empty vessel making the loudest noise - a view on the Paki economy

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BUDGET: EMPTY VESSEL MAKING THE LOUDEST NOISE

By Wajid Shamsul Hasan - cross post from SindhPost.

On the eve of the induction of Mir Zafarullah Khan Jamali as the prime minister

of the ‘loli-langri' democracy, President General Pervez Musharraf had blown

his own trumpet of handing over a revived vibrant economy with his make-believe

legacy of good governance. His handpicked Finance Minister- Shaukat

Aziz--imposed on PML(Q) coalition government--has come up with his fourth

budget—much of what at best could be described as a large empty vessel making

the loudest noise most loudly. When implemented, the budget for 2003-4 would

make the rich richer and poor and poorer.

This is Pakistan’s fourth year running under the stewardship of General

Musharraf with Shaukat Aziz handling the economy. In October 12, 1999 Musharraf

had promised good governance and revival of economy among many other things.

None has been achieved while he insists that he needs to keep on his uniform to

continue the so-called pace of progress initiated by him. There is neither good

nor governance in the country. Lawlessness is rampant, terrorism is the order

of the day, his much publicised campaign to deweaponise the society has

miserably failed or deliberately allowed not succeed in view of the close

collaboration between the agencies and the religious militants. About the state

of economy the less said the better.

The most appropriate indictment on Shaukat Aziz managed economy was part of a

survey published by the much-persecuted Lahore magazine “Weekly Independent”

(June 5) that gave details of what it called "Suicides Spiral'. For every

suicide there are ten unsuccessful attempts. It gave the conservative figure of

2,386 suicides last year and the gruesome cases it has quoted in detail leaves

one's conscience badly shaken and battered.

According to the Human Rights Commission of Pakistan, 178 people took their

lives in April alone--perhaps the highest toll in a month ever in Pakistan's

history. Independent print media estimates say an overwhelming 94 percent of

victims are in the age of group of 14-50 years. The main cause for people

killing themselves in such a large number lies in galloping unemployment with a

poverty level at more than 43 percent with 31 percent of Pakistanis barely

sustaining themselves on a dollar a day earning while Islamabad's Planning

Commission claims poverty at 39 percent in rural and 22.67 percent in urban

areas. The Asian Development Bank estimates poverty in rural areas has shot up

by 50 percent.

There is a wider perception that the federal budget will not be able to tackle

poverty, unemployment and the widening gap between the rich and the poor.

According to Sartaj Aziz people living in poverty had increased by over 11

million, from 36 million to 47 million during the four years and as per the

official Economic Survey the level of unemployment in the country had gone up

in the last three years from 5.9 per cent in 1999 to 7.9 per cent in 2003. He

is of the view that only a sustained rise of at least 6 per cent in the GDP

over several years would reduce poverty and that was not currently in sight

because of low level of investment in the country. The claims of "economic

recovery" and "take-off" made in the budget were based on very fragile

foundations and lacked substance to back them up notwithstanding a large number

of discrepancies in the facts and figures printed in the Economic Survey and the

Budget.

Despite the much orchestrated claim of the government to have achieved 10

billion dollar plus of foreign exchange reserves, there has hardly been any

foreign or reasonable domestic investment in job creating ventures except of

course a negligible number in the textile sector. Our wizard Finance Minister

does not account for the number of skilled and semi-skilled educated youth—in

between 200,000 to 300,000--who are becoming jobless every year.

In his “Mercedes-Benz” budget that has much too offer to make rich richer,

Shaukat Aziz has dismissed the enormous problem of unemployment just in

passing. He has claimed that the “government is laying special emphasis in

creating employment opportunities. Public and private investment is required in

this regard…this year we have increased our development budget by 30pc, which is

a historical increment. This would provide thousands of job opportunities.”

Indeed, there has been an enormous increase in foreign exchange reserves.

However, it needs to be emphasised here that neither Shaukat Aziz nor his

Finance Ministry’s performance have anything to do with the foreign exchange

pile up unless they also claim that they were responsible for 9-11 that created

conditions for the expatriate Pakistanis to send their savings back home.

Shaukat Aziz has not told us to what use this huge reservoir of foreign

exchange has been put to generating economic activity, employment, reduction in

inflation and overall prosperity in the country. Just a glimpse of the dismal

picture punctures the oft-repeated claim that the government policies are aimed

at alleviating poverty besides developing human resources seeking economic

growth. Indeed, facts speak louder than fiction as manifested in the

orchestration of governmental cooked up statistics that 40% additional budget

allocation was made during three years for poverty alleviation and that poverty

ratio has dropped to 0.8% this year. Leave him with his uniform in the

Presidency and the General's magical wand will reduce it to 20% in about five

years with the continuity of his ongoing policies.

While, indeed, continuity in uniform as President is the name of the game, there

is a considered view that the budget has failed to spell out steps that are

urgently required to bail out country's shattered economy. PPP Chairperson

Benazir Bhutto has hit nail on the head in her criticism of the federal budget

that it is bankrupt of measures that were drastically needed to stimulate

economy and to protect the working, middle and white-collar classes. She says

the budget has failed to address the issue of increasing poverty nor has it to

say anything for augmenting industrial productivity. "It is astonishing to find

that the Finance Minister claimed that the debt had come down when the State

Bank's Website said the opposite." Bhutto also has a point in highlighting the

yawning gap between wages and prices. According to her, diesel went up by 100

per cent while the government employees' salaries have been increased only by

15 per cent; electricity rates up by 50 per cent but pensioners only received a

15 per cent raise.

To add more to it, notwithstanding Shaukat’s phantom figure of 3.3pc, the fact

is that inflation was over 10 per cent at the time of the budget and with

prices of inputs to go up as a result of the measures announced, not to expect

a further increase is like living in a fool’s paradise. Only a highly

imaginative person like the Finance Minister sitting in his cool, comfortable

ivory tower can have the psychopathic satisfaction of believing that poor

people in Pakistan can afford to have cake when they do not even have the means

to buy their two rotis and are committing suicides for want of jobs.

Besides that, the most glaring and almost criminal, is the contempt shown to the

agricultural sector that forms the back bone of country's economy by not

extending any reasonable incentives to it. Shaukat Aziz’s policy framework is

reflective of the sustained and obvious anti-farmer bias as manifested

throughout the past four years directly contributing for the increase in rural

poverty. Instead of protecting the farmers from the effect of the subsidies,

our Citibanker-finance minister, under pressure from the IMF and World Bank had

started taxing the agriculture sector by imposing 15 per cent GST on fertilisers

and pesticides and raising the prices of electricity and diesel. When Musharraf

staged his coup against Nawaz Sharif, the amount of money owed to the banks by

defaulters was 180 billion rupees. He had promised to recover every bit of it

since it was doled out by the ‘corrupt political governments’ to their

favourites. Almost four years down the lane and despite enormous rescheduling

facilities and concessionary readjustments in the principal amounts, the

current default position stands at 260 billion rupees. This proves a continuous

deterioration in the economic condition in the country.

Briefly, about other claims of incentives for investment and creation of job

opportunities. One of them relates to the reduction in the interest rate. While

it would definitely benefit the 80,000 bank borrowers, it would be a

disincentive for the 18 million depositors whose funds have contributed in the

sustained cash flow and foreign exchange reserves. Since Mr Aziz’s is a rich

man’s budget, the lowering of the bank interest rate would make more money

available to the borrowers to make them richer at lesser cost than ever before.

It is a perception that the Finance Minister has reduced excise duty on cement

by 25pc not to promote and boost housing as an industry but to usher in

cartelisation so that the prices are managed ‘hizbe-mansha’. Mr Aziz would be

advised to look into the history to educate himself as to how housing became an

industry in Pakistan generating huge employment and shelter for the shelterless.

 

Prime Minister Zulfikar Ali Bhutto did it to implement part of the PPP

manifesto. His government recognised housing as an industry for the first time,

gave it tax and other concessions besides extending it and to the houseless

people land developed by the government at cheap rates. Real estate development

in Karachi, Lahore, Islamabad, Peshawar, Quetta, Hyderabad etc., became

phenomenal in the seventies. This was besides the mushrooming of the Defence

Housing Societies that enabled hundreds and thousands of military personnel to

become multi-millionaires overnight by selling their plots of land in the

choicest of localities at cheapest possible rates.

Indeed, Shaukat Aziz’s budget intends to do just what the Quaid was

fundamentally opposed to. Mr Jinnah had said that he would rather not have

Pakistan in which rich would become richer and the poor poorer. The other

message from the National Assembly—as columnist Imtiaz Alam—calls it, was not

of economic stability, but of political instability enough to shy away all

prospective investors, foreign or domestic. The post-9/11 windfall gains that

created fiscal space is being squandered at the altar of authoritarian

self-perpetuation.”

Indeed, it is rightly perceived that it was just not the economics that has been

wronged over the years but it has been the politics of state management that

been crippled. And even now the continuing lock jam on LFO is holding as

hostage the entire political system in a state of perpetual uncertainty. One

would, however, not agree with the view that since the General cannot be

removed by democratic means, the political forces need to come to terms with

him.

What needs to be realised is that the General has outlived his options in the

post-Saddam global atmosphere. Even his foreign mentors who invaded Iraq to

restore democracy to the people there would find it embarrassing to openly

support him. To accept him with his uniform and in the Presidency too would

mean establishment of a precedence rather than an exception to the rule leaving

the door wide open for other Bonapartic generals to walk in whenever it suited

their whims to “serve the national interest”. If the Constitution of 1973 is

not restored in its full glory and democracy its real supremacy now, than all

would be lost forever. (Article ends)

(ARTICLE PUBLISHED IN NATION, LONDON AND WEEKLY INDEPENDENT OF LAHORE)

 

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