Prime Minister Imran Khan gestures as he delivers a speech at the Asia Society, during his New York visit for the United Nations General Assembly, Sept 26, 2019. — AP/File

Creative and bold policy measures are critical for the post-Covid economy, but will Imran Khan walk the talk?

The scale of the crisis means it is a tremendous opportunity to restructure the economic foundations of the country.
Updated 12 Jun, 2020 06:30pm

The Covid-19 pandemic is perhaps the most serious socio-economic crisis Pakistan has faced since the violent upheavals of Partition in 1947. This crisis will have long-term implications for Pakistan’s economy and its impact will reverberate for years, if not decades, to come.

So far, the Imran Khan-led government’s economic response has been exemplary, especially if one were to compare it with stimulus measures taken by regional economies like India and Bangladesh. However, to pave the way for an economic recovery, the government needs to be bolder and more creative in its approaches.

The nature and scale of the crisis means that it is a tremendous opportunity to restructure the economic foundations of the country and chart a new path forward. This can be done by making policy choices that push the adoption of new technologies, catalyse innovation, and empower the country’s citizens by boosting their skills. Doing so can help build a new economic contract between the state and its citizens.

Also read: Economy at a crossroads

The first measure the government should consider taking is to reduce the GST to 0% on all digital transactions for the next 12 months. Over 90% of Pakistan’s annual GDP is consumption-based. Retail and wholesale trade represents a significant portion of the services sector, which is approximately 60% of GDP. Largely informal and non-compliant with the tax regime, this segment has failed to digitise and formalise itself for years. In fact, the former head of the Federal Board of Revenue failed in his attempts to force businesses to adopt cash machines and document themselves.

While the proverbial stick has not worked, the carrot may succeed in accelerating formalisation and documentation by incentivising digital transactions. This measure will do away with a regressive tax, boosting demand while forcing businesses to adopt digital transactions. A push from consumers to save taxes will mean that businesses will have no choice but to use digital tools and accept non-cash transactions. In the medium- to long-term, the data can help policymakers develop deep insights into consumer and business transaction patterns, identify big spenders who are non-compliant, and adopt a more targeted approach to promoting tax compliance. It may in fact also lead to public health benefits, given that the virus is here to stay and could be transmitted through currency notes.

More on this: Adrift in a sea of uncertainty

Another measure that the government should seriously consider is the elimination of import and customs duties on electric kits for vehicles, particularly two- and three-wheelers. Pakistan's economy is dependent on energy imports, which drain scarce foreign exchange reserves. At the same time, there is surplus capacity in the country’s power sector, and Pakistan’s cities suffer from some of the worst air pollution in the world. Incentivising the up-gradation of the vehicle fleet to electric across the country can accelerate the development of a next-generation transportation and automotive industries, increase demand for power, and help clean up the air.

Given that this will be a long and painful economic recovery, tens of thousands of young graduates and millions of low-skilled workers will struggle to find jobs in the coming months. This excess labour should be absorbed by the government through two flagship programmes: the first should hire recent graduates, particularly women, in a national literacy promotion programme for a period of two years. These graduates should be sent to every district in the country to conduct literacy and training programmes for people of all ages, particularly younger adults who were not able to gain a decent education during their schooling years. The second programme should hire blue collar workers in an environmental restoration programme that seeks to clean rivers, and restore Pakistan’s urban and rural environments. The PTI has already started hiring thousands of labourers to plant trees, and this programme should be expanded to other environmental restoration projects as well.

Read further: In quest of economic revival

Critics will argue that these are expensive projects that the state does not have the money to pay for. But this is not the time to worry about fiscal deficits and tax collection. With both the formal and informal economy coming to a grinding halt, it is imperative that the government take bold and transformative measures to restore economic growth. In the early 2000s, policy enabled the rapid adoption of CNG kits for vehicles; adopting electric kits is no different. Lady health workers are a case study in how a government programme can engage with women at the grassroots level to improve their health outcomes — the country’s polio programme relies on these workers to this day.

Imran Khan has always talked about transforming Pakistan and charting a new course forward. This pandemic has given him an opportunity to walk the talk. Creative and bold policy measures are the necessity today, and if executed with intent, they can chart a more sustainable and inclusive path forward for Pakistan and its citizens.

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Uzair Younus is a non-resident senior fellow at the Atlantic Council in Washington DC.


The views expressed by this writer and commenters below do not necessarily reflect the views and policies of the Dawn Media Group.

Comments (51) Closed

A shah
May 05, 2020 02:15am
I’m sorry but I have zero confidence in this man. All talk and no action
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Ajaz
May 05, 2020 02:25am
Some good ideas.
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Feroz T. Jhantawala
May 05, 2020 03:06am
Best of luck!
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RAja Raman
May 05, 2020 03:22am
Imran Khan will not walk the talk... he will do the reverse.
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Naveed Malik
May 05, 2020 03:23am
These are excellent suggestions. Digitizing the economy through incentives like the one proposed will definitely do better than the half-baked measures previously adopted. Also, utilizing the educated, unemployed young people to impart education/literacy could be a real game changer.
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Fastrack
May 05, 2020 03:51am
Pakistan has so far been the best model across the world in containing Covid19. A nation of 22 crore has managed to keep Corona deaths to 450.
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Just Saying
May 05, 2020 04:19am
At the center of Pakistan's economy is this huge white elephant, which unless put on a diet, will devour Pakistan's future.
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haq
May 05, 2020 04:22am
While much attention has been made towards relief and charity which is highly appreciated, the emphasis on agriculture modernization and industrial revolution is lacking. Solar energy industry has huge potential not only to modernize but create vast amounts of permanent jobs in our sun enriched country also reduce pollution. An electric car maybe excessive thinking but at least basic project should be launched the who knows given Pakistani progress in technology (Thunder jet) may be achieved.
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MAZHAR AZIZ ANSARI
May 05, 2020 04:24am
Nicely written, I believe Imran Khan has the capability to Deliver, no doubt he has weathered very ably all the storms that he has been confronted with .
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haq
May 05, 2020 04:33am
Please sir give Urgent attention to energy sectors besides abundant solar resource, wind power capacity can be increased many folds in northern mountains. It's a lowtech industry suitable for our circumstances can create thousands of jobs, reduce pollution in the long term. Please implement such policies urgently.
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Ibrahim S
May 05, 2020 04:42am
Talk is always cheap. Based on past performance, I doubt it. Sorry , but that is a fact.
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S.Ahmad Washington D.C.
May 05, 2020 05:17am
This is too tall an order for a regime whose performance has been dismal so far.
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saeeds
May 05, 2020 05:30am
The only time I agree with IK. PPP after great start on initial lock down commit political suicide after not understanding ground reality. Smart lock down was good strategy after few weeks of strict lock down.
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Umesh
May 05, 2020 05:39am
He will consult the moulanas and the military.
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Rizwan
May 05, 2020 05:53am
'Imran Khan has always talked about transforming Pakistan and charting a new course forward'. Just like corruption was the legacy of Zardari and NS, Imran Khan's lasting memory would be of someone who promised great reforms in governance, justice, taxes, education and health, but did not even take the first steps to achieve these goals - either because he was too scared to fight battles against vested interests, or because he was a wolf in sheep's clothing. He is as 'status quo' as it gets. No one will miss him when he's gone, and because of this monumental betrayal of trust no one will believe the next guy promising reforms and deep structural improvements.
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LAHORI KID
May 05, 2020 07:00am
We are no where near the post Covid time situation, yet, the numbers of infected and dead are doubling everyday. Economy is being destroyed by the health crisis, in order to overcome it, health crisis must be dealt with first, let’s not talk about the economy as if “We” Gabe overcome its, and the government has total control over it. Good day.
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Dr. Habib A. Zuberi
May 05, 2020 07:04am
It is a fairly positive analysis and I hope IK and other members of the government will be reading it. One suggestion about women's literacy and the jobs for them is very positive recommendation...I am not sure about non- cash transaction. Don't borrow, revive textile industry, grow more Cotton for domestic use and export.
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Pathanoo
May 05, 2020 07:06am
What the Article recommends will help 100%. What are the chances of the recommendations being implemented - 0% or may be slightly more if you really want to be extremly optimistic.
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Patriot
May 05, 2020 07:19am
The solutions given by the writers are good and should be adopted. The pandemic cannot be controlled by isolation now as our people are not educated enough to understand social distancing. Threfore, we have to go towards herd immunity.
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Pakistani
May 05, 2020 07:38am
Creative and bold policies work with a nation that is willing to work hard and prepared to sacrifice about two to three decades for the future generation. It is not meant for people who want someone to turnaround their lives in a few months.
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PJS
May 05, 2020 08:00am
@Fastrack, Please get your facts right, you neither know nor realise the gravity of the situation. Stop misleading readers. Have you observed the rate at which is is spreading? Have you analyzed the number of tests co ductedbper million? Have you checked the doubling rate of cases? People are dying, not being tested and you claim this to be the best model. Dont test anyone and feel happy that there are no patients.
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SRK
May 05, 2020 08:02am
The article starts with comparison of India and Bangladesh both of which are not dependent on external loans to the extent Pakistan is. They are also saving more for future while the Corina cases and death rate in both nations is less than in Pakistan. India has much better health care systems than Pakistan and its COVID cases are spread in less areas in percentage as compared to Pakistan where both major states are reporting more numbers daily. Indian economy is more digitised as well. There are many more factors to be considered than an one side views
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Justice
May 05, 2020 08:10am
@Fastrack, How does your Covid-19 numbers compare with our numbers for Population of 135 crore?
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Abdul Qadir
May 05, 2020 08:21am
Pakistan prime minister Imran Khan is neither creative nor bold so his policy will be complain about corruption of Sharif's and Bhutto's all the time hoping to get elected again but do nothing on your own.
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Toni
May 05, 2020 08:35am
"The first measure the government should consider taking is to reduce the GST to 0% on all digital transactions for the next 12 months. " Given Pakistani businessmen honesty for paying tax, NOT!, roti will be called digital because Tundoor was digital controlled, will be claimed.
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Toni
May 05, 2020 08:40am
@LAHORI KID, "the numbers of infected and dead are doubling everyday. " No! be specific and correct, deaths of 457 did not double from yesterday did it?
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Mumtaz Ahmed Shah
May 05, 2020 08:48am
Nicely written. Imran khan may look into.(Texas)
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shan
May 05, 2020 09:11am
He has no experience I was talking to PMLN friend he said that he will fail.
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MG
May 05, 2020 09:13am
Tiger force will handle it
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Surya Kant
May 05, 2020 09:22am
Yes a chance may come when the whole world may ask China to pay up for Corona losses holding them responsible. In such situation Pakistan may have good chance of adjusting all China debts against its Corona claims.
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Manoj
May 05, 2020 09:22am
More education? Do the already educated have their jobs?
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Patriot
May 05, 2020 09:30am
@A shah, Your confidence does not matter. He is not the PM of India.
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Patriot
May 05, 2020 09:32am
@Umesh, Exactly like PM Modi who consults Yogi Adityanaath all the time!
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Aravindan S
May 05, 2020 09:37am
Surprised that you are still expecting something positive from this crook
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Kar
May 05, 2020 09:39am
When are you starting Naya Pakistan housing scheme? Or are you keeping it on waiting list to fool nation to vote you again?
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Aurora
May 05, 2020 11:22am
Walk the Talk? No Way. He has turned out to be a "U" turn expert. Fast loosing his writ. Post Corona situation in Pakistan will probably decide his political future.
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ON .
May 05, 2020 11:56am
Till now only denial and submission is demonstrated. There's no hold of IK on his own party. Writer must be seeing different data than what is in public domain
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munib
May 05, 2020 02:10pm
Ah yet another burger rant copy pasted from Eco books. I dont know why Pakistaniz fail to understand that the main problem this country is facing on Eco front is not "income" - Its "expenditure" Let me ask a simple question as an example : Even if we follow all measures mentioned in above article and gov is able to raise finances say increasing tax collection from 3900 Billion to 6000 billion - you still have to pay the Elephant in the room its huge share - and thats the main issue with Pakistaniz analysis of their Economy and Finances. Someone rightly mentioned the white elephant in other comment
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Gilbert
May 05, 2020 03:15pm
He is losing credibility by talking too much and not doing much! In order to bring change he needs to dump his cronies around him!
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KM
May 05, 2020 04:31pm
Why just IK, why cant the opposition, which has near majority in the parliament bring forth its own program? Or is the parliament not supposed to play its own role?
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Jai Moolchandani
May 05, 2020 04:40pm
@MG, Let real Tiger come , than see .
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Jehengir khan
May 05, 2020 07:13pm
PM IK is neither creative nor bold...but has good intention....
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Patel D
May 05, 2020 11:05pm
@Fastrack, with your perceived best model for Corona-19, PM IK is on right track to start gearing up for the economy by relaxing the Corona SOPs.
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Patel D
May 05, 2020 11:06pm
@Ibrahim S, Yes, the past is the best guiding factor for predicting the future.
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wasim
May 06, 2020 12:00am
@Fastrack, i do think that you really do believe your statement, clearly the deaths are much higher but you keep blindly suporting IK in every action be it a good or bad one.
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Asad Bajwa
May 06, 2020 03:47am
I think I have read something very simple and understandable. But, sometimes only giving policy is not enough but having the capacity to follow that policy proves to be crucial while aiming to achieve a long term goal. Very well written Sir.
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Yousuf47 London
May 06, 2020 09:55am
Bravo - succinctly put. Pakistan should take on board lessons learnt how the English Chancellor is at the forefront to drive the economy forward. Pakistan is in a unique position to fill the void of verious products produced in China as USA spats its anger by forming joint venture agreements with Chinese firms of repute. Textile manufacturers could take advantage of Chinese superiority of low cost production by increased productivity and volumes.
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INDMKB
May 06, 2020 10:56am
PM Imran Khan Zindabad
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Mangoman
May 06, 2020 11:47am
@Ajaz, What good ideas? This guy wants move towards digital transactions with zero tax for 12 months? He says don't worry about fiscal deficit. In effect he just wants the government to spend and spend and not worry about earning. I am just a layman, but I know this logic is the reason behind most of pakistans economic woes.
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Qaisar Khan
May 06, 2020 09:37pm
Creative and Bold measures need Creative and Bold leadership, not one with "electables" walking sticks.
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Lahori kid
May 06, 2020 11:38pm
Be prepared to see the numbers of infected skyrocket, its inevitable, today only 544 are dead and 20 some thousand infected, these numbers will increase at a fast pace, you watch. The PM is hellbent on easing the lock down, he will have to live with the fact that hundreds, if not thousands more die, all of it will be on his watch, on his head. Yesterday, it was all about the poor, about people, about their lives.Today, the economy has become much more important than lives of the people. Sad facts of today
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