ARTICLE: The world seems to have been caught between what appears to be a sense of muted hope and a feeling of deepening despair, thanks to Covid-19. Pakistan is no exception. We are also sailing in the same boat.
And notwithstanding the pandemic-related concessional assistance offered by multilateral and bilateral sources, plus the debt standstill facility available until December 31, 2020, we cannot, however, rule out the possibilty of being pushed into self-isolation in a world driven by 'each for himself' motto-a disastrous side-effect of the pandemic.
Therefore, we need to take our future in our own hands and that too by being totally reliant on our own resources to achieve a modicum of self-sufficiency with equity.
We do enjoy the following comparative advantages which we could exploit to achieve this objective:
We are a market of 200 million plus. Essentially, we are an agricultural country. We are endowed with a huge youth bulge and a number of precious minerals and scores of waterfalls. China, world's foremost economic giant is our closest neighbor and a declared friend of all seasons; already the work-in-progress China-Pakistan Economic Corridor (CPEC) is being regarded as a potential geo-economic game changer for Pakistan.
But in order to be able to exploit to the maximum all these advantages we need enormous amount of financial resources which we do not have.
The rich countries short of cash to fund their stimulus packages to meet the challenges of Covid-19 are virtually printing money.
The IMF predicts that rich countries will borrow 17% of their combined GDP this year to fund $4.2 trn in spending and tax cuts designed to keep the economy going. Indeed, central banks are tacitly financing the stimulus which is being pumped into the economy by the government. This is exactly what we also need to do. Print money to get the economy kick-started with focus kept on each of the above mentioned comparative advantages.
Adair Turner, a House of Lords member and a former head of the UK's Financial Services authority has made a compelling argument in his recently published book that money supply and inflation have been decoupled in today's economy, and it may be better to stop dressing up monetary injections as bond purchases and just print the cash.
So, hopefully, we can also attain self-sufficiency in a 200 million plus market by printing money without suffering the damaging burden of infaltion rate going through the ceiling if we could dare take what is known as calculated risk.
There is, indeed, a lot of economic sense in investing the resources mobilized by printing money in public-sector projects aimed at expanding the much-needed physical infrastructure, like irrigation systems, power plants, roads, bridges, housing schemes, motorways and metro buses, etc. Such projects generate all kinds of jobs and most of these are highly labor intensive. Also, such projects do give a fillip to the manufacturing sector as demand for building material, such as cement, electrical fittings, plastic materials, etc., goes up. More jobs would mean more money in the hands of more people belonging to all classes: upper, middle and lower. More money in the hands of more people would mean a steep escalation in the demand for all kinds of essential and non-essential consumer goods, necessitating expansion in production capacities of the goods in demand, leading to a significant growth in the real economy.
At the same time, it would need a great deal of balancing in the allocation of resources to physical and social infrastructure (education and health) so as to make the two develop in a way that the opportunity cost is not too high.
While doing so, let us also seriously consider suitably using world renowned economist Atif Mian's advice (How to fix Pakistan - New York Times - Dec.10, 2019): "the unproductive moneyed class...instead of investing in real businesses buys urban land and sits on it the correct policy response to discourage such activity would be to tax the value of land appropriately. Moreover, the revenue generated from land taxes could fund much-needed urban infrastructure. Carrying through with the policy requires courage as a large percentage of urban land is held by the powerful elite."
We could also consider taking advantage of our geographical location. We are situated at the crossroads of trade routes that traverse from Casablanca in Africa to Urumqi in north-west China and from Myanmar in the Far East to Kazakhstan in Central Asia and Iran, Saudi Arabia and Turkey in the Middle East. CPEC would hopefully help Pakistan make the most of this locational advantage in due course of time.
The advent of knowledge-based society, which, perhaps, is no more than five years old, offers Pakistan and many other developing countries a godsend opportunity to escape to greener pastures. The fast-paced developments in the information and communication technologies have offered us new tools to jump start our education system.
A state does not deserve to be called one if it fails to provide to its citizens universal schooling, at least up to the primary level, universal primary healthcare, free potable water, universally affordable two square meals a day, universally affordable gas and electricity, universally affordable road, rail and air transport and univesally affordable housing.
So, the most essential function of the state of Pakistan, if it intends to become one in the real sense, is to enforce its tax collection laws with all the powers at its command. Secondly, it should rationalize its defence expenditure, bringing it in line with our funding capacity after having taken care of the physical and social needs of the population. Rich countries have already started using technology increasingly, to not only keep one step ahead of challenges that their food security systems are likely to face in the foreseeable future, but they have also started exploring nature itself to help their distant future generations avert the dangers of food shortages. But technologies with potential to reduce the cost of production come at a high price. There is one more reason why these technologies are not likely to be adopted anytime soon in most developing countries with surplus labour; they have been designed to reduce the number of farm hands needed to run a farm.
Some years back this writer visited a 1,300-acre corn farm in the US, which the owner claimed was being managed by just two persons - himself and his 80-year-old father. It was all technology. Rodney Schilling and his father perform all kinds of tasks on the Schilling Farms, from planting to managing, harvesting and transporting the produce to the market on their own, sitting in one or the other highly complicated, and in some cases, computerized machines. In fact, this writer saw one iPad-mounted machine, which does precision planting, reducing land wastage while selecting the right seed for the right soil. One can understand the machines and also comprehend their magical utility. But when it comes to interfering with nature for the genetic modification of seeds for higher yields, even comprehension takes leave of senses. But then today, in the US, 95 per cent of corn, 98 per cent of soybean and 85 per cent of cotton are bio-tech (BT). In India, cotton production has gone up to 30 million bales using BT cotton seeds. In Pakistan, we are still producing no more than 12 million bales because of official resistance to formalizing the use of BT cotton seeds. One fails to understand why we have chosen to concede our share of the world cotton market to India and China, both of whom use BT cotton seeds. In India, thousands of cotton growers are said to have committed suicide when yields crashed drastically on reusing hybrid seeds instead of, as advised, buying afresh for each new crop. This we can ensure by keeping supplies of BT cotton seeds strictly out of the private market. Also, we could with the help of our own agro-tech specialists working abroad turn these technologies into labour-friendly ones.
Since we are running short of irrigation water, it is about time we started using drip irrigation and at the same time discouraged production of water intensive crops like sugarcane. We also need to start conserving rainwater for the 'rainy day'. Meanwhile, we could put to beneficial use the scores of waterfalls in KP to produce electricity (estimated potential of 33,000 MW) as well as to store water for irrgation purposes. Also, we could enhance our minning activities, both in KP and Balochistan. The Reko Diq mines which have proven copper and gold deposits in commercial quantities could also be revisted by inviting relevant specialists of Pakistani origin working abroad offering them generous emoluments.
Copyright Business Recorder, 2020
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