Akram Khatoon
Pakistan has been witnessing frequent upheavals and rather downturns in its economic path for the last thirty years, depriving it of sustained economic growth and giving poverty a stagnant status.
Apart from various economic and social inhibitions, resultant of its geopolitical position like a large poorly educated and fed population and their lack of access to new technologies and worsening law and order situation in the wake of increasing terrorism, both on the borders and within the country, it is mainly the poor institutional framework that is hampering sustained economic growth pattern and rule of law.
A good institutional framework aiming for removing severe inequalities needs to ensure enforcement of property rights for a broad section of population, ultimately resulting in access to economic opportunities for all. This presupposes elimination of bad practices like corruption, manipulation and expropriation of income and investment by powerful elites and even politicians adding to inequalities in all walks of life.
Legislative assemblies, both at federal and provincial level, need to bring reforms in agriculture sector on priority basis, thus ensuring property rights for the real cultivators on the farms they are toiling on. In view of the growing shortages of both food and cash crops, landless farmers need to be empowered by giving them proprietary rights of the farms, thus prompting them to put in their best to improve yields of the crops through the use of new technologies.
In this regard the recent announcement by the Chief Minister of Sindh, in his budget speech to allocate two lakhs acres of land for poor Haris with provision of all farm inputs to be provided at reasonable cost needs to be applauded. It is also heartening to note that at least Sindh government's policies are gender sensitised as a sizeable allocations of land are to go to women farmers.
Similar initiatives need to come from legislators of other provinces. There is urgent need to improve yield of all crops. Incidentally the present yield of wheat crop per hectare (16.8 tons) is now the lowest even among South Asian countries.
There is need to apply latest technologies regarding all farm inputs, which must be accessible to farmers through easy and cheap institutional credit. This must be free of all bottlenecks and infiltration by big landlords as happened in the seventies and early eighties that a viable supervised agriculture credit program met least success due to misappropriation of credit by big landlords, which in fact was extended to small farmers by big five state owned banks.
The culture still pervades in rural areas and despite presence of branches of Zarai Taraqiati Bank, various micro finance banks and commercial banks landless cultivators continue to remain at the mercy of big vaderas, who in fact are absentee owners of the land running big industrial projects in urban areas and abroad and are least interested in improving yield of the crops through the use of new technologies.
Apart from feudal culture the dictates of funding agencies like IMF and World Bank, who insist on removing subsidised crop price structure and also producing exportable surplus of both food and cash crops leads to uprooting and destruction of small farms, while big landlords having big farms are benefited by producing exportable surplus crop by applying all improved farm inputs, which can fetch them favourable price, while poor farmers cultivating the same crop expecting same price is hoodwinked by middlemen and seldom finds himself in a cost effective deal.
The government's decision to remove all subsidies, particularly from petroleum before the end of the current year is not a wise move. Sharp escalation in all fuel prices, almost 6 times in a period less than four months, and substantial increase in food prices due to higher prices offered to farmers are causing immense misery to common men.
Although arrangements are there for providing essential food items at subsidised prices, yet due to little control on monopolistic trend and cartelization on the part of suppliers, unbridled hoarding, smuggling and speculative trading is going on in major food items like wheat, rice, sugar and edible oils. This has already swelled inflation rate to 20%, thus bringing another big chunk of population below the poverty line.
The price spiral of all items may engulf the country in a worst inflationary situation by the end of the year unless strict measures are taken by the government to curb unlawful trading practices. In this regard there is need to make Monopoly Control Commission more effective to obstruct growing undesirable monopolistic and cartelization trends.
Compulsions from foreign funding agencies during the last two decades for undertaking structural adjustment programme in all aspects of economy in general and strengthening institutional framework of public sector entities for improving development prospects by improving fiscal, monetary and exchange rate policies, but lack of good governance and unnecessary or rather ill-planned intervention of establishment in the affairs of these organisations continue to impede smooth functioning of these entities.
Despite State Bank of Pakistan getting autonomous status was subjected to severe government influence for doing heavy deficit financing during the last and current fiscal years.
Disinvestment and privatisation of public sector corporations and financial institutions done at the behest of funding agencies remained lacking in transparency mechanism, thus not only depriving the country of just and fair price of entities, but also suffering of general public due to poor performance, particularly of utility services providing companies like KESC and PTCL etc under their new management.
It is due to weak institutional framework, devoid of rule of law that despite sizeable allocations for development of necessary infrastructure and particularly for social sector, development funds were not either utilised effectively or remained unutilised.
Resultantly, in the area of education, it has now been revealed from World Bank's recent Survey report that despite sizeable increase in enrolment rate for primary education hovering around 51%, net induction at primary level remains stagnant at 40% due to high dropout rate.
No doubt incentive of stipend scheme of Rs 200 per month in Punjab and Rs 1000 annually in Sindh announced by respective governments for girl students from low income families has arrested the growing trend of dropout among girls to some extent, but lack of monitoring and supervision by relevant education departments facility is not accessible to a large number of girls schools, both in rural and urban areas of these provinces.
It is also unfortunate that due to poor governance at all levels, a large number of schools, particularly in rural areas, though existing on record, were never established and not only sizeable funds were embezzled, but also a large number of children could not have access to education. In this scenario achieving MDG of primary education for all by 2015 will remain a dream.
Allocations for social safety nets like subsidised food items to poor through utility stores and monetary help through Baitul-Mal announced both by previous and the present governments, seldom reach the deserving poor families due to little care for accountability and transparency in the institutions. Consequently the country is likely to miss the MDG of halving poverty by 2015.
Controversy regarding construction of big dams and hydro-power projects for improving electricity and water supply position is going on for the last three decades and lack of commitment and seriousness of each successive governments prevented taking firm decisions to start and complete all viable projects. As such the people of this country cannot expect respite from loadshedding in the foreseeable future.
In order to remove economic and social imbalances the entire institutional framework of the country needs to have emphasis on accountability and transparency. This will ensure not only targeted sustained economic growth, but also fair distribution of growth benefits among individuals and groups of society according to their inputs in the economic process.
Institutions working for economic stability and regulating economic process like all tiers of Ministry of Finance, State Bank of Pakistan and Securities and Exchange Commission need to enforce monetary, fiscal and exchange rate policies in letter and in spirit with total transparency at all levels. Besides that independent judiciary, free press and corporate governance need to be strengthened in order to ensure the rule of law to prevail and to arrest the growing inequalities.
Since the country at present is subjected to enormous external and internal economic shocks due to sharp rise in oil and food prices internationally and scarcity of food items due to lack of check on hoarding, smuggling and cartelization in trading of food and other essential items leading to unbridled rise in food inflation and trade deficit as shortage of these items compelled the government to import to remedy the situation.
There is need to review macro economic policies in the areas of trade and fiscal issues. There is need to cut down use of oil and unnecessary import of luxury items by tightening the fiscal policy.
Recent announcement by the Prime Minister to cut down use of oil products and imported luxury items is the right step in this direction, but it is to be seen how the policy is implemented; whether by cutting down public sector expenditures or by levying more taxes on luxury items. In this regard macro economic policy must be geared to achieve the objective at the least possible cost and without causing social and political conflicts in the country.
