The transition towards democracy was completed in Pakistan with the holding of general election in 2008, in which Pakistan People Party (PPP) won the majority of seats. After the assassination of Benazir Bhutto, the country went through a difficult phase, which led to a multi-party government at federal and provincial levels.
Zulfikar Ali Bhutto coined the slogan of “Roti, kapra aur makan” (bread, clothes, and shelter) during the 1970s which was later used during successive election campaigns. During the 2008 elections, the PPP decided to reach out to the masses with a variation of this basic slogan, encapsulating economic uplift and social development (Ilm, roshni sab ko kaam, roti kapra aur makaan).
The PPP promised change through accessing basic education to every child of the nation, creation of new employment, building new sources of energy, conserving environment for future generations and brining equality.
Based on these principles, the PPP set targets in the manifesto prior to the general elections in 2008. The salient features of the manifesto are growth with equity, sound debt policy for ensuring low burden on future generations, and combating employment through vibrant economic growth by creating employment in private and public sectors. There was a call for the adoption of a four-pronged package comprised of labour-intensive public works assuring employment to one working member of the lowest 25 percent poorest families, literacy and health crops (LHCs) assuring two-year employment to all youth completing intermediate, graduation and post-graduation, vocational training programme and micro-finance.
It also includes containing inflation through prudent monetary and fiscal policies. In addition to these, enhancing staple production, promoting competition in manufacturing and domestic trade leaving impacts on cost of goods, enhanced the role of SECP for stopping cartelisation, strengthening supply of staples and maintain wheat reserves and establishing a fair tax system through overhauling of existing system and making it taxpayer-friendly for compliance, etc.
During the PPP’s first budget speech in the National Assembly, Prime Minister Syed Yousaf Raza Gilani promised to achieve GDP growth rate of 5.5 percent during Fiscal Year 2008-09. However, it could not be materialised due to multiple problems leading to low GDP growth rate of 1.2 percent GDP. The government performed better during FY 2009-10 where it achieved 4.1 percent growth rate. The situation further exacerbated for the PPP led democratic government, which again failed to achieve the targeted GDP growth of 4.5 percent. Growing terrorist attacks, the war on terror and the energy crisis led to depressed domestic and foreign investments, which are likely to prevail into the next few years, impeding targeted GDP growth. The total investment has declined to 13.4 percent of GDP in 2010-11 from 22.5 percent of GDP in 2006-07, out of which fixed investment also declined to 11.8 percent of GDP from 13.4 last year.
Last year, public investments had been revised in the wake of tight conditionalities imposed by the IMF and flash floods. The national government has to adjust spending on public investments downwards in order to remain within the limits of fiscal discipline imposed by the IMF. In the absence of substantial private investment, public investment stimulates private investment. The failure of implementation of public investment funding, reflected in last year’s revised estimates, presents a complex and long-standing hurdle to real public investment outcomes. Diversion of resources away from productive public investment to contain fiscal deficit within discipline may lead to hinder expected outcome of public investments.
PPP promised to generate robust GDP growth rate with equity, which could not be materialised during the last three fiscal years. Poverty is likely to be reversed due to declining purchasing power and high inflation. Regressive system of taxation address through taxation reforms is yet to implement and produce the desired results for the economy and people. Public also failed to spend money on pro-poor sectors due to stringent IMF conditionalities due to diversion of resources to expenditures, other than pro-poor.
The current budget does not envisage an exit strategy from external debt, which will automatically lead to another high cost loans for repayment of existing stand-by-arrangements. One of the remedies towards achieving debt reduction is the sale of finance starved Public Sector Enterprises (PSEs), which impose substantial funding, burdens on the national exchequer. Previous governments privatised state-owned enterprises and proceeds of privatisation were adjusted towards public debt. Lukewarm response was given by finance minister with no privatisation of PSEs, rather the minister announced to revitalise these PSEs. It served two purposes; one is saving money from deficit financing and second, is realisation of proceeds to public debt.
Food inflation has reached double digits due to contributions from the supply side as well as demand pull factors. The current government’s policies led to a devastating situation for the poor and low income classes. Petroleum, wheat and electricity prices leaped upwards many times during three fiscal years. The increased lending rate is leading to higher costs of production. Currency depreciation also brought unprecedented increase in prices. On other hand, high fiscal deficits through bank borrowing, high interest rates and high interest payments added woes to existing inflation hikes. Monetary measures may not be the solution, rather the continuous supply of essential items and better logistic may relive consumers in the short run.
The election manifesto envisaged employment generation opportunities especially for the youth, in Pakistan. The statistics highlights that under the army led regime, unemployment was curtailed to 5.60 percent, which was followed by an unprecedented increase in unemployment rate under the PPP government, touching 15.20 percent. The PPP government could not bring employment generation programmes in the country as promised in the manifesto. The government should start employment guarantee schemes as our neighbouring country took this milestone years ago.
The PPP election manifesto promised energy security by bridging the 8000MW gap. After two budgets of the PPP government, no concerted efforts have been made in terms of allocations. Diamer-Bhasha dam is going to be kick-started during the fiscal year, which will generate 5000 MGW after its completion in 2018. However, the government is not taking proper steps to import energy from the neighbouring countries through intra-regional energy trade. The government claimed to have added 2000 MGW into national grid and promised to add another 1200 MGW this year.
The federal government’s flagship policy for social welfare revolves around the Benazir Income Support Programme (BISP), which provides Rs1000 (US$12) per month to poor households. The budget for the BISP is cut from PKR70 to PKR50 billion rupees. Last year, the government spent PKR30 billion rupees and is committed to spend PKR50 billion rupees this year.
As revealed in the economic survey, literacy rate is increased to 57.7 percent in 2009-10 from 57.4 percent in 2008-09, showing very paltry improvement. The PPP promised the change in the country through the spread of education to every child. The youth in the country demands the provision of basic and technical education through which the dream of high growth rate can be achieved.
The writer works at Sustainable Development Policy Institute and can be reached at Gulbaz@sdpi.org.
This article was originally published at: The News
The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.