Expectations of people from any change in government through elections are much higher than its capacity to deliver, which becomes the basis of discontent as the time passes.
The politicians raise the expectations of the electorate too high promising them everything from high salaries to top class education and excellent health care. They assure the farmers of improving their lot but do not explain ‘the how-to’.
Any government that assumes power in Pakistan can deliver even if it implements the existing policies in letter and spirit. If current environmental laws, for instance, are fully implemented it would improve our water channels, reduce emissions caused by factories and vehicles. This would ultimately improve the health of the nation. There would be a drastic reduction in airborne and waterborne diseases. The productivity of the labour would improve as would be the learning abilities of children.
Currently, a rickshaw driver is challenged if its rickshaw emits smoke but the factories that openly pollute sky with thick smoke are allowed to operate. The mill owners throw their polluted waste in the clean water channels without fear of law.
Every elected government is composed of assembly members from the same families that have been ruling the country for decades. They belong to the elite class and they are reluctant to share the burden of the poor. As the time passes by, the gap between the expenses and the revenue is widening. No government can deliver on its election promises without plugging the gap.
The lifestyle of all our leaders matches that of a filthy rich in a developed country. But they pay nominal taxes because the system has provided them the rules and laws to avoid heavy taxation. Each leader of big parties uses private planes for travel and lives in lavish houses that a richest person would be proud to live in. Still the system allows them to pay lower taxes than even some salaried persons. The elected governments fail to live up to their promises because the elected elite that are beneficiary of the system do not want any change or improvement that deprives them of their privileges.
Governments need revenues to fulfil the aspirations of the electorate. All revenues, however, are locked for expenses that cannot be avoided. Take for instance the debt servicing for which government needs Rs1,300 billion annually. There is no way to avoid the expense. The public sector companies eat up Rs1,200 billion annually. The government has to arrange the amount to keep the companies going. This expense could be avoided by immediately privatising the public sector companies. However, this is easier said than done, as none of the governments in the last 10 years have been able to privatise any notable state-owned company.
Two of the three main parties contesting elections are against privatisation. The defence expenditure exceeds Rs1,100 billion. Pakistan’s tax revenue is around Rs4,000 billion; out of which 60 percent is distributed to the provinces. The federal government is thus not in a position to bear the above three expenses from its tax revenues.
Some non-tax revenues do provide some cushion; still there is a revenue gap of over Rs1,200 billion that rulers have to arrange in form of loans, which means further increase in debt servicing.
In such a situation, the election slogans are likely to take backstage.
The next government would be fighting an uphill task to carry on the day to day affairs. It will finance development through loans as the previous three governments had been doing. People’s expectations would remain unfulfilled until the next government musters the courage to break the status quo.
Moreover, next government would inherit high inflation, unmanageable debt servicing and very low foreign exchange reserves. The interim government has gone beyond its mandate in taking some vital decisions. The interim government agreed to all the conditions of the Financial Action Task Force’s committee. No developing country even India and Bangladesh have complied with the conditions.
The next elected government would not be able to remove Pakistan’s name from grey list as the promised actions cannot be taken in short time. The interim government also loosened its grip of rupee that is constantly going down. The industry would still desire a relief package to boost exports. The resources for the package would not be available with the government.
There is a need to revisit the role and responsibilities of intern on the caretaker governments. When caretaker government was inducted after Shaukat Aziz, it was formed on the whims of the ruling elite. The only condition at that time was that the caretakers would not take part in elections. The economy that looked healthy when Shaukat Aziz government relinquished power was in doldrums by the time the new elected government took power from the caretakers.
The rupee had started sliding against the dollar, inflation was on the rise and the foreign exchange reserves had started depleting. Pakistan despite having sufficient reserves faced balance of payment crisis. The Pakistan Peoples’ Party (PPP) government, its incompetence apart, was not able to stop the downslide in the economy. It was forced to go to the International Monetary Fund (IMF) to save Pakistan from sovereign default. For the next three years, PPP government was busy fire fighting as inflation remained very high and the crude oil rates touched all time high while growth was stagnant or going down. In the next two years, it was able to take the economy towards growth, but could not stem the decline in foreign exchange reserves.
The caretaker government that followed PPP rules was inducted after consultation with the opposition leader. This government kept the things as they were and concentrated on election. It neither touched the petroleum product rates nor increased power tariff. The damage to economy was minor compared with the earlier caretaker setup.
The Pakistan Muslim League-Nawaz (PML-N) government again faced the balance of payment crisis and had to go back to IMF that is the lender of last resort. The huge decline in crude oil rates provided this government much needed breathing space and growth momentum picked up. However, in its last year the government came into crisis and the growth momentum was stalled. Like the two previous elected governments, this government failed to improve governance or control corruption.
The caretaker government, after taking oath, took decisions that look beyond its mandate. It let the rupee free when the elected government was defending it. It increased the rates of petroleum above the recommendations of the Oil and Gas Regulatory Authority. This perhaps was the first time that any government increased petroleum rates above the advice of the regulator.
The next government is again likely to go to the IMF to shore up its foreign exchange. It would face backlash of the electorate if petroleum or power rates are further increased. The inefficiencies in the power sector will balloon the circular debt because of very high power generation. Its first priority would probably be to remove these inefficiencies; otherwise circular debt would be as much a problem as is the debt servicing burden.
The writer is a staff memder