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The first Prime Minister of India, Pandit Jawaharlal Nehru, said the following on the occasion of abolition of zamindari system in his country’s largest state, UP, in 1952:

“I was reminded of the times, more than thirty years ago, when I used to wander among the peasants of this province in the districts of Allahabad, Pratapgarh, Jaunpur, Rai Bareilly, Sultanpur and other places. The plight of those poor farmers is etched in my mind. I saw the harm that the zamindari system had done to the peasantry… . We had raised our voices against the zamindari system thirty years ago. But it has taken years of hard work to accomplish that task. Our most urgent priority was to challenge the might of British rule and overthrow its yoke. Only then could we take up other tasks.”

Is sovereign default inevitable? – I

With the abolition of the zamindari system, more farmers have got some land. But even now, there are a few people who own large tracts of land. This is a problem which has to be solved quickly. Please remember that not only in the matter of land but as a matter of principle we want that there should be greater equality among the people in all walks of life, whether they work on land or are in business, in the urban or the rural areas.

We the Muslim feudals of north India disliked land reforms as it was against our land holdings at that time. However, the division of India provided relief for the landlords of the areas which later constituted Pakistan. This cannot be the objective of a state, it ended up in that way, though.

India with a population of over one billion people is a big exporter of wheat. In Pakistan the Shariat Appellate Bench of the Supreme Court considered land reforms invalid in the case of Qazalbash Waqf versus Chief Land Commissioner on August 10, 1989: reported as Supreme Court 1990 PLD 99. It stated as under:

Muhammad Afzal Zullah, J.—“I am in respectful agreement with Shafiur Rahman, J. on jurisdictional question. I also agree with him regarding the conclusion on the repugnancy of the specified provisions, with the Injunctions of Islam. But with profound respect, my reasons are by and large based upon the relevant injunctions of Quran and Sunnah as analysed by Syed Karam Shah. And Mohammad Taqi Usmani, J. and agreed to by Pir Mohammad and the other thus agreeing with him regarding the repugnancy of the provisions, I accept the verdict of the majority.

I am also of the view that while, rightly rejecting, the scheme in the impugned laws, of purported partial implementation of Islamic mandates of equality and social justice (see substantive the second paragraph of the Objectives Resolution also), concrete alternatives with elaborate framework have not been proposed, which might satisfy the Islamic injunctions, as well as, the modern needs and out conditions.”

Justice Afzal Zullah, who was a very competent judge, had to write. The sad experience is that enough proper assistance was not rendered on the difficult issues relating to the provision for the Islamic alternatives.

Despite best efforts by the Court it could elicit only patchy responses to its questionnaire; except from very few scholars and the Islamic Research Institute, International Islamic University, Islamabad. For obvious reasons, without comparative examination with other similar responses, the same alone could not be treated as an unquestionable basis. Those who could but did not. We hope and pray they would come forth similar exercises in future, which, in our estimate, are very valuable for the ideological progress of our state.

The judgement of the Supreme Appellate Bench specifically states that a confusion has been created by misinterpreting Islamic injunctions without providing the way forward for future. The so-called bodies which were supposed to provide the answer for the common man and the courts are struck with consideration laid down in the Objectives Resolution, which was adopted by the Constituent Assembly of Pakistan on March 12, 1949.

In my view, the luxury of laxity is no more available as the country is moving swiftly towards a possible sovereign default and if that happens, God forbid, our ‘Objectives Resolution exercises’ would not be able to rescue us. The result of this judgement is that there cannot be any legislation on land reforms in Pakistan. The recent study of Lahore School of Economics stated about the land reforms as under:

Despite the fact that Bhutto’s land reforms appear to be more radical than Ayub Khan’s in terms of lowered ceilings and fewer exemptions, the net effect of both reforms was marginal at best.

That is where the story of land reforms in Pakistan has stalled. Land ownership concentration has hardly changed despite all the volumes of paper expended on studying agrarian questions and the three land reforms promulgated. This can be gauged from the fact that the latest information at hand indicates that one percent of the landowners own 26 per cent of the land even today.

The power of the landlords over their tenants continues unchallenged. Tenancy protection measures provide no succour to the peasantry. Feudalism is alive, intact and thriving. Further, its educated scions (educated in the best universities the West has to offer) are today engaged in a massive public relations exercise to convince the uninformed that feudalism no longer exists in this country.

The most theoretically advanced ideologues of the feudal lobby, in recognition of the fact that the world has changed and their interests today have to be pursued by different means, are positing new theories concerning what ails agriculture and how to correct it (of course, shudder the thought, without any mention of the dreaded words ‘land reforms’).

The purpose of these descriptions is to highlight the fact that in Pakistan the agricultural economy is not designed to fulfil the needs of the country by providing food security and creating an exportable surplus and making reasonable living conditions available in the rural areas to stop massive migration to already unsustainable metropolises such as Karachi, Lahore, Faisalabad and Peshawar. As rightly observed by the Lahore School of Economics, agrarian economy is only used as a means to secure a political base in the parliament.

In the real sense there is a clash of interest as any sustainable development in an agrarian economy will erode the power base of rural politicians therefore all the agricultural economic policies are neither in the interest of the country nor the population at large. One such example is the use of the cotton belt of southern Punjab and Bahawalpur for cultivating sugarcane in the interest of big landlords who are politically affiliated with some of them owning sugar mills.

The crux of this argument is that in the past when our population was not 220 million and we were receiving adequate support from the West for their adventures like the Cold War, the Soviet invasion of Afghanistan and the War on Terror, the need for a complete transformation of the agrarian economy was not as relevant as it is today. Now in 2022, Pakistan is not expected to receive considerations for some political settlements; there will be a dire need to transform the agrarian economy, otherwise the national economy will collapse.

With this background of our agriculture economy in this second part of the ‘Is sovereign default inevitable’ article the subject matter is the sustainability of dollars spent on the import of food items. On an average, the country spends from 8 to 11 billion dollars per annum on the import of food items.

This represents the complete failure of our agriculture economy to meet our domestic needs. There have been variations over time, however, in almost all the years, food item imports constitute 15 to 20 percent of the total value of goods imports.

The question that needs a plausible answer is whether a country where around 50 percent of the population is directly engaged in agriculture should be so dependent on imported food. This is again not the problem of governance. It is a fault line in our socio-political structure in which land reforms are out of the question due to non-understandable edicts issued as our clergy. Still in 2022 around 60 percent of parliamentarians are feudals using landholding as their base for political survival, who directly or indirectly resist any substantial reform in the agrarian economy.

When I was the Chairman Federal Board of Revenue, I issued a notice requiring reconciliation of wealth with agriculture income tax paid to the provincial governments. I was visited by around 40 MNAs from all political parties who gave a very clear message that such actions do not carry political mandate. One veteran MNA from the Seraiki belt said ‘Maida Syed Sain Aeh Na Karsi [My respectable Syed elder, please don’t do it]’. Like an ordinary insecure urbanite I withdrew the notice.

Before 1947, the provinces of Punjab and Sindh were treated as a food basket of the entire sub-continent. Now we have become a food importing country. Whereas across the Wagah border in the Indian Punjab, the yield per acre is almost twice that of the areas on our side. The failure of agricultural economics evident from the burden of imports can be summarised as under:

  1. Over the years, especially after the 1980s, Pakistan entered into a strange economic system where almost 95 percent of edible oil is imported. It is mostly palm oil which as per medical research is also not a preferable edible oil. The import of edible oil is of around USD 2.75 billion per annum. It is totally incomprehensible why a country so heavily engaged in agriculture had to import almost all the edible oil required for consumption. There is no reason for it. We used to be a big producer of cotton seed oil, canola oil, rapeseed oil and mustard (serson) oil.

However, in the last 20 to 30 years, we have completely switched to imported palm oil. There is no economic rationale for it; however, the simple answer that would be given by our policymakers is that per unit cost of palm oil is cheaper than locally-produced edible oil’s if there is zero duty on such oil. The question for agrarian economics is not the per unit cost.

The question with respect to viability of Pakistan’s import bill is whether or not Pakistan with its present and foreseeable USD crunch can afford using around USD 3 billion for edible oil imports. This is a simple question of development economics which is not being addressed due to some ulterior motives. The simple remedy to address this issue lies in a few years of subsidy in rupees for locally produced edible oil that we can afford as it is an expenditure in rupees and not in dollars.

  1. Pakistan is also a big consumer of tea. Prior to 1971 almost 70 percent of tea was produced in the then East Pakistan. Now almost 100 percent of tea consumption is met through import of this commodity of around USD 1.75 billion per annum. There has to be import duty and other adjustments with respect to tea imports in order to reduce the import of tea.

  2. Lentils, a staple food item of lower and lower middle classes, are imported in big quantities which amounted to around USD 1 billion in some years. This is again the failure of agriculture economics as farmers switched to sugarcane and other crops which are directly or indirectly subsidised at the cost of production of lentils and chickpeas.

  3. Pakistan’s share in the export of high value Basmati rice has been seriously eroded by development of better qualities by India. Now India is a bigger exporter of Basmati rice than Pakistan. How ironic, however, is the fact that Basmati is purely a product of our region.

  4. The last two items are wheat and sugar which are often imported in heavy quantities. At times the value of such imports reaches 3 to 4 billion USD per year;

  5. Another tragedy resulting from the failure of agricultural economics is the import of good quality raw cotton required for our high value exports. Pakistan is not able to produce raw cotton from which yarn above 40 counts can be produced. Now it is estimated that for around 40 percent of high value-added cotton products there is an import of 60 cents for each 1 USD export.

Six factors as identified above are only one part that reflect of our state of affairs. On the infrastructure side there has not been any significant improvement in our irrigation system and still almost 100 percent of the canal and waterways are not lined with concrete. We are still at the stage where we were after the completion of the Fifth Five Year Plan in 1970.

In Pakistan each year around 5 billion dollars worth of water is wasted in the flood season as we have not created any water reservoir after Tarbela which is around 1,000 kilometres from the sea. The Kalabagh dam would have enabled us to save around 40 billion USD up till now. Unfortunately, this mega project is not being built because we have failed to evolve political consensus on it.

This brief description of this challenge reveals that unless there is a complete new paradigm for agrarian economy the burden of food imports on the total import bill of Pakistan which is nearing USD 80 billion has become unsustainable. These are all signs of an inevitable default in 2023 onwards. It should be our endeavour to change positively otherwise we should be ready for sanctions which the common man of this country cannot afford.

Copyright Business Recorder, 2022


Comments are closed.

Dabeer Razvi Jul 14, 2022 11:36am
Agreed. Action needed at Priority.
thumb_up Recommended (0)
Maaz Jul 14, 2022 01:19pm
This is the sad situation with our country. No one will believe you sir but at the end we may just default. I do not understand how come we are so lazy in implementing policies which are good for our country. When this feudalism will end?
thumb_up Recommended (0)
Hassan Jul 16, 2022 11:30am
So things like Palm oil and edible fats (3.6 billion dollars), built car imports (billions more) tea, coffee, chocolate (another billion) should all be banned to import to save our dollars. And to reduce reliance on imported petrol, the import duty on imported fully electric (EV) cars, EV motorbikes, Solar power equipment should all be reduced to near zero. All new housing societies like Bahria & DHA etc should obligate all be houses being built to have a minimum of 6kw Solar system, and solar hot water, because that's where most of our electricity get's wasted on ACs in the summer and heating in the winter
thumb_up Recommended (0)

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