It seems that top functionaries of the government are not much bothered about the ground realities and are excessively optimistic about the future. After a successful visit to China (no visit has ever been unsuccessful in Pakistan) where about 40 agreements were signed for the promotion of trade, investment and economic relations, Prime Minister Shaukat Aziz was highly upbeat about the prospects of the economy.
Addressing a press conference, he revealed that GDP growth during the current year would be above seven percent which would be higher than expectations. The share of rural areas in this growth would be higher than urban areas'. Per capita income which would be around $900 this year would increase to $1000 during FY08.
When his attention was drawn towards the current power crisis in the country, he replied that he had called a meeting of all the stakeholders to review the situation and devise a proper strategy. Iranian gas and imported LNG would be used for power generation. As far as Karachi was concerned, the KESC system had been improved and its management was engaged in maintenance work, which, hopefully, would be completed soon.
Beautiful words indeed if these were the only indicators of a better future, although veracity of the figures he quoted could also be questioned. For the per capita income to reach $900 in 2006-07 and $1000 in 2007-08, net growth should be 6.26 percent during the current year and 11.1 percent during FY08. Assuming a population growth rate of about two percent per annum, increase in national income required to attain the above level of per capita income appears doubtful.
The comments of the Prime Minister on power shortage in the country also betray a certain level of indifference to a huge problem. Everybody knows that there have been numerous meetings on the subject without any visible results. Increased generation of power, which is the real solution to the problem, is nowhere in sight.
Meetings would lead nowhere if not followed by resolute action. Import of Iranian gas, to which Shaukat has referred, to eliminate the energy shortage is still in the planning stage. How long would it take to construct the necessary pipeline to import this gas and then convert it into electricity by building the power houses, etc is anybody's guess. Every resident of Karachi knows that the KESC system, instead of showing improvement, has gone from bad to worse after the privatisation of the utility.
In all seriousness, we believe the government authorities should attend to the real problems of the economy and be less boastful. To sustain even the present growth rate, savings and investment rates in the economy have to increase substantially, but there is no proper policy framework in place to achieve such an increase. Trade and current account deficits of the country are on the rise and reaching nearly unsustainable levels.
The budget deficit, after remaining under control for a few years, seems to be again widening while such imbalances persist, the standard and quality of life of ordinary man seems to be deteriorating rapidly. He is not only groaning under the weight of poverty and consistent increase in prices but has to face a number of other problems, too.
The Power crisis, particularly in Karachi, has reached a stage where it is becoming unbearable and could lead to riots at least in some parts of the city any day. Law and order situation has deteriorated to an extent that nobody feels safe and the security agencies have seized the opportunity to do a roaring business.
The writ of the state appears to have ceased to exist for most people for all practical purposes. People are generally so fed up and engrossed in their own problems that they don't even care what the government is saying about the economy and its prospects. Statistics about growth are just meaningless for them.
We would advise the government to realise the actual difficulties of the ordinary people and tailor its policies to overcome those rather than live in a fantasy world of its own. Would it be too much to ask for really narrowing the mismatch between production and consumption of energy to start with? People at large would be much happier to get regular supply of electricity and industry would get a boost even if per capita income remained stagnant.
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