KARACHI: The level of uncertainty in our economy is increasing as the elections come nearer and nearer. In this state of uncertainty, the matter of concern is not only who is going to win, but what economic initiatives they will take.
The current economic meltdown is no doubt a response to our economic managers’ multiple blunders. The crises of governance which lead to institutional collapse are an obvious outcome of a split mandate of political parties which assume power in Pakistan. Dictatorship is an opposite extreme of this phenomenon, where the decision-making power lies in one hand alone, but it can be observed that even military rulers have always surrendered when the time to take a bold decision for the sake of the economy is at hand.
The Iran-Pakistan gas pipeline, which was initiated as early as the 90s, remains to be implemented after almost nine years of dictatorship wherein the sole authority to make such a decision was held in one hand alone. Another example is the building of water reservoirs to tackle long term energy requirements, which has similarly been neglected by successive governments. It can be argued, then, that merely holding the power is not enough for economic development: it should be exercised regardless of internal and external pressures.
It is unfortunate that political parties have often failed to deliver just because of their hanged position in government. When different parties form a coalition government, all parties are considered to be in power, but no party alone has the power to implement its own economic program absolutely to contradictions in economic preferences among the coalition partners.
Similarly, interest groups and lobbies within and outside the government also create hindrances when it comes to implementing economic development agendas. The incessant delay in taxing agricultural income is a perfect example in this regard, where an income of approximately Rs40 trillion contributes only Rs1 billion to the national exchequer. Similarly, tax evasion and theft have also not been eliminated due to the weak administrative writ of successive governments.
There are certain examples in history wherein strong political governments took bold decisions and turned the economic history of the country. The decision to implement land reforms and nationalise industries in the 70s indicate the strength and willpower of an elected government. Similarly, political parties in the 90s came into power with huge mandates, and successively performed relatively better on the economic front.
In contrast, reports of cartelisation in the sugar, cement and other industries shows the weak current position of the government. We are also surrendering on the external front, where lending institutions freely dictate their own conditions for economic reform.
The country seems to be stuck in a cesspool of crises driven by factors like electricity and gas shortages, stagnation of industrial growth, unemployment, deteriorating law and order situation etc. The only way out is a strong political government, which has the will and power to implement its own economic agenda.
The writer hosts business talk shows on FM 101 and Radio Pakistan and is pursuing M Phil degree in Economics.
Published in The Express Tribune, April 29th, 2013.
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