July 05 - 11, 20

That poverty makes people to resort to extreme steps is a global fact becomes a common in this part of South Asia with high population growth rate and misplaced resources both monetary as well as intellectual.

A startling and heart aching fact was recently revealed in the lower house of representatives in Pakistan and was widely covered by local newspapers. Over 200 people resorted to suicides during last one year in the country as they found no other ways out to fight back the poverty. The numbers of suicide cases during this period were reported from nationwide and this is manifestation to ubiquitous nature of the action. An estimate says out of 200, 113 cases of suicides were recorded in Punjab, 56 in Sindh, 20 in Khyber Pakhtunkhwa, and 15 in Balochistan. An analysis of the cases found out that poverty was the key stimulant of all these attempts.

Unabated rise in food prices and unemployment have stirred up the poverty graph in the country. While there are many reasons behind increase in food prices, unemployment rate goes upward only because of underutilised economic potential. Pakistan is an agro-based country, however its economy is driven by foreign exchange or exports.

Successive governments introduced agriculture reforms to push up the shares of agriculture sector that gives out incomes to large number of workforce in the country, but no reforms brought about desirable outcomes. Undoubtedly, these reforms gave rise to agriculture production, but due to its incomprehensiveness they remained quantitative stimulants whilst administrative and resource management sides were ignored. Consequently, benefits of bumper productions could not be transferred to society at large.

A veteran agriculturist says there is not only a need of economic change but also social change in the agriculture society to keep the growth sustainable and transferable. Having observed closely agriculture communities and farmers, he concluded until the urban-rural divide is removed the benefits would stay in few hands.

The farming community is highly dependent on middle persons to temporarily bridge this gap. This third party assistance not only keeps them isolated from process of social change but also multiplies the cost of products of end users. In a bid to limit the role of middle persons also known as Arthi, a bill was passed in the Sindh assembly last week. The provincial government wants to protect the rights of farmers to interact directly with consumer market forces and avail the facilities nonchalantly used by Arthis. Despite that it is not clear how will the legislation work and motivate financially farmers to take hassle of direct market interaction, the bill will prove a good starter to better living standard of famers and a social change, an analyst says. Unnecessary moves of produces with in different hands swell up their prices for consumers.

Some say the poverty-stirred suicides are not new in Pakistan that has a wide income disparity between poor and rich and where poverty is a longstanding phenomenon, but it is active media that now do not leave such events going unnoticed. Whatever is the dimension, a truth is more despicable and that people are opting death for themselves and for their dear ones just because they do not have access to meals.

In recent past, reports that people were putting their children on sale after being irritated of vagaries of life were going the rounds in the media, but that such disenchantments were only a tip of the iceberg was being realised by nobody. At least planners could have averted the situation that followed these attempts and in which mothers along with children unfurled to be crushed under the iron wheels of trains, had they been proactive.

The present government started with an economic agenda to increase employments and reduce poverty. It initiated some praiseworthy poverty reduction programmes, but the source of its power made it bow down to political expediencies. Instead of taking fiscal measures, it pinned hopes on external flows to fuel the engine of the economy. No doubt, foreign funds shored up the sagging economy of Pakistan constrained with depleting foreign exchange reserves. Yet again, this proved a stopgap solution as feared by many critics of foreign lending at the time Pakistan signed a lending programme with International Monetary Fund. Pakistan is expected to sign another deal and that is being termed as double whammy by many of independent analysts. Pakistan is under enormous pressure of already running lending programme of IMF, which unleashed a flurry of poverty in the country by making the government withdraw subsidies on many commonly used products and impose regressive taxes.

Value added tax or restructured general sales tax both would catalyse the price storm for consumer products. Government decided to hold imposition of VAT from first month of current fiscal year. Now, it will levy good and services tax or VAT by October. As name implied, the tax will grab in its clutches all consumer products that are exempted from tax. It is commonly believed that the tax would hike food prices significantly. An estimated collection from the tax will however be far less than tax revenue that can be generated from agriculture sector. In contrast to its size and contribution in national GDP, agriculture sector has very minuscule share in total tax collection.

Private sector can support the government to increase revenues. It is surprising to note that the government seems oblivion of the sector's debilitating conditions despite decline in exports. While it is feeding fattish departments with capital from banks- nonetheless government's borrowing causes inflation -it is not using its prerogatives to make the central bank bring down interest rate that hovers around 12 percent, highest in the region.

High interest is hampering the growth in the private sector. State bank Pakistan has increased export finance rate to 8.5 per cent, which is again a hard blow to liquidity strapped exporters. In this backdrop, risk-aversive commercial banks find treasury bills more profitable to park in liquidity. Such parking does not help real economic growth or employment generation. State bank should refrain from making high inflation a justification to stir interest rate.

Economic analysts say private sector needs to have access to low cost funds to play its role in employment generation and poverty reduction.