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December 3, 2020

Masses suffer as incompetence runs rampant

Business

December 3, 2020

LAHORE: The term glass half empty is used by sceptics when the economy is growing. But when the economy is going down and incomes declining critics say the glass is leaking.

In developing countries, where most of the population lacks quality of life and some even do not have access to basic amenities; high economic growth brings prosperity for some and reduces the lack of basic amenities for the poor.

Still the sceptics want that growth should remove all deprivations immediately. They therefore term the growth as glass half empty. Those managing the economy at the time of high growth though say that the term should be rephrased to glass half-full.

They assert that the glass would slowly fill if the growth momentum is maintained for a longer period. Many countries with sustained growth of 10-25 years have brought general prosperity. The inequalities remain intact, but poor also start enjoying at least the basic amenities needed in life.

China is one example in this regard that has maintained high growth for over three decades, Chile is another. East Asian economies maintained sustained growth for over a decade and their economies are flourishing.

Indians maintained sustained high growth for at least a decade, and now their economy is among the top six largest global economies.

Pakistan unfortunately never enjoyed a sustained high growth period of even five years in the last four decades. In earlier years, after independence the economy grew at a high rate from a low base to put Pakistan on the industrial path up to 1970.

After that the growth remained lopsided. It accelerated in some years and grew at a slower pace in others.

Barring a year of negative growth in the 1950s, the country always posted growth even during deepest global recessions and during periods of political turmoil in the country.

Pakistan experienced steep decline in growth in the year 2018-19 from 5.8 percent a year earlier to only 1.9 percent. The decline in growth was accompanied with large retrenchments.

Inflation remained in double digits and the rupee lost most of its shine. The next year, multilateral agencies predicted a growth of two percent, but unfortunately Covid-19 hit the entire world, including Pakistan.

Our GDP declined by Rs54 billion and with it the per capita income as well perhaps for the first time in 50 years. The economic growth was negative in 2019-20.

This is when sceptics started terming the state of the economy as a leaking glass. The glass was neither half empty nor half-full, but it was unable to retain its contents due to leakages.

The handling of the economy is a cumbersome job requiring dedicated experts, who take every decision after careful analysis keeping in mind the broad impact of each decision on the economy.

One cannot doubt the sincerity of any government on its efforts to improve the economy and improve the wellbeing of the population. However, when the economic policy constantly fails to deliver then the head of the government should act.

In the present case for instance, the minister or advisor on power and energy should be grilled on their failure to reduce inefficiencies in the system. Half of government woes

would have evaporated if only the energy and power sector were reformed in the past 30 months.

The losses in transmission and distribution must have been brought down to global average. It would have reduced the power and energy tariff by 10-18 percent and provided relief to the industrial and domestic consumers. It would have boosted production.

The exports have not picked up despite government claims. Data released by the Pakistan Bureau of Statistics reveal that the exports have posted a ‘growth’ of 0.6 percent in the first four months of this fiscal.

It is worth noting that when compared with exports achieved in 2017-18 the exports posted a negative growth. This is despite the fact that rupee has devalued by over 40 percent.

Even the power and gas subsidy has not helped. This demands an explanation of the advisor.

Two and a half years is a long period to show results. Those remotely connected with the sugar, wheat and petroleum debacle should not only be shown the door, but also be prosecuted.

Economy is all about the wellbeing of the masses. The masses should feel that their lives have improved compared with the way they were living 30 months back. At the moment it is the other way round.

The government would remain in trouble until the economy shows improvement, and improvement would come through competence, transparency, and merit.

Till then it would go on pouring loans in the system and the glass would never be full because it would continue to leak.