Pakistan or ‘Plotistan’?

Published September 24, 2021
The writer is an economist and research fellow at the Pakistan Institute of Development Economics.
The writer is an economist and research fellow at the Pakistan Institute of Development Economics.

THE recent furore over plot allotments to bureaucrats and judges has again brought to the fore a dark aspect of governance in Pakistan — the practice of gifting away valuable land at subsidised rates. Although the allotment has been cancelled, it is unlikely to stop a malpractice that has already cost Pakistan a huge fortune since its creation.

More important than random outbursts of anger is the need to understand the basis of this uncalled-for generosity. Till now, there has not been much information and research on the antecedents of land giveaways and related matters. That should change with an upcoming PIDE study, co-authored by the institution’s vice chancellor Dr Nadeem who coined the term ‘Plotistan’. Although the topic is public wealth, land-related issues have received extensive coverage since land is the most sought-after asset in Pakistan. What follows is a recap of the findings.

First, a word about the importance of this issue. From a purely social justice perspective, it is downright abhorrent that in a country where a major portion of the population finds it difficult to buy their own chunk of land for building a shelter, extremely valuable land is gifted to a select group of people at ridiculously low prices. Additionally, if assets like public land are professionally and properly managed, there might not arise the need for extractive taxation and taking recourse to expensive loans for financing development work.

Let’s revert to the question of historical antecedents for which we’ll have to traverse back to the times of British rule. The Empire had its own priorities and ambitions, and gifting ‘crown’ land at extremely low rates (or for free) was one major avenue of ensuring that official goals were met. The establishment of canal colonies like Lyallpur (Faisalabad), for example, would not only bring in revenue, but also help win loyalties and establish denser settlements on the western side of British India. The best way to do it, they reasoned, would be to offer land (and private entitlements) at extremely low rates or as an incentive. Policies like the provision of land to martyrs of the armed forces, harken back to that time when military personnel died serving the Empire.

Land giveaways have gone through an evolution of sorts.

In Pakistan’s case, land giveaways have gone through an evolution of sorts, from initially being a compulsion under adverse circumstances to setting a constitutional and legal basis (in 1973) for the government to indulge in this untoward largesse. In 1947, as waves of migrants descended upon the new country, the government had no alternative but to allow the use of its land for settlements. Having little or no experience of land management and housing, it turned to various cooperatives, established during the colonial times to handle these issues. The Karachi Cooperative Housing Society Union, for example, was leased 1,200 acres of public land.

Briefly, the public sector took it upon itself to provide housing, courtesy of donor support (‘master plans’ for cities like Karachi, Lahore and Islamabad were developed by donors) and the courts that termed housing as a basic right. By the 1970s, though, there was an implicit recognition even within ruling circles that the government needed to back off from this area because the results of its forays were less than encouraging, besides spawning corrupt practices and rent-seeking.

Unfortunately, by that time, the plot culture had become well entrenched in the public sector. Any doubts were laid to rest by the 1973 Constitution. Under sub-clause 3 ‘e’ ‘ii’ of Article 24, government is mandated to provide housing and related facilities to all or “any specified class of citizens”. Legally speaking, the only required qualification is to satisfy the “public interest”! Unfortunately, this legal licence for public-sector indulgence in land and housing only furthered the already entrenched culture of plots and perks.

To date, there has been no aggregate quantification of the loss inflicted by granting land at subsidised rates, except for a few random studies. A study in 1991, for example, estimated that over four decades, Punjab’s provincial authorities doled out 318,952 plots at ‘DC’ (subsidised) rate, earning a meagre Rs6.9 billion in total. The market price, though, stood at Rs63.9bn, meaning an enormous subsidy of Rs57bn, equivalent to the total income of the federal government that year. Just imagine the amount that would turn up if there were ever an estimate of the losses at an all-Pakistan level!

Editorial: ‘Unjust’ allotment

The PIDE research elaborates on the various innovative methods employed to garner these subsidised goodies. Government departments, for example, are dotted with ‘housing societies’ that consist of its own employees who have been successfully carving up precious land among themselves. Coopera­tives, over time, have been another favoured avenue for extraction of this subsidised favour.

This virulent culture of subsidised plots has done Pakistan a huge disservice in more ways than one. In the 21st century, investing in land still remains the biggest obsession in Pakistan, mainly because public regulations have ensured that its scarce in supply and thus pricy. This, to a large extent, explains why other wealth-creating avenues (like the stock exchange) remain a very small part of the economy. Moreover, we observe millions of capable, talented youngsters opting to join the civil service and armed forces rather than aspiring to become entrepreneurs and businessmen. A major reason is the prospective perks and privileges (subsidised plots being a top attraction) that are on offer. Put another way, the plots and perks culture has become a self-inflicted, binding constraint upon Pakistan’s wealth-creation ability.

The poor administration of public assets (especially land) has cost the Pakistani exchequer tremendously. Administering lands and dishing out subsidised plots has created innumerable problems for the country, from the ever-expanding, unmanageable cities to rent-seeking and huge wealth inequalities.

It is time then to put an end to this colonial construct and stop Pakistan from turning into ‘Plotistan’. For that to happen, the public sector needs to retreat from its more-than-active role in this area.

The writer is an economist and research fellow at the Pakistan Institute of Development Economics.

shahid.mohmand@gmail.com

Published in Dawn, September 24th, 2021

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