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February 10, 2018

Path to long-term growth passes through level playing field


February 10, 2018


LAHORE: The economic strategists will have to forge policies that promote competition and demote all kinds of inequalities down to zero, if they aim to bring about social stability and harmony to get on and stay the course of sustainable growth.

Inequality hurts in economies in which low-earners lack basic amenities of life. But even in the developed economies, where most of the population enjoys comfortable lifestyle, inequality is resented but the social stability is still intact.

In Pakistan the difference between haves and have-nots is so sharp that those at the bottom have to skip a meal almost every day. They miss proper shelter and security. The poor youth living in poverty get agitated when they see their families starving while even the pets of the rich are well-fed. It is a matter of concern that the direction of economy has tilted towards facilitating the rich. Economic boom benefits the rich immensely, while the poor hardly get even the trickle-down benefits.

Recession takes a little toll on the profits of the rich, but it devastates the poor to their bones.

Efforts like Benazir Income Support Program or other similar initiatives do not address the problem of inequality. These dole-outs do not provide equal opportunities to all. Whatever these programs offer is too little to even feed a family of six for even one week. There is a need for a paradigm shift in economic and social sector policies of the country.

Pakistan’s rank in ease and cost of doing business has to increase substantially if the government desires a sustainable growth.

By putting up discouraging barriers at business entry level the state hands the economic opportunities on a plate to those, who have the wealth to remove those hurdles or enough political clout. It is very difficult for a poor wannabe micro-entrepreneur to even imagine setting up a business in the country with the high-costs associated at every level, where official consent or stamp is required.

It requires speed money to get an electric, gas or water, connection quickly. It is indeed a matter of concern that the regulators and administrators do not take action when the official records show that some connections are provided promptly and in most cases the applicants have to wait for months or years.

If higher budget allocations improved the socioeconomic outcomes Pakistan would have attained economic vibrancy long ago. The entire national budget in 1999 was hardly Rs300 billion today it is over Rs4 trillion.

There are more children suffering from stunted growth as a percentage of population than there were in 1999 and the health outcomes are still very poor or the same as two decades back. Establishing new schools and hospitals also does not resolve the problem. You have to have competent teachers for better learning outcomes. There should be a single national curriculum so that every child gets an equal learning opportunity. Currently, on the top, we have elite institutes that follow curriculums used in the educational facilities of developed countries. At the bottom are the government schools where even the basic facilities needed for imparting education are nowhere to be found.

Some provinces have largely overcome this problem but others are still lagging far behind. By encouraging inequalities, this flawed current system is further polarising skills, competence, and job market in the long term.

Issues such as land acquisition and compensation are as much a part of the agenda as are better schools and free medicines. The idea is to make people feel they too are stakeholders in the growth. Common man still feels left in the lurch after two successive tenures of democratically elected regimes.

The policies of the last two successive regimes can be called market friendly but not business-friendly as they only favoured the powerful. The segment of trade that encounters less red tape has an edge over those with long tortuous bureaucratic procedures. Imports flourish because red tape is limited to custom clearance. Even here the exclusive rights of imports (under-invoiced or smuggling) are enjoyed by the rich and influential.

No economy has ever attained maturity without promoting true competition as it ensures access to new technology, a trend bound to accelerate over time in all areas like it did in cellular telephony. Policies restricting competition would have to be removed to unleash the actual growth potential of the economy.

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