The PTI government‘s policy shift from stability to growth supported by fiscal expansion in the current year’s budget, is perceived by many as a tactical move with an eye on general elections due in 2003.
That may not be the whole truth because production-led growth should have the highest priority in policymaking to come out of frequent boom and bust cycle.
However, the budget FY22 does have features such as stipulated wide distribution of reliefs and incentives that signal a two-year political election campaign. The PTI’s is trying to make up for its past three years’ underperformance particularly on its election promises on employment and low cost housing which, coupled high inflation, has eroded some of its political capital.
Normally populist policies and party manifestoes are announced in an election year. The PTI’s two-year election campaign will perhaps be the second longest after that of the prolonged pre-1970 polls. In fact the campaign then really started with countrywide mass agitation provoked by celebration of former President Ayub’s development decade amidst a strong public perception of a widening disparity in household incomes and regional development.
The then policymakers were sold to the regressive belief of trickle-down effect of economic growth and the regime was banking on movers and shakers of the economy for its political survival.
The PTI’s two-year election campaign will perhaps be the second longest after that of the prolonged pre-1970 polls
Though Ayub’s concept of basic democracy was sound, it lost much of its political gloss as it was used as an electoral college in place of adult franchise in polls. Ayub’s era sparked a serious political crisis.
Under public pressure, the centralized One-Unit Administration in the then West Pakistan was dissolved by former President Yaya Khan before the scheduled 1970 elections. The authoritarian rule had politically isolated Ayub and Yahya from their own people. “Our present fate is to move from crisis to crisis,” admitted Ayub in his book ‘Friends, not Masters’: It was not realised how politics of the people and economic development were closely interwoven and together, they finally shaped the future’.
As the development decade shows, most of the time economics holds sway but during times of crises and election campaigns, politics moves to the driving seat. Mr Subramanian Swamy, a politician and a scholar with a Ph.D in Economics from Harvard University finds increasing evidence that slower economic growth contributes to political instability, feeding a vicious cycle.
A special report on emerging markets in the London-based ‘The Economist’ sees the costs of political instability likely to rise further, before they fall. Unrests, in some cases, limit governments’ ability to tackle pressing policy problems.
“Should global financial markets turn on stressed economies, in absence of social consensus, they could prevent political leaders from taking the macroeconomic steps to fend the crisis. In worst cases, political instability could deteriorate into internal or inter-state violence. Both political instability and inter-state tensions may increase….. A more fractious politics has become a norm around the world and countries have slid either towards or further into autocracy.”
Pakistan is not immune to the international trends outlined above. The Pakistan society is violence-prone and the country faces political tensions on its western and eastern borders. The recent government’s geo-economics initiative is coming fast under the shadow of geopolitics because of emerging situation in Afghanistan and strained US-China relations. And the past shows how short-sighted geopolitics has damaged our economy and the country continues to suffer from its legacy.
Both economic and political crises have to be tackled simultaneously to put the political economy on the right track.
Those indulging in superfluous geopolitics need to take note of a major emerging trend, aptly described by Foreign Minister Shah Mahmood Qureshi as ‘the capitulation and meltdown’ of US-trained Afghan army in the face of Taliban’s assault.
In Pakistan, the political and economic roadmap drawn up by the 1973 constitution — unanimously approved by representatives of the people of the four provinces in parliament after the 1971 tragic episode — has been made politically controversial by anti-democratic forces. Nor is the 18th Amendment, 7th National Finance Award, Water Accord etc achieved by consensus under the civilian rule being implemented in letter and spirit.
The extra-constitutional forces do not care about the guiding principles for conduct of the state as enshrined in the constitution. This has given rise to and nurtured divisive politics.
The conflict of interests between MNAs and MPAs on one side and the political leadership at the district level has resulted in suspension of elected district, tehsil and union councils. Instead of focusing on federal and provincial affairs, the parliamentarians are trying to consolidate their hold on electoral constituencies. In fact they should help local bodies’ representatives to carry out their electoral mandate to expand their party’s grass root support base.
The matter is being made worse by mudslinging, with political parties trying to destroy each other’s public image that weakens representative democracy. This, however, by default and not by design, makes the case for participatory democracy stronger for promoting grassroots development and uplift of common citizens.
According to an opinion piece published recently in a leading US newspaper the key problem in both developing and developed countries is: “Until the economy finds a new equilibrium of prices, wages, output and demand, things are not going to get just right.”
In Pakistan prices are unaffordable for a majority of the people, inflation is high, wages are low, output is not enough to meet domestic demand and the country spends more than it earns. Politics is divisive and economy is in distress. The recovery is fragile, not holding the promise as yet of long-term sustainable growth.
The social safety network is being expanded to provide some relief to a segment of inflation-hit poor as the current mainstream economic activities are unable to provide enough decent jobs or reduce poverty.
Published in Dawn, The Business and Finance Weekly, August 16th, 2021