SAVINGS CULTURE IN PAKISTAN
Apr 30 - May 6, 2012
Savings play an important role in any economy and its role is important at different levels. It simply means setting aside part of your income for future use. This entails the portion of income, which is left over and not spent on consumption of goods and services in the present period.
There are different purposes of savings such as for emergency, accumulation, investments, education, etc. These can be done through notice, saving, fixed deposits and other investment accounts at banks, post offices and other non-banking financial institutions. Households, firms and the government can save their earnings.
Saving ensures that the saver is financially independent in the future and does not rely on debts (overdrafts, bank or cash loans) or family and friends. It avails money for special events such as weddings, anniversaries, vacations, etc. and also enables a person to purchase goods and services in cash. Money saved can be used as a collateral or security for loans. Savings facilitate the process for establishing and/or expanding business ventures.
Saving, which is translated into investment, becomes the engine that drives economic growth. It can be used for lending to other people who might need the money for production purposes. The investments would create economic growth and result in job creation.
It can serve as an answer to the lack of investment funds and dependence on foreign direct investment.
When savings are high, investments increase and the economy grows. However, the increase in saving does not always correspond to an increase in investment. If savings are held under the mattress or otherwise not deposited in a financial intermediary like a bank, saving will not be channeled into investments by businesses. Saving should thus be encouraged in order for the funds to be directed to investment.
In Pakistan, we do not very much believe in savings. The nation has distinguished itself by its ruthlessness, indifference, and disregard for the future. If one has the money, one would eat to kill himself; dress himself uncomfortable and tasteless clothes; walk in most weird shoes; travel in vulgarly expensive vehicles. We have gotten into every bad habit that we cannot afford.
Palatial homes and gaudy decorations have become our symbols of distinction. Wastage has become so rampant that we no longer believe in conserving anything. We have denuded our mountains, cut down jungles, devoured wildlife, or destroyed it. Water courses and reservoirs have been polluted. The list goes on and on.
The situation has been worsened by lack of education and a destruction of values and norms which regulated consumption and prompted saving. The irony is that even our religious leaders are not prepared to address the issue of extravagance, as they are a beneficiary of expansive spending habits and generosity.
This state of affairs may provide an explanation of our stubborn rates of saving. But, it still leaves some important factors. The policymaking and executing elite, the rich and the influential indulge in ostentation the most. They are not prepared to adopt austere ways of living. Many of them are not aware of the vulgarity contained in their overspending. As a result, they neither formulate policies, nor exact laws which would encourage frugality and savings. The common person, instead of adopting a balanced life, tends to emulate the attitudes and habits of the elite. In the rural areas, the age-old social structure continues to persist with the feudal dominating the life of the villager. They set the way and the pace of spending and saving.
Why our government allows the import of goods, which we cannot afford as a nation suffering from chronic shortage of foreign exchange. The luxury cars, the superlative editions of electronic goods whose alternatives are manufactures in Pakistan, and gadgets which are not needed due to our climate, large labor force and our stage of sophistication.
Are these commodities essential? Wheat, edible oils and sugar and infant milk are items of daily use. But has anybody tried to assess the extent of their wastage, People are being encouraged of their consumption by varied incentives, prizes, and all provocative advertisements. A highly injurious item of consumption like cigarettes and sheesha is encouraged gripping adolescent populations.
Tea is also hawked aggressively in the same manner. Suggestions like discouraging smoking and tea drinking had been taking funny forms.
Cut the number of cups of tea in a day: do not serve tea in official meetings; do not smoke in the office buildings and ban sheesha from the restaurants. If one has to ban some bad habits, he should learn from Thailand, where, by a single order betel leaf and nut chewing was banned in the 1930's; now only some very old Theresa and some Indians are left to indulge in this habit.
The second question is what have we done to produce the imported items locally? We have failed to cultivate tea in viable quantities. We have not been able to grow oilseeds in quantities required to meet the demand. We have not established any dairy industry worth the name. Even to quench our craving for leaves and betel nut, we have not been able to have sufficient quantity of the leaf, and practically any nuts in spite of favorable environment in the Indus Delta and the coastal region.
This applies to a large number of imported luxury items - our effort at their production in Pakistan has resulted only in substandard goods in the market. Quality has never been a strong point of our manufacturers. One should be clear that saving involves a basic change in attitudes in life. If we save today, it will be helpful for our country, economy and of course for ourselves.
Successful nations are those who believe in simplicity, the importance of saving money cannot be stressed enough for those who want to experience financial freedom. There is a famous saying,
"Savings can't buy everything in the future, for example poverty" - Nelson Algren