CALL FOR GIVING 'DIRECT SUBSIDY' TO THE POOR
PER CAPITA INCOME IS ONE OF THE IMPORTANT INDICATORS OF THE DEPTH OF GROWTH, GENERAL WELL-BEING OF THE COUNTRY
Sep 29 - Oct 12, 2008
Per capita income defined as Gross National Products (GNP) at current market price in dollar terms divided by the country's population has grown at an average rate of above 13 percent per annum during the last five years rising from US $ 586 in 2002-03 to $926 and further to US $1085 in 2007-08.
Pakistan's per capita income in dollar terms rose from US $926 in financial year 2006-07 to US $1085 in the outgoing financial year 2007-08 showing an increase of 18.4 percent. Continuous depreciation in Pak rupee, high oil prices in the international market, food inflation, surge in import bill and inflationary pressure had left negative effects on the country's economy that led to decline in GNP. Per capita income is treated as one of the foremost indicators of the depth of growth and general well-being of any country. Despite the array of recent and more sophisticated tools to measure growth, development and economic advancement, none match the historical importance and simplicity of per capita income, as a measure of the average level of prosperity of any country.
A study shows that the higher inflation rate of 10.3 per cent (as measured by the CPI) had played a significant role in pushing up both the GDP and the per capita income for 2007-08. To work out, the per capita income for a particular year, the gross domestic product (GDP) is calculated at current market prices, which includes the element of annual inflation. As a result high inflation in 2007-08, the GDP calculated at market prices showed an increase of 20 per cent over the previous year, while at constant prices (of 1999-2000), the GDP growth moved up only by 5.8 per cent. Similarly, the per capita income at current prices had gone up by 17.1 per cent to reach $1,085, whereas on the basis of constant prices of 1999-2000, the per capita income increased by only 4.4 per cent.
The per capita income appears impressive largely because of the higher inflation rate during the year 2007-08. Had the inflation rate been moderate, the increase in the per capita income would, also, have been modest, at best. The net factor income from abroad shows a robust growth in last fiscal. If the net factor income from abroad is positive, it adds to the gross national product (GNP) and vice-versa. The per capita income is arrived at by dividing the GNP over the country's population. If the net factor income from abroad is positive, the per capita income works out to be higher. It helped in taking the per capita income from $926 in 2006-07 to 1,085 in 2007-08. The marked increase in the net factor income is attributed to a surge in the income in home remittances which moved up to an all time record of nearly $6.5 billion in last fiscal.
According to experts, the per capita income had been arrived at by converting the figures in the rupee into the dollar, on the basis of an exchange rate of Rs 78 to a dollar. The significant slide in the value of rupee vis-‡-vis dollar started only about a couple of months ago and the exchange rate had fluctuated. The average exchange rate for 2007-08 worked out to be considerably better than the present exchange rate of Rs 78 to a dollar. If the per capita income was calculated on the basis of the current exchange rate of the rupee vis-‡-vis dollar, it would be considerably less.
The figure of per capita income thus loses much of its charm, particularly when we know that the increase is largely inflation-related. The government should aim at bringing down the inflation rate by boosting the production/availability of both the agricultural and industrial products. Only a rapid and sustained growth of the commodities sector, whose performance was lackluster last year, can help lower inflation, they said, adding that the government needs to focus to boost all other sources of national income.
Financial experts told PAGE that real per capita income in rupee terms has also increased by 4.7-percent on average for the last five years while real per capita income grew by 4.2 percent as compared to 4.8 percent of last fiscal year. Although, the per capita income has moved up to US$1,085, our indebtedness has also grown alarmingly during the last few years.
Despite higher international oil prices and devastating earthquake of 2005, the country's economy has grown on an annual average of 7.5% during the last few years, they said, adding that total size of Pakistan's economy went up to $170.8 billion in the outgoing financial year 2007-08 against $143.9 billion in the previous fiscal 2006-07, registering $26.9 billion nominal growth.
Pakistan's economy is facing heavy pressure now a day. The major problem in the country is poverty, which is becoming the cause of crime and social disorder. Government policies, food inflation, corruption, uneven distribution of resources, lack of education, large scale imports, poor law and order situation and exploitation of work force are stated to be some reasons of poverty in Pakistan.
Experts believe that more and more people are being pushed below the poverty line due to continuous rising prices of staple food and other essential items as well as food inflation, which is mounting with every passing day and touching new heights, economic experts say. ''Pakistan is listed among 36 countries facing food crises and situation may aggravate if due attention is not paid to facilitate the farmers so that they can grow more that will ultimately lead to enhanced crops production'', they said. The government also needs to evolve a strategy on both short and long term basis responses to food supply strains, they said, adding that ''poor focused subsidy'' must be given to help poor strata of society to get food items.
Former Federal Finance Minister and economic expert, Dr Salman Shah told this scribe that the government must give ''targeted subsidy'' to the poor so that those living below poverty line could be saved from worst economic situation. He said the government had allocated around Rs 395 billion in the budget 2008-09 to give ''general subsidy'' across the board to the people. However, for giving ''direct subsidy'' to the poorest of poor, the government had allocated an amount of Rs. 34 billion under "Benazir Income Support Programme", which is too meager in view of high food inflation. The allocation for direct subsidy to the poorest of poor needs to be enhanced at least Rs. 100 billion so that they could be saved from starvation, he added. Further, he argued the budgetary allocations made for giving ''general subsidy'' should be reduced, as it is also benefiting to those who have capacity to pay. He also asked the government to adopt stringent measures to check artificial shortage of items by putting in place an effective system of check and balance.
Dr Salman Shah said that on one side, the government had allocated amount for giving subsidy to the people while it had enhanced the rate of GST, which is badly effecting the people across the board. He was of the view that eight million people are paying sales tax and the government can fetch more revenue by extending scope of sales tax.
To a question, he said that Malaysia, China and India are slashing subsidies to survive in the globalized competitive environment.
Dr Salman Shah said that the government must create more and more employment opportunities for which it is necessary to improve the investment climate in the country. In India and China, which are our main competitors, prices are on rise, therefore, Pakistani industry has golden opportunity to enhance its exports, he said.
He said that significant decline has been noticed in the investment graph for which immediate attention must be paid by the government to bring in more and more investment.
Another economist Shahid Hafeez Kardar criticized the government for burdening the countrymen by raising petroleum, gas and electricity prices, enhancing the rate of GST and increasing the non-developmental and defense expenditures.
He was of the view that if raise in gas prices was necessary, it should be for those who have capacity to pay the same. On one side, the government is raising tall claims about helping the poor while on the other hand; it is spending huge amount on wasteful expenditures. Talking about the "Benazir Income Support Programme", Shahid said that around 10 million people are required to be given direct subsidy, while through this programme only 3.5 million people would get benefit in a period of around 4-5 months. He said the government must identify the people first and then announce the programme whose benefit is yet to be given to the people.
On the other hand, Pakistan Muslim League-Nawaz led government in Punjab is showing determination to render selfless public service and to come up to the expectations of the masses through tireless efforts.
Pursuant to directions of Chief Minister Shahbaz Sharif, the PML-N government has set its priorities for far-reaching development of the province and hopefully, the steps taken by the provincial government will help in poverty alleviation, generation of job opportunities as well as rapid progress of the province.
Punjab Chief Minister Mian Muhammad Shahbaz Sharif in a meeting finalized recommendations for removing poverty, ignorance and illiteracy from the province.
Addressing the meeting, Shahbaz Sharif said that every effort would be made for the elimination of unemployment, improving the standard of living as well as provision of basic amenities to the masses, as it is the top priority of PML (N) Chief Mian Muhammad Nawaz Sharif. He said that all possible resources would be utilized for the achievement of this objective. He said that the recommendations formulated for service of the people will be fully implemented and effective monitoring system will also be evolved for this purpose.
Shahbaz Sharif said that the whole system has been ruined during the last eight years and sense of responsibility has vanished from all institutions. He said that the present government is determined to set the things right with commitment and a spirit of public service. He said that bureaucracy should also make welfare of the people and public service as its motto.
He said that government officers should perform the responsibilities with honesty and diligence so that the government efforts for the betterment of the people should yield positive results. He commended the services of Chief Secretary Punjab and provincial machinery for the provision of flour and Roti to the citizens at cheaper rates. He said that other officers should also display the same spirit of service to the people.
Shahbaz also constituted a committee for practical implementation of the recommendations presented in the meeting.