LAHORE: The United Nations has come out with the lowest GDP growth projection of 2.1 percent for Pakistan; earlier Fitch had estimated growth of 2.4 percent in 2020-21, and International Monetary Fund (IMF) 2.8 percent.
Improvement in some economic indicators does not mean they would trigger growth. A comfortable level of foreign exchange reserves simply ensures that Pakistan does not default anytime soon.
While on one hand stable rupee partially attracts investment, compressed imports (another indicator government proudly publicises) means decline in growth and productivity as import of numerous raw materials has also been compressed.
On the other hand, high inflation means a setback for investors and operating businesses.
High mark up discourages private sector to seek loan even for working capital. Decline in large scale manufacturing is the outcome of these above negative indicators.
Turn down in productivity accompanies pressure on existing jobs and reduces new job creation. The sharp decline in cotton production means that we would add an unnecessary burden of $2 billion on its imports even to maintain the current sluggish exports of textiles.
Our woes are the outcome of the absence of government writ and political will to set things right. We ignore blatant violation of law.
There are many instances that can be quoted like the affairs at customs, ignorance of massive corruption in power sector, and the non-transparent management of public sector companies.
There are many other spheres where improvement is needed. Let us for instance look at the plight of the sugarcane farmers.
Law mandates that all sugar mills in Sindh start sugarcane crushing season on October 1 of every year and on October 15 in Punjab. No sugar mill starts crushing according to the law.
They start it in December or January and deprive most of the sugarcane farmers from cultivating wheat. The law was passed to provide level playing field to the farmers and the millers.
Government announced sugarcane support price on the assumption that the mills would start crushing according to the law. The mills violate this law because it is to their economic advantage.
At the start of winter season (October), the water content in sugarcane is high. Its sugar content is calculated on the bases of that water content.
As the time progresses, the mature sugarcane crop starts losing water and its sugar content rises. If the millers procure sugarcane in October, the weight of the sugarcane bamboos would be higher because of higher water content and constant sugar content.
When the mills buy sugarcane in December or January, the sugarcane water content declines by 20-22 percent, while sugar content remains the same.
This way they technically deprive the farmer of 20 percent price. In addition they get higher percentage of sugar from the cane.
Start of late crushing season is only a win-win for the mills. Farmers are not only deprived of actual price, but also lose the opportunity to sow wheat.
Those who still try to sow get 20-30 percent less yield than those who cultivated the crop in time.
The government, the officials and the regulators know of this cheating by the millers, but they look the other way instead of taking any action. Perhaps the sugar mill lobby is much stronger than the famers lobby as most sugar mills are owned by political families.
The elected representatives who make hue and cry on any proposal to bring agriculture under the tax net remain silent on this exploitation of farmers.
The exploitation does not end here as the farmers then have to go from pillar to post to get the payment of their supplies.
Again the law mandates that the mills are bound to pay the sugarcane farmers with 15 days of procurement. The mills usually ignore this condition of law and delay payments beyond reasonable limit.
In some instances, the touts of millers offer to pay the farmers against their CPR (crop procurement receipt) immediately on 5-7 percent discount.
Some farmers accept this and are thus deprived of 27 percent of their legitimate payment (20 percent they lost on delayed crushing plus 7 percent on cash payment). There are also reports that some mills weigh less and deprive the farmers of 10-15 percent in this process.
The story does not end here, the mills that openly violated all laws then put pressure on government to get subsidy for exports or else they would not be able to make the payments to farmers for crop procured 6-8 months earlier.
If we cannot stop these types of malpractices, the masses are bound to suffer and influential will always prosper at the masses’ expense.