Pakistan's budget hardly affects 10% of the population yet the entire population suffers. Why do we make life difficult for the country and the population? Where the legacy carries on is in the way, the economy expenditure is conducted. Examine all governments and see how they start recruiting their connections unwisely thinking that they are helping get votes.
Only a few ministers understand what is required of them. In fact, when the jobs are handed out, the majority of the recruits are not fit for the job. There are many kinds of difficulties that are to be faced by those asked to deliver. Examine any federal ministry or any department of the provincial government and imagine how jobs are provided to party workers, to relatives and how the media saves the day for these guys that are messing up the entire work of the country.
What happens when recruitment is not in keeping with the work required to be done. The increase in inefficiency is a normal occurrence. The government is considered a blotting paper that can absorb any degree of inefficiency. Soak all of it like ink is soaked by the paper. Not so any more.
The ministries of the federal government and the departments of the provincial governments do different kinds of work. The regulatory work requires a different kind of personality and the development work requires a different kind of personality. Not all can fit all kinds of shoes. The umbrella ministries like the finance, planning and law require that the person should not be a crank. If that happens and if he does not have shoulders broad enough to handle the situation, then life can become what it is today. If you were to consider the condition in which we are, then you will understand what has been happening. The work of the ministries and the provincial departments cannot be considered outside the framework of ethics and abilities. If the government functionaries are not functionally sustainable, then how do you get rid of him? If he is good and he is on the wrong side of the minister, how do you save him? How are the extreme situations handled?
It is wrong to assume that treason and rationality will prevail? That is not how the real world of Pakistan works. It is in a dilemma with itself and that dilemma is getting more and more complex.
Is it an arithmetic exercise in which one simply has to reduce the expenditure? It cannot be for the definitional issues will never be resolved by this kind of thinking. The budget deficit is to be held at 4.7% or whatever the figure? The balancing act is to be worked not in the traditional manner but rather differently. What balancing will one do in Balochistan for the provinces also create the problem? With opportunities few and far between, it is not surprising that the wrong kinds of abilities have been propounded.
The banking reform of the Musharraf regime was one of lies and puffed up accounts so that the individuals get the wrong impression and keep on using the wrong non-statistics. Since governments taxation policy inelastic, there is a requirement to either determine new basis for taxes or reduce expenditure.
In a developing economy and where the government is stagnant and the economy in regression, the chances of anything worthwhile are limited. Everything gets in to turmoil. The earning capacity of trade related investments do not work any more because it is not understood by the country that the requirements of the industry are different from the insistence of the International Labour Organisation [ILO]. Pakistan is a major signatory to the charter with 35 clauses signed while some of the most developed countries have signed at best 5 or 6 clauses. Why? The ILO is not interested in our earnings but what it is interested in is that we should not be able to challenge the major developed countries in their trade related matters. Only those countries that have not signed the ILO charter are doing well in export related trade. China is a great example. No ILO clauses for them.
We still have no means of knowing why we are doing what we are doing or what we have done? Unemployment is another expenditure-related intervention and which country would not want full employment. The tragedy is that there has not been any effort at mitigating the circumstances under which West-related opportunities are to be created. The feudal wants to get into the act. The deal gets more relevant when the expenditure items are added together; small wonder that the stagnant civil service had lost its masters, its teachers and its mentors.
When the WB economists come together, they do so to keep us in our place and to make sure that the debt crises increase or at least the benefits do not accrue to us. Have they ever made any comments on bad loans created by the industrial sector and the ability of the banking system to recover these bad loans from the signatories? Why should they for these loans are responsible for purchase of machinery from the developed countries and all kinds of human-related misdemeanours are created. No, they cannot be taken to task.
Take the tractor industry and the concentration in the industry. What is the requirement for the agricultural bank to have a credit line that has extended for nearly fifty years? That would never be allowed if the major beneficiaries were local manufacturers. The federal government has never taken the provincial government and the local government to task simply for misleading the economy. Local government would have ensured that there would be harmony in the requirements of the demand for these local institutions. Not to be outdone, the WB/ADB will encourage the formation of fiscal irregularities that would enable the gender aspects would be honoured in the fight. Nothing of this kind happens.
There are four options before a government to maintain its level of expenditures and the first one is to take it as it comes and do nothing. The second is to maintain an expenditure level that balances the expenditure with the taxes collected. The third is when the expenditure is maintained by all the government levels [national, provincial and local] at the most desirable level. The fourth is the level of borrowing from the public is curtailed.
In the case of developing countries, the borrowings from the WB/ADB and other international agencies to maintain their levels of lavish expenditure. The issue is that it is assumed that all expenditure is required and that there is no waste in the system. In fact, the Western system of organisational level has led to exorbitant waste.
The staffing at the federal, provincial and local level has led to this waste and this deficit creation. The sources of revenues will always be limited in the budgetary process. The purchasing would have to be based on a desirable level of active ingredients in the purchasing system. The entire result is then to look for the waste and to do away with that waste and superficial expenditure.
The formula for equilibrium level between purchases and expenditure is such as to allow the minimum imbalance in the economy. Functional finance should now be considered and should take this balancing aspect seriously. Expenditure that does not add to the economic prosperity of the population has to be reconsidered. For after all public finance has to be differently ordered.
In the case of Pakistan, the real culprits are the wasters that we have in the system under the mistaken consideration that these individuals are doing a productive job. That is not the case and the tendencies to encourage such appointments are a recurring loss to the economy. And yet it has no control. Pakistan's tragedy of the financial system is poorly and the only way to correct the system is to accept the actions of ones own financial managers. The devil has to betaken out of the system.