The harsh reality is that despite improvement in
economic indicators the purchasing power of people is on the decline.
The number of people living below poverty line is increasing with the
passage of time. More and more people have begun to ask economic
managers the reasons for having no trickle down effect of economic
prosperity. The economic managers at times get a little bitter while
responding to this question. However, it is a fact people wish to
understand the reasons and the hike in the level of desperation is
The economic managers are never tired of saying
that what they have achieved is near a miracle. The commonly referred
achievements are: foreign exchange reserves exceeding 12 billion
dollars, a GDP growth rate of 8.4% achieved during last financial
year, tax improvement to GDP ratio, higher allocations for public
sector development projects and human resource development. It is
often being asked that if these assertions are true, one does not have
reasons to doubt the credibility, why the condition of masses is
getting from bad to worse with the passage of time?
A number of critics say that least was the
contribution of economic managers in the building of foreign exchange
reserves. It was more of an outcome of the changing geopolitical
situation after 9/11, which led to reprofiling of Pakistan's external
debt. On top of this, funds for utilizing Pakistan-based logistic
services and purchases of dollars from local money changers helped in
building up the reserves. They also say that after the reduction in
such inflows the reserves are on the decline.
One may understand the level of desperation and
frustration but it is also a hard fact that improvement in per capita
income does not mean change for an average person. It is because the
average figure is mostly misleading. The per capita income of a small
percentage of total population may have gone up manifold but
purchasing power of masses is on the decline, which is also evident
from growing percentage of people living below the poverty line.
However, one must also keep in mind that there is a
time lag between higher spending on public sector development programs
and their real impact on the people. According to an analyst higher
spending on public sector development program does not necessarily
mean improvement in earnings of people because it does have impact on
the quality of life. Construction of a motorway requires spending of
millions of rupees but does not add to the prosperity of people.
Similarly plying of air-conditioned buses may make traveling easier
but also add to the expenses.
It is also being said that attaining higher GDP
growth rate of 8.4% has not benefited the masses. However, it is not
correct because higher GDP was the outcome of improved production and
productivity. If one may recollect, a few years back the average
capacity utilization of various sectors was dismal. As against this,
most of the industries, at present, are working at close to designed
capacity. Most of the units have enhanced capacity through BMR and are
now in the process of expanding capacities. This has certainly
increased the demand for manpower. However, due to growing emphasis on
technology the nature of jobs has changed. While the job opportunities
for technical and skilled people is on the rise, the job opportunities
for un-skilled are on the decline.
It is also said that increase in production of
cars, airconditioners, motorcycles and other consumer durables hardly
has any impact on the life of common man. The higher sale of these
items is driven by consumer finance, which is allowing people to live
beyond their means or on the borrowed money. Apart from everything,
this facility is available to a very small percentage of population,
mostly living in the urban areas.
There is also a growing skepticism about the much
talked about 'Privatization for People' program. Though, the ongoing
privatization program has yielded millions of dollars, its true
benefits are not yet evident; the worst example being KESC. It may be
true that it was a very difficult transaction, but backing out by the
buyer was even more embarrassing. There is also some uneasiness about
the payment by the buyer of PTCL. Does this mean that Pakistan is
still not considered a safe heaven by the foreign investors? While the
reality is not as bleak as perceived by many, it is also a fact that
Pakistan has not been able to project the correct picture.
It may be true that Pakistan needs foreign
investment but not by ignoring the local investors. At time one feels
that there is discrimination between the two, foreign investors being
the preferred one. This often leads to flight of capital and brain
drain. If the local capital and human resources continue to move out
of the country, it would only be left with low quality entrepreneurs
and limited capital. The policy planners have to keep in mind that
foreign investment cannot be ensured without the active participation
of local investors.
The effectiveness of public sector development is
directly dependent on tax collection but more importantly on the
distribution among the provinces. There is a growing feeling among the
provinces that the distribution is not equitable. Whether the
perception is right or not the least developed areas need more
allocations. Previously, incentives were given for the establishment
of industries in the lesser developed areas but the present policies
offer no incentive. Lack of employment in the rural areas is resulting
in forced movement of people to urban areas. This is putting pressure
on the urban resources as house rents are going up, traffic jams are
becoming a norm and other amenities are getting scarcer.