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Wednesday November 29, 2023

No wings, only prayers

December 19, 2020

LAHORE: We are emotionally comparing the existing economic growth with the pre-COVID-19 one, conveniently or rather intentionally turning a blind eye to the unpleasant truth that our ever-struggling economy had nosedived way before the country was struck by the pandemic.

The economy has reached the level it was at pre-coronavirus period, when our GDP growth was 1.9 percent -the lowest in the past nine years. The growth from low base has not brought smiles on the faces of the households. The large-scale manufacturing has posted a growth of 6.6 percent in October 2020 from a low base of last year. Last month, car sales jumped 40 percent, but this surge is no way near the car production in the same month in November 2018 when the previous regime was in power.

The small and medium enterprises that are the engine of our growth are still struggling to survive. One should not compare the economic performance of the incumbent regime with its own more dismal performance of the previous two years.

We should strive to improve our productivity from the one witnessed in the previous regime’s last year in office. We can only celebrate if that productivity is surpassed and we start producing over 350,000 cars compared with expected yearly production of 150,000 units. It will be a matter to rejoice if the workers start getting regular salary increments they had not received in the last 30 months. We have increased our exports compared with last fiscal, but the increase is merely 2.1 percent. Textiles in the first four months of this fiscal posted a gain of only 3.78 percent (sector-wise data for November not released as yet). Cotton yarn exports have declined 40 percent and fabric by over 7 percent.

The surge in value-added textiles is a welcome sign but the industry is already operating at full capacity and we cannot expect it to take exports to new heights this year at least. It will have to enhance its capacities to export more. Our food exports have declined by 16 percent and petroleum product exports by 32 percent. Sports goods and leather exports also witnessed decline. The only silver lining is the export of engineering goods that have surged 25 percent to $66,063,000 from $52,519,000 last year.

Textiles account for 60 percent of our total exports. Out of $9,536 million total exports the number comes to $5,721 million. The rest is non-textile which has not registered any notable increase except engineering and cement. With capacity constraints in textiles, we cannot take our exports to desired heights. We have survived up till now on the huge reduction in imports (that are on the rise right now) and huge overseas workers inflows (the remittances have increased against all odds but danger of downslide remains).

Economic managers of the present regime are more interested in finding faults with the previous regime and lack the vision to move ahead. Bad policies, absence of merit, and nepotism have eroded the confidence of the investors.

They are running the government by borrowing money instead of generating resources. It has now been reported that the foreign inflows in the first five months of this fiscal (soft and commercial loans) have surged 45 percent amounting to $4.5 billion compared with the same period last year.

To top it all, the bureaucracy is dysfunctional because of the treatment reputable bureaucrats received at the hands of this regime at start of their tenure. All administrative and development work in every country is looked after by the bureaucrats. They have to make certain decisions in good faith according to the situation.

Their actions even if in violation of rules are ignored when their best intentions are established. But this regime targeted almost all those bureaucrats that performed miracles in development projects during the tenure of the previous regime.

They were held in awe by their compatriots for their efficiency and dedication. When they were nailed the other bureaucrats lost their heart to take timely decisions or grant routine approvals fearing that an inadvertent mistake might put them in trouble.

Technocrats are experts in their fields, but the execution of their plans depends on the willingness of the bureaucrats to move ahead at the speed desired by the technocrat (advisers). This they cannot do for obvious reasons. Another point that worries bureaucrats is that many advisers in the federal government are not experts in their field and are young and inexperienced. Toeing their line blindly have and can bring more harm to economy. And in such cases, conscientious as well as highly professional bureaucrats, acting as the last line of resistance, tend to delay the execution of irrational orders by these special advisers.