While conceding that this government has some sort of economic plan in mind, the trouble is that nearly every economic claim for a turnaround disappoints the moment it is put to the test. If they honestly believe their claims, then it is even more dangerous, since they will continue to do more of the same, worsening an economic situation standing at the brink of disaster. Economic management entails successfully harnessing the potential of economic activity in an economy and then using it to spur real growth in a manner that is not only sustainable but also equitable. Artificial growth and development on the other hand is one based on borrowed funds/resources bearing little correlation to an economy’s true underlying ability to repay its assumed debt and one that in the long-term tends to cause more pain than joy – Greece, Spain, Portugal, Iceland, Ireland, etc are all recent examples we can learn from. Call it a coincidence, but democracy in Pakistan and a rapid rise in its national debt are phenomenon that almost always seem to coincide. The PML(N) government of the 90’s was instrumental in borrowing excessively and of late in the last 5 years of PPP and the first 1 year of the PML(N) government, the rise witnessed in our national debt is unprecedented and irresponsible. Borrowing in itself is not an ill, provided it is put to productive use and linked to an endeavor’s propensity to pay back the borrowed amount. In fact, post 2008 financial crisis, countries have become very sensitive about professionally managing their national debt accounts. More and more struggling western economies are setting up independent cum autonomous monitoring bodies, comprising of professionals representing both the public and private sectors to manage their national debt accounts. The idea behind this is to promote responsible borrowing, ensure the judicial usage of the borrowed funds and an oversight on servicing and re-payment of the debt – an institutional framework to manage debt rather then relying on the whims of an individual! With a rapidly swelling national debt, Pakistan also needs to think on these lines fairly quickly.

PML(N)’s shortcomings reveal that they suffer primarily on two counts, a) Incompetence in management and b) Lack of focus or clarity. On the former, we see that key areas continue to be governed through political priorities instead of resorting to a professional management model combining private sector’s entrepreneurial skills and public sector’s social priorities. One hoped that by now they would have embarked on structural reforms using their business background, and would have addressed operational difficulties by differentiating between external rhetoric and domestic ground realities. However, their economic team appears to be totally out of depth when it comes to tackling these underlying economic challenges. Further, it is all very well to talk about strategies like export led growth, fixing fiscal imbalances and improving CAD (current account deficit) etc in your manifesto, but these initiatives require ‘doing.’ And successful implementation in-turn requires competence and a focused mind-set.

India did not improve its exports from a mere $18 billion in 1990-91 to its current level of around $300 billion without first undertaking significant lower tier structural reforms and unleashing a support environment to enable its businesses to look outward. One can understand the desire of our economic managers and global financial institutions (whom they excessively borrow from) to see national companies operate on global standards and to quickly raise more taxes, but anyone with a deep understanding of Pakistan’s small and medium sized corporate sector will be quick to realize that without freeing-up doing business per se and before bringing back legitimate profitability to the markets, it will be impossible for them to tax the people to finance their own idiosyncrasies. As for the wishes of the lending agencies like the IMF, World Bank, etc in context of Pakistan, there is nothing more to be guarded against, than the overweening confidence these institutions display to introduce their doctrines in untried soils. Such arrogance always leads to acrimonious disputes, if not violent reactions.

Regardless of what we are made to believe, the 18th and 19th amendments have serious shortcomings when seen through the prism of the corporate sector. Primarily lawyers and politicians got together to draft these amendments without seeking any help from or ensuring due participation of corporate stakeholders; the real drivers of economic activity and revenue that pays the state’s bills. As a result, a mish-mash of decentralization has occurred that impairs the ability of companies to operate freely on a national scale by developing products and management models that are acceptable countrywide. Needless to say, this lack of uniformity compounded by a lack of coordination within the provinces hurts the competitiveness of Pakistani companies by compromising options on ‘economies-of-scale’ and optimization of funds’ allocations for research and development. As an example, a leading food company recently had to pull out its tomato ketchup from Punjab’s market simply because the newly formed Punjab Food Department came up with its own independent set of regulations, which ironically happen to be completely out of sync with the rest of the provinces and even with Western European standards! Further, given an obvious lack of capacity at the provincial level and with a rather declawed centre, the uncertainty adds to the confusion on leadership and makes the cause of bringing about an economic turnaround that much more difficult. Sound economic management as we know, takes its strengths from coordination, linkages, synergies and leadership.

Finally, if we look at recent successful turnaround stories closer to home then we see that all have been based mainly on providing a conducive work environment to operate in. That is, respective governments ensuring the following of three elements: a) law and order, b) prudent oversight that acknowledges the trade-off between an idealistic regulatory framework and one that is practical, and c) an understanding that some inequality is needed to propel growth. More importantly, these economic turnaround stories are based on ‘clarity’ and a ‘narrow cum targeted focus’. For example, Nitish Kumar in Bihar kept it simple by concentrating on just two areas: Law & Order and Industry. Likewise, Modi in Gujarat chose Agriculture and Industry.

All reforms, revised regulations, infrastructural development and new governance priorities revolved around solving a practical day’s problems of agriculture and manufacturing and then leaving it to the private sector entrepreneurial juices to do the rest. The way Gujarat handled its power sector solutions, both in the short-term and the long-term, has now found its way in text books. While the government embarked on its long-term vision of correcting the supply side, in the short-term the solution was simple: power will be rationed but continuous. Meaning, if electricity load-shedding in an area was to be 8 hours, then it would be in one go and the remaining 16 hours will have uninterrupted supply. Also, no tariff increases but everyone would have to pay their bills. This was a tall order as Indian farmers were not used to paying for electricity. However, gradually when the culture of uninterrupted power (albeit for the benchmarked duration) replaced the uncertainty of frequent and unannounced power cuts, attitudes also began to change. In rural areas, where milking buffalo mechanically had been a hit-and-miss affair because of power cuts, there was now regular electricity supply and a surge in production. The animals reportedly gave extra milk because they were comfortable standing beneath cooling electric fans. Savings and productivity began outweighing costs.

Ultimately, an economic turnaround is all about one thing: making economic activity happen.

The writer is an entrepreneur and economic analyst.

Email:kamal.monnoo@gmail.com