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The economy

If one were to evaluate the performance of the PPP-led government on the economic front, one would be amazed at the achievements of the present dispensation which, one believes, no other political party in power could have been able to achieve had it been faced with the same set of extreme difficulties and obstacles that the PPP regime has been encountering throughout its term in office.

Certainly, this is a fact and not at all a claim. For example, take into consideration the remarkable accomplishment of bringing down the budget deficit from 7.6 percent of GDP in 2007-08 to 6.6 percent of GDP during 2011-12. For sure, this is no petty an achievement in the presence of unfavourable circumstances that could have crippled our economy had not the PPP government taken up this challenge and hit the bottlenecks with sagacity, perseverance and tolerance.

It was, of course, the combination of these three pivotal factors namely sagacity, perseverance and tolerance that led to the minimisation of chronic problems that have continued to eclipse our growth for years and years together.

Those who have failed in the past to understand the rationale behind President Asif Ali Zardari’s and PPP leadership’s policy of tolerance and reconciliation, must try to interpret the government’s planning and functioning in the economic perspective.

They will arrive at the conclusion as to how much success this policy of reconciliation has met, especially in the economic sector. As a matter of fact it is a universally accepted reality that economic progress and development are always contingent on intelligent planning, good sense of timing and above all, on a goodwill approach towards other people that include the people coming in contact for commerce and trade and also for collaboration in industry and in other important segments of the overall growth engine.

Zardari’s goodwill gestures and that of PPP leaders have worked well in this specific area and people who have deep insight into the working of our economy and polity – now believe that economic turnaround is no more an unfulfilled dream for the people of Pakistan. Now the situation is quite encouraging as one can gather from the lowering of inflation rate.

According to economic experts, due to tight monetary policy regime, inflation was brought down from 25 percent in 2008 to 11 percent in FY 2011-12 and it is estimated to go down further to 9.5 percent during FY2012-13.

But all these controls aside, the PPP government’s focus, throughout its tenure, has been on the welfare of the people for which it has launched a number of projects and schemes some of which are going on in full swing completely transparently and to the complete satisfaction of the people. The government also intends to expand the welfare projects further.

Some of these projects include: People’s Works Programme (PWP) for which Rs 153 billion were earmarked in five years. As many as one hundred thousand internships have been provided since 2008 through the National Internship Programme; sacked employees were reinstated and besides that, the government also facilitated employment of at least 660 thousand Pakistanis abroad. Other measures in the same scheme of things include: ban on employment partially lifted; 12,000 public sector contract jobs converted into permanent jobs and facilitation of self-employment through Waseela-i-Rozgar scheme under Benazir Income Support Programme (BISP). This programme has been acknowledged world-wide as one of the most transparent and benevolent state interventions to the benefit of the masses. Some countries have rather expressed their desire to introduce this system exactly on the pattern and operational scheme of the BISP. It has also been reported that the Pakistan People’s Party regime now intends to double, treble the amount paid to the destitute who can’t afford livelihood at all for a variety of reasons.

And the government has not taken respite at any stage. Instead it has continued with its pro-worker and pro-poor schemes in a number of ways that also include Benazir Employees Stock Option Programme by way of which 12 percent shares of 80 State Owned Enterprises were transferred to 500,000 employees, making them shareholders in the respective PSEs (Public Sector Entities and Enterprises). And Bait-ul-Maal distributed more than Rs 7 billion among the poor over the past three years whereas Rs 52 billion were provided to flood-affected people under Citizens’ Damages Compensation Programme.

The biggest achievement of the democratic forces and of the people’s government was the adoption of the 7th NFC Award that marks marvellous success of PPP’s policy of reconciliation and its commitment to awarding real and financial autonomy to the provinces as per their longstanding demand and also in line with the Constitutional requirements.

In the area of resources’ transfer to the provinces, the 7th NFC Award gave due weightage to poverty/backwardness, revenue collection, revenue generation and inverse population density. In addition to population, this new formula was a replacement of the old formula (that was not acceptable to provinces other than Punjab). In the past, only population used to be made the basis of resources’ distribution among provinces. But as a result of the 7th NFC Award, share to the provinces increased from Rs 633 billion in FY2009-10 under 6th NFC Award to Rs 999 billion in FY2010-11; Rs 1,090 billion in FY 2011-12; and Rs 1459 billion in FY 2012-13. It also increased the share of Balochistan to 9.09 percent from the previous 5.11 percent. Now the things have improved tremendously since 70 percent of the divisible pool is now being transferred to the provinces and Special Areas, which reflects greater financial empowerment of the provinces.

All these positive developments apart, the government has also taken some pragmatic measures like restructuring of Public Sector Enterprises through professional boards of directors; induction of professional management from the market; reconstitution of boards of directors; restructuring of power sector distribution companies and restructuring of Steel Mills, PIA, Passco, Utility Stores Corporation and Trading Corporation of Pakistan.

Another significant step taken in the economic sector that sits well with the standard practices followed throughout the world by vibrant economies is the reduction in subsidies. As such, subsidies have been reduced from 3.5 percent of GDP in 2007-08 to around 1 percent of GDP in the budget 2012-13. The government, at the same time, adopted stringent austerity measures that helped reduce the expenditure on civil government from 1.3 percent of GDP to 0.9 percent of GDP. And in the most difficult area of revenue collection, the FBR collections increased from around Rs 1157 billion in FY 2008-09 to Rs 1908 billion in FY 2011-12 and are estimated at Rs 2381 billion in FY 2012-13. This owes to the business friendly policies of the PPP government that also believes in effective public-private partnership as declared, time and again, by President Asif Ali Zardari.

In all, the PPP-led government’s economic vision and practicable policies that were acceptable to all, have put the economy on a track of recovery and prosperity. Some other achievements of the government include: workers’ remittances grew from US $7.8 billion in FY 2008-09 to US $13.2 billion in FY 2011-12; exports increased from US $19.1 billion in FY 2008-09 to US $25.3 billion in FY 2010-11, stabilising at US $24.6 billion FY 2011-12; the current account deficit of $13,874 million in 2008 was turned around into a surplus of $423 million in September 2012; foreign exchange reserves rose from a low of $7.5 billion in September 2008 to $18.2 billion in June 2011; currently they stand at around $13.21 billion; debt to GDP ratio has been kept within the statutory limit (Fiscal Responsibility and Debt Limitation Act, 2005); economic growth: 3.7 percent during FY 2011-12; estimated at 4 percent during FY 2012-13 and in the area of Development Spending, Public Sector Development Programme (PSDP) over a period of five years was Rs 3.0 trillion. Current year’s PSDP outlay is Rs 873 billion as compared to Rs 668 billion last year. (The views expressed in this article do not necessarily reflect those of the newspaper

S. Rahman, "The economy," Business recorder. 2012-12-26.
Keywords: Economic policy , Economic system , Monetory policy , NFC Award , Political parties , Government-Pakistan , Pakistan , Citizens , PPP