Development experience of Pakistan in the recent past has been interpreted differently by various people. Government functionaries, including the Prime Minister and his colleagues miss no opportunity to propagate the achievements of the economy like high growth rates, booming industrial sector, comfortable level of foreign exchange reserves, better credit rating of the country, stability in exchange rate, lower debt servicing, and a decline in budget deficit. Until a few months back, surplus in current account, stability in prices and a buoyant shares market were also on their list of achievements but negative developments in these areas have forced them to be less boastful about their performance.
The government is so sure and upbeat about the direction of its policies that last year poverty level in the country was also claimed to be on the decline. Quoting a survey, covering 5046 rural and urban households, it was claimed that the incidence of poverty at the national level had declined by 4.2 percentage points with both urban and rural poverty showing a significant fall in 2004 compared with 2000-01.
Other social indicators representing the living conditions of the people, it was asserted, had also shown significant improvements, thanks to the strong growth and huge spending on the social sectors and poverty related programmes.
Unfortunately, the claims of the government about poverty reduction, improvement in the social sectors and employment generation are hard to believe. Unlike some of the textbook indicators, their level and impact could not really be felt by a vast majority of the people in their daily lives.
Yes, there has been an increase in the number of cars, air conditioners, etc but the misery, squalor and deprivation at the lower rung of society also clearly seem to be on the rise as evident from the number of beggars on the streets, high level of frustration due to growing unemployment, number of suicides and the deteriorating standards of government schools and hospitals. No amount of high sounding words can provide solace to the poor.
At times, the success claims of the government look like rubbing salt into the wounds of this group of people. Some of the important institutions have also joined the clamour to strengthen the perception of higher level of poverty and unemployment.
The Social Policy Development Centre (SPDC) of Islamabad occasionally comes up with statistical evidence to show that development in Pakistan is highly lop-sided, resulting in a widening gulf between income groups and regions. It is of the view that even if growth is maintained at 6 percent over the next few years, poverty is likely to increase by 1.7 percent unless pro-poor policies are vigorously followed by the government.
The World Bank and Asian Development Bank have also reminded the government that poverty in the country is on the rise and millennium development goals (MDGs) to reduce poverty by half by 2015 cannot be achieved with the present policies. In the recent meeting of the Pakistan Development Forum (PDF) held in the last week of April, 2005, the Dutch ambassador, representing the European Union, was quite blunt in warning the government that its medium-term development framework (MTDF) did not sufficiently address the issue of poverty and a well thought-out plan should be put in place as soon as possible in this key area.
In our view, there is no doubt that the overall thrust of the government policies to spur growth and improve major macro-economic indicators in the past was well conceived and fully justified, but the time has now come to pay more attention to redistribute the fruits of development for a just and equitable social order.
Such a policy shift, if delayed any longer, could have serious repercussions for social fabric of the society, unleash destabilising impulses and ultimately lead to derailment of the whole development process now underway. No growth is possible in a society torn by civic commotion and strife. When President Musharraf took over the management of the country, it was imperative to seek assistance from the IMF and other multilateral institutions, accept their conditionalities and undertake a tough reform agenda because of the waywardness of economic management in the past, but the situation has changed for the better since then. Pakistan has parted company with the Fund and is no more required to follow the rigid policies dictated at that time.
Taking cognisance of the growing discontentment in the society, a new beginning should be made in the forthcoming budget to increase employment and alleviate poverty by undertaking certain bold measures. We can understand the rationale of present policies like the emphasis on SMEs and higher social sector spendings, but the impact of such policies is either too limited or is felt after a long time.
It would be far better at this juncture to eliminate all kinds of levies on petroleum products and utilise some fiscal space, if needed, to reduce their prices. Such a step would lower the cost of transportation, energy and other basic industrial and agricultural inputs and result in increasing employment and softening price pressures which would provide a great deal of relief to the common man.
The concept of "pass-through" and "revenue earner" in the case of P.O.L. products was all right when fiscal deficit was exceptionally high and the Fund had to be satisfied, but the ground realities have changed and Pakistan can now afford to have a slightly higher budget deficit or mobilise revenues from some other sources. The prevailing dissatisfaction, under no circumstances, should, in our view, be allowed to exceed the tolerance level.
People of Pakistan are not known for their patience and should not be expected to remain a silent spectator to the widening gulf between the 'haves' and the 'have-nots'. The growing discontent may render them vulnerable to exploitation and provocation to take to the streets on the ground of growing inequalities. Some concrete measures are immediately needed before they run out of patience and try to repeat the experience of the late 1960s.
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