Campaign promises and ground realities

February 4, 2024

Are the political leaders painting too rosy a picture of the economy for the electorate?

Campaign promises and ground realities

Political parties in Pakistan have always made tall promises to the electorate during the campaigns ahead of general election. Pakistan Peoples Party’s roti, kapra aur makaan was the most famous and attractive campaign promise in 1970.

In the last general elections, held in 2018, Pakistan Tehreek-i-Insaf had promised to create 10 million jobs every year and build 5 million houses for the poor in five years. Instead, job opportunities became scarce during its rule. The housing promise too remained unfulfilled.

Now that the country is passing through its worst ever economic crisis there is no dearth of tall promises by major political parties. The electorate might have believed the promises made in 1970 and 2018. However, this time around, not many people seem to be buying the narratives the political leaders are trying to sell them.

In providing subsidies some of our past rulers have indeed acted like medieval kings – arbitrarily and without due regard to the potential consequences of their actions. The beneficiaries of the largesse have included not on the extremely poor but also some well-established industries and businesses. The fact that all subsidies over the last 20 years have been financed through borrowing has not deterred them.

Three parties have ruled the country during the last two decades. Most of their leaders should therefore be aware that some of the promises being made today will never be fulfilled. They know that Pakistan is currently in a standby arrangement with International Monetary Fund. They know that once they come to power, the IMF will not allow them the kind of spending they are promising their electorate.

Let us take a look at the state of our economy and examine the promises made by some of the leading politicians. Our total tax revenue this year is expected to be Rs 9,400 billion. Out of this, 57 percent or Rs 5,358 billion will go to the provinces as their share in the federal divisible pool. The federal government will be left with Rs 4,042 billion. The cost of debt-servicing alone is Rs 4,200 billion. This means that the government will be left with practically no resources for other expenses such as general administration, defence, social protection and development.

Then there are loss-making public sector entities. These need around Rs 2,000 billion a year. Some of these expenses are covered from non-tax revenues like the petroleum levy and government fees. For the balance the government is forced to borrow high mark-up domestic and international loans.

Despite the precarious situation, a major party has promised to provide free electricity to lifeline consumers using up to 300 units per month or 3,600 free units per year. Based on the average cost of Rs 30 per unit this translates into a subsidy of Rs108,000 per domestic consumer per year. For one million consumers the subsidy will require Rs 108 billion. For 10 million domestic consumers, it will be Rs 1.08 trillion. Where will this money come from? The government will also forgo general sales tax and other levies that are currently about a third of the bill or Rs 337 billion.

Some of the political parties have also promised to raise the minimum wage to at least Rs 50,000 per month. The fact is that only about 20 percent of the workforce in the country is currently paid the legal minimum wage. 

Such campaign promises tend to raise the citizens’ expectations. However, after several iterations a large number of citizens have come to realise that many of the promises are hollow.

Providing free electricity requires resources which a country operating on a fiscal deficit of over Rs 3 trillion cannot generate. Who will lend us an additional Rs 1.4 trillion?

Even more insane is the promise by another party that the prices of essential items will be brought back to the 2018 level. Any government coming to power after the elections will be lucky if can maintain the prices at the current level. The inflation, driven by the large fiscal deficit, is currently around 30 percent. And yet the government will have to borrow heavily to perform its functions.

Some political parties are also promising to raise the minimum wage to at least Rs 50,000 per month. The fact is that only about 20 percent of the workforce is currently paid the minimum legal wage (Rs 32,000 per month). Nobody has talked about the resolve to improve governance so that every worker will get the notified minimum wage.

It is as if no political leader in Pakistan has the courage to tell the truth to the electorates. They promise the moon to the electorate and peak as if the government coffers are awash with cash. Do they fear to lose the elections if they disclose the economic reality? The campaigns featuring false promises are being run with the help of influential people who will seek the help of these leaders after the elections to fast track bureaucratic approvals for their projects. Some of them will seek leniency for their workers afoul of the law.

Many of the people at political gatherings are brought thee by the influential people of the area who are supporting the candidate. They are seldom bothered about the promises made by the candidate.

The poor state of economy today is a result of bad governance in the past. Those responsible for key tasks were either incompetent or corrupt.

It is worth noting that none of the parties appears too worried about the worsening health indices of the nation. One does not hear a pledge to address the problem of malnutrition for instance. The programme to curb malnutrition is relatively inexpensive but it is not predicted to catch the imagination of the electorate. The most inexpensive way to address malnutrition in Pakistan is through fortification of staple foods. The planners are aware of the menace of malnutrition but pay on lip service to overcoming it through low-cost fortification. The impact of fortification is invisible as improvement manifests gradually.

Fortification is the practice of deliberately raising the content of one or more micronutrients (i.e., vitamins and minerals) in a food or condiment to improve the nutritional quality of the food supply and provide a public health benefit with minimal risk to health.

Food fortification has been in place in industrialised nations since the early 20th Century. It has helped eliminate deficiency-related diseases in high-income countries. However, its success in low- and middle-income countries has been limited.

The writer is a senior economic reporter at The News International. He is based in Lahore.

Campaign promises and ground realities