'Build a pyramid, if you have to...'

ARTICLE: When you are in a crisis what you do is build an infrastructure-you build a pyramid if you have to, build anything. You create jobs and the economy doesn't stop--John Maynard Keynes

But when you have multiple options, you need not build pyramids; instead you should select the most appropriate option that would take care of the most of our jobless, that too at the most economical cost and at same time having the widest and the deepest positive impact on the national economy.

Prime Minister Imran Khan's first preference seems to be housing. On the face of it, the choice seems to be just what, as they say, the doctor had ordered. There is, indeed, a huge backlog of housing in the country. It is a highly labor intensive activity as well, catering mostly to most of the daily wagers which make up the majority of those who live from moment to moment. And a vigorous house building activity has a multiple economic impact with forward and backward linkages triggering accelerated production in some 70 or so related manufacturing facilities.

However, so far the housing industry in the country has remained confined to constructing luxury houses and apartments, for example the DHAs, Bahrias and similar other housing schemes which when completed require, to make them livable, substantial water, gas and electricity supplies which are already in short supply in our country. Such schemes have done nothing to reduce the backlog of housing that cater to the needs of our middle and lower middle classes. In fact most of the real estate actors in the country have only catered to those whose main purpose for investing in housing has been to camouflage their ill-gotten money. And, as the amount of black economy started swelling and the available land for constructing such luxury houses became dearer these real estate actors started buying agricultural land for the purpose, thus impacting negatively on our future food security situation.

One cannot, therefore, rule out the possibility that the generous concessions being offered to the housing industry by the government would not be manipulated by these real estate sharks to enrich their pockets further without making any dent in the affordable housing backlog the country is suffering from currently.

What is perhaps needed to avert these pitfalls is to change the focus of construction industry from housing to infrastructure building. And to save precious resources from going waste a ban should be immediately imposed on launching luxury housing schemes and on converting agricultural land into plots for housing. In any case investment in such luxury housing schemes is considered dead investment - as good or as bad as investing in building pyramids.

PM's Naya Pakistan Housing scheme, however, should be taken in hand in right earnest as such schemes have the potential to curtail significantly, in due course of time, the huge backlog of the kind of houses that are required to bring housing within the reach of our middle and lower midde income groups. Verticle buildings having two-room bankable apartments should be built in all cities in the public sector and allotted on mortgage basis. Private sector should be kept out of such projects.

The recently announced Quaid-i-Azam Business Park occupies the top of a long list of infrastructure projects that are being earmarked for early launch. Indeed, the Sheikhupura project is ideally located between the business hubs of Lahore and Faisalabad. Such projects would increasingly attract relocation of those manufacturing units in China that have become uneconomical for Beijing because of escalating labor costs there. Other such projects include Ravi River Front urban development.

A number of such projects to be constructed in Sindh, Balochistan and Khyber Pakhtunkhwa costing a total of Rs. 290 billion have already been approved by the ECNEC. The list includes 306 km long Hyderabad-Sukkur Motor-way at a cost of Rs165.67bn; 47.55 km Khyber Pass Economic Corridor project at a cost of Rs77.9bn; 146 km Hoshab-Awaran-Khuzdar Section of M-8 project worth Rs26bn; Land acquisition for Swat Motorway Phase-II at a cost of Rs20bn.

All these projects could be launched as public-private ventures which would cause accelerated economic activity in the immediate surrounding areas. With job opportunities opening up at these locations as the projects get launched the labour force belonging to these areas gone to cities in search of livlihood would return home thus bringing down pressure on jobs in cities which in turn would cause a disruption in the labor supply-demand equation in cities resulting in the cost of labour going up in these cities which would certainly be a labour-positive development.

It would certainly be a prudent decision to let consruction industry take the lead in reviving the economy with special emphasis on infrastructure building. However, putting all your eggs in one basket would not be considered prudent. We need to take a closer look at other options as well, which may not seem as promising as the option of building infrastructure, but could be promising enough to merit a closer look.

And since we enjoy a clear comparative advantage in agriculture, this sector would in any case merit a closer look. More so because, this option concerns the future of our food security. And it is also highly labor intensive sector. And increased economic activity in the agri-sector would mean more job opportunties in the rural region which, to a large extent, would help discourage the exodus of able bodied population from rural to urban region. This will further lessen the pressure of population in cities which at the moment are bursting at the seams.

The focus on agriculture should be aimed at turning Pakistan into the granary and orchard of the entire region including the Middle East and Central Asia. The emphasis in the industrial sector should also be on agro-based manfacturing rather than engineering industry for which we lack comparative advantage.

The prospects for agriculture mainly hinge on adequate water availability, better seeds, use of modern technologies and the latest hardware. But first of all the government would need to take a number of steps on priority basis to improve the efficiency of water use. There is an urgent need to expand the program of linning of existing canals and building of small reserviors and dams.

In this regard the government would do well to seriously consider a recent statement of KP chief minister Mahmood Khan which he made during a Nepra hearing. Khan said that the province had a potential capacity of producing more than 30,000 megawatts of electricity, which could be utilized to address energy crisis in the country as well as solve KP's irrigation water problem.

There is also the need for increasing the use of drip irrigation by offering subsidy on the purchase of required equipment. Meanwhile, water charges need to be rationalized to make its availability cost effective. Also, cropping pattern, especially in Kharif needs to be changed towards less-water intensive crops. Sugarcane consumes three times as much water per acre as other crops like cotton which is the mainstay both as raw material for our manufacturing sector and also as major export earner.

Agricultural pricing policy also is in the urgent need of change. The coverage needs to include cotton (phutti), potato, onion and many other major and minor crops.

India has procurement/ support prices for as many as 28 commodities. Further, agriculture is massively subsidized in India. The total subsidy given to agriculture is as much as $27 billion. Fertlizer subsidy alone adds up to $13 billion. The corresponding estimate for Pakistan is about $600 million only. The price of urea in India is 60% less in dollar terms than in Pakistan.

We also need to set up silos for grain storage and cold storages for preserving perishable crops.

Also, we need to take a closer look at the livestock sector as well. So far we do not seem to have exploited this sector to its maximum potential. Of course, estimates show that the poultry products have shown fastest growth of almost 8% per annum. Milk consumption has also gone up by 2.5%.

However, there are no annual surveys of livestock and their output, as is done in the case of crops. We need to undertake such surveys regularly to update the real situation and make the most of this sector.

Copyright Business Recorder, 2020