b. Selling Cheap: Except from 1971 to 1977 on the economic policy side, there was complete unconditional surrender before the US. The consideration for political and strategic support received for this support never passed on to the masses.
It created an elite segment of society that has now captured all facets of the socio-economic sphere. The problem does not lie with the US side; it actually lies with us as the economic policy people listed above were practically compromised and they were not from amongst the masses.
Despite complete surrender before the US in 2023, the trust of US authorities and their counterparts in Pakistan has weakened.
Understanding and addressing fault lines–I
c. Elitism and barrier of theocracy: The fourth fault line was continuation of elite culture heavily supported by theocracy, which acted vehemently against any progressive thinking; for example, the actions against family planning and female workers.
The author has worked very closely with the government during his short tenure in Islamabad as a chairman of Federal Board of Revenue (FBR). It is a fact that the ‘Q’ Block remains paralysed for the reason that the officials there are fully aware of the aforesaid fault lines, but they do not have the will and courage to address these fault lines whilst deciding the future economic policies of the country.
In author’s view, it is high time to correct these fault lines, otherwise this state will fail in a manner, which will be totally undesirable. The author’s interaction with the establishment during his tenure in Islamabad reveals that by now the armed forces have fully appreciated the gravity of these challenges and they are ready to correct provided the civil side takes the charge appropriately and sensibly.
Unfortunately, the civil side is not acting in a mature manner to understand the situation; they are being misguided by orthodox economists who want to maintain the status quo in order to remain relevant.
This is a conspiracy against the Pakistani masses, a conspiracy that has been perpetuating for the last 75 years. Should it continue? This question will find a plausible answer in the events that will be unfolding in the next six to twelve months.
Be that as it may, the primary problem of Pakistan is the continuous and perennial trade deficit. Our exports, which were equal to Vietnam’s in the 1990s, are now one-tenth of the same country. It is important to note that we often forget that trade deficit is a direct consequence of the fiscal imbalance and lack of investment in capital and human resources.
If we analyze the entire quantum of fiscal deficit of the last two decades then it becomes more than obvious that almost all of the deficit is there to finance non-capital expenditure, including defence. Interest cost is a balancing charge for which the concept of ‘primary deficit’ has been coined.
Now in 2023, the amount of our loans has soared to Rs 57 trillion, causing an interest cost of Rs 7,500 billion with a net revenue collection of less than Rs 6,000 billion. We cannot survive with these financial figures.
For a common man this matter can be explained in very simple terms through another example. Pakistan produces at least 70% of its exportable products in central Punjab. These goods are required to be brought to Karachi for exports.
During the last 75 years of Pakistan’s existence we have not made any improvement in our railway system. The number of cargo trains from Karachi, up and down, has only decreased.
The goods, therefore, are ferried through road transport. Transport cost through road network is at least 40% higher than through railways. The question that remains unanswered is whether Pakistan can ever be an export- oriented country with the present railway network and complete reliance on road transport. The answer is in the negative.
There is, however, a sense in this madness. All of us are aware of the fact that Pakistan does not possess adequate resources to finance the up-gradation of railways from Karachi to Peshawar. So instead of coming to the point to admit that they have failed, they intentionally choose to ignore it.
This ignorance or denial was acceptable when we had money to finance our trade deficit through various acts of generosity or bailouts by the US-led West. Then Gen Zia came and introduced the National Logistic Cell (NLC).
This was an emergency program at that time with a view to supplementing or strengthening the railways. It would have to be decided whether or not an agency directly under the army can be a commercial transporter competing with the private sector. This question is never asked and answered, although it is a simple question of economics.
To be continued on Sunday
Copyright Business Recorder, 2023
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