Everybody is talking about the worst condition of the
Pakistani Economy and worried about which measures should be taken to recover
the economy from worst to bad and then Good.
Some Facts about Pakistan's Economy.
After the restoration of democracy from 2008; there is a lot
has been changed in Political arena of Pakistan. Constitutional amendments,
revenue devolution from federal to provincial level, introduction of packages
like BISP (Benazir Income Support Programm), Kisaan Package and CPEC projects
are the most prominent and viewed achievements of 10 years of democratic
government of Pakistan.
18th amendment is really proved a structural
shift of revenue from federal to provincial level. It has created a big loss in
federal revenue. As we know that 18th amendment devolved General
Sales Tax (GST) to Provincial Level; and taxation on services has increased and
delivered a big chunk of revenue to Provinces. And service sector covers the 55
percent of the economy. Now provinces are enjoying a big chunk of revenue but
they are not bound to provide money for Social welfare programs run by federal
government. Provinces are happy!!!
During Pakistan People’s Pary tenure, subsidies are 20-25
times higher than the income tax collected from agriculture sector. Subsdies
structure is inefficient in Pakistan to control inequality and support poor farmers.
As small farmers receive small subsdies and large farmers get larger subsidies that
indirectly represent the PPP Government support to feudalism. There is nothing
good for the small farmers betterment.
BISP (Benazir Income Support Programm) was introduced by Pakistan
Peoples Party. But it has lot of inefficiencies. This program provides low
grant. That means member of this program remain a beneficiary since its
beginning and will remain in future. Grant is not enough for the beneficiary to
get out of poverty. So, some proper measures and strategy should be taken to make
this program successful. Objective reconsideration is needed.!!!!
Some bad measurement that had been taken by the previous
government Finance Minister.
Finance Minister Ishaq Dar reduced the tax rate
for direct taxation and this reduction brought inflation.
Imposition of withdrawing tax on drawal of cash
from banks – this resulted in deposits crisis and declind is estimated from
27.6 to 25 percent.
Kisaan Package worth of Rs341 billion was introduced by
PML-N Governemnt in September 2015. The Punjab government disbursed interest-free
loans for rabi and Kharif harvests under its Kisaan Package.
Introduced tax reduction on agriculture from 45 percent to 9
percent and reduction in sales tax was 17 percent to 7 percent on Cold Chain
Machinery. Tax-holiday and make up free loans were provided to the farmers that
holding the land less than 12.5 acres.
Pakistan is continuously suffering from the trade deficit as
the imports are double as compared to exports that lead to trade deficit.
On other side Power sector also enjoyed heavy subsidies from
restoration of democracy 2008 to 2018. Power sector provided 96 percent of
subsdies by the government of PML-N at one stage.
Currently, the Economy of Pakistan is facing a financial
meltdown; urgent relief is required to stop it from collapsing.
In Pakistan Labour is Surplus and on other side Capital
Deficit. Contradiction is prevailed. Pakistan is facing trade deficit, fiscal
deficit and shrinking foreign exchange reserves.
Pakistan Tehreek-e-Insaf has become the national party after
PPP in 1970-71. PTI has introduced some cosmetic measures like Austerity. Austerity
is not enough but it will set a trend if properly implemented. It will prove to
be a good principle to get rid of so-called king lifestyle in Pakistan Politics
arena. If done so!!!!
To control the trade deficit, it bans imports of luxury
goods and luxury vehicles. It has increased the tax and reformed its structures.
Pakistan has received bailout package that will definitely increase tax on
electricity and petroleum.
Pakistan is borrowed Rs8.9 billion from others on daily
basis. Being a nation, we are beggar on daily basis to meet our living ends. OOOPSSS!!!!
The is only one formula to convert this worst state of
economy to surviving economy and then to prospering one.
Increase Exports (awareness creates demand) + Decrease
Imports + Increase Remittances + Increase Foreign Direct Investment (cost of
doing business must be appealing) + Increase Tax and stop Tax evasion.
Hopefully theses measures
will help our economy from collapsing.