Much is talked about democracy and secularism that the Quaid-i-Azam stood for but hardly anything is heard about his move to promote out of the box thinking with the help of the best economists, academicians, civil servants and public figures for the uplift of the independent state of Pakistan.

Following the 1940 Pakistan Resolution and as far back as August 1944, the Quaid had set up the Economic Planning Committee (EPC) to prepare a five-year plan. Dealing with the problem of the then growing inequality of income and wealth the committee spelt out guiding points — full employment, adequate wages and reasonable prices — in pursuit of evolving a new economic model.

The defined guiding points are still relevant today as the country is faced with increasing unemployment and high inflation while decent jobs are not many.

The EPC had recommended that “the right to work, adequately remunerated, appropriate to the mental and physical capacity, training and aptitude should be guaranteed. The idle population should be made productive. We may find a way out by utilising the idle resources, natural and human.” Nothing of the kind seems to be happening on the required scale.

It is time to evolve a system through which every citizen puts his shoulder to the economic wheel to harness the country’s unutilised rich resources

While successive governments have focused initially on economic development and then on economic growth to create jobs and widen prosperity they have neglected human resource development. Labour is cheap and its productivity is low.

The long-term sustainable high growth remains elusive and after repeated boom and bust cycles, we have reached a point where the problems of unemployment and poverty are becoming more difficult to resolve. An independent economist estimates that the unemployment rate would increase from the current estimated 6 per cent to 8pc by 2020. Differing sharply from the official figures reported from time to time, President of Employers Federation of Pakistan Majyd Aziz asserts that the jobless rate is not less than 14-15pc. He said the country has seen large layoffs in recent months.

Joblessness and poverty erode social cohesion, create tensions and adversely impact the business environment. Unemployment and sluggish economic growth are fuelling social tensions and popular protests in several Arab countries, says an International Monetary Fund report. And Pakistan is confronted with its own ‘Azadi March’.

According to old data quoted by special assistant to the prime minister on social protection and poverty alleviation Sania Nishtar, multidimensional poverty stands at 38.4pc and income poverty measures at 24.3pc.To update the data, she said the PTI government has launched digital the National Poverty Survey which be finalised by next February.

The PTI government is making some efforts to cope with the situation. A sum of Rs190 billion has been earmarked for its Ehsaas Programme for addressing poverty and inequality. For self-employment of youth, it has launched the Kamyab Jawan Programme (KJP) for which another sum of Rs100bn has been allocated.

The KJP envisages provision of interest-free as well as concessional loans to targeted one million youth. It includes Rs10bn for imparting technical training to 100,000 people. Internships will be arranged for 25,000 persons within industries. Seminary students will be provided with science education. About 2,000 teachers will be sent abroad for training. However, the KJP’s performance will depend on the appetite of the banks for lending to small enterprises under the scheme. Some idea how things may work out can be derived from the performance of the PML-N’s Prime Minister Youth Business Loans (PMYBL) scheme launched in 2013.

By the end of 2018-19, the cumulative disbursement under PMYBL amounted to Rs26.76bn against the sanctioned amount of Rs32.94bn. The total number of beneficiaries was 26,679; just over a quarter of 101,938 applicants qualified for bank financing.

Not all banks participated in the scheme. Loans up to Rs2 million are provided at a service charge of 6pc per annum for setting up of new businesses and strengthening existing ones. And 5pc of the bank losses in their outstanding loan portfolio is shared by the government.

However, while having some similar features as PMYBL, the KJP’s scope of funding has been enlarged with regards to both the credit volumes and the category of borrowers for banks to have a wider choice to pick viable proposals.

Under Tier I of KJP, soft loans will be to extended to people between the age of 21-46 years from Rs10,000 to Rs0.5m on a debt-equity ratio of 90:10 with 6pc interest rate. Loans up to Rs100,000 will be interest-free. Under Tier 2 loans of over 0.5m to Rs1m will be provided on a debt-equity ratio of 80:20 with a mark-up of 8pc.In all cases, loans are for eight years with a grace period of one year.

The skewed debt versus equity ratio may be seen appropriate from the point of view of borrowers with meagre resources but it carries the risk of financial charges making entities under heavy debt unviable despite concessional loans. The government will, however, share losses in a given proportion with the banks.

Currently, the Benazir Income Support Programme (BISP) for cash transfers to the people living below the poverty line remains the single largest safety net. BISP Secretary Ali Reza Bhutta says cash transfers are aimed to ensure a stable living standard but does not help (beneficiaries) to exit the programme.

BISP and other social safety networks are being managed with significant help of foreign donors. Within a year, the incumbent government has raised $200m each from the Asian Development Bank and the Bill and Melinda Gates Foundation. The regime lacks its own resources to finance the country’s social security network though its overall coverage is limited.

With multiple anti-poverty and job creation efforts now underway, it would be pertinent to quote a former finance minister and a former finance secretary to indicate in which direction things are moving. According to Dr Abdul Hafeez Pasha, 2m people would lose their jobs and 8m people will be pushed below the poverty line by the end of this fiscal year. After an overall review of the economy’s performance for the first quarter of 2019-20 Dr Waqar Masood observes that the risk of a recession has increased.

It is time to evolve, step by step, a system through which every citizen puts his shoulder to the economic wheel to harness the country’s unutilised rich resources for economic and social

progress and benefits from it. The overarching objective should be common good with no one left behind, made possible by the latest technologies and innovative thinking.

Published in Dawn, The Business and Finance Weekly, November 4th, 2019

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