Excellent priorities for Budget 2016-17. Now we need 'caring' governance
LAST week the Finance Minister, Mr. Ishaq Dar, sat down with his bureaucratic team at the Ministry of Finance in Islamabad to chair the first meeting to plan the shape of the Budget for the Year 2016-17. Which possible way will this PML(N) government steer the economy in order to be prepared for the next elections due in 2018.
All 'democratic' governments play politics with the economy, and to imagine that any economic policy is divorced from political realities is to be naïve beyond imagination. In this piece let me dwell on what we see on the surface, how does it match what other similar economies are doing, what are the professed areas of priority, and, lastly, what would the ideal priority areas in which future Budgets should be planned. It is a tall order so many things in a limited space, but we can skim the surface and in future pieces dwell in detail on all these matters. On the surface and the Press Release issued by the Ministry of Finance, the priority areas are going to be (1) energy production, meaning reliable and unhampered electricity and gas supply to industry and the people, (2) the security situation, meaning that the law and order situation be got under control over 100 per cent of the land, sea and air of Pakistan, (3) the return of all Afghan refugees to their homeland, including their children born in Pakistan, (4) continuing of infrastructural projects including providing critical and essential public transportation systems at affordable rates in the major cities, and, lastly, (5) to provide fiscal and monetary space to manufacturers within Pakistan. Our newspaper, the daily 'The Pak Banker' has been the first to be able to provide readers, especially bankers, with these future priorities as spelled out just three days ago in a closed meeting. As a first comment on the priority areas it must be said that all of them surely sensible, and unavoidable, priority areas. We would have been happy if the agricultural sector had also been given more priority. We say this for a reason, and that being that if we expect cottonrelated textile industry, the leather industry, or most importantly the food providing sectors to provide products at reasonable rates, to tackle the problems of agriculture are critical. If we fail in them then all other priorities are not worth the paper they are written on.
The production of cheap and reliable energy is an unavoidable priority that, let us confess, Pakistan has badly failed in. Our inability to build dams in time is the main reason for this situation. But then let us also confess that private sector investors in energy projects have been unreliable to say the least. Pakistan is now wanting to dabble with coal-fired energy generation. This surely will end in disaster, with the argument that it has worked in India and China not being a sound enough reason given the terrible condition of their environment. Probably, the time has come to rethink the entire privatization of the energy sector. Maybe, had it been left to WAPDA to come up with timely power generation projects, given their immense expertise, and with a centralized management, this would have worked out better. But even allowing for private sector indulgence, there is a need for a serious debate on this issue.
On the internal security it goes without me saying that our very survival depends, as a nationState, on getting rid of the threat of terrorists. There is surely a need to play down the internal religious differences, and to control divisive communal activities, especially on the expanding social media. An attempt has to be made to involve common citizens to keep the security forces informed of any activity related to terrorism in their area. Only when the people support the security forces will this menace be overcome. Already we see our rulers making 'liberal' comments, which is a good sign.
The return of over three million Afghan refugees, not to speak of an equally larger number of children born in Pakistan, means that we are talking about almost ten million persons. Given that Pakistan's population is 200 million, it is like shifting almost five per cent of the population back to a country than certainly is not prepared, economically, to accept them back. The price of supporting the foreign policy objectives of alien forces might well see the unravelling of our own very dear State. This effort will need a lot of money, a lot of work, and a peaceful environment with Afghanistan, which egged on by a hostile India, is making a solution impossible. This is a laudable and undeniable priority area.
The continual of major infrastructural work, especially the providing of critical public transportation, is critical if we are to live in a modern State. The wrath of those interested in saving our heritage from damage has not been honestly handled. The mere fact that UNESCO is also worried means there is something wrong. Is it becoming a case of bad governance, this I leave to the reader? Or is it a case of the total absence of an alternative that sees a situation of a project being bull-dozed on a city and its people? Lastly we have the government not allowing manufacturers with enough fiscal and monetary space to develop their projects. We know, and it has been announced by Mr. Dar himself, that in the current financial quarter the government will raise yet another 1.74 trillion rupees of 'government investment bonds' for banks to pick up. The auctions have come up with twice the sought amount. This just shows that there is an emergency need for 'Monetary Responsibility' on the part of the banks. Just how can any country continue to exist if all the money deposited in banks is handed over to a government which is spending left, right and centre on infrastructural and transport works?
It goes without saying that these are basically election-winning projects too. Is the element of corruption present? To deny is useless because no one in Pakistan will believe any such assertion. To claim that it is Chinese loan, and hence clean, is also not an honest answer. Surely the next step will be for the people of Pakistan to blame all ills on the Chinese. Can Pakistan afford this situation just as we all blame the USA for all our ills?
But the point is that there is an urgent need for the State Bank of Pakistan to enforce a law whereby all commercial banks should not provide the government with money, in any form, over a 50 per cent limit. Let the private sector, and hence the people, also prosper. This is the law in many countries, and is meant to safeguard banks. Have we forgotten the lessons of the 2008 Recession? Let it be said that the priorities of the government are absolutely spot on. What is wrong is the manner in which solutions are being enforced. Mind you, this is the difference between good and bad governance. Pakistan has already experienced a 'no governance' government of the PPP. The country cannot afford governance going up the wrong track. That is where leadership comes in. We hope and sincerely wish to see more of it, one divorced from extremist solutions.