IS THERE ANY JUSTIFICATION FOR CELEBRATING PAKISTAN DAY?

INTERNATIONAL DONORS HAVE MUTED FINANCIAL SOVEREIGNTY

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
Mar 29 - Apr 4, 2010

Muslims of subcontinent has given sacrifices during the independence movement and also after the partition to achieve financial sovereignty. They feared that once subcontinent got independence from the British rule they would be subjugated by financially strong Hindus. However, if one looks back it becomes evident that soon after achieving independence the habit of living beyond means added huge external debt. Most of the money borrowed was spent on lavish life style of the rulers. Feudal lords have kept the rural population away from education and have been giving them minuscule stipend. In the urban areas industrialists and traders have minted money, multiplied their wealth and also transferred billions of dollars abroad. In fact less than five percent of total population controls the entire economy of the country. These elites have gone richer and richer but nearly 35 per cent of total population lives below the poverty line.

According to certain economists the breach between the incomes of haves and has widened to an alarming level. The per capita income is officially stated around US$1,200 but in large urban cities like Lahore, Islamabad, Faisalabad and Karachi per capita income ranges between US$5,000 to US$10,000. Per capita income of rural areas where wheat, rice and cotton are cultivated and areas having orchards is also estimated around US$15,000. Less than two percent population of these areas controls most of the resources and the remaining 98 per cent population barely earn one dollar a day.

Feudal lords have also become industrialists as they own ginning factories and textile and sugar mills. Some of them have also established rice husking and flour mills. Since income from agriculture is exempted from payment of income tax they club all their income under this head. This practice has been approved and condoned by the tax collectors.

This elite class also occupies significant number of seats in the provincial and national assemblies as well as senate. This gives them ample power to influence government policies. Their mindset can be gauged from the fact that the budgetary allocation for education and healthcare is the lowest. In fact they do not wish that people should get education, as they fear educated poor can challenge their absolute power. Private jails and bonded labors are the two worst examples of their heinous crimes against the society.

The colonial rule had prescribed two different set of syllabi for elites and the commoners and the tradition has continued after more than six decades of independence. In fact the system is aimed at grooming two separate set of educated people one who could be hardly termed educated and second those who are prepared to become the rulers. In this country we have yellow schools, public schools and private schools following entirely different syllabi and language of instructions. Ghost teachers/schools are common because the money allocated for them is ultimately routed to members of city district governments, provincial and national assemblies and senators.

Yields of different crops in Pakistan are the lowest among the countries of the region. This dismal state can be attributed to different factors, worst being irrigation water being controlled by the big landlords and bulk of the credit disbursement being made in the names of small farmers but pocketed by feudal lords. Due to absentee landlords though lands are cultivated the produce ultimately goes to the owners and workers continue to lead pathetic life.

The rural setup encourages many of the people to migrate to big towns and cosmopolitan cities for education and in search of better job opportunities. This constant migration puts heavy burden on cities. Since population of any area is determined by the number of computerized national identity cards, most of the people are considered residents of those areas but are in fact living in urban areas. This example could be best understood by looking at Karachi. The officially stated population of Karachi is around 12.5 million but the number has exceeded 20 million. The fall out is that developmental funds are allocated on the basis of population and fall grossly short of the requirement. The result is mushroom growth of katchi abadis, mostly devoid of basic amenities.

It is often said that rate of inflation is very high in Pakistan and the central bank has been following strict monetary policy, keeping interest rate high. However, the policy makers forget to consider the basic point that inflation is cost pushed in this country. The prices of basic products i.e. wheat flour, petroleum products and even sugar move in tandem with their international prices and consumers have no option but to buy these at the inflated prices.

It is on record that lately price of crude oil touched historic high of US$147/barrel, wheat over US$550/ton, urea also above US$550/ton and TCP lately placed an order for import of refined sugar around US$650/ton. In such a scenario local prices of these products also touched historic high. One fails to understand the point that economic managers are not ready to give a decent return to the local manufacturers but are always ready to import the same at a fabulous price. Last year apex court fixed retail price of sugar at Rs40/kg at a time when the landed cost of imported sugar was around Rs70/kg.

Similarly, some of the quarters say that local manufacturers of urea are provided gas at subsidized rate. Lately, urea was imported at US$350/ton as against locally produces commodity costing nearly half of this price. A huge amount has to be paid as subsidy for selling imported urea at the cost of indigenously produced one. During 2009 Pakistan imported around 1.5 million tons urea which cost nearly US$800 million and billions of rupees subsidy. Had it not been better that local manufacturers were given subsidy on gas to save millions of dollars paid to the overseas manufacturers. It must be kept in mind that urea manufacturers have reciprocated the good gesture of the government. The first ever urea plant established in late sixties had an annual production capacity of around 150,000 tons and today the installed capacity exceeds 5.5 million tons.

The country also succeeded in producing around 24 million tons wheat last year only because of fixation of an attractive support price couple of years ago. However, the point of concern is that the government has storage capacity of around 6.5 million tons. Therefore, bulk of the wheat is purchased by the private sector and controlling its price and quality becomes difficult for the government. Fixing of relatively high purchase price of wheat has hardly benefited the small farmers.

The country has hardly achieved self sufficiency in wheat and rice but still hugely dependent on imported edible oil. The groups having vested interest are promoting imported palm oil but facilitating the least in increasing indigenous production of cotton seed, sunflower, canola and corn oil. Since most of the farmers are not educated and are also dependent on the middlemen for money they cultivate only those crops for which they get the seed.

The climate and soil conditions of the country are ideal for the cultivation of maize. While the world is focusing on increasing production of corn oil, an ideal bio-fuel, Pakistani farmers are not aware of this. They are discouraged and told that country has a glut of maize and it is best suited for feed milk-yielding cattle. It is on record that during Ayub Khan's regime ration card holders given corn flour as a substitute for wheat flour but today its price is far higher than wheat flour.

Similarly, plan to sell ethanol (petrol blended with ethyl alcohol) has fizzled out because oil marketing companies oppose it. Promoting ethanol can help in saving millions of dollars spent on import of motor gasoline. Since ethyl alcohol is produced from molasses, it will encourage the sugar mills, also having attached distilleries to crush more sugarcane. It is on record that sugar mills located in Sindh managed to produce 1.1 million tons sugar this season despite many odds. This was nearly 50% higher as compared to the previous year. The only regret is that bulk of the molasses would be exported, distilleries would operate at low capacities and country would continue to import motor gasoline.

The worst crisis facing Pakistan at present is an acute shortage of energy products, electricity and natural gas. Ideally, Pakistan was required to add one mega size dam in each decade. Magnla was completed in sixties and Tarbella became operational in seventies. Over the last three decade no dam has been constructed. Kalabagh became a controversy and the policy makers remained so busy in finding the rationale for its construction that they totally forgot looking at other proposals. According to the informed sources the money spent on preparing revised feasibilities was enough to construct at least two dams of Kalabagh dam size. The most disgusting point is that the country is capable of producing up to 40,000MW of hydel power, but stuck at 6,500MW for a long time.

A lot is said about Thar coal treasure but it has not been exploited as yet. Benazir Bhutto has performed the ground breaking ceremony of a Thar coal based power plant during her second regime. Over the years neither the coal mining has started in the areas or the project gone beyond that ceremony. One of the reasons is that provincial/federal government has not allocated special funds for creating facilities to encourage the miners to explore this area. Lately, Chinese have become active and working on mine-mouth power plant. However, certain quarters are not happy and creating different obstacles, including attempts of Chinese engineers working in Pakistan.

Lately, copper has attained the status of one of the most precious metals. It is mainly used in producing different types of wires because of very good conductivity. Pakistan has huge copper reserves and Chinese are involved in one of the projects but annual production of copper ore in the country remains highly negligible.

Balochistan is rich in mineral reserves but certain elements have become a serious threat for the investors who wish to undertake mining in the province. The first ever gas field was discovered in the province and despite having huge reserves, share of the province has declined significantly. Those claiming to be the representatives of Balochs have launched war against the state. In such a scenario hardly any exploration activities can be undertaken in the area. It is true that the country is loosing but the real looser are the Baloch. They must learn a lesson from Afghanistan, where the conflict of warlords has devastated the country and people are leading a miserable life.

It must be kept in mind that if Pakistan wishs to attain a position among the developing countries, nothing can be done without changing its image from hardcore militants to moderate and peace loving nation. There is a need to weed out foreign militants who take refuge in Pakistan. The ongoing war in Afghanistan for nearly four decades has had the worst impact on Pakistan. Its economic, social and cultural fabrics have been destroyed to a large extent.

Economic growth cannot be achieved without peace. Investment is like migratory birds which fly in search of safe havens. India has attained the status of regional super power because of its vibrant economy. While Pakistan's GDP growth is still hovering around 2.5% India is striving to achieve 10% growth rate. It is investing heavily in Afghanistan and Iran to consolidate its relationship and attain access to energy rich Central Asian countries, whereas Pakistan is still busy in fighting a proxy war for the US in Afghanistan.

Is it not ironic that Pakistan stalled Taliban in Afghanistan after the fall of USSR but became their worst enemy when the US invaded the country for providing a safe haven for Osama bin Laden? The US claim that Iraq had weapons of mass destruction proved a hoax call and so is proving the claim of Osama's presence in Afghanistan. Pakistan should come up with its own independent foreign policy rather than towing the US agenda.