re-elected on July 25 by improving ease of doing business for manufacturers and exporters. It promises to cut input costs for exporters by rationalising import tariffs on their raw materials, remove anti-export bias, harness opportunities offered by CPEC to increase access to international markets, continue the support package it had announced for exporters and so on.

Simultaneously, it has a plan to push the investment to GDP ratio to 22-25pc to boost industrialisation in the country and create 2million jobs a year.

Private investors will be facilitated to invest in new projects through establishment of special economic zones, operationalisation of a national single window to reduce trade time and cost by bringing 20 government departments and agencies under one roof, checking smuggling and under invoicing of imports and cutting corporate tax to 25pc in five years.

Also, small and medium industries will be helped to access finance and form joint ventures with foreign companies around the CPEC.

Businesspeople insist that the PML-N did not take their input before writing their election manifesto. This is despite the fact that Punjab’s textile industry invited the heads of the three parties.

“We invited the heads of these parties to give our input for the revival of manufacturing and exports. Both Asif Zardari and Imran Khan turned up. Shahbaz Sharif didn’t.

“After listening to our presentations, both the PPP and the PTI promised to truly zero rate exports, help revive over 100 factories — mostly in Punjab — closed down because of energy shortages, higher gas and power prices and bad government policies, and reduce the cost of energy to regional level so that our exports become competitive in overseas markets,” the Aptma group leader said.

The third contender for power, PTI, has yet to give its programmer for the polls. But its plan that the party wishes to implement in its first 100 days in power indicates that it plans to revive manufacturing and exports through reduction in taxes and energy rates, payment of export refund claims and so on.

Additionally it intends to make interventions in the housing market to kick-start the industries associated with the construction sector.

Many businesspersons argue that it is a mistake to read too much into election manifestos. “At the end of the day, these are just slogans and political rhetoric to charm voters,” a former president of the Lahore Chamber of Commerce and Industry said on condition of anonymity.

“When it comes to the industry, decisions are made according to how much clout a particular industry enjoys over the sitting government and its economic team.

Manifestos become meaningless and forgotten once a party comes into power. So it doesn’t really matter if a party has a better plan than the others.”

Despite reduced urgency, reforms remain top priority in Power

By Khaleeq Kiyani

Five years down the road when they return to the electorate, addressing electricity shortage is no more an issue for the PML-N and PTI even though it still remains a challenge in the eyes of the PPP

Before the 2013 general elections, energy shortages and loadshedding were among the top most chal-lenges facing the country, and the major political parties — PML-N, PPP and Pakistan Tehreek-i-Insaaf (PTI) — laid out steps in their manifestos to overcome them as a top priority besides reforming the governance structure of the sector.

Five years down the road when they return to the electorate, addressing electricity shortage is no more an issue for PML- N and PTI even though it still remains a challenge in the eyes of the PPP. Even though the urgency has lessened, reforming the sector remains among the top priorities of all parties.

All the three major parties, nevertheless, appear to be feeling the need to improve the fuel mix and reduce tariffs even though they have different lines of action. They also equally want to transform state owned power companies — generation companies to distribution companies — as a means of improving the energy sector and addressing the chronic circular debt problem.

Perhaps because of its hands-on experience, the PML-N has a far better, more comprehensive roadmap for the power sector on paper, including initiatives it miserably failed to implement in the last five years, privatisation being the most important.

Followed by this is the PPP that also has a comprehensive plan for the power sector including many tall promises it could not deliver on in its five year 2008-13 term — providing electricity to every citizen at an affordable cost and materialising the Iran-Pakistan gas pipeline.

PTI trails behind with a significant lag both in quality of objectives and preparedness. It has not yet spoken in detail about the power sector and is currently in the learning process through various standing committees of the senate. Its three prominent senators Nauman Wazir, Shibli Faraz and Mohsin Aziz have developed a 360 degree-view of the entire power and energy sector owing to their leading different standing committees.

It plans to begin with Imran Khan’s 100-day plan if voted to power and then come up with a detailed policy direction and implementation plan. Individually Senator Nauman Wazir is convinced the smallest possible transformers must be introduced and feeders should be leased out on a revenue sharing basis for billing, recovery and power supply, starting with the most inefficient Peshawar Electric Supply Company.

The party, without explaining how it planned to go about doing so, wants to start reforms on an emergency basis in Gencos and Discos and begin work urgently to shift towards sustainable and affordable energy.

It also loftily talks about addressing the root causes of circular debt and initiate regulatory reforms designed to move away from rent seeking models and towards increasing system efficiency and recovery of losses.

In its next term (2018-23), PML-N aims to transition Pakistan from sufficiency to breakthrough efficiency, affordability and sustainability. It promises to introduce IT based monitoring and evaluation systems to provide operational and financial information of power companies on a real time basis and pursue privatisation of Discos.

It also promises universal access to power through innovative on-grid and off-grid solar and cluster based mini grid solutions by ensuring targeted subsidies and concessional agricultural tariff.

“The cost of electricity would be dramatically decreased through retiring and replacing inefficient plants, reverse tariff biding, smart metering, and developing accountability in an open access and competitive market place,” the PMLN promises for the next five years.

While the PML-N has been imposing surcharges to block declining electricity rates to shift funds to cover losses and theft, it now promises to ensure reduced costs to consumers and to rationalise tariff.

It plans to add another 15,000 megawatts by 2025, including 5,000-7,000MW through Thar coal and hydroelectricity to be able to reduce tariffs by creating a comprehensive plan for water storage and run of the river hydropower generation.

The PPP also wants to provide electricity to all as a basic need irrespective of urban-rural settlement. It has a four-pronged strategy to address the energy requirements of a growing population and economy “on a sustainable basis, by providing adequate, affordable and progressively cleaner energy to all.”

For this, it promises to fully utilise all domestic resources of energy, including Thar coal, natural gas and hydropower, and ensure maximum exploitation of Sindh’s rich wind corridor for at least 12 hours a day to move away from imported fuels.

“By 2023 wind and solar parks in Sindh will add at least 5,000 MWs to the national grid,” the PPP promised in its manifesto and pledged to ensure the Bhasha Dam project, which has remained stalled so far, is taken to quick completion along with resuming work on the Pak-Iran pipeline. It also promises to increase the share of renewable energy in the energy mix to 5pc in five years.

Business leaders' persepctive

By: Kazim Alam

Q: Do you think the next government should compromise growth to achieve stability? Growth consolidation would likely entail lower taxes, a big development budget and a higher fiscal deficit. Or would achieving economic stabilisation by reversing tax breaks and cutting development spending would be a better approach?

Q: How can the next government best address the challenges of the external sector? Can the decline in reserves be contained? How do you view the rising borrowing from Chinese lenders? Do you favour a return to the IMF?

Ghazanfar Bilour

President, FPCCI

A1: Pakistan’s economy has the capacity to grow at a high rate if it is managed properly. Since 2013 -14, exports and remittances contributed $111bn and $98bn, respectively, while the country received $ 9.5bn in investment inflows. Tax revenues amounted to Rs3.8 trillion last year. All these indicators reflect that the economy has potential to grow without taking foreign aid. However, it takes time and prudent policies to achieve sustainable economic growth.

It will not be possible to finance government expenditure without enhancing the tax base. The current situation reflects that the fiscal deficit will keep widen-ing unless the government creates some fiscal space by raising revenues. The government may not compromise growth while sustainability remains a prerequisite for achieving development.

A2: Pakistan’s reserves are a mix of borrowing and foreign earnings. During the past five years, a gradual slide in the country’s exports cost cumulatively $13.8bn. Pakistan received $23.6bn loans from the IMF during the same period. Pakistan and China have signed a currency swap agreement of approximately $1.5bn to facilitate bilateral trade. But given the trade deficit with China, borrowing from Beijing will not solve this issue.

Pakistan has two options. It can either manage the economy on its own or go to the IMF to achieve stability. However, we observe that the country received both IMF support and foreign investment for mega projects during the past five years. But the macroeconomic situation is still unstable. We have to rely on our own resources and manage the economy ourselves.

Irfan Wahab Khan

President, OICCI

A1: Pakistan needs consistent economic growth with stability in its policy and actions. The next government must give priority to the economy and address other political and administrative issues later on. The new leadership must ensure that issues with economic fundamentals are comprehensively addressed in the first two years of the term with input from all major stakeholders, like the Overseas Investors Chamber of Commerce and Industry (OICCI). This will require commitment and participation from all leading political parties so that a change in government every few years does not result in any fundamental change in economic policies.

We think that higher economic growth can be achieved by leveraging technology and promoting digitisation in key economic sectors. The next government should seriously engage with business stakeholders to build a better economic and business environment for the economy to thrive. Transparent, consistent and predictable policies are critical for attracting foreign direct investment (FDI) in manufacturing and key strategic projects with a longer maturity timeframe.

A2: Challenges on the external front are serious, but not insurmountable. Foreign exchange reserves can be boosted through a smart but urgent review of trade policies as well as attracting funds held overseas by the Pakistani community — a process that has already been initiated under the ongoing amnesty scheme.

The OICCI recommends that there should be a Private- Public Dialogue Forum headed by the prime minister. It should comprise key stockholders, like the OICCI and government leadership, to period-ically review key economic challenges. We expect the new government to introduce a forward-looking, longer-term export policy with significant incentives for the diversified value-added product range and destination, with an increased focus on growing regional trade.

The government is advised to engage world-class consultants for assistance on the export diversification strategy and attracting FDI in export-able sectors, including from China. Moreover, there is a need for restricting imports by creating a positive environment to boost domestic production and revise many free and preferential trade agreements in the country’s interest.

We do not favour going to the IMF because of tight conditions it entails. Nor do we favour frequent borrowing from China as it creates a bad precedent and defers tough measures that policymakers need to take. We favour self-sufficiency, which may be painful but dignified.

Many countries in the region, including India and Malaysia, have prospered without seeking IMF assistance despite tough challenges. Pakistan should also show determination and good governance to navigate through challenging times.

Ehsan Malik

CEO, The Pakistan Business Council

A1: The next government’s key priority should be to achieve macroeconomic stability, with the twin deficits – external account and fiscal – as the main areas to focus on. There are no shortcuts here, but the first thing that the government must do is to curtail its expenditure. Reversing the tax breaks should be the last option. High rates provide a bigger incentive to evade taxes. The country needs a broader tax base. However, in setting the tax rates for different classes of taxpayers, the globally followed principle is to tax corporations at a lower rate than individuals. Incorporated entities promote higher standards of governance and accountability.

Taxing companies at a lower rate prioritises job creation over consumption, which is already high at 80 per cent of GDP and has encouraged imports and undermined domestic manufacturing due to fundamental flaws. One consolation for the new government is that tax revenues will be bolstered by devaluation. However, an International Monetary Fund (IMF) programme is inevitable.

A2: Successive governments have indulged in temporary fixes, which at best amount to first aid when the economy needs drastic surgery. Relying on short term loans is not a sustainable solution. China, the provider of such assistance, is also the source of Pakistan’s largest trade deficit — over $15 billion per annum or $1.25bn a month. Short-term loans from Beijing help sustain exports from — and jobs in — China whereas the need is to create jobs in Pakistan for value-added exports and import substitution.

Implemented intelligently, an IMF programme — along with structural reforms to fix fundamental flaws that have undermined domestic manufacturing — will restore the balance on the external account.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018

Manifestos promise the moon, but misgivings persist

By Mohammad Hussain Khan

Illustration by Rahada Tajwer.
Illustration by Rahada Tajwer.

Two of the major political parties have come up with their manifestos for the 2018 election. Both documents make a number of commitments to the farming community.

Agriculture is a now devolved subject. Provin­­ cial governments oversee this sector after the 18th Amendment. There is a greater need for them to address basic issues that confront farmers.

For small and medium-size farmers, growth in the agriculture sector is directly linked with strong institutional oversight, which is currently missing. The federal and provincial governments avoid taking initiatives to ensure input cost control and adequate commodity prices.

The PML-N also makes many promises in its 2018 manifesto and reminds the electorate about the initiatives it took in its last term to serve the farming community.

The PPP has devoted a large part of its manifesto to the agriculture sector and related subjects like water and livestock. It discusses sectoral issues in greater detail this time around than in its 2013 manifesto.

The PPP manifesto talks about an agricultural revolution and seeks to address the issue of support prices. It aims to overhaul the entire support price system and improve grain storage by making the required investment. The party made a similar commitment in its 2013 manifesto when it pledged to announce support prices for the four major crops: sugarcane, wheat, rice and cotton.

But it could not honour its commitment. On the contrary, farmers struggled to get the indicative price for the sugarcane crop fixed by the PPP government. The row over the sugarcane price for the 2017-18 season continues to date as the apex court has yet to adjudicate on it. The Sindh government appeared to be taking sides with sugar mill owners.

The PPP says it will extend the price support system beyond the wheat crop to achieve higher diversification in the country’s crop portfolio. It will provide farmers in non-irrigated areas with an opportunity to benefit from this mechanism for the first time. The PPP intends to complement it with an innovative crop insurance scheme. It also says that farmers will be allowed to store their produce in government-run storage facilities for onward sales at a later stage.

The PPP has come up with the idea of a Benazir Kisan Card, which promises to introduce crop insurance and ensure the provision of subsi-dised fertiliser and electricity for small farmers. It will be good if the party indeed overhauls the entire support price system to include a range of crops as well as the announcement of prices ahead of the sowing season.

According to Sindh Abadgar Board (SAB) Vice President Mahmood Nawaz Shah said political parties make lofty commitments, but farmers end up getting nothing in the absence of an implemen-tation plan.

As for depleting water resources, the PPP is targeting efficiency and conservation besides controlling water-logging and salinity, improving water quality management and augmenting supply by investing in new technology.

As far as subsidies and the conservation of groundwater supplies are concerned, the PPP made a pledge in 2013 too when it announced that it would “hold periodic consultations with all stakeholders to fund farm subsidies for the pur-pose of arresting waterlogging and salinity and conserving groundwater supplies”. But nothing to this effect happened in last five years.

For the conservation of water, the PPP plans to focus on the lining of canals, rainwater harvesting, effective storage and irri-gation system, including the promotion of drip irrigation.

Currently, two World Bank-funded projects – the Sindh Agriculture Growth Project and the Sindh Irrigated Agricultural Productivity and Enhancement Project – are being executed.

These projects cover components like the lining of canals and the improvement in rice, chilli, onion and date crops. According to a safe estimate, Sindh has 45,000 watercourses. But not even 30 per cent of them are completely lined.

Mr Shah said the 2013 manifesto was never implemented. “Take the example of the PML- N. It says it has provided farmers with 7,000 laser lev-ellers. Our counterparts in Punjab might have received them, but we have got none here in Sindh,” he said. However, he said he appreciates the fact that the PPP has decided to invest in stor-age facilities — something Sindh currently lacks.

The PML-N had announced a Rs341 billion Kissan Package under which subsidies at the rate of Rs5,000 per acre were to be provided to cotton and paddy growers before the local government election in 2015.

Provincial governments were supposed to share the 50pc cost of the subsidy. While Punjab-based farmers received the subsidy, their counterparts in Sindh could not get it as the provincial government did not pitch in its share.

Sindh Chamber of Agriculture (SCA) leader Nabi Bux Sathio appreciated the fact that the PML-N seeks to invest 1pc of gross domestic product in the agriculture sector. However, he said the PML-N and the PPP did not explain explicitly as to how they intend to reduce the cost of input to ensure affordable commodity prices. Growers remain at the mercy of buyers due to the missing institutional oversight, he added.

Both parties talk about access to farm credit.

However, Sindh-based growers have had a bitter experience with agriculture credit. Mr Shah claimed that up to 80pc of agriculture credit is diverted to Punjab. Farmers want this disparity in credit disbursement to end forthwith, he added.

The PPP also failed to do anything tangible about research and development for seed improvement. There is overreliance on the hybrid variety of seed in the paddy crop and the BT variety of cotton. The plan listed in the 2013 manifesto about on-site, field-oriented research went nowhere.

One could only hope the two parties will honour their promises to their constituents this time around.

With shallow reserves, the next govt is in deep water

By Ahmad Fraz Khan

View of the Rawal Dam, Islamabad. The country has been in the grips of a severe drought for the last few months, setting new records of abysmal river flows and reservoirs drying up.
View of the Rawal Dam, Islamabad. The country has been in the grips of a severe drought for the last few months, setting new records of abysmal river flows and reservoirs drying up.

The current water scenario is so alarming that it can change the very scope of agriculture, wreaking havoc on livestock and human lives

Almost all parties now realise the critical role of agriculture in national development. The Pakistan Muslim League-Nawaz, pledges to continue down the same path.

The Pakistan People’s Party, more prone to pandering to rural voters, also has elaborate plans for its next stint in power. The Pakistan Tehreek-i-Insaf is now promising to address the “agriculture emergency” if voted to power.

However, with the way things are going, the parties might want to consider declaring a “water emergency” before they do anything else on the agriculture front. The current water scenario is so alarming that it can change the very scope of agriculture, wreaking havoc on livestock and human lives.

The country has been in the grips of severe drought for the last few months, setting new records of abysmal river flows and reservoirs drying up. As the Indus River System Authority (Irsa) termed it, the country is in a “critical phase” as far as its water is concerned.

According to Irsa, Pakistan had only 0.89 million acre feet (MAF) of water remaining in storage on July 2 as against 6.81 MAF on the same day last year; the 10-year average for the day stands at 6.2maf.

Last year, river inflows were recorded at 396,000 cusec, while this year they plummeted to 259,000 cusec. All calculations by Irsa and provincial experts, even after factoring in low activity, were grossly inaccurate for the first half (April-June) of the Kharif season.

They had anticipated a water shortage of 40 per cent during this period, but the provinces in the country faced upwards of 60pc shortage this season. Due to this poor availability, the national reservoirs have been empty for the last five months since Feb 25.

For the first time, there are chances that both dams may run dry completely; Mangla for sure and Tarbela as well probably. This situation has not emerged overnight but has developed over decades. According to the Pakistan Council of Research in Water Resources, Pakistan reached the “water stress line” in 1990.

It crossed the water scarcity line in 2005. It would go dry by 2025 if the present conditions persist. Pakistan would be the most water-stressed country in the region and 23rd in the world by 2040.

There have been plenty of reports by the World Bank, USAID and other agencies warn-ing the country of this emerging disaster, which has now manifested itself fully. The Supreme Court of Pakistan has also begun highlighting the crisis to help parties find solutions.

Just last week the Supreme Court directed doubling the efforts to build the Diamer-Bhasha and Mohmand dams. Fortunately, the Water and Power Development Authority (Wapda) is already in the process of appointing consultants and finding contractors for both of them.

It may be suggested that the next govern-ment adopts a two-pronged policy approach: developing reservoirs and rationalising the use of current supplies. The main point of focus for the next government should be short-term mea-sures that yield immediate results.

For that purpose, one proposal could be to deal with water-intensive crops like rice and sugarcane. They consume excessive water and are then exported at cheaper rates. If they can be reduced to domestic use only, the country may have some spare water.

There is then a whole range of on-and off-farm activities that could be used to rationalise water usage. Rain harvesting is one of them; farmers can spare some land on their farms to store rain water and utilise it at critical points of agriculture activity.

It would not only help agriculture but help replenish underground water as well. Punjab has been pumping some 35 MAF out every year but only 30 MAF is recharged; this difference of 5 MAF is disastrous for the under-ground aquifer levels, which have declined to the point of rendering pumping commercially nonviable.

These measures would require an elaborate regime of policy, rules and regulations, along with required financial incentives and massive political will to back them up. How far the next government succeeds, only the next five years will tell.

Farmers' perspective

By: Amjad Mahmood and Mohammad Hussain Khan

Unlike developed nations where manifestos of political parties are taken as their respective agendas after coming to power, local farmers are not upbeat about the agriculture plans being presented by various political entities during the ongoing election season.

In view of the parties’ past performance during their respective tenures in power, the farming community considers the manifestos “purposeless” documents meant only for discussion amongst political competitors and for making “false” promises with the electorate.

Ebadur Rehman Khan

Farmers’ Associates Pakistan

Ebadur Rehman Khan, a senior member of the Farmers Associates Pakistan (FAP), which represents big landlords, declares the manifestos as each other’s copies. “If you mask the logos and some specific terms used by the parties you cannot differentiate which plan has been given by which party. And this makes one believe that the parties are giving future agendas only as a formality with neither being aware of, or clear about, issues.”

All three major political parties — the PML-N, PTI and PPP — are talking of value addition in agriculture, improving productivity and reforming the irrigation system by introducing drip irrigation and other water conservation steps.

But despite remaining in power at least in provinces during the last five years none of them worked out the quantity of water each crop needs and how the inputs required for it could be subsidised, or if it’s feasible to replace this crop with the other in the specific environment, bemoans Mr Khan.

Chaudhry Nisar

Kisan Board Pakistan

Chaudhry Nisar, president of the Kisan Board Pakistan, which represents small landholders, regrets that no revolutionary announcement like providing free electricity to agriculture sector, as in India, has been promised by any political party. He points out that livestock, a major sub-sector of the agriculture sector, has been ignored by all political players.

He rejects the Kisan Card Scheme as a waste of public money in the name of farmers for it doesn’t benefit the small growers. Chiding the price support mechanism promised by the PPP, he recalls that sugarcane growers have been the worst hit in Sindh, the province governed by the party during the last 10 years.

In Khyber Pakhtunkhwa, where PTI was in power, both sugarcane growers and tobacco growers have been facing exploitation at the hands of the related industries.

He regrets that the PTI didn’t bother to fulfil the formality of giving an agriculture sector plan in the 2013 manifesto though the three big names in the sector — most senior FAP leader Shah Mahmood Qureshi, known progressive farmer Jehangir Tareen, and Asad Umar, one of the top personalities in agribusiness — have been and are senior party leaders and part of its decision making body.

Syed Mahmood Nawaz Shah

Sindh Abadgar Board

Sindh Abadgar Board Vice President Syed Mahmood Nawaz Shah believes that the agriculture sector has recorded a negative growth in the last five years.

According to him the agrarian economy has badly suffered due to missing political will, and he regrets that the sector has not yet been linked with the China Pakistan Economic Corridor (CPEC).

He also notes that for almost a decade now the agriculture sector has been a devolved subject, in provincial control and should be managed with proper stakeholder input; yet apparently, farmers’ suggestions, sought by the government, remain unimplemented.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018

Change skips education

By: Zahra Anum

THE new PPP slogan is in-dicative of the priority all po-litical parties seem to have assigned education in the current elections. Emphasising ilm, or education, with “Roti, ka-pra aur makaan,” the age-old slogan’s latest iteration is now a poetic “Roti, kapra aur makaan; ilm, sehat, sab ko kaam”. (Bread, clothing and shelter; education, health and jobs for all.)

At first glance both the PPP and the PML-N manifestos seem to have certain aspects in common. They reiterate the promise of ensuring education for all, emphasise the need for improved facilities and quality in delivery.

Both parties go on to promise increasing education spending to a certain percentage of gross domestic product (four per cent for the PML-N and 5pc by 2025 for the PPP), highlighting the importance of equitable access for girls, introduc-ing curriculum reform and hiring teachers on merit.

But in order to actually understand the road map laid out by the parties with respect to education, it is import-ant to take a look at the challenges the country faces in this regard.

According to a report by the Academy of Educational Planning and Management (AEPAM), a subordinate office of the Ministry of Federal Education and Professional Training, launched last Thursday, out of the total 51.53 million children between the ages of five and 16, as many as 22.84m or 44pc are out of school.

A major challenge for the country, therefore, is the reintegration of these children into the school system; a task that will require an innovative approach the likes of which have not been touched upon in the manifestos.

While primary schools are in abundance — a total of 150,129 in the country — there are a significantly lower number of middle and high schools (49,090 middle schools and only 31,551 high schools), com-pounding the problem of out-of-school children. Reintegration of this demographic requires a radical commitment on the part of policymakers, which is also not evident in the vision put forth.

Article 25-A of the Constitution talks about education being a basic right of the people. Both the PML-N and the PPP aim to achieve univer-sal primary enrolment — the PML-N by 2023 — although how they intend to do so remains up in the air.

Even considering the PML-N’s farewell budget to be a precursor of its manifesto, no concrete steps have been identified for the implementa-tion of the 100/100/100 programme.

The need for innovation in learn-ing has consistently been empha-sised by independent experts. Alif Ailaan, an education advocacy group, states in a report that “the development of local content and delivery mechanisms that excite children in and outside school needs to be institutionalised”.

The PML-N perhaps interprets innovation by promising to introduce computer labs in middle schools. The PPP, meanwhile, mentions the issue in broader terms by encouraging the use of technology in socio-economic learning and early learning education.

But the lack of substantial innovative learning practices and the mention of promoting math and science subjects have multi-layered, consecutive consequences that may hold back both parties’ eventual aim of growing the economy.

The report mentioned above states that “existing data shows a low learning baseline in math and science in addition to English and Urdu writing; a state of affairs which cannot be allowed to continue given the critical importance of these two subjects in developing human capital, and consequently, its link to the overall agenda of development”.

The PML-N states that it will take steps aimed at encouraging “indus-trial growth; removing economic barriers to education and meeting the demands of the growing industrial sector”. It plans to do so by developing adult literacy programmes, expanding need-based scholarship programmes and providing universal access to vocational training.

With regards to improved learning outcomes, the PPP intends to fall back upon its expertise in streamlining administrative processes: standardising teacher training, institutionalising processes for teacher education and curricula, autonomising textbook boards and creating a separate management and teacher training cadre in education departments.

The PML-N, meanwhile, mentions reforming assessment models and ensuring compliance with National Education Standards. What sets it apart though is its attempt to tie learning outcomes-based incentives for teachers’ career development, thereby addressing another challenge faced by the sector: ensuring quality after merit-based recruitment — tying teachers’ career planning to learning outcomes.

Despite the challenges mentioned above, the gains each province has made in education under the auspices of the three political parties so far must be acknowledged as investment in education does not show immediate results.

Sindh under the PPP focused on streamlining administrative processes that inhibit improvements and merit-based recruitment — in the last five years, over 30,000 teachers have been recruited on merit by the Sindh education department.

Khyber Pakhtunkhwa under the PTI focused on fixing existing schools and their missing infrastructure while the PML-N surpassed all by managing to improve its school facilities, retention and enrolment rates and learning outcomes.

But in order for our labour in education to actually bear fruit, fundamental underlying assumptions in our policies must be challenged and a larger, more holistic vision needs to replace the one currently being put forth by those vying for power.

As Mosharraf Zaidi, an education activist, points out: “Why haven’t we seen transformational change yet? Because we don’t have political commitment. Each government has made tweaks in the system and there have been pockets where things have turned around, but until there is not a national feeling of urgency on the subject, unless we don’t reach the ‘tipping point,’ as Malcolm Gladwell put it, we won’t see transformational change.”

Are politicians really serious about the climate?

By: Ikram Junaidi

Rising temperatures will melt glaciers and cause either floods or droughts.

PAKISTAN may already be on the brink of an environmental disaster, but political parties seem to be in no hurry to formulate a cohesive strategy to avert it.

Although the environment and climate change are considered national security issues, politicians are simply not ready to understand them, said Dr Muhammad Irfan Khan, an environmental scientist and professor at the International Islamic University in Islamabad, while speaking to Dawn recently.

“National security can be divided into three parts: water security, energy security and food security. Nuclear weapons cannot protect a country if it lacks water, food and energy. We have the example of the Soviet Union, which could not survive despite having a huge number of nuclear weapons,” he stated.

He said the next government needs to understand that Pakistan’s contribution to global greenhouse gases was less than one per cent, yet the country is among five to eight countries that are most vulnerable to climate change.

“We get most of our water through glaciers. We will face devastating floods in the future because of increasing temperatures that will melt the glaciers rapidly. We will face either floods or droughts in dif-ferent years. If we want to save our-selves from floods, we have to build dams to store water,” Dr Khan said.

He said that no political party was ready to understand the gravity of the situation. Their focus is on roads and metro bus projects, which will further complicate the problem instead of addressing it, he added.

“Unfortunately, our political parties don’t realise that our issues can-not be addressed by ensuring military security only. They need to understand that the environment and climate change need more focus than other issues,” he said.

The PPP manifesto claims that going beyond the 2016 ratification of the Paris Agreement by Pakistan, the PPP will develop, mainstream and implement a national action plan that can fulfil international com-mitments and meet local needs.

The Paris Agreement is an accord within the United Nations Frame­ work Convention on Climate Change dealing with greenhouse gas emissions mitigation, adaptation and finance starting in 2020.

“We will do so by pushing a Pakistan Climate Change Act along with a 10-year National Strategy Action Plan for parliamentary debate and approval within the first 100 days of the government,” the manifesto states.

The PML-N manifesto said Pakistan needs a rapid and effective response to the dangers posed by climate change and environmental degradation that has occurred over the last decades. In its previous term, the PML-N prepared the first framework for the implementation of the climate change policy (2014-30), ratified the Paris Climate Agreement and became one of the handful of countries that passed a law dedicated to climate change, the Pakistan Climate Change Act 2017.

The PML-N claimed that the approval of the first water policy was another landmark achievement. In the last five years, the PML-N government has built a strong foundation to fight the menace of climate change, it said. Over the next five years, the PML-N promises to enact aggressive reforms under agreements and legal framework established during the previous tenure of the party.

Talking to Dawn ,Pakistan Tehreek-i -Insaf (PTI) Information Secretary Fawad Chaudhry said the PTI was the only political party that gave real importance to climate change during the last five years.

“We have given the concept of one-billion-tree tsunami. We have been giving priority to climate change. We have a comprehensive plan to deal with climate change,” he claimed.

Healing an ailing nation

By Dr Taneer Ahmed

How do these parties intend to improve the ailing health sector when they present no concrete measures to mobilise current revenue?

WHAT brings people to, or drives them away from the polls? To a great ex-tent it is their deeply en-trenched political loyalties. But what remains common among the voting masses is the basic wish to improve their quality of life.

Promises of economic uplift are all well and good but leaders often fail to realise the crucial role that healthcare plays in the country’s economy. “Good health and well-being” features third in the United Nations’ Sustainable Development Goals that we have adopted; though we fell short of achieving the targets set by the Millennium Development Goals, we should aim now to save face before 2030.

When it comes to election manifestos parties are prone to proposing radical projects and programmes to revolutionise the health sector without sorting out its fundamentals first. One of the core tenets of enhancing service delivery in healthcare is health financing.

Currently, Pakistan spends only 0.91 per cent of its gross domestic product (GDP) on health. What is more deplorable though is how this figure is cited as a benchmark of success compared to the figures of yesteryear — a dismal 0.27pc — when it comes to healthcare spending.

Of the Rs5.36 trillion budget outlay for fiscal year 2017-18, a mere Rs384.57 billion had been allocated to the health sector. In its 2013 manifesto, the ruling PML-N had pledged to increase health expenditure to at least 2pc of GDP.

Failing to mention this in their manifesto for the 2018 elections, the PML-N again promises to somehow raise public healthcare expenditure to 2pc of GDP by 2023, if elected back into power.

Vague promises of increasing health-care expenditure are also floated in the PPP’s recent manifesto; while the Pakistan Tehreek-i- Insaf (PTI) in both its previous manifesto and National Health Policy, vowed to bring healthcare spending to 2.6pc of GDP.

What is conspicuous by its absence in the manifestos is the mechanism to generate funds for public health. How do these parties intend to improve the ailing health sector when they present no concrete measures to mobilise current revenue?

Health indicators across the country remain horrifying. We stand at the very bottom of the pit regarding neonatal deaths. Despite this, maternal healthcare remains neglected and immunisation coverage is frightfully low.

Though provinces have autonomously conducted health surveys, a nation-wide exercise was only carried out in 2012, after which it has proved difficult to harmonise national health indicators.

All parties seem to have once again shied away from outlining any steps to regulate the burgeoning private sector in healthcare.

In its manifesto, the PPP unveils an initiative termed “Health Care for All — Expanding, Linking-Up and Joining-in (ELAJ)”, which includes launching a Family Health Service and a Mother and Child Support Programme (MCSP).

An aspect of both these pro-grammes is distributing swipe cards that would be used to create a database of patients, which the MCSP would follow by cash/voucher incentives to cover antenatal and postnatal care and child-hood immunisation.

PPP’s future plans seem similar in nature to PTI’s efficacious Sehat Insaf Card, which the latter in its 11-point agenda said would be distributed across the country to provide 8 million citizens with income support. However, PPP’s performance in Sindh has been far from promising.

The last available estimates for the infant mortality rate (IMR) ranged from 53.8pc in 2012-13 to scarily below 30pc as approximated by experts in 2017. As of 2013, the maternal mortality rate (MMR) in the province was 311 per 100,000 live births, second only after that of Balochistan’s at around 780 per 100,000.

Khyber Pakhtunkhwa fared better, under the PTI, in comparison. The MMR fell from 206 per 100,000 live births in 2012 to 183 at the present provincial government’s end of term. IMR, too, had been brought down to 58 to 22 per 1,000 live births. In the absence of their manifesto, one hopes that they stick to their Health Policy announced in 2013.

Punjab, under the PML-N, has also shown some improvements as immunisation coverage increased from 49pc to 84pc in 2018, and IMR declined from 96 in 2014 to 65 per 1,000. Unfortunately, MMR rose from 178 to 300 per 100,000 live births in 2017. The PML-N has pledged a realistic goal of expanding immunisation coverage to 90pc, and reduce stunting and IMR by 25pc each in its manifesto “Promise 2018-2023”.

While both the PML-N and PPP mani-festos have covered population growth by highlighting the importance of population control through family planning initiatives and female reproductive health interventions, the PTI has so far not let anything on regarding curbing the disquieting magnitude of population growth.

The PML-N and PPP have this time also emphasised integrating all levels of healthcare — primary, secondary and tertiary — a vital step in overcoming the gross mismanagement and substan-dard quality of care that frequently occurs due to a lack of cohesiveness.

All parties seem to have once again shied away from outlining any steps to regulate the burgeoning private sector in healthcare. A comprehensive health policy to tackle the public and private spheres is still non-existent but very much needed.

Most important of all, is the nutritional emergency for which all parties, apart from the PML-N — which plans to introduce a “First 100 days” strategy to reduce malnutrition and stunting — appear to be ill-equipped. It is the responsibility of the next government now to ensure it provides holistic and affordable care to its people.

Economists say

By: Zahra Anum

Dr Hafiz A Pasha

Former caretaker finance minister

Pakistan faces an incipient financial crisis. The burgeoning current account deficit over the last two years in the external balance of payments has led to a serious haemorrhaging of the foreign exchange reserves.

These reserves have fallen by $8.3 billion since June of 2016 and now stand at $9.8 billion. If ‘swap’ funds with the SBP are excluded then the actual level of reserves is only $3.4 billion, not even enough to finance one month’s imports.

Strong actions ought to have been taken in 2017-18 to prevent the imminent financial downturn. But this was the year prior to the elections and the incumbent government preferred to make only relatively mild moves. Some steps even aggravated the situation like the big income tax breaks in the Budget of 2018-19.

We now have passive economic governance. By the time the newly elected government comes in the economic conditions may have worsened even more.

The obvious option is for the new government to go back to the IMF. The fundamental problem is that in the election campaign no major political party has recognised fully the magnitude of the impending financial crisis, the usual offering of gifts to the people is at a peak, raising expectations at exactly the wrong time.

Therefore, there are two possible scenarios.

First, going back to the IMF will mean acceptance of tough prior actions like probably a further steep devaluation, rise in tax rates and energy prices and so on. Given the vulnerable position that the country will be in, non-economic conditionalities may also be introduced bilaterally by the largest member of the IMF Executive Board. The alternative option of seeking support from friendly countries is unlikely to fill the huge external financing requirement of over $26 billion in 2018-19 in the ‘business as usual ‘scenario.

The second scenario is one in which the party in power hopefully rises to the occasion and calls for a political dialogue to arrive at a broad-based consensus on the difficult actions and deep structural reforms to be undertaken. The only party which has come close to highlighting the need for national consensus at this time, even to the extent of formation of a national coalition government is the PML-N. This should be recognised as a serious proposal in the face of the very difficult days that lie ahead for Pakistan on the economic front.

Dr Ali Cheema

The immediate challenge for a new government is the macroeconomic situation as Pakistan’s balance of payment (BOP) situation continues to deteriorate. The flow of funds resulting from the tax amnesty and from an expected loan from China will, at best, give temporary relief.

This is because the BOP situation is a manifestation on an underlying crisis of international competitiveness of our economy that the new government will need to address, which results in our ability to earn foreign exchange falling short of foreign exchange requirements as growth rates begin to rise. It also leads to low productivity and low social mobility.

Dr Asad Sayeed

The main difference between parties is in their underlying ethos. The PPP is raising issues of social policy, redistribution, women’s empowerment and the revival of agriculture. The Bhook Mitao programme (women-run subsidised food outlets at the level of union councils), benchmarking the minimum wage to a living wage, universalisation of the Employees’ Old-Age Benefits Institution (EOBI) pensions and the provision of agricultural subsidies directly to poor farmers through the Kisan Card are some of its promises.

The party claims that it has a credible track record in delivering social programmes and cites the Benazir Income Support and the Lady Health Workers programmes as examples. Its emphasis is thus very much in the realm of left-of-centre social democratic parties.

Both the PML-N and the PTI are right-of-centre and neo-liberal in their orientation, although with important differences in emphasis. The PML-N emphasises high rates of GDP growth without much concern for distribution, provision of bricks-and-mortar infrastructure and energy provision. It mentions its success in enhancing growth, bringing CPEC to Pakistan and claims to have ended loadshedding.

The PTI is ambivalent on most issues related to either growth or distribution, but emphasises almost solely the elimination of corruption to kick-start the economy. The underlying concept appears to be that existing institutions and policies are fine as they exist and will deliver growth and development provided that corruption in the political class is eliminated.

However, one will say something definitive on its programme once its manifesto is presented. The foremost economic challenge will be to stabilise external imbalances in the economy. Exports have plummeted in the last five years and an unsustainable current account deficit exists, which is depleting both foreign exchange reserves and the value of the rupee.

Also, circular debt in the power sector is close to Rs1 trillion. Both issues will require stabilisation of the economy, most likely under the gaze of the IMF. This will be painful as government expenditure will have to be reduced and taxes and tariffs will have to be increased. This is not a happy place to be for a new elected government.

The only consolation will be that every new government is usually saddled with a similar situation. The most important thing to watch out is how effectively the new government can negotiate with the IMF to insulate the poorest and the most vulnerable from the consequences of the stabilisation policies that will be put in place.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018

Manifestos: taking care of ordinary citizens

By Jawaid Bokhari

The delay by main-stream political parties in announcing their manifestos will not leave enough time for public debate — needed to enlighten the voters on the merits and demerits of different programmes and policies — before July 25.

The manifestos are about how the fruits of economic development would be shared by various segments of the population including ordinary citizens. The key public concerns are jobs, fair wages, housing for the poor, civic facilities like clean water, affordable and easily available trans-port facilities, etc, and the rising income disparity in developed urban areas.

The issue of unemployment does feature in casual remarks by political leaders and in party manifestos but much of it appears to be a vision rather than a plan for a five-year term. If elected back to power, former president Asif Ali Zardari recently said that his party would provide a job to one member of every family which has no relative in the government.

Announcing the Pakistan People’s Party’s (PPP) manifesto in Islamabad on June 28, chairman Bilawal Bhutto said that the youth will be provided guaran-teed one-year internships and an employment bureau will be set up for ‘creating’ job opportunities.

The Pakistan Tehreek-e-Insaf’s (PTI) 100-day agenda stipulates 10 million jobs in five years. Muttahida Majlis-e-Amal (MMA) has plans to provide job opportu-nities to all unemployed people.

Easier said than done. The last PML-N government had also launched youth and self-employment schemes.

Urban renewal has become a major issue that affects not only ordinary citizens and also has an impact on the cost of doing business.

Launching his election campaign from Karachi, the PML-N President Shahbaz Sharif promised that, if voted into power, his party will announce a special package for resolving civic problems listed by the Federation of Pakistan Chambers of Commerce and Industry.

PTI chief Imran Khan has said that all policies under the 100-days’ agenda will look into how to make education, employment and other basic rights accessible to the common man.

PTI pledged to build five mil-lion houses in five years. In public speeches Nawaz Sharif had promised to build houses for the poor without giving any targets.

On June 5, PTI’s political rival in Khyber Pakhtunkhwa, the MMA announced a 12-point election manifesto. It pledged to distribute public lands among poor landless farmers, provide interest-free farm loans and reduce taxes on the agriculture sector.

The PPP government intends to issue Benazir Kissan Cards to farmers which will enable them to get subsidy on fertilisers and crop insurance. The PTI agenda calls for emergency measures for the uplift of the agriculture sector.

In the thick of political battles on the frontline, the mainstream parties were unable to finalise and announce their manifestos in time as they did in the 2013 elections.

Fully aware of this obligation, they did take some piecemeal steps before finally announcing their manifestos. Towards the fag end of it’s tenure, the PML-N government came out with its business-friendly sixth budget to further consolidate its foothold in the business community and offered tax concessions to middle-income groups.

And PML-N president Shahbaz Sharif told Geo news that his party would contest the elections on the basis of its past perfor-mance over the last decade.

The PML-N’s sixth budget move was followed by the outgoing PPP-government’s cabinet’s decision to hike the exemption limit of agricultural income tax for the benefit of both landed gentry and peasants of small holdings.

The move was designed to strengthen the party’s hold over the rural constituencies in the province. Political parties are accused of a general lack of will to implement their manifestos. This has created a strong impression that representative democracy is dysfunctional and works for a few, not for the many.

As the theory goes, representative democracy bestows upon a nation’s people the sovereign right to rule through their chosen representatives, approve programmes and policies presented by different political parties, and subject their representatives in the national and provincial assemblies to periodical accountability.

The party manifestos have assumed more importance now as the country is gradually moving towards a citizen-based democracy. Over the last decade, the PPP and PML-N governments have successfully completed their five-year, politically-strenuous tenures as mandated by the electorate.

The challenges facing sustain-able high economic growth are deep-rooted and too enormous to be tackled by the cash-starved state and the private sector — hamstrung by low capital formation. Party manifestos need to unleash the energy of the people to fend for their livelihood.

And the best way forward is a coalition of the government, business and civil society to work for a people-centred development— an evolving model that was abandoned in the 1970s.

Political parties can ill afford to ignore the emerging consensus among leading liberal economists, as The Economist puts it: “This is an age of inclusion... include the excluded and mainstream the side-streamed.”

How people voted in the 2013 elections

Our sceptical ‘common man’

By Humair Ishtiaq

It’s election time and the common man — the beloved of every single political party worth its name — seems to be more involved in political happenings this time round. But this spike in interest is more about what is happening today, in the immediate, rather than being about the manifestos that deal with the post-election sce-nario, the future.

Talking to this universal political beloved — the Common Man — on the streets and in social circles throws up three main themes defining the activity: utter ridicule for the opponent, vague rationalisation for the favou-rite and downright across-the-board scepticism of the neutral.

The good thing about the term Common Man is that it cuts across boundaries. If you are not filthy rich, you are part of the fraternity. Nobody has read the manifesto, but almost everybody has something to say on the basis of what the media says the manifestos say.

If you are in a hurry, here is the gist of what the Common May says in response to the litany of promises: “How will they do it? the economy, education, healthcare, employment and even tourism. For God’s sake, tell us, how are they going to do what they say they will?”

If you are not in a hurry, here are glimpses of how the encounter with the Common Man went.

For many, it may not be too unexpected. Poverty elimination has been one of the main elements in the manifestos of all the three major parties. For want of space, let’s focus on this factor alone in the spirit of sampling a dish to judge the quality of the entire menu.

The PPP vows to “free all Pakistani people from the fear of hunger, thirst and helplessness.” The reaction to the statement ranged from mocking laughter to remarks that are hard to quote here. One can be quoted though. “See, they have not promised to free people from hunger, thirst and helplessness ... just from the fear of such things. If you are dead, you don’t have fear of anything, right?”

On its part, the PML-N manifesto promises to “eliminate poverty by 2030”. The response range remained pretty much the same, with the outstanding quote being: “2030? They can’t even do it by 3020!”

The PTI has worded its pledge slightly better by talking of disparity rather than poverty. In its first 100-day plan and then again while launching his eleven points, party chief Imran Khan regretted that “all policies being developed and implemented in Pakistan [were] aimed at making the rich richer and the poor poorer.”

It sounded alright, if not impressive, but the Common Man continued to have a different take, wondering: “What about his own journey from Zaman Park to Banigala? Is it not a case of the rich getting richer? Will he move against himself?”

Interestingly, the Common Man forced into the equation a few other factors, citing the PTI chief’s self-declared latest income tax payment worth Rs103,763. “After being elected, and after introducing the promised tax reforms, will he be will-ing to rationalise his lifestyle and income tax?”

About Mr Khan’s insistence that the “system won’t flourish in the country until merit was followed in all spheres of life”, the Common Man had a simple query: “Merit or ‘electable’ merit?”

As for party supporters and sympathisers, every act of PTI and PML-N stands abso-lutely rationalised to their eyes on two respective grounds. For the PTI, it is about, “just let him come and you will see the difference ... it will be a revolution”. For the PML-N, it is the victimisation card: “We never got a free hand. This time we will handle it differently.”

The PPP supporters, however, are in a league of their own. They don’t talk of what the party would do or at least about its failure during two consecutive terms in power. Instead, they start, continue and finish their argument with what “Bhutto did” and what “Benazir did” for the country. It may not quite be the case, but the consistency of this line of argument does make one wonder if the party is part of the past already.

Letter from Mumbai: Businesses want smooth transition

By Anand Kumar

Exporters from India, who have seen a steady growth in the sales of goods and commodities to Pakistan in recent years, are eagerly monitoring electoral developments in the neighbouring country.

Indian business enterprises, especially those in Mumbai, Delhi and other parts of western and northern India, are all for politi-cal stability in Pakistan, as they hope for increased trade ties.

Bilateral trade between the two countries adds up to around $2.2 billion, though the figure doubles if one considers exports from regional hubs including Dubai.

Ajay Bisaria, the Indian High Commissioner to Pakistan, had revealed a few weeks ago that bilateral trade (including deals done through third countries) adds up to about $5bn. If relations between the two sub continental nations normalise, this could jump to $30bn, he had claimed while addressing the Lahore Chamber of Commerce and Industry.

“We should not talk about negative and positive lists,” the Indian diplomat had said. “Rather, we should work on the windows of opportunities. At present, over $5bn trade is being done through a third country but after removal of non-tariff barriers, liberalisation of visa and normalisation of mutual relations, the two-way trade could touch a high $30bn.”

The July 25 elections to Pakistan’s national and provincial assemblies — which will wit-ness nearly 12,000 candidates battling for a total of 849 seats (including 272 general seats of the National Assembly) — have drawn con-siderable attention in the political and busi-ness corridors of India.

And even in Pakistan, bilateral ties with India continue to crop up among the top political leaders, though many prefer to remain tight-lipped about their strategies.

Shahbaz Sharif, the Pakistan Muslim League-Nawaz president and the prime ministerial candidate from his party — and younger brother of former Prime Minister Nawaz Sharif — is one of the few top politicians wanting better ties with India.

“The Singapore summit between the US and North Korea should set a good precedent for Pakistan and India to follow,” he tweeted recently. Sharif wants the two neighbours to resume dialogue, especially in the wake of the historic meet between US President Donald Trump and North Korean leader Kim Jong-Un.

In India, while the ruling Bharatiya Janata Party (BJP) wants to be seen as a party that takes a “tough” stand towards Pakistan, the National Democratic Alliance government which it heads, like its predecessor, the Congress-led United Progressive Alliance, wants closer trade ties.

Of course, India is keen on expanding trade ties with Pakistan, especially as it has for the past two decades dominated bilateral trade in terms of growing exports.

India’s exports to Pakistan added up to less than $300 million in 2003-04, while imports amounted to less than $60m. This shot up to $1.35bn in exports in 2006-07, and even imports from Pakistan surged to $325m.

Exports to Pakistan topped in 2013-14 to $2.275bn (and bilateral trade touched $2.7bn), while imports from the neighbour peaked at $542m in 2012-13.

While the cementing of ties between the two neighbours is still a long way off, cement as a commodity is playing an increasingly major role in the relationship.

India has emerged as the second-largest market for Pakistan’s cement exports. Last year, cement supplies to India surged by more than 26 per cent and the commodity accounts for a 27pc share of total exports to India.

Cement is increasingly emerging as a major commodity from Pakistan, especially with domestic producers in India unable to meet the growing demand for it.

Pakistan’s cement exports topped $200m between July 2017 and May 2018 (slightly lower than the corresponding period in the previous year). The biggest markets were Afghanistan and India.

India also imports significant quantities of light oils and preparations, aluminium ores and concentrates, gypsum, seeds, leather, denim and yarn from Pakistan.

Cotton is the largest commodity that it exports to Pakistan. Cotton exports from India to Pakistan added up to nearly 1.2m bales by May, making it the second-largest buyer of Indian cotton.

However, with China — the world’s second-largest producer of cotton — expecting lower production this year, it is likely to buy about 4m bales from India in the current fiscal.

India’s cotton shipments are expected to top 7m bales in marketing year 2017-18 (October to September). According to Atul Ganatra, President of the Cotton Association of India, Indian cotton prices are 10pc lower than international prices, leading to growing demand.

Other major items imported by Pakistan from India include paraxylene, polypropylene, single yarn of combined fibres, tomatoes, refined sugar, woven fabrics and vaccines for human medicine.

In a bid to boost bilateral trade, India grant-ed the Most Favoured Nation (MFN) status to Pakistan a few years ago. However, Pakistan has not yet given the MFN status to India so far.

Analysts, however, believe that even after the new government takes over in Pakistan later this month, business ties with India are unlikely to improve further, thanks to the 2019 elections in the country.

The Modi government does not want to be seen close to Pakistan and trade concessions are unlikely to take off till well after the 2019 elections. The Congress and its partners would of course want to deepen trade ties with Pakistan, but if the BJP emerges as a powerful opposition party, it would not want to push ahead with closer ties — political or business — with Pakistan.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018