Pakistan needs a high economic growth rate of 7-8 per cent for the next thirty years to absorb the entrants of the labour force, according to a summary on Population Analysis Situation (PAS) jointly prepared by the Ministry of Planning and Development and international development partners.

The summary also noted that Pakistan suffered not only from low economic growth but also an inequitable distribution of gains from such growth and associated opportunities of education, health, employment and income.

And the debate on poverty and inequality should not be limited to income but extended to focus on access to health, education and unemployment, says the report.

A former chairman of the planning commission and the Vice Chancellor of Pakistan Institute of Development Economics (PIDE) Dr Nadeem ul Haque blames under-utilisation and misallocation of human resources for under-performance of the economy. Some development economists are of the view that policymakers should rethink their approach to work and employment policies.

It is time to develop a people-centred innovative development strategy which would enable citizens to fend for their livelihood and improve their quality of life by themselves

Such platforms as the European Environment Bureau and the European Youth Forum suggest: build back better by breaking free of our structural dependence of GDP growth to create jobs. A growing number of academicians engaged in social activism share this view as mainstream activities and the existing growth models are unable to address the problem of surging inequality and social exclusion.

The two European entities highlight policies which they consider innovative for making work more rewarding for people while serving broader social and environmental goals. That includes unpaid voluntary labour.

The 7-8pc growth rate for 30 Years to absorb entrants of the labour force envisaged seems to be beyond the realm of possibility

Given the various domestic and external constraints that the country is facing, Dr Ashfaque Hasan Khan says Pakistan’s economic recovery may not be seen any time soon. And no recovery would be sustained unless the pandemic was defeated everywhere, says an International Monetary Fund report (IMF).

As Covid-19 is reversing the fall in global poverty, countries will have to tend to several priorities with less fiscal resources, says IMF Deputy Managing Director Geoffrey Okamoto. One may suggest that the PTI-led government should actively promote and enable communities to get organised to work for their own socio-economic uplift.

The government is pursuing an aggressive policy with an unprecedented focus on the revival of labour-intensive economic activities. And the upswing in domestic sales of cement is one indicator of the rebound in the construction industry. But fears are being expressed by builders that PTI’s flagship low-cost housing project may be adversely affected by rising prices of steel and cement on the back of growing domestic demand.

The investment trend in the first four months of the current fiscal year is indicated by a plunge of 14pc in machinery imports from the level recorded in the same period last year. “Unfortunately,” says Dr Hafiz A Pasha, “the government does not have the fiscal space to stimulate further the pace of economic activity.”

However, indicating better utilisation of capacity, large scale manufacturing (LSM) grew by 5.46pc during July-October. By the end of November, the taxes collected by the Federal Board of Revenue rose by a mere 1.01pc to Rs1.686 trillion against the projected target of Rs1.669tr. As the current expenditure is rising faster than expected, the space for development spending may be further squeezed.

One can observe incremental improvements in macro-economic indicators with some showing month-to-month diverse trends. In sharp contrast, remittances by overseas workers have continuously surged for the past six months.

During July-November, inflows of workers’ remittances reached a record level of $11.77 billion, 26.9pc higher than the same period last year. So far, non-resident Pakistanis have also deposited $154.6 million in Roshan Digital account with $88.7m invested in Naya Pakistan Certificates. Together, with foreign loans, the remittances have helped build foreign exchange reserves of $20.4bn as on December 4.

Notwithstanding the surge in remittances, the current level of external debt inflow just takes care of debt repayments while the ratio of commercial borrowings in total public debt is rising.

Of the total foreign loans and grants of $10.7bn received during 2019-20, $3.4bn or 32pc were commercial loans, according to the Annual Report 2019-20 on Foreign Economic Assistance released by the Economic Affairs Division (EAD) on December 11. Of the total inflows, 3pc were grants.

Commenting on the EAD report, Minister for Industries and Production Hammed Azhar said $10.4bn was repaid on account of debt servicing of external public loans, $8.5bn of the principal sum and $1.9bn in interests. Now China has lent $1.5bn commercial loans under the bilateral Currency Swap Agreement to enable Pakistan to repay $2bn Saudi debt. It is stated that the loan has been made available by upsizing the swap arrangement.

The external sector performance recorded for five months of this fiscal year as compared to the same period last year was as follows: exports of merchandise increased 2.11pc to $9.737bn, imports inched up 1.29 pc to slightly over $19.492bn and the trade deficit rose 0.48pc to $9.685bn. The export of services dropped over 25pc to $404m in October.

With low growth rates, rising unemployment and poverty, some governments have introduced universal basic income scheme to enable their citizens to receive an amount of money to cover their basic needs and ensure a minimum standard of living. That tends to narrow down the widening inequalities plaguing their societies.

As an enabler, the basic income support, in view of the European Environment Bureau and The European Youth Forum, will empower people to pursue more rewarding forms of labour and work for socially valuable goods but that will not be limited to paid work.

Though much handicapped for want of adequate resources, the PTI’s flagship Ehsaas programme has expanded the social safety net that has also helped stimulate sagging domestic demand.

The 7-8pc growth rate for 30 years (to absorb entrants of the labour force) envisaged in the summary of the ministry of planning division seems to be beyond the realm of possibility. It is time to develop a people-centred innovative development strategy which would enable citizens to fend for their livelihood and improve their quality of life by themselves.

Published in Dawn, The Business and Finance Weekly, December 21st, 2020