Trapped in their vicious ‘debt prison,’ South Asian countries will not achieve sustainable growth in the social sector unless they first strive to become economically self-reliant and egalitarian societies.
Economic challenges faced by South Asian countries are enormous and multifaceted. Negligence of social sector development remains the most worrisome area having far-reaching ramifications for sustained economic growth. In health and education, for example, not only allocation of funds is inadequate in all South Asian countries but the spending, due to poor governance, is problematic — sleazed with wastage, underutilization and leakages. It is now universally accepted that economic development without social sector uplift can lead to all kinds of problems — financial crises, social unrest, commotions, clashes and, in the end perhaps, total collapse and anarchy. Realizing the key importance of the social sector for economic development, Asian Development Bank (ADB) and other donors, during the last many decades, have given munificent grants to South Asian countries for reforms in vital areas of the social sector — education, health, poverty reduction, gender empowerment and environmental protection, just to name a few.
Knowing that South Asia is home to more than one fourth of the world’s population, with tremendous potential to be an engine of growth for the rest of the world, ADB in its Strategy 2020, approved in April 2008, has pledged to make the Asia-Pacific region “free of poverty” and has reaffirmed its “mission to help its developing member countries in improving their living conditions and quality of life.” In 2008, the World Bank also approved a number of projects for South Asia and almost all of these focused on social sectors such as education, healthcare, poverty alleviation and agriculture. In these areas, Pakistan benefited substantially from the ADB assistance specifically since 1966. In 2009, the ADB disbursed $1.10 billion and invested $942.7 million in newly approved assistance, with the bulk of these supporting development initiatives in infrastructure, energy, social sectors, governance and transport in the four provinces and at the national level (http://adb.org/
ADB’s Strategy 2020, while identifying major drivers of change - development of private sector, good governance, gender equity, gaining knowledge and expanding partnerships with other development institutions and with community-based organizations - promised that by 2012, 80% of its lending would be in the following five core operational areas: Infrastructure, including transport and communications, energy, water supply and sanitation and urban development • Environment • Regional cooperation and
integration • Finance sector development • Education
ADB in its Strategy 2020 has reiterated its commitment to continue operating in health, agriculture, disaster and emergency assistance, “but on a more selective basis”. It means that for social sector development, funding from ADB would decrease substantially in the coming years. It poses a challenge for South Asian states where poverty is on the rise and due to higher population growth, facilities in health and education are suffering. Education gaps by income and gender in these countries also indicate that even in countries where economic growth rate is over five per cent, chances of social mobility for the poor are bleak. The discriminatory systems are creating more disparities in income distribution. It is tragic that in South Asia one child in 13 dies before the fifth birthday. Half of the births are not attended by skilled staff. And wealthy women are more than twice as likely as the poorest women to have access to skilled health staff at childbirth. Defense spending in India and Pakistan is reckless and there is no commitment to allocate more funds for the social sector.
The South Asian countries, like other developing countries having colonial legacies, are facing a dilemma: ruling elite thriving on debts/grants are more interested in plundering national wealth and taxes paid by the masses rather than working for their welfare. Democracy is confined to electioneering only, enabling the rich and the mighty to rule whereas the overwhelming majority deprived of the real fruits of democracy, lives below the poverty line. The weaker segments of society, especially women and children, are deprived of their fundamental rights and, as a result, so-called economic growth brings more prosperity for the rich and further misery for the poor and the downtrodden.
The prevailing political culture of corruption and incompetence coupled with an oppressive economic system is the root cause of all problems, especially debt enslavement and backwardness. The major weakness of governance in these countries is unchecked, wasteful spending and reluctance to collect taxes from the wealthy.
Trapped in their vicious ‘debt prison,’ South Asian countries will not achieve sustainable growth in the social sector unless they first strive to become economically self-reliant nations and egalitarian societies. Nothing will change unless rulers in these countries come out of their colonial mindset and start living like common people; within their means. They must surrender their extraordinary perks and privileges, enjoyed by them at the cost of taxpayers’ money.
In a democratic setup, responsibility towards people who vote for parliament and accountability are interconnected. The concept of a modern egalitarian state emerges from the sovereign right of the parliament to levy taxes. At the same time it has to spend the same for public welfare rather than for personal comfort and self-aggrandizement. The second part of democracy is completely missing in South Asia resulting in the prevailing state of affairs. The writers are partners in the law firm HUZAIMA & IKRAM (member TAXAND) and Adjunct Professors at the Lahore University of Management Sciences (LUMS).
Our debt-ridden future generations have little to hope for.
Political corruption has prevented South Asian societies from reaping
the benefits of international funding.