Need for much improved ‘Uraan Pakistan’ plan

Ministry of Planning, Development, and Special Initiatives (or simply ‘Planning Ministry’) recently launched Pakistan’s thirteenth five-year plan (2024-29) under the title ‘Uraan Pakistan’ – where the word ‘uraan’ means flight – as the government under a ‘5Es’ framework intends to focus on (i) exports, (ii) E-Pakistan, (iii) environment & climate change, (iv) energy & infrastructure, and (v) equity, ethics & empowerment, with high-spirited comments, for instance, from the President as ’Our vision is to see Pakistan among the top ten economies by 2047, the centenary of our independence, while the PM hopes country to achieve the ’milestone of a trillion-dollar economy by 2035, and the minister for planning aiming still higher, whereby reaching ‘a 3 trillion’ mark.

Although fully appreciative of the ambitious nature of the plan, something which the country needs to get, given it is heavily indebted, with more than one-third population being below the poverty line, and having acute level of inequality and being among the top ten climate change challenged countries, yet the plan seriously lacks two essential ingredients – an underlying appropriate economic philosophy, and a purpose-driven strategy; something which makes the plan quite a non-starter on the face of it unless an accompanying document fills on these important details.

Regarding economic philosophy, the country is knee-deep following neoliberal policy since the late 1980s, even though a strong backlash is in order, both in developing countries, and more advanced ones.

Moreover, the country also needs to rein in overboard use of austerity policy – a phenomenon closely associated with Neoliberalism as it sees a very dominant role of aggregate demand in determination of inflation, while it is quite clear that especially in developing countries like Pakistan, aggregate supply has at least an equal role in determining inflation – since it balloons the interest payments facing the country, taking away not only significant amount from fiscal space, but also a lot of growth sacrifice is rendered for short-lived macroeconomic stability since inflation makes a comeback as soon as policy rate falls, given seriously wanting institutional reforms on the aggregate supply side, which continue to be ignored.

Nobel economics laureate, Joseph E. Stiglitz, for instance, in his comment published in a Project Syndicate (PS) published article ‘What comes after Neoliberalism?’ not only points out the serious shortcomings, and dangers of following a neoliberal policy, but also rightly draws parallels between a neoliberal policy, and ‘sound economics’ being practiced by colonials, with the overall aim of extracting resources from the most in society, to a few elites similar to what happened during colonial times when, for instance, the theory of ‘comparative advantage’ kept the colonized country to continue to produce low value-added raw products, while the colonizers produced much more value-added products.

In the article, he articulates his thoughts in this regard as follows: ’The neoliberal agenda was always partly a charade, a fig leaf for power politics. There was financial deregulation, but also massive government bailouts. There was “free trade,” but also massive subsidies to big agriculture and the fossil-fuel industry.

Globally, this led to the creation of rules that preserved colonial trade patterns, with developing countries producing commodities and the advanced economies dominating high-value-added industries. …That it was a charade has now been made apparent by the US, which is providing huge subsidies to certain industries – essentially disregarding World Trade Organization rules – after decades of scolding developing countries that even considered doing the same. …The end of neoliberalism, the recognition that some of the institutions created under its aegis are failing, and the new geopolitical realities provide us with a critical opportunity to rethink globalization and the rules that have underpinned it.

We must seize it.’ The policymakers seemed to have not lifted the veil from the global backlash on this policy, and hence not internalized an appropriate plan of action in response to the neoliberal assault, for instance, by announcing a social democratic styled policy framework.

Lack of institutional reforms is another important missing link in this five-year plan in the sense that while focus on improving institutional quality is mentioned, but such focus is too narrow, and is not nested in the proper understanding of what institutions are in the first place; something, which does not qualify the ‘plan’ to be called a purpose-driven strategy. Firstly, what are being called institutions such as educational institutes, hospitals, police, among others, are basically organisations.

Secondly, implementation needs to come from each and every involved institution or, in other words, ‘ministry’ since it is the ministry that provides the laws, rules, and procedures, through getting approved legislation from parliament, and provides a conducive environment for the underlying organisations/state-owned enterprises, or departments at the provincial level for sectors that are purely provincial subjects.

Hence, formulating a ‘National Economic Transformation Unit (NETU)’ is not an implementation framework, but just a macro-level coordination center for bringing some understanding of how involved stakeholders are performing, which is a ‘too little’ sort of approach, while what is needed are sound institutions or ministries and the underlying organizations, and markets, with effective public service based on administrative-, and technocratic services, and operating at two different levels of routine- and fast-streams, depending on the quality of efficiency, with the better performing lot in the later stream.

Thirdly, how markets relating to the domain of each institution, like markets for education, markets for health, markets for public goods, will need to be co-created by the public sector, in partnership with the private sector. That is, the government needs to understand that the neoliberal model of relying too much on ‘market fundamentalism’, that is, market knows best, and requires least regulation, and that government is only a facilitator to the private sector – rather than being a ‘co-creator’ of markets, and an active partner of partner of private sector – has back-fired in terms of poor price-, and service discovery, as the case may be of particular sector, like (i) agriculture where farmers have received poor pricing of their farm produce, (ii) educational institutes having charged too high prices (or fees) for low quality education, or (iii) high taxes being paid for public services like police, health, for low quality service.

Moreover, depending upon what suits a particular sector that will determine the extent of role of ‘hierarchy’ or government regulation in a particular market which, in turn, thus categorizes into market, and hybrid, respectively, with the latter category having a lot of involvement of hierarchy.

Sadly, the five-year plan lacks this philosophical clarity, and envisioned under it, thereof, an effective implementation strategy. Lofty goals do not mean much; it is the clarity of problem, and the necessary process, all of which are seriously lacking in the ‘plan’.

Also, there is lack of centrality to the existential threats facing the country, and this is in the shape of main global challenges like climate change, and the associated ‘Pandemicene’ phenomenon.

This is because it is after such centrality is given, that any plan being envisaged, then needs to have an overlapping, three-pronged plan, based on coordinated effort from environment, economy, and epidemiology.

Such necessary contextualization is totally absent from this plan, adding to many reasons why the plan is virtually a non-starter in terms of reaching any lofty goals, may that be of tripling economic growth rate, or level of exports, over the medium term, since by not understanding that the plan needs to be based on social democratic type economic philosophy (and not neoliberal), needs to understand the importance of right-sizing the government, in terms of both the extent and nature of government’s role in reducing transaction costs, and better price discovery.

Copyright Business Recorder, 2025