Renowned economist Dr Hafiz A Pasha Friday said around one million more people lost jobs in 2018-19, making it difficult for the PTI-led federal government to live up to its promise of creating 10 million jobs. Addressing the launch of his book 'Growth and Inequality in Pakistan agenda for reforms' and seminar on 'State of Economy and Reform Agenda' Pasha said he along with his two PhD students in Lahore have constructed a macroeconomic model of Pakistan 47 equations and simulated the actions taken by the government since May.
"The end result is, during 2018-19 around 4 million more people became poor and one million other got unemployed and that is also likely to be the outcome this year, they even be more, if the country's growth rate is less and the inflation rate is high." The event was organized by Social Policy Development Center (SPDC) and Friedrich Ebert Stiftung (FES) at a local hotel here.
He said the government's initial slogan was of austerity; hence its focus should have been on rationalization of expenditures. But, the targeted growth in current expenditure (excluding debt servicing) is almost 30 percent which is one of the lightest growth rates ever, so there has been no focus on austerity. "With the help of FES, he said the SPDC has decided to produce annual review on structural adjustment with a human face, and will present alternative strategy for achieving stabilization for the benefit of people at large."
Talking about the state of economy and reform agenda, he said Pakistan had probably no other option but to go for a fund programme, but "the enthusiasm and the speed with which the adjustment has been resorted to, and the intensity with which the instruments like the exchange rate and interest rate has been used and the way fiscal policy has been used by cutting back particularly on development spending, and latest budget heavily taxing basic commodities and services, with all due respect, this speed and the nature of the adjustment is flawed."
Discussing on the book, Pasha said it focuses on the two fundamental structural deficiencies of Pakistan. First, since the early 90s we have seen relatively low growths around the average we have been below 5 percent growth. The other unfortunate dimension is inequality which has been in high during the last many decades.
Exemplifying the inequality with sharing the agricultural census outcomes, he said distribution of farm land remains extremely skewed in Pakistan as only 1 percent of the farmers of Pakistan own 22 percent of the farm area and their average landholding is over 400 acre of prime agriculture land. This kind of inequality has never been seen in the official statistics.
The book has sixteen sections, and presents a comprehensive agenda of reforms, covering the issues of trade, monetary policy, fiscal policy, social development, human development, and covers a wide range of subjects. Pasha said one of his popular chapters in the book which has featured in lot in social media has the title - 'State captured by the elite'. This is about privileges which are enjoyed by certain powerful wasted interests in Pakistan including feudal elites, the corporate sectors, high income individuals etc.
He said one of his colleagues Dr Bengali has suggested him to place this document of agenda of reforms before the national assembly for consultation to evolve some minimal consensus on the political economic agenda, as there are diverse subjects like the cost of load shedding, the cost of terrorism, the impact of CPEC, the revival strategy for exports, the agenda of tax reforms, the 18th amendment, how to focus on meeting the SDPs etc in this document. "So, if they do, I will be very happy to assist." Pasha said.
He said the government last year opted to cut development spending by over 30 percent which was the wrong this to do. The 'tax credit for balancing modernization and replacement' a very important fiscal incentive has been withdrawn by the government at a time when the textile industry was in dire need of training and technology to compete with the global export players.
Pasha said he had introduced investment policy back in 1998 that helped brining $5 billion investment in the country's textile sector in three years. He asked the government not to hurt the real tax base in search of the revenue. He urged the government for increasing property tax revenue. Mumbai's urban property tax revenue is some $ 750 million which is close to 90 billion rupees, but our total urban property tax stands at Rs 22 billion rupees. Writer Javed Jabbar, Dr Samina Khalil of Applied Economic Research Center, Muhammad Shabbir of SPDC, renowned businessman Dr Mirza Ikhtiar Baig and others also spoke on this occasion.