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December 14, 2019

Discretionary powers breed corruption, poor economy


December 14, 2019

LAHORE: Instead of changing policies frequently, the best way forward is to strictly adhere to the rules and regulations and do away with discretionary powers that breed corruption. However, it is easier said than done, as rulers adore these powers.

We have almost the same policies and rules that prevail in our competing economies. The only difference is that the use of discretion has to be justified in other economies, while here it acts as a blank cheque for the rulers and bureaucrats, who use it for political or personal gain.

It is worth noting that the chief minister enjoys the power to relax not only the age, but the qualification of a person they want to appoint at a high government post. This discretion was blatantly used by a Chief Minister in Punjab during Musharraf era, when he appointed an illiterate personal cameraman as a grade 20 officer in the Punjab Information Department.

Similarly, the custom officials enjoy discretion to confiscate any item that is banned for import in the country. They also have the discretion to release that item at 300 percent penalty or release it at a nominal fine of three percent.

Now, this discretion and many others like it can be and are being used to exhort money from the importer. In fact, many importers first take the customs staff into confidence before importing banned items like used auto parts or any machinery.

It is because of these discretions that we see hundreds of political appointees in the state owned enterprises. In the same way, the boards of these institutions consist of persons dear to the ruling party.

This is also the reason that numerous efforts to restructure the SOEs fail, as the man tasked to reform, lacks the power to remove political appointees and instead appoint competent persons.

There is no way that these political appointees could be made accountable. While restructuring goes on, every sitting government continues to interfere in awards of contracts and appointments.

Infrastructure is important for development, but no one ever tried to evaluate as to why we have failed to perform consistently despite adding new infrastructure every year. In our single minded approach to build roads, and other projects, we neglected other factors vital for growth.

We failed to develop our governance, improve our human capital, introduce measures that improve efficiency and strengthen domestic commerce.

This has resulted in wavered economic performance of our country. We grow at a high speed for few years and then go into recession.

Every government in Pakistan considers that the economy can be revised through incentives. But we have seen that the incentives strategy has failed to deliver.

Our businesses make excuses like shortage of energy for slow industrial growth, but when these utilities are available they cite other reasons like high inflation or high interest rates. If we look at our manufacturing performance, we will find that most of the industries were stagnant even when the interest rates were very low and there was surplus electricity and gas. Only those prospered that were provided subsidies by the state.

Neighbouring economies of China and India have same infrastructure constraints as in Pakistan, but they have sustained high economic growth.

Only difference is that we have neglected prudent management, efficiency, innovation and productivity, while China and India did not.

In our endeavour to promote industries, we loaded ourselves with too many things that we could not manage. We forgot other sectors of the economy that could trigger more growth.

We have become mimics and we try to copy what is going on elsewhere in the world. It is regrettable that Pakistani planners never encouraged innovation.

There is no personal gain in innovation for the bureaucracy and rulers. The rent seeking mentality would have to be replaced with fair opportunities for everyone.

Public Sector Development Program is a farce. There are projects worth trillions of rupees in the pipeline, but the budgetary allocation is not enough to finance even 1/5th of them.

Delays increase the costs and the feasibility will have to be revised several times. Priority is given to projects that have political backing and not to those that have higher economic benefits. This incompetence continues and therefore the people remain stuck in the boom and bust cycles.