Let’s talk Growth

It is sufficiently clear now that it is the PML-N which will take charge of the federal government later this month. The leading political party went to the May 11 polls campaigning on energy crisis and economic issues. With a strong federal government, one expects Nawaz Sharif’s government to place inclusive economic growth and job-creation front and centre of its policies, as promised in the party manifesto.
Successive years of abysmal growth rate are bound to take their toll on the country’s social fabric. Planning Commission has been insisting for last many years that only a sustained GDP growth rate of seven to eight percent can absorb the annual labour force growth of three percent.
Population statistics reveal urgency for job-creation. More than 60 percent of the population is less than 30 years of age. Median age comes up to 21.9 years, which means that half of the population is below 22 years of age. Over one million graduates are currently enrolled at universities and degree colleges. Many millions more who aren’t attending tertiary education are also expected to join the labour force.
Meanwhile, those Pakistanis who are currently unemployed add not just a number, but also a grim social connotation to this burgeoning problem.
Unfortunately, the last government didn’t pay heed to the youth bulge. Even its general economic management was defined by stop-gap measures that bordered on inaction. Its finance ministers seemed to be preoccupied with fiscal stabilisation, and focused very little on reviving growth and stimulating the private sector.
But the need for growth and jobs was vocally highlighted by Dr Nadeem-ul-Haq during his term as the deputy chairman of Planning Commission (PC) in the last government. “Pakistan needs to generate three million jobs a year to absorb its growing population. Instead, it has been losing about one million annually, mostly due to the power crisis,” he said while talking to Reuters last week.
Dr Haq and his team at the PC came up with a ‘Framework for Economic Growth’ (FEG), which focused on endogenous growth, and made a strong case for developing ‘software’ of growth (management and organisation) rather than just the ‘hardware’ (brick & mortar infrastructure). Reforms were proposed in key areas such as the civil services, PSEs, domestic markets, productivity and urban management.
Criticisms aside, the NGF had the backing of many independent economists and donor agencies. But it couldn’t be implemented, seemingly due to lack of desire or will in the PPP-led government. The human resource, time and funds invested in producing this framework demand that the new government at least review this framework seriously, and possibly build up on that.
The PML-N manifesto shows that the party is cognizant of the role of private sector in creating jobs, in factories as well as in farms. Given the nature of constraints and challenges, the new policymaking elite perhaps should work on a ‘home-grown’ growth strategy, in which the PML-N’s election promise to provide start-up loans to the youth can be one of many possible measures.
Yet with the economy facing imminent challenges, the growth narrative might take a back seat for some time. From the outset, the PML-N government will have to deal with critical issues such as external account imbalances, energy crisis, and the fiscal mess. Complex nature of the law and order problem will also require simultaneous action. In such scenario, it is not difficult to lose sight of the growth agenda.
It appears that the proverbial honeymoon will be over for the incoming administration before it even starts. It is hoped that the PML-N think tank is aware of this situation, and are ready to hit the ground running...