Economic Progress and Prosperity in Pakistan
Claims vs Facts
Professor Khurshid Ahmad

General Pervez Musharraf assumed power on October 12, 1999 through a military coup and his economic team has just completed seven years. Throughout this period, General Musharraf has been the chief executive, while Mr. Shaukat Aziz worked as the main player in his team. The General has since long been enumerating economic achievements of his team and presenting them as his biggest success. In interviews to the television channels of America, Britain, and India he replied to pointed questions about his biggest achievement with great pride: economic progress and prosperity. To add more color to it, Mr. Shaukat Aziz often says that per capita income has risen to $800 in the country, poverty registered a decline of 7 percent, and unemployment has also decreased: from 7.7 percent to 6.5 percent. According to the last labor survey, he said, the number of unemployed people was 3.5 million in 2003-2004, and came down to slightly more than 3.3 million in 2004-2005. He also claimed that real rate of growth was 6-8 percent; and primary education has become widespread as 86 percent of the children of school-going age are admitted in education institutions, and 83 percent is benefiting form immunization program.

The purpose of our observations here is not to present an analysis in pure academic and technical terms, but to show that ground realities do not support government’s claims. As for the common man rate of growth in GDP or increasing foreign reserves are not important. He evaluates government’s performance, its success or failure, against the standard of provision of necessities of life, basic facilities, employment and prosperity. Looked from this angle, the common man’s life is full of bitterness created by economic deprivation, exploitation and injustice. The rate of poverty has risen from 30 percent to 40 percent and there is no truth in government’s claims of 7 percent decrease in 2005 if compared with 2001. The World Bank, Asian Development Bank, as well as ABN-Amro Bank, all show poverty as 32 percent in their reports. Even the 10-year medium-term plan of the Planning Commission – which appeared in 2005 and which was published after the government claims of decrease in poverty – declares that one-third of the population is living in poverty. According to the estimates of Pakistan Institute of Development Economics (PIDE), the rate is 32-37 percent.

An agricultural country that was meeting the needs of the whole of India before Partition and had become self-sufficient in 1980, and even 1990, to a great extent in agricultural produce is now dependent on others for wheat, sugar, onion, potato, and grains.

In Pakistan, the minimum legal wages are Rs 3,000 per month, but many have to do work for half or two-thirds of this amount, though the fact is that even a family with income of Rs 5,000-10,000 cannot meet its needs in this much amount. On this basis, 60 to 70 percent of the population is in the grip of poverty.

This is the reason that out of 177 countries Pakistan comes at 135^th in the United Nation’s Human Development Index. And, we have come down during the past 6 years, not gone up. The picture of economy that Dr. Shahrukh Rafi Khan presents in his book Hazardous Home-based Labor, published in 2005 by Oxford University Press, is appalling and alarming. In the carpet, bangle-making, plastic, and candle making factories, young boys and girls of 8-12 years work for 16 hours daily to earn meager wages of Rs 1,700-2,000 per month. The condition of coal-mine workers is very distressing. A worker at the brick kiln gets only Rs 60 for making 1,000 bricks, which are sold in the market for Rs 4,000. In agriculture too, the condition of small cultivator and tiller is miserable. Apparently, support prices are announced for agricultural produce, but the benefit goes only to the big landlord as the small farmer cannot stop production and has to sell on lower rates.

Similarly, many surveys on urban population also reveal that ‘real wages’ have come down, rather than gone up, during the last 10 years. This is also a reason for increase in poverty.

The promises to provide employment are not also based on truth. The very definition of employment is defective. If one gets 10-hour work in a whole week, he is considered employed, though this little work cannot generate income for meeting basic needs. Then, there is a strange ‘unpaid house labor’ employment; and 1.1 million of the total 3.3 million to whom employment opportunities are being claimed to be provided belong to this category: they are unpaid house labor.

The situation of unemployment among the educated youth, as Dr. Junaid Ahmad’s article based on labor survey depicts, is such that: In comparison to 2002, unemployment among those educated up to the matric-level registered an increase of 10.5 percent in 2006, whereas the number of those acquiring graduation-level or higher education during the same period increased by 18.25 percent. During the past two years, unemployment among these educated youth has increased by 24 percent. Out of 3.7 million unemployed, 1.3 million have education above the matric and below the graduation level.

Low wages, rising prices, lack of government-provided services or their pathetic situation like in education, healthcare, provision of clean water, house, roads and electricity. The cumulative effect of all this on the common man is that his life has become very miserable. In times of moral decline and weakness in Faith, these conditions are giving rise to terrorist acts, thefts and burglaries, kidnap for ransom and murder are taking volcanic proportions, on the one hand, and producing despair, helplessness and despondency leading to prostitution and self-immolation, on the other. The responsibility of this situation lies on the government and well-off segments of society.

No matter how much rosy picture government spokesmen may try to portray, the fact is that the latest reports of the UNICEF note that the number of under-nourished and under-weight children is highest in Pakistan and South Asia. The ratio is 46 percent among children of up to 5 years, which is double of the world average. The number of these children is 8 million in Pakistan.

In spite of all the claims of increase in education budget, the World Bank’s latest report “Little Green Book 2006” says that education budget is only 2.3 percent of GDP whereas the average for South Asia is 3.6 percent and of less developed countries of the world is 3.4 percent. The issue is not just of the education budget, but its use, corruption, shabby condition of schools, lack of teachers and their apathy, low standard of education etc. are all problems that are there for everyone to see.

The Prime Minister claims that 86 percent of school-going age children are getting education, but the World Bank report notes that only 50 percent are getting education; i.e. only half of the 20 million 5-9 year children is getting education facilities, yet the number of drop-outs is very high among them. According to a survey, the number comes to half by reaching the 5^th grade.

Karachi is the richest city in the country. Yet, 55 percent is composed of ‘kachi abadi’ (illegal encampments), with no access to basic amenities of life and country-wide surveys show that 59 percent of the population is consuming polluted water, which is a major cause of stomach diseases.

This is how a common man is living – neither full meal nor clean drinking water, neither education nor healthcare, nor house.

Another deplorable aspect of the economic situation is uneven distribution of wealth. Capitalism in its worst form is being promoted. An exploitative economy is being raised in the name of free economy, market system and privatization. As a result, an elitist economy has come into being, where wealth is concentrated in a few hands while the poor are getting poorer. A few thousand families are occupying all resources of wealth. Their lifestyle presents not just a picture of extravagance, wasteful spending, pomp and show, but is also a cause of spread of class-hatred in society.

The State Bank’s statistics about the banking system and performance show that the number of account-holders in all the banks was 27,270,000 in June 2001, which came down to 26,980,000 by June 2005. The decrease, in major part, is of those account-holders whose deposits were up to Rs 40,000. In contrast, the number of those whose deposits exceed Rs 500,000 has increased from 183,000 to 395,000. How the banks are exploiting the account-holders after being privatized can be gauged from the fact that in 2001 the profit given to the account-holders – the real return after adjusting with inflation – was 0.6, but the real return according to the figures of 2005 and after was in the minus, i.e. it was –5.8, The reason is that the spread (profit to account-holders) they give and the advance (profit they extract from account-holders) they take is 7 and 7.5 respectively, a practice that is found nowhere in the world. Its result is that banks earned 58 percent more profit in the first three months of 2006 than that of the corresponding period in 2005, amounting to Rs 114 billion. A review of banks’ profits show that they earned 98.7 percent more profit in 2005 than they had in 2004. It was Rs 47.5 billion after payment of tax.

While banks are paying taxes, at least, what is sad is that speculative activity in stock exchange is not reined at all. For speculative activity, the index of Karachi Stock Exchange that had once fallen to 1,900 crossed 11,000 during the past six years. A few big players have made billions while thousands of ordinary investors have been ruined. When the body that is tasked to oversee stock exchange activity, tried to catch big fish, its head was removed without being told any reason. Similar is the issue of rising property prices. The land mafia has earned billions and prices have increase 10 to 20 times during the past six years and it is becoming impossible for a common man to build a house and have a shelter of his own.

There is abundance of luxury vehicles. Thousands of vehicles are coming on roads every month. During the last year, a whopping $ 1 billion was spent on import of cars. If the import of machinery and tools for cars that are assembled in the country is included, then this amount simply doubles. Then, there are smuggled vehicles of billions of rupees. This is increasing burden on the foreign reserves because of import of petroleum, and increasing pollution. Public transport system is in very bad situation. There are no plans to develop the railway system. It is a matter of shame that not even a few kilometers have been added to the 5,000-km track that was there in 1947. It is just as it was then. To increase the fairs in the name of increase in international market has also become a norm, but there is no energy policy or transport policy. There is no way for thinking about a comprehensive policy that takes into account all aspects of transportation, low costs, and better service.

How official resources are being wasted can be assessed from a cursory view on the expenditures of the Presidency and the Prime Minister’s Secretariat along with the whole army of ministers and advisors. The estimate of expenditures that Sultan Ahmad has presented in Dawn, on foreign trips of the President, the Prime Minister, ministers, members of the Parliament and government officials during only one year has surprised all. He tells that $ 795 million were spent on these royal journeys only in six months. For official use, 60 luxury Mercedes were imported last year, but Speaker of the Assembly and Chairman of the Senate desire new Mercedes. The Speaker also wants to build a house for himself for Rs100 million. Rs 205 million have been approved for addition in Minister’s Enclosure for new ministers. A social club for the big shots is to be built with Rs1 billion in H-11, Islamabad. In Karachi, a 620-foot high fountain in front of the Karachi Port was built in the sea with Rs 225 million; it is not working!

The level of mental poverty and moral bankruptcy is evident from the directive of the Central Board of Revenue that cigarettes and cigars of foreign brands imported for the President, Prime Minister and the four Governors will be exempt from Federal Excise Duty.

The widening gulf between poverty, indigence, unemployment and despondency on the one hand, and wasteful spending, pomp and show on the other, is disastrous not only for the economy but for the whole fabric of society. It is causing unrest, rage and hatred and the lava may burst out anytime.

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Translation and adaptation of the editorial of Tarjumanul Quran August 2006.