EDITORIAL: President Arif Alvi in his constitutionally mandatory address to the joint sitting of parliament at the start a legislative year (fourth in the tenure of the Pakistan Tehrik-i-Insaaf government) focused understandably on the PTI administration’s strengths: (i) a growth rate of 3.94 percent in 2020-21 against the earlier projection of around 2 percent due to pro-growth fiscal and monetary policies spearheaded by Prime Minister Khan including a bottoms-up approach (an ever enlarging ehsaas programme - from the inherited Benazir Income Support Programme to Ehsaas Nashunuma to Waseela-e-Taleem to Ehsaas Kifalat to Ehsaas Emergency Cash to Ehsaas Scholarship to Ehsaas Langars to Ehsaas Bhooka Na Soye to the very ambitious Kamyaab Jawan programme that is scheduled for a full launch by end-December this year) as well as top-down approach providing fiscal and monetary policy easing to the productive sectors particularly the large- scale manufacturing sector (specifically for the construction/building and exports sector); (ii) a rise in exports from 23.78 billion dollars to 25.3 billion dollars; (iii) record remittance inflows of 29 billion dollars; and (iv) record high stock exchange performance.
The President completely ignored weaknesses during his speech and thereby did not present a balanced assessment which, in turn, provided ample fodder to the critics to nitpick the limitations prevalent in the economy. The growth rate, they contend, is on the back of a particularly poorly performing year due partly to the severely harsh monetary and fiscal policies effective May 2019 to March 2020 and thenceforth the negative impact of Covid-19 led to a growth rate of negative 0.4 percent in 2019-20. The 3.94 percent is thus on the back of the low base of the year before.
Gross Domestic Product (GDP) as indicated in the budget 2021-22 documents was 47.7 trillion rupees; while the figure in the 2018-19 budget documents shows a GDP of 38.5 trillion rupees and a forecast of 55.3 trillion rupees in 2020-21. Thus the projection for 2020-21 fell short of the target due to Covid-19 by nearly 8 trillion rupees yet two elements should have been acknowledged in the President’s speech notably that the persistently high rate of inflation during the past three years implies that even though the increase in GDP is in nominal terms yet given the experience of other pandemic-hit countries it is nonetheless a positive element; and secondly, the rise in food inflation has eroded the value of each rupee earned considerably and though the Ehsaas programme has been used effectively by the administration to mitigate the impact of Covid-19 yet it has not been enough to reverse the increase in poverty levels. The sustainability of the rise in exports and remittances so claim critics would have to be assessed as our competing countries come out of lockdown and their economies gear up to full swing. While it is critical to sustain these trends yet the consensus is that the outcome of the sixth review with the International Monetary Fund would be a determinant of the success (or otherwise) of the government’s revised strategy associated with the incumbent Finance Minister: pro-growth and bottom-up approach that would require considerable increase in expenditure – a difficult prospect given the rupee depreciation by nearly 15 rupees since May 2021 (each rupee loss vis-a-vis the dollar raises debt servicing costs by 100 billion rupees), an unsustainable budget deficit during the past three years and last but not least a rise in prices associated with structural reforms and failure to check the “mafias” operating in the perishable goods sector.
However, one subject that was raised by the President and on which the government has not yet focused is population growth. President Alvi, therefore, deserves a lot of praise for bringing this challenge under the spotlight by stating, among other things, that “it is becoming tougher for the government to provide health, food, transport, water and other necessities to the masses”, underscoring the need for “birth spacing and a focus on making the family smaller.”
Finally, the President also commended the Prime Minister on his defence of the Kashmiri people at international fora while lamenting the lack of interest of the international community in human rights violations in the valley, reaffirmed the correctness of Prime Minister Imran Khan’s assessment of how to deal with the Taliban, extolled the legislation passed to ensure women their legal rights though he acknowledged that in some parts of the country these rights are still being ignored, and of course the regional connectivity made possible through the China Pakistan Economic Corridor.
The speech was delivered amidst opposition protest and walk-out while beat reporters of the media that were locked out of the press gallery protested inside parliament; outside parliament the media protested against the PMDA – the draconian law proposed by the government which has yet to be tabled in parliament giving the aura of a prevalent divisiveness that for all intents and purposes is not the picture one would like to present to the world given the prevailing issues subsequent to the Taliban take-over of Kabul.
Copyright Business Recorder, 2021