Last update: Tue, 17 Jan 2017 10pm

BR Research: All


Smart politicians have a way of framing crisis to their advantage. And the Indian Prime Minister Narendra Modi has that sense of cunning. His government's bold November 8 move that took out Rs500 and Rs1000-deniominated money bills (an estimated Rs15 trillion at the time, or 86.4% of entire currency in circulation), was rationalized with a hard crackdown on the estimated $2 trillion black-economy, one of Modi's campaign pledges.
All the focus these days is on power generation, and somewhat rightly so, for the acute shortage has long been a bane. What should not be forgotten, is that in the frenzy of adding thousands of megawatts, some very crucial elements take a backseat. Power tariffs and related subsidies seem to have been the least discussed topic in the energy sphere of late, as the debate that revolved around power at any cost seems to have been over.
Thanks to low labour costs, Pakistan is one of the most price competitive T-shirt producers of the South Asian region; yet the country has been facing low export growth for many years. The narrative that seems to be missing from the discourse is that improving competitiveness is about raising productivity rather than merely keeping costs low.
Globally, the oil and gas sector was marked with OPEC's return in 2016, after it let the market forces play with the demand and supply for at least two years; with flagging prices, the cartel surprised many with the first cut in production since 2008.
Monetary diplospeak may not always be a good thing. Calling the external account situation "broadly stable," the central bank isn't yet sounding alarm over the worsening shape of Pakistan's major non-debt creating foreign-exchange sources - exports, remittances, and net FDI. At best, the SBP has termed the recent drops in these inflows as "structural weaknesses", a "challenge", as per its latest quarterly review.
Pakistani governments are fond of pardoning corrupt behavior, and since 1958, time and again; several amnesty schemes have been introduced repeatedly and unsuccessfully aimed to bring more citizens, businesses, investors and traders into the tax net and increase tax revenue. In the short term, these schemes may have filled the kitty with funds (in many cases, they didn't garner any substantial sums) but compared to the mid- to long term repercussions, the temporary one-time revenue inflows are simply not worth it.
After a bumper 2016, the bulls have taken control during the first week of the new-year as well. The benchmark KSE-100 index gained 2.6 percent and closed at 49,038 points.