AS the widespread public criticism indicates, the country’s governance is deteriorating. And if the multiple crises are any indication, cultural practices based on ‘old mission, vision and values’ have failed to deliver.
When governance is anchored on failed ideas, different outcomes remain a dream. Going by the news reports, policymakers are averse to a change in the ‘work and institutional’ culture, resulting, among other things, in a controversy over the accuracy of the current economic growth rate. Budget figures can be fudged, but because of it the ground realities will not change. Unaddressed problems will make the situation worse over time.
More often than not, policymakers are hamstrung by powerful lobbies or they may represent the status quo and shy away from taking tough decisions. For example, no serious effort has been made to collect tax on farm incomes over the past six decades barring a legislationduring the Bhutto’s government which was annulled by military ruler Zia ul Haq.
While the major stakeholders may resist reforms, the multiple crises that result from the resistance, change ground realities and become harbingers of structural changes. The delay only in seeking timely and appropriate solutions do more damage and often result in a collapse.
The banking system that expanded so rapidly under Shaukat Aziz’s stewardship is shrinking. Despite the so-called best ‘internationalpractices’, many foreign banks have wound up their operations in Pakistan and the process is continuing. Risk-shy domestic banks are heavily dependent on government bonds to post robust profits. Sooner or later banks would reach the conclusion that exclusive focus on the balance-sheet is not as prudent as working with other stakeholders to push economic growth rate. After all, it is economic growth, that offers them lucrative business. In a sinking economy, the banks cannot risk giving credit as liberally.
No doubt, with the unitary system of governance thoroughly discredited, the present government succeeded in strengthening fiscal, legislative and administrative autonomy of federating units but the provinces have yet to build their own capacity to deliver public goods effectively. While democratic federalism has been reinforced by the Seventh NFC Award and the 18th Amendment, egalitarianism has largely been reduced to paltry handouts to the poor under the Benazir Income Support Programme supported by World Bank funds. PPP’s vision of the federal democratic and egalitarian system is still far away.
It may, however, be conceded that the country’s political culture is changing. The Constitution, this time, has come to stay. It cannot be abrogated or suspended because the multiple crises cannot be resolved by any individual institution, however strong and powerful it may be, while cooperation among various stakeholders has emerged as an imperative.
Either by choice or compulsion almost all major political parties are working together in coalition governments at the federal or provincial levels as a result of the electorate mandate of March 2008. While maintaining their independence, political parties are learning to cooperate with each other.
While so much noise is being made over preservation of national sovereignty, there is no effective policy to achieve economic self-reliance. If the Western sources of financial assistance are drying up, the government is trying to make up for the shortage of foreign credit by seeking funds from China or Russia. There is no strategy to mobilise domestic resources and investment. Worse still, over the past four years, the present government has failed dismally to overcome the energy shortage. The experiment of rental power plants has ended in a fiasco.
In the field of economics, the present government continues to stick to the old policies which have failed to deliver. Its record on delivery of ‘public goods’ is dismal. Neither politics nor economics is grounded on common good. The rich are lightly taxed despite the huge profits that corporations are making in what is generally described as a distressed economy.
While higher agricultural support/ market prices have injected billions into the big farmers’ pocket, they are being treated as ‘sacred cows’ and remain virtually ‘exempt’ from income tax. No questions are asked about the source of funds invested in the stock market. And energy that fuels growth is either heavily taxed or exorbitantly priced. The subsidy given by the government to the KESC has gone up since privatisation.
The economy suffers from inefficiency because of the presence of a powerful community of rent-seekers while entrepreneurship is stifled by bureaucratic hassles and all forms of corruption. That explains much of the buoyancy in the informal sector.
The multiple crises facing the country cannot be resolved without a culture change — replacing old ideas by the new ones whose time has come, changing mindsets and, at the same time, tackling in an integrated way a whole range of persisting social, economic and political issues. It is about setting new strategic directions by focusing on the big picture. As it appears, the current national debate on a wide range of issues has the potential to help usher in a culture change.