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How realistic is it?

August 26, 2012

THE economic plan unveiled by the Pakistan Tehrik-i-Insaaf touches on the right issues, but carries the same weaknesses that the manifestoes of its rival political parties do: it is rich in sentiment but poor in substance, tall on promises but short on credibility. The framers of the vision are quite right to say that “business as usual is not sustainable”. They are right to point out that the governance failures of the present government have resulted in a doubling of per capita public debt, record high fiscal deficits, persistent double-digit inflation, sharply growing power shortfalls, and depleting foreign exchange reserves (although it’s hard to see how much of this depletion could have been avoided given persistently high oil prices). The programme is strong on the reform of public-sector enterprises. All this is fine and testament to the first-rate talent that has helped the PTI draw up its programme. But what exactly does the party intend to do about the dismal state of affairs that it describes so well?

That is where the problems begin. For starters, consider this. They claim they will raise “welfare spending” to Rs4.6tr, compared to present-day disbursements of Rs0.9tr. They claim they will cut the deficit and free up bank resources for investment by industry. They claim they will resolve the power crisis by diverting fuel to power generation. They claim they will bring down inflation to seven per cent. Yet they have opposed tax reforms in the past, vilifying the RGST, or reformed general sales tax, as evil. Where will the money come from to pay for the expenditure hikes and deficit cutting? Will industry grow if it is deprived of gas? They promise a muscular effort to recover looted wealth. Remember when the Musharraf government went on a rampage to recover loans and looted wealth in their early years, causing business confidence to plummet? What lessons have been learned from that experience? At the end of the day, the economic plan almost reads like a wish list drawn up by somebody who thinks complex problems have simple solutions.