The next fiscal year’s budget announcement is round the corner and much is being said these days in the business and economic circles to guide the government on where to focus and how to spend its resources in the coming year. Not that budgetary announcements in Pakistan mean much in terms of absolute numbers, since these allocations are invariably readjusted during the year to suit shifting governmental priorities, still they do tend to capture the mindset and test the competence of our economic managers to find the correct way forward for the economy. And it is for this very reason that instead of merely concentrating on balancing the national books our leadership should also simultaneously unleash a management plan to work towards the larger economic picture. Meaning, a road map and an implementation strategy that can actually make the economy grow, and that too equitably and responsibly. Given that Pakistan is going through a period in history where a number of external factors are working in our favor, in-turn presenting some unique economic opportunities, it will simply be a shame to lose out on them – “opportunity they say doesn’t knock twice.” Finally, this budget is going to be critical for PML-N, as this provides them with a last chance to dispense economic policies that can actually start paying dividends during their present term.

Here are my eleven suggestions on what the economic managers should seek to do in 2015-16:

1)     Build mood and perception for growth: Often in the economic history of nations we have seen that instilling sheer belief in the state of the economy can create its own momentum. For example, in our neighborhood we just witnessed how Modi’s government used every trick in its bag to create a perception that India’s economy has finally turned a corner and back in the cycle of high growth. Techniques like counting collection and usage of animal manure in fertilizer production and consumption, cleaning of toilets and disposal of human waste in infrastructure up-gradation and redefining poverty benchmarks to portray poverty alleviation etc., were used freely to come up with an unrealistically high GDP growth number. Today not only the Indians but the entire world firmly believes that India is back in business.

2)     Devalue Rupee by 3% against the US Dollar: A simple glance at the Pak economy and the most worrying indicator that comes across is that exports are falling and sliding fast. Exports as we know tend to be a developing country’s cheap ticket to growth because not only does it earn precious foreign exchange but also, that it does so by converting a nation’s weakness, poverty, into its strength in shape of cheap labor. As the developing country’s exportable trade grows so does its employment since its competitiveness mostly lies in its cheaper labor. And despite this adverse and rather dangerous trend the government continues to be stubborn by not allowing the Pak Rupee to drop to its ‘real’ value. As recent as August 2014, I argued the case against devaluation and why a stable currency in-effect promotes export growth. However, today’s is not the case of devaluation but of fair market adjustment. China’s Rinminbi over the last eighteen months has devalued by nearly 40 percent, India’s Rupee by nearly 18 percent from its one time high, Bangladesh’s Taka by about 12 percent over a similar period; what to mention about the stronger currencies like Euro, Sterling, Yen, etc.

3)     Exports, release stuck drawbacks and resist announcing additional drawbacks: A decline in exports of Pakistan - which is still to transition to real value added exports – also means that employment opportunities are dwindling and Pakistan’s competitiveness is suffering. The natural temptation will be to announce new rebates to address this. However, doing so would be a mistake since such measures in our system promote corruption and distort fair competition.

4)     Keep Fiscal Deficit at no less than 6%: With an improved reserve position and given that South Asia is being tipped as the region of growth in the next decade, Pakistan should not miss the bus and for this the government has to play its part through enhanced levels of public sector development. Other South Asian economies, including India, have much higher fiscal deficits than us and surely IMF and WB can also be convinced, as there are recent precedents where they have relaxed terms in Europe to accommodate spurring of growth.

5)     Tax reforms: The General Sales Tax (GST) is the main vehicle of indirect taxation being used. The share of sales tax in our overall tax collection was recorded at 44% in FY14, overriding the share of direct taxation, which stood at 39%. Currently charged at 17%, the rate is too high when compared with both our neighbours and competitors. It is recommended that this be brought down to 5%, albeit with broader based implementation and zero-rating for exports. As done by India, the corporate tax rate should also be brought down to 25%. More importantly, tax collection should be based on reciprocity and minimising contact between the tax collector and payer instead of the present damaging style of witch-hunting, coercion and corruption.

6)     Industrial reforms and labour reforms: In its budget announced recently, the Indian leadership has taken upon itself to formulate economic policies that endeavour to increase the “share of labor in the Indian Economy”. To achieve this they have undertaken a clever mix of financial, corporate and industrial reforms in the country to help boost investment and also the performance of its private sector. Further, the Modi government has successfully reduced bureaucratic red tape, opened up sectors previously closed to foreign investment and rung much awaited property rights’ legislative reforms– Ironically, Ayub Khan did all this back in the 60s, but his work has been un-done.

7)     Incorporate an independent Board to oversee promised Chinese Investment: External stimulus and engagement is good, but only useful when undertaken in a transparent and productive manner. The present economic managers just do not carry the credentials to oversee utilsation of such mega funds in a way that serves the long-term interests and priorities of the country. Foreign inflows, as we know come with a price tag, which more often than not carries long-term repercussions. Not too long ago the Germans were also extremely generous with the Greeks!

8)     Use PSE to spur growth: PML-N’s current prioritisation vision is flawed and needs to change direction. Capitalising on the traditional strength of its Public Sector Enterprises the Indian Government has devised an innovative plan to spur growth and investment by making its state enterprises to not only partner but also lead the private sector into making investments. For example, initiatives like: announcing US $137 billion investment in Indian Railways, which in-turn will also open up related projects for the private sector and the plan to turnaround its national carrier, Air India Limited.

9)     Support the farmer and subsidise where necessary: The recent plight of the farmer and a steep slump in agriculture incomes tends to be a ticking time bomb, politically and economically. Over the last decade and more, it has been the backbone of our economy, especially the consumer economy. Across the border, our neighbour had allocated IRs 37 billion to support the farmer and the agriculture sector, a figure now in excess of 50 billion. We need to follow suit.

10) Prioritise power supply to industry: Ensure that the small and medium sized industrial sectors clustered in cities like Hyderabad, Nowshera, Turbat, Faisalabad, Sialkot, Gujranwala, Multan etc., are not subject to more than 4 hours/day of power outages.

11) Distance personal interest and friendships from economic management: Adhering to the notion of properly addressing ‘conflict of interest’ is paramount to the success of any leadership. It will be welcome if this government can go that extra mile in shedding the tag of ‘rewarding the loyalists’ syndrome by just concentrating on merit. Tainted with a perception of being big-business friendly, the first thing Modi did after becoming the Prime Minister was to consciously distance himself from the big boys of the Indian corporate world!