LAHORE - State Bank of Pakistan former governor and Beaconhouse National University vice chancellor Shahid Hafeez Kardar has observed that rupee appreciation is temporary, as local market is very small and injection of just $1.5 billion has improved dollar supply, pushing value of local currency.
Sharing his views at a seminar on ‘Eeconomic policies of the present government’ here at Tech Society Club on Sunday, the former SBP governor said that dollarization cannot be controlled without transformation in fundamentals of economy. He challenge that dollar is not available in open market despite government claim of better supply of greenback.
Kardar said that major surgery is required for economic stability in Pakistan facing multi dimensional crises. Engr. Abdul Majeed Khan, Dr. Muhammad Sadiq, Qayyum Nizami and Jameel Gishkori also spoke on the occasion. “There are more than 400,000 industrial electricity connections in the country but 46,800 have tax returns while as low as 16,000 are paying taxes to the government. In the same way, there are 350,000 commercial connections out of which mere 35,000 are taxpayers as state itself issues SROs for exemption.”
The former minister of finance Punjab said that solution to the basic economic problems is required surgery. Kardar said that if we want to progress like China and India where investment has reached to 38 percent we should bring our national savings upto 15 percent. Kardar said that it will be further difficult for us to enjoy foreign aids after departure of the US forces from this region in 2014. After paying external debts and meeting defence expenditure running cost of the state exceeds from available financial resources, he added.
Pointing out the reasons of improvement in stock exchange shares Kardar said that it is due to the large scale investment by small local investors in view of growing trust on the present regime.
“We require at jobs for at least 2 million youth every year but only 0.9 million youth succeeded to get jobs. Government will have to increase growth rate from 3 to 8 per cent to provide employment to the youth. To ensure 8 percent growth rate we should fetch investment rate to 30 percent which is 19 per cent at present in Pakistan.”
He also appreciated private sector for providing jobs to the youth on the basis of their capabilities.
Kardar emphasized the need to adopt a strategy at national level to face the challenge of providing jobs to the 50 million youth in the years to come for which a realistic taxation system is necessary. Investment should be made in those cities where revenue collection is high, Kardar suggested.
Addressing the meeting Dr. Muhammad Sadiq said that government needs to reset priorities to provide basic amenities of life to the citizens like supply of pure drinking water, health facilities, employment and sewerage system”.
On this occasion, Qayyum Nizami said that Pakistan has become a security state instead of a welfare state. Agriculture and industrialization should be the bases of our economy but unfortunately agriculture contributes just 3 percent and industry upto two third only, he added.
Nizami said that elite economy is increasing distances between the poor and the rich classes due to unequal distribution of resources. He quoted the statement of former Governor State Bank of Pakistan Ishrat Hussain who said that formal economy was going down while informal economy was escalating rapidly in the country.
Nizami also gave a reference of FBR according to which 4 million people should give taxes whereas only 100 companies were paying 80 percent of total tax collections in Pakistan. Unfortunately as compared to direct taxes government of Pakistan is collecting indirect taxes, promoting price-hike, Nizami added.