EDITORIAL: The prime minister has come to the correct conclusion, perhaps a little late in the day, that the success of his government depends on how it is able to reduce poverty in the country. He said this while addressing an MoU signing ceremony between four private banks and the ministry of maritime affairs, which was aimed at providing soft loans to poor fishermen to enable them to add value to their work by purchasing some essential items like better boats and freezers. This is a very welcome initiative no doubt because these fishermen at the edge of Sindh represent one of the most marginalised communities anywhere in the country and any help they can get in incorporating modern techniques and equipment in their work will go a long way in bringing them into the 21st century.
This government has, to its credit, undertaken a large targeted subsidy programme by expanding the Benazir Income Support Programme (BISP), but how far such initiatives can go in actually reducing poverty remains open to a wider debate. Subsidies and concessional loans can no doubt ameliorate poverty and make people breathe easy for a while, which is admirable, but they are still mostly loans that have to be paid back at the end of the day and don’t do much to enable people to earn their way out of poverty. Providing temporary relief is one thing, however necessary and praiseworthy, but to actually make a difference in poverty levels on the ground the government needs to stimulate growth and generate employment in the real economy. And since neither is happening at the moment, the day when the government can celebrate lifting hordes of people above the poverty line isn’t about to dawn just yet.
The Chinese model, which the prime minister himself has praised to no end, was successful because the country registered double-digit GDP growth for two decades. That created the kind of growth environment and generated income flows that lifted hundreds of millions of people out of poverty, which is not short of a miracle. The Pakistani growth story, on the other hand, has been nowhere near as inspiring. In fact, the way the economy has been run over the last 20 years or so we have relied more on good luck than good policy to grow just enough to keep from collapsing. And now, with the pandemic taking whatever wind was left in the economy’s sails, there’s no telling when the time will come when the government doesn’t have its hands full with trying to secure bailout loans to keep from defaulting itself to give the country’s growth trajectory, and the lot of its poorest communities, much thought.
Right now, the economy isn’t exactly what stands out when it comes to the Pakistan Tehreek-e-Insaf (PTI) government’s strong points. The PM has had to change a number of finance ministers and the biggest reason for sending Dr Hafeez Sheikh packing was in fact high prices, especially in important items of daily use with very inelastic demand. That, of course, is the textbook nightmare scenario if poverty alleviation is one of your biggest priorities. The PM said very clearly that when he goes to the people after his five-year term, his success would be about “how many people have been steered out of poverty, not how many have become richer.” Yet so far there is nothing to show that the old trend of poor getting poorer and the rich getting richer has even begun to change. So if the PM is counting on poverty trends to do the trick at the next election, then he might be setting himself up for a very bitter disappointment.
There is no doubt that targeted subsidies put a floor under the most vulnerable communities and protect them from utter devastation in some cases. But that does not mean in any way that people are able to snap out of poverty because of such measures. The proper fight against poverty will be won only when we are able to grow strongly for a long time. And it won’t even begin if we are still uncertain about what kind of economic policies are needed and how much money we need to borrow for them. The PM’s aims are no doubt admirable, but when it comes to poverty a lot more than wishful thinking is going to be needed.
Copyright Business Recorder, 2021
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