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April 17, 2018

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Next govt must improve service delivery, governance

LAHORE: The federal tax revenues have doubled in the past five years, improving the finances of the provinces, which get the lion’s share from the centre, however, the provincial governments failed to improve service delivery and governance, both.

Most economic experts are of the view that there is nothing wrong with Pakistan’s economy, and the main issue is that of governance. This means that after the election, the first and the foremost priority of the next government that assumes power should be to improve governance.

Governance reforms are not a big challenge. We can start by ensuring merit-based appointments. In recent years there has been capacity erosion in the bureaucracy. However, this is still not a major hurdle in governance. There are many capable and upright bureaucrats available who have been sidelined.

Reforming and where possible privatising the bleeding public sector companies is absolutely essential. It is high time the impression was dispelled that over employment in public sector companies is the root cause of losses in state-owned enterprises. It is in fact the mismanagement caused by the incompetence of the upper level staff that is posted against merit.

Various state-owned enterprises need to be revitalised. Railways are one such entity. It is the cheapest mode of goods transportation in the world. It is indeed deplorable that despite having an adequate rail line infrastructure, Pakistan is still dependent on trucks for transportation of goods.

One engine can pull 100 bogies (wagons) that could carry goods load equivalent to 300-400 trucks. The goods service should be the priority instead of operating loss making passenger trains.

Reducing the losses should also be one of the top priorities of the government. The next government should first make sure that the overall deficit does not exceed five percent of the gross domestic product (GDP). The Public Sector Development Program (PSDP) should have ensured allocation of 1.5-2 percent of GDP and there should be no cut during the financial year under this head.

To make up for infrastructure deficiencies, some projects equivalent in value to at least one percent of the GDP should be executed through public-private partnership in the most transparent way.

Growth from now on should be with an aim to redistribute the benefits more towards the poor. All general subsidies like the ones given to the CNG sector and power consumers should be immediately replaced with targeted subsidies.

The government has identified six million poor families through the Benazir Income Support Program (BISP). All consumers should pay the full electricity bill without subsidy and the poor should get the power subsidy through the BISP.

Industrial consumers should be preferred over other consumers to keep the wheel of the employment generating manufacturing sector moving. There is a structural problem with the economy. Government has failed to control its expenditures which are increasing at a much faster pace than its revenues; and most of it is non-development expenditure.

Priority should be given to education, health, and drinking water supply. All new recruitments should be immediately suspended except of teachers and healthcare staff. The small and medium enterprises are engines of growth. The credit to the engine of growth that has been squeezed should be restored.

Growth policy is planned according to the prevailing economic situation. Currently, the inflation was low which facilitated the central bank in lowering interest rates. Government should support and facilitate industrial sector in technology upgrade.

Assistance from the donor agencies like World Bank and Asian Development Bank (ADB) should be sought, but that credit should be utilised prudently in productive use through competent and dedicated executioners of those funds.

All available resources should be earmarked for the up-gradation and rehabilitation of infrastructure essential for sustained economic growth. The resources spent on these projects are not a burden on the exchequer as these projects start repaying their cost through sustained economic activities.

Every major emerging power had a multiplier effect in the region. It would be interesting to see when the Chinese growth impacts other countries in South Asia positively. The spill over impact of Chinese high growth has been felt by its far eastern neighbours that were connected with China.

This region despite being very close to China lacked connectivity that has been provided by the China-Pakistan Economic Corridor. The next government of Pakistan should reap the benefits of this connectivity more than its other neighbours.

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