THE Planning Commission has prepared a strategy paper focusing on measures to improve the economic fundamentals that have retarded economic development with equity over the years.
Recently, the government had asked its strategic planners to determine as to why despite half a century of development, Pakistan continues to be trapped in a syndrome of low savings, low investment, erratic growth rates, low taxes and low productivity.
Interestingly, the same Planning Commission (PC) whose long-term development strategies have failed to materialize, has been entrusted with the task of proposing policy guidelines.
PC was given a mandate to come up with an in-depth analysis to explain as to why Pakistan is stuck up with a low-income equilibrium and has not been able to shake off much the traditional-cum-feudal modes of production and distribution. The PC was told to suggest modes of development adopted by the industrialized and fast growing economies the world over and applicable to Pakistan.
In their strategy paper, PC officials argue that macroeconomic stability is a critical pre-requisite for ensuring continued investment and availability of required resources— both from the domestic and external resources— to ensure better, growth, better investment, better taxes and better productivity. They maintain that it is equally necessary pursing programmes and policies for further improvement in living standards and quality of life for the people of the country.
Finally, they say that the formulation of a neatly-defined macroeconomic framework will help spell out the types of changes/improvements- quantitative and qualitative - needed in different institutions that impinge upon the economic and social development.
Strategies for growth, poverty alleviation and employment are basic to development process which needs to be bolstered with sound planning, and greater human participation and ownership.
According to the strategy paper, an macroeconomic framework in the context of long-term vision, will outline the contours of the economy during the intermediate and terminal period of the proposed 25 year vision.
It will provide the basis for consistent projections in other areas of the economy, namely social and infrastructure, in terms of setting sector priorities, financial availability, and demand for their services/products during the vision period.
But good policies are often founder on poor execution.
“To some major extent, I would admit that the Planning Commission failed to propose long- term and effective macroeconomic policies. But then the economic advisors and the officials of the finance ministry are equally responsible for failing to put this country on a right track in terms of suggesting better socio economic policies and their effective implementation”, says a senior official of the Planning Commission.
This was in that backdrop, he said, independent economists and experts had been demanding the closure of the Planning Commission, he said. “But our job is just to propose measures and implementation is not our job. That is why we always collectively have to share the blame for not putting this country on right economic path”, he said.
Giving the details, he said that the main measures of the various macroeconomic models for vision 2030 will accelerate GDP growth, through rapid productivity increase and industrialization of all activities whether agriculture, manufacturing or services (better practices, inputs and research, diversification quality management, improvement in productivity) through appropriate policies.
It will also focus on increasing national saving rates and investment so as to attain a sustained high growth with reduced dependence on foreign assistance and ways and means to keep inflation within a reasonable range. The Vision 2030 will include lessons from previous and current development efforts in Pakistan and elsewhere, especially about element of pro-poor growth, prepare a blueprint for societal needs and strategic benchmarks for economy growth, poverty reduction and social transformation.
The study will include the macroeconomic scenario for Pakistan’s ‘catching up’ with advancing countries through detailed modelling and simulation of various social and economic parameters which are probable and realistic enough to emerge during the next 25 years, examine options for major strategic stances, diversification options and new initiatives for economic growth. According to the Planning Commission, there is international consensus that the national competitive environment can be divided into four categories which are: economic Performance (domestic performance, international trade, international investment, employment and prices), government efficiency (public finance, fiscal policies, institutional framework, business framework, societal framework), business efficiency (productivity, labour market, finance, management practices and attitude and values) infrastructure (physical infrastructure, education, health, technological infrastructure and scientific infrastructure). “Each of these will be examined in the context of Pakistan and the future, weaknesses highlighted, and action proposed to mitigate them”, the study says. While economic growth is a ‘sine qua non’ for higher level of economic development, when combined with social and infrastructure development, it both feeds and feeds upon the remaining four areas. It is important to make the framework consistent, mutually enforcing and a catalyst for overall economic activity. The Commission officials believe that the new vision would identify the strong points that have to be taken forward into the future; and the weak points that need to be either rectified or eliminated.
It will further look at imperatives emerging from expected global scenario, and apply the desired share of the dream and vision for Pakistan in 2030. The macroeconomic framework will reflect a mutually consistent state (the present and future) of five key macroeconomic variables and their inter- connections. These are economic growth, distribution, employment and poverty, inflation/ monetary development, foreign trade and capital flows and public finance. Within these broad parameters, thrust will be to draw up models, policies and strategies which will steer the competitiveness of Pakistan in the right directions.
There is a need for different sectors of the economy to bear the appropriate burden in revenue generation and for the tax system to be more elastic with respect to tax base, so that increase in GDP can be automatically lead to proportionate increase in tax. “This require coherent long- term taxation policies and measures”, a concerned official said.
After the formulation of the required frameworks, it would be the test of the political leadership to implement them with all sincerity, otherwise we will be again to square one, ending up doing nothing”, he said.