ISLAMABAD: Economic policy cannot be successful until and unless it benefits the common man. This was the conclusion of a discussion titled “Growth and Sustainability – Hand in hand or poles apart” hosted by the Islamabad Policy Institute, according to a press release issued on Friday.
The discussion was participated by former finance minister, Dr Hafiz Pasha and former chairman FBR, Shabbar Zaidi.
Equity market veteran and senior fellow at IPI Hussain Haider moderated the event.
The panellists highlighted that policy failures of the past decades are reflected in the “elite capture” visible today, which forms a great barrier to unlocking Pakistan’s immense potential.
In his opening remarks, Executive Director IPI Prof Sajjad Bokhari noted that Pakistan has fallen behind its regional peers.
Even though myriad internal and external challenges are generally blamed for this decline, it is the absence of policy consistency and endemic political instability which continue to stymie efforts for building strong foundations for sustainable economic growth and development.
While Dr Pasha agreed with the notion that there is plenty of work to be done, he did applaud not just the government’s bottom-up approach but also Prime Minister Imran Khan’s resolute stance on not allowing Pakistan to become a client state yet again.
He emphasized the need for a 7-8 percent GDP growth rate to absorb the large idle youth, alleviate poverty and to manage the increasing public debt.
This, he opined was not possible without high levels of savings and investments, an equitable taxation system and growth in exports.
On fiscal policy, Dr Pasha was of the view that expenditures need to be re-prioritised; while highways and mass transits are indeed important, the pressing priority at the moment should be to focus on water resources and the transmission and distribution system of the power sector.
He went as far as to say that half the PSDP should ideally be spent on these areas instead of the NHA.
On fiscal deficit, Dr Pasha was of the view that the government’s claim of a 6.3 percent deficit is unrealistic.
Even if it remains at 8 percent, it will be a laudable work, he added.
Shabbar Zaidi mentioned that so far, the growth models employed have failed in reducing income inequality.
In fact, he drew attention to how the taxation system has been at the root of the problem.
According to him, the success of a capitalist system pivots on two things: tax collection and government efficiency.
If society does not get a fair share of the wealth, the society would collapse, he warned.
He emphasized that GDP composition should be a key area of focus given how the labour intensive agriculture and manufacturing have lagged in the past few years in Pakistan.
The absence of substantial investments in these sectors is among the reasons that our economic growth lacks depth.
Zaidi very candidly stated that more often than not, policy makers at the helm of the affairs are deliberately kept at arms-length from the ground reality by creating confusion in the details.
On the implementation framework, Dr Pasha believes that the need of the hour is a Charter of Economy where devolution of power to the third tier of government is of utmost importance.
Furthermore, bodies such as the National Economic Council and the Council of Common Interests need to be rejuvenated. —PR
Copyright Business Recorder, 2021