A recent report that the Government is considering borrowinh $ 500 million from the International market through issuance of Sukuk Bonds against Islamabad – Lahore Motorway to finance the Federal budget is a grave pointer to the present state of national economy. Pakistan’s public debt is increasing Rs. 1500 to Rs. 2000 billion on average each year. Pakistan’s external debt has reached 73 billion & may reach $ 87.3 billion by the end of 2016-17.
There is no doubt that the present Government has made earnest efforts to improve the national economy by enlarging the tax base and enhancing tax revenues. The stock market has greatly improved. Without drastic economic reforms, however and with a resolve to implement the same, the rising public debt situation would keep on posing serious threats to the national economy. Sizeable chunk of the national budget goes to debt servicing each year.
It is highly imperative to put the national economy on a high economic growth path in real terms based on actual and advanced productivity trajectory in each sector of the national economy. The following parameters will have to be addressed through massive reforms coupled with short term and long term action plans free of “babu culture” and with strong political will at the top to implement them.
These factors alone can generate real wealth for the national economy to pay off the current public debt liabilities in a few years and make Pakistan economically self reliant in the very near future.
Agricultural and industrial productivity growth with high value addition is the most vital need to add national wealth. Fast track GDP growth strategies and implementation plans are sine qua non to high growth targets achievements. In this connection, the roles of agricultural and industrial productivity indices are very vital. Presently these parameters are very low in our national economy. This requires necessary reforms package and pragmatic policies to enhance productivity levels in agriculture and industry. The present National Productivity Organisation needs to be strengthened and reorganised professionally. Cost of production needs to be cut through modern technologies. Innovation and technology upgradation are needed in industries and agriculture based on international models. Research and development plays a massive role in boosting industrial and agricultural productivity. This requires massive reforms, applications and implementation strategies in consultation with independent experts.
Massive Industrialisation: Aggressive industrialisation policies are needed to be launched in the SME sectors and large industries focusing on exports orientation. PML-N Government in the past launched a rural industrialisation program which needs to be relaunched with updated approach. This alone would help achieve high growth targets. It would be advisable to set up public sector companies to ensure fast track implementation of the industrialisation programs based on simplified procedures and updated methodologies.
Corruption: Corruption eats away a sizeable chunk of our national resources and adversely effect public welfare policies through redtapism. It can be checked through reforms and by using intelligence agencies as well. However honest and good political leadership, efficient accountability frame work and effective parliamentary system alone can minimise corruption.
Taxation: Taxation is only one national income resource and not the only measure to boost national income. Too much taxation breeds inflationary spiral as the heavily taxed sections of the society pass it on to the public at large. Tax base should be enlarged and developed to induce voluntary participation through an effective motivational campaign using media and education.
Administrative Reforms: This is the core area which eats away the effects of all good policies & plans. Bangladesh, on independence, drastically changed the old complex procedures breeding redtapism & corruption. Services Reforms based on results achievements and market orientation, are needed to meet the challenges of masses welfare, accountability and freedom from corruption.
About forty percent of the budget is wasted through redtapism, delayed and costs escalated projects and corruption. This needs drastic reforms.
Agricultural Reforms: Agriculture is the mainstay of our economy. On basis of consultation with all stake holders and agricultural experts, comprehensive agriculture reforms policies need to be introduced with the following objectives;
To achieve higher per acre yields.
To improve quality of agricultural products.
To boost exports.
To introduce new crops.
Farmers empowerment & Training.
To strengthen the Agriculture Extension Programs to reach the formers effectively.
Control of Wasteful Expenditure in the Public Sector: A nation gripped by economic crises have to adopt austerity and economical ways to cut wasteful and luxuriant expenses in Government and public sector organisations.
Number of ministries need to be cut & reduced to the minimum. International models of developed democracies need to be followed.
Public Sector Revenues Enhancement – Plugging Leakages: Public Sector revenues including taxes collection and utilities revenues have big leakages thus badly effecting the targets of receivables. In this connection, outsourcing and use of IT, and modern arrangement techniques can help boost revenues. Reform packages in each sector are direly needed.
Intensifying use of Modern Technologies: Technology advancements are fast modifying public sector, industrial and agricultural methodologies worldwide. Information and communication technologies are playing a pivotal role. Resultantly, higher efficiencies, costs reduction and value addition in operations are being achieved. More competitiveness is being attained. Research and development activities are enhanced.
Education and Literacy: High literacy rate and education spread at least upto Higher Secondary levels is key to long term growth and a strong economy. With enhanced economic resources, allocations for education and Public Private Partnership in this sector can also help boost literacy rate. Economically self reliant nations today have high literacy rates.
Exports: Pakistan’s current exports range between 20-30 billions US$. Focus should be shifted more on value-added exports especially for the engineering goods and machinery which has high export potential. Likewise new markets for enhancing exports need to be explored.
The defence items of exports can achieve high export targets. With good planning and efforts, Pakistan can achieve an export target of fifty billion US$ per year in a short time.
Overseas Pakistanis: Overseas Pakistanis remittances are well over fifteen billion US$ per year now. Infact, this alone is sustaining Pak Economy in difficult situations. With good political leadership and a credible system, this can go up. Infact, these remittances can be more productively utilised with proper institutional framework to strength the national economy.
To work out details of the reforms packages mentioned earlier, action plans and implementation strategies, a high level experts group comprising of professionals from the public and private sectors need to be set up the soonest to rid the nation from the ongoing debt trap and save the country from disastrous consequences.
Focus should be shifted more on value-added exports especially for the engineering goods and machinery which has high export potential.