Kamyab Naujawan Programme

Prime Minister Iman Khan pledged transparency and merit as he launched the Kamyab Naujawan Programme (KNP) on Thursday. Providing details of the programme, the Prime Minister stated that 100 billion rupees has been allocated for the purpose; however, the budget for the current year stipulates an amount of 450 million rupees for the KNP and it is therefore unclear whether the amount announced by the prime minister is for the current year alone or for the remaining period of his tenure.

The prime minister revealed that loans to the youth would be made under three categories: (i) interest-free loans for those seeking an amount of 100,000 rupees; (ii) concessionary loans available to those seeking 100,001 to 500,000 rupees though he did not mention the actual cost of borrowing for this category; and (iii) those seeking 500,001 to 5 million rupees would be given regular loans which given the discount rate of 13.25 percent may not be an attractive proposition, given that it has few takers from the large-scale manufacturing, medium-scale and small-scale enterprises which has choked off productive activity in the country today. Given these categories one would have to conclude that the objective is not to encourage small enterprises defined by the State Bank of Pakistan as enterprises with an annual turnover of 150 million rupees with up to 50 employees but micro units that would hone entrepreneurial skills of the youth and thereby generate a source of income for them that would not compel them to stand with the ranks of the unemployed.

The Prime Minister did not specify as to how much of the programme money is earmarked for which category of borrowers. In this context, the government would be well advised to deal with two possible lacunae in KNP's successful implementation. First, the paperwork for 100,000 rupee loan is the same as for 5 million from the perspective of a bank and hence the lending bank may be forced to hire more staff which would raise its costs. Unless an adjustment of sorts is made to take account of the higher costs a bank would be hesitant to participate in the scheme. And secondly, the major impediment to all previous easy credit schemes for the poor has been the lack of collateral of applicants which may be taken care of in the fine print of the KNP though the Prime Minister did not highlight it in his speech.

PML-N's Marriyum Aurangzeb, in response to the Prime Minister's launch of KNP, stated that it is identical to former Prime Minister Nawaz Sharif's Youth Programme that he appointed his unelected daughter Maryam to run. That programme included Prime Minister's Interest-Free Loan Scheme, Prime Minister's Youth Business Loans, Prime Minister's Youth Training Scheme, Prime Minister's Youth Skills Development Scheme, Prime Minister's Scheme for Provision of Laptops and Prime Minister's Scheme for Reimbursement of Fee of Students from the Less Developed Areas. The allocation for 2013-14 for Nawaz Sharif's Youth programme was 25 billion rupees, an amount that was not disbursed that year. By 2015-16 the PML-N government had disbursed 21 billion rupees under the PM's Youth Programme and earmarked 20 billion rupees for 2016-17. In other words, the design was much more ambitious given the number of schemes, though the interest rates were much lower at the time and therefore a greater number of people benefited from the scheme.

To conclude, while sceptics point to the fact that this is the first time in the history of our extremely partisan politics which have always had a direct bearing on the title selected for any programme with socio-economic implications, that a programme that has yet to be implemented contains the word 'successful' in its title, yet it is a good programme but needs some fine tuning.