The first step towards recovery is admitting you have a problem. PML (N)’s economic governance ratings have been plummeting over the last few months and serious concerns are being raised on the sheer ability of its policy makers to take sound management decisions. More importantly, as the government’s management falters, so do the country’s economic fortunes. Pakistan’s debt has increased manifold in the last 14 months but with little bearing on improving national productivity and competitiveness. As a result, growth continues to be low, current account deficit is on the rise, national exports are under pressure and energy woes have compounded especially for the SME (small and medium size enterprises) sector, thus constraining any meaningful employment generation in the country. At present, load-shedding on average in the main industrial centres of Punjab: Faisalabad, Gujranwala, Sialkot, Multan, Jhang, etc where most SMEs are located, is close to 12 hours per day as compared to between 6-8 hours during the PPP’s period and 3-4 hours during Musharraf’s period in corresponding months. Moreover, routine typing mistakes in the finance ministry’s numbers, acute misunderstanding on part of the State Bank’s untimely releases and a comedy of errors at the commencement of the Nandipur power project, is not helping the cause of the government. Clearly, something needs to be done by the Nawaz league not only to turnaround the fortunes of the nation, but perhaps its own as well.

The economic challenges facing Pakistan are by now an open secret. If we exclude macroeconomic mismanagement, which to a large extent can be controlled directly by the finance ministry, what we are left with is a series of structural and supply-side reforms that are still awaited. These measures basically aim at raising productivity and employment generation mainly in the small and medium sized enterprises, which as we know, form the real engine in an economy of employment generation, growth and its equitable distribution. For example, Germany’s midsized manufacturers, collectively known as the Mittelstand, are globally recognized as a group providing the backbone of the world’s fourth largest economy. Mittelstand tend to be family-owned, located in small towns and work in their specialized products. More importantly, they appear to offer a solution to the two biggest worries haunting the developing world. One is inclusiveness: countries with too much economic activity becoming concentrated in a small number of companies or in just the main cities or amongst a few high net-worth individuals. And the second is youth unemployment. The supply-side measures on the other hand include raising productivity through policy making, which helps create an environment where businesses can flourish. Improving productivity – which has invariably been our Achilles’ heel – entails better education and training, transport infrastructure, management of available logistics related infrastructure, rationalized tax laws, increased ratio of private investment in the total national investment pool, intensified competition and more openness to free and fair trade.

In Pakistan’s case in particular, the government needs to take extra measures pertaining to general law and order, providing security to businesses and taming bureaucratic corruption by minimizing the contact between the entrepreneur and the regulator. Such measures are never easy and often generate strong political reactions, but are now urgently needed if this government is serious about shoring up economic activity. To refer to a recent example, we saw the opposition to the Spanish government’s reforms post-2008 financial crisis, but it stood firm and today the Spanish economy is bearing the fruit of some very difficult choices made by its government back in 2010-11.

The good news for the Pak government is that most of the economic issues facing Pakistan today are somewhat regional in nature. Just as in the case of PML (N), closer to home and across the border, the BJP government recently managed to get an absolute majority in the Lok Sabha (a feat achieved in Indian elections after 30 years) on the back of its economic manifesto and election time rhetoric cum promises. However, unlike the Nawaz government, which seems to be suffering from reform paralysis, the Modi government seems to be in a hurry. In a landmark move, it announced abolishing the age-old requirement of mandatory but pointless attestations required from a first class government officer by the general public to submit any kind of paperwork to government and semi-government offices. The rationale being that the burden of proof should be on the institution – which has more resources available at its disposal – and not on the common man. This simple move has instantly catapulted Modi’s popularity ratings and at the same time has rid the general public of unnecessary burden, expense, extortion and corruption. Further, his government in its first budget has resolved to prioritize its focus on India’s historic industrial centres. The plan is to turn the industrial cities into symbols of excellence by providing them better infrastructure, improving their electricity supply and restraining the bureaucracy from creating unproductive hurdles in the way of entrepreneurship. Already in Varanasi (from where he got elected), load shedding stands reduced by 8 hours per day, water treatment and effluent plants are being installed on the government’s cost to help industry meet international compliances without adding to its cost of production. Further, a congestion management contract is being signed with the Czech government (a leader in this business), to help reduce Varanasi’s traffic congestion in order to improve the city’s access and bring transportation costs down for the small industry.

Don’t ask me why, but it is always easier to implement policies in Pakistan that have already found successful roots in India. Still, even clear and elementary policy choices require doing. Management is about leadership and assembling the right human resource. To achieve results, kinship and personal loyalties carry no weight since in the end it all boils down to the competence and performance of the selected team. The sooner this government realizes this, the better for all concerned.

 The writer is an entrepreneur and economic analyst.

kamal.monnoo@gmail.com