The dilemma Asad faces today is to bring the change through the conventional bureaucrats. The problem was faced by the previous ECC head (Khaqan Abbasi), especially when dealing with the power sector.
There are recommendations of NEPRA to raise the tariffs by Rs3.85 per unit and the ECC asked the babus to come up with some number crunching and data based analysis. The officers, however, came up with back of the envelope calculations with no substantiation of data. They were asked to do it again; but no meaningful analysis was put on table for decision makers to have informed decision.
This has resulted in a stalemate for the time being. And the story is no different for the FBR where the lists of those owning properties in Dubai or other information regarding big fish not paying taxes is based on secondary and unconfirmed sources.
In the days of Dar, the government used to think that they know it all and have made decisions even without consulting with relevant officers and if someone used to talk sense, he would have snubbed. But ever since Dar left, Miftah and Abbasi duo tired to take decisions based on facts and figures; but failed. And now Asad faces the same problem.
The issue is the capacity of government institutions. The institutional decay does not happen in a day and there is no quick fix. It would take a painstakingly long process to mend affairs. The need is to take the powers from the hand of line ministries and make regulators autonomous and independent.
The need is to build capacity by brining experts from private sector into these institutions and the government should base decisions on regulators’ and bodies’ informed analysis.
The government needs to move away from fixing pricing for energy such as electricity, gas and petroleum. As these issues are not only political but also the government machinery does not have the capacity. The politics has its role to play such as lately SBP has increased the interest rates by 1 percent to curb imported demand but at the same time the petroleum prices have not been revised up as per the recommendations of OGRA.
The by-elections are getting close and political compulsion for PTI is to take the tough decisions on the back burner till 14th October - the gas prices increase is yet to be implemented, the power tariff increase decision is pending and the petroleum prices have not been revised. With no respite to hike in oil prices, this would imply continuing accumulation of circular debt and higher imported fuel demand.
Similar is the case of FBR where policy unit has to be effectively separated from enforcing wing to make policy decisions independent from the pressures of tax revenue targets. The list goes on which includes numerous ailing PSEs in various sectors.
Here is hoping the government is cognizant of the fact and has appointed Ishrat Hussain for reforming public sector. The need is to wait for some time and let him and the team appoint right people at the right places and then these people would take some time to understand the system and form policies. Till then it is 'business as usual'.