Entering a structural slowdown?

LAHORE: Our governance structure faces major flaws, as things deteriorated further after governments took measures to reduce malpractice in different sectors of the economy.

The situation in our institutions whether it is provincial food authorities, Small and Medium Enterprises Development Authority and Ministry of Textiles, is worse.

In order to ensure health and pure food to the public, the provincial government has established Punjab Food Authority five year ago, while the Sindh government followed the suit.

These food authorities conducted raids on reputable food outlets and fined them heavily for violation of relevant laws. Some processed food products were also destroyed. That is good, but the real problem in food sector is adulteration that takes place at the lower levels.

Food is a very delicate issue. It purity ensures better nutrition for the consumers. Its adulteration with some substances may not injure health but are a tax on the pockets of the consumers.

For instance mixing clean water in milk will dilute its ingredients and its health benefits will be proportionate to the amount of milk present in the mixture.

There are certain substances that impact health. Mixing red brick dust in powdered red chilies would be highly injurious for consumers’ health. In the same way use of use of nonfood colors would place the consumer on risk of cancer. All these adulterations are on rise even after the establishment of food authorities.

The small and medium enterprises are the main drivers of the economy and employment across the world. In Pakistan, SMEs have been denied access to capital. Where the credit is made available, the markup is 5 percent to seven percent times higher than that charged from large manufacturing sector.

SMEs were denied credit at reasonable rates even in 2003/04 and 2014/15when bank markups were very low. Nawaz Sharif established SMEDA in 1998 and promised that the SME sector would get credit worth Rs250 billion in the next five years.

After two decades, the total SME project loan is not even one-third of that amount. Today, the SMEs are in worse condition compared to the time when SMEDA was established. Likewise, the Ministry of Textiles was established a decade ago to resolve the issues of the industry.

Textiles account for over 55 percent of Pakistan’s total exports. The textile sector is in more trouble ever since this separate ministry was established.

In India the Textile Ministry got muscles and it forces the government to honour all commitments made in the textile policy.

In Pakistan, two textile policies were announced in the last 10 years and the implementation was less than 20 percent in each case. Not only this, but export refunds issue deteriorated after the establishment of this ministry.