The undershooters

LAHORE: Economic planners should ensure the annual planning they unveiled in the budget is strictly followed. They must adjust strategy fortnightly in line with change in global or domestic scenario to achieve goals set at the start of year, rather than remaining constant undershooters.

The main reason for the failure of many governments in Pakistan to achieve their annual budgetary targets is no well-chalked-out strategy is in place to achieve the targets and the core team of economic strategists do not meet as frequently as needed to take measures that facilitate the achievement of targets. The regional economies leaving Pakistan behind in development make sure the targets set in their budgets are achieved. India and Bangladesh have been mostly posting higher than targeted growth because they either overshoot or achieve all their annual budget targets.

India’s economic planners remain vigilant and promptly act on any change in scenario that could disturb their planning. Prime Minister Narendra Modi meets industrialists at least once a month. Modi goes to other countries not for pleasure but to market India.

He has the guts to openly support businessmen. The businessmen in India command respect, but the Indian government is very strict against tax evaders that are prosecuted indiscriminately.

Pakistan’s planners are rich in ideas but poor in execution of their plans. For instance all planners agree that Railways should be the main mode of transportation in Pakistan but they do not have the heart to privatise the goods train operations in a transparent manner. Railways should manage the track and outsource its goods and passenger transportation services to the private sector. Private sector could increase the goods transport capacities of Railways.

Currently Pakistan Railways carry 1,500 tons of coal compared with 2500 tons carried by a coal train in India and 3,800 in Australia. If the private sector is allowed to operate a goods train it could increase the goods carrying capacity of Railways.

Though the cost of hauling 1,500 ton coal by one train is 1/3rd the cost by road but if the quantity is doubled the cost would further reduce. The cost of doing business would drastically go down if most freight is channeled through the Railways.

In the same way planners set numerous goals on agriculture but do nothing on these. There is a need to develop a vibrant food economy which ensures efficient agricultural production. It could be achieved through innovative technologies and best production and harvesting practices. Trade and investment approaches should be tailored in a manner that benefits the farmers. Domestic agricultural markets should be revamped and to make them efficient the role of middleman should be eliminated. At the same time the state should maintain strategic food and water reserves. The Finance Minister has admitted the need to eliminate middlemen from agriculture marketing but no concrete steps have been taken in this regard.

Food crops production could be achieved mainly by increasing productivity. There are numerous countries that produce 10 times more corn, two times more rice and wheat per hectare and three times more beef per animal than Pakistan. We need a strategy that strengthens the entire food economy. Moreover a realistic agricultural strategy discourages cultivation of crops that do not suit the local environment. Sugarcane is one such crop where Pakistan cannot achieve global productivity as it is the crop that grows in the tropics.

Domestic markets are not efficient in Pakistan. The route from farm to table is long, complex, and subject to disruptions. Each of these bottlenecks to market is an implicit tax on farmers as well as consumers. The economic planners should take cue from the Indian e-Choupal initiative that grants four million farmers in 40,000 villages real-time access to market prices, weather conditions, and production techniques through Internet kiosks.

Our economy is in dire straits. We are constrained to plan for half the growth needed to absorb 2.5 million workers entering the labour market annually. Pakistan needs to grow at 7-10 percent per annum for a decade to come out of the woods. To achieve this we will have to restore the competitiveness of our industries through balancing and modernisation and reduce energy cost to regional level.

The actual consumer base in Pakistan is not known to foreign investors who look at the official GDP of less than $300 billion based on the documented economy, while its actual size is $600 billion when the informal economy is included. This fact is realised by many multinationals that have been operating in Pakistan since long and are constantly reinvesting part of their profits in upgrading their industries because they know the actual size of the economy.