Dr. Ikramul Haq
There is a growing concern among admirers/supporters of Prime Minister Imran Khan that despite tall claims, core reforms promised for making Pakistan a prosperous State have not been undertaken/delayed/deferred/abandoned. It is tragic that our leaders have little regard for what they promise to do before being elected, and voters conveniently ignore once electing them by not effectively protesting to force the successful party or coalition of parties to abide by their manifestos.
On August 24, 2012 before elections, Pakistan Tehreek-i-Insaf (PTI) unveiled a comprehensive economic plan committing that it would mainly focus on doubling the growth rate through investment, trade-driven growth strategy, tax reforms, breaking of cartels and introducing drastic changes in state-run corporations. Almost the same agenda was incorporated in a brief document under the title ‘Plan Of PTI After Forming The Federal Government’ before 2018 elections. Though it was undertaken that for each promise, step-wise implementation progress report would be periodically issued, but none is available.
In 2012, the central theme of PTI’s manifesto was: “The PTI is determined to provide a credible new leadership that can restore Pakistan’s political and economic sovereignty through building a new bond of trust between the government and the people. Only through the active participation of the people can we collectively mobilize our human and material resources to forge ahead on the road to a confident and self-reliant nation”. The preamble of ‘The agenda for resurgence: Manifesto of Tehreek-i-Insaf’ said: “The fundamentals for a free democratic society and democratic culture cannot flourish without strengthening the vital state institutions….In Pakistan the credibility of these institutions to deliver has been undermined by successive governments while corruption at the highest levels has made them a focus of public scorn and ridicule. The PTI would restore the credibility of vital state institutions and their moral authority to govern through a process of reform”.
In PTI’s 2018 election manifesto, the pledge was: “Taking on human development and investment in Pakistan’s citizens as the agenda priority, the plan is set to be able to enable an improvement in the quality of lives of ALL Pakistanis. This is a great digression from the traditional culture of rhetoric only politicians who, despite taking multiple turns in office, have not been able to give focused plans or agendas stabilisation as to how they plan on improving living standards for the common man…”
Since coming to power in October 2018, the PTI coalition Government has failed to implement core reforms, rather created political/economic instability. There is hardly any need to repeat all that has already been written in these columns about it.
The government says it is borrowing—externally and internally—by compulsion. The historic high fiscal deficit of 8.9% of GDP for last fiscal year posed enormous challenge and that it inherited record public debt, trade and current account deficits. The disastrous policies of Pakistan Muslim League (Nawaz), left the PTI’s Government with no choice but to seek yet another bailout from the International Monetary Fund (IMF) and for stabilisation resort to rupee devaluation, higher interest rates, austerity measures etc, leading to stagflation.
All said and done, the real issue is what Imran Khan should do in adverse circumstances to revive economy. The starting point is institutional reforms that are sine qua non for achieving sustainable economic growth. At the same time, he needs to ensure that centre and provinces improve public services. The right-sizing of the dysfunctional and monstrous government machinery is the daunting challenge, but nothing will change unless the elitist structures are dismantled. Revenues come from investment and growth—these have been destroyed by present economic team. Presently, golden opportunity is created by problems in China for $ 20 billion export market. While India and Bangladesh are gearing up to increase their share, our wizards (sic) are creating a situation where no one will invest/increase capacity. In fact, the decision of retrospective charging on power bills will bankrupt companies, leading to major unemployment crisis. Discouraging the existing businesses and prospective local/foreign investors through hostile policies/laws/rules/regulations is a sure recipe for disaster—this is what is being done.
Today’s dire need is to explore/utilise the untapped resources, establishing industries through private-public joint ventures for import substitutions and value-addition, stop wasteful, unproductive expenses, cut the size of cabinet and government machinery, restructure or privatise loss-bearing public sector enterprises, invest on human capital, facilitate exports, increase productivity, revolutionise agriculture and reduce inequalities, simplify and reduce taxes. It is high time that all anti-people, anti-growth policies are reversed and facilitation is extended to existing and potential investors by improving ease of doing business, reducing costs and imparting skills.
We can make Pakistan prosperous through fiscal decentralisation at local government level. Implementation of Article 140A of the Constitution that is political, administrative and fiscal decentralisation is the key to democratisation of institutions. This is the most neglected area in Pakistan. Article 140A requires that decision-making power should be with the elected local governments. A council, elected by the residents, must enjoy the right to levy municipal taxes. Municipalities should be given wide-ranging powers. Extensive functions that fall within the specific sphere of authority must include education and skills, health care and social welfare services. The municipalities should be responsible for matters related to the residents’ recreation, housing, and the management and maintenance of their living environment (i.e. roads, streets, water supply and sewerage, waste management etc) and land-use planning for commercial/business growth.
There is nothing to be pessimistic as research-based solutions are available. The only thing we require is to debate and implement reform agenda in all spheres of governance. This should be our national cause, above party lines. All the parties must reach a consensus that whosoever may win elections, the policies of national importance would continue so that investors have confidence about stability in policies, transparency and level-playing field.
Firstly, Parliament should pass Taxpayers’ Bill of Rights assuring that money collected would be spent prudently for welfare of all. Secondly, there should be taxation of all incomes irrespective of their source (agricultural or non-agricultural). Thirdly, broad-based and harmonised sales tax (HST), covering all goods and services, at a low rate of should be introduced. Economic prosperity and equality can never be achieved unless the taxation system is restructured and social welfare model is implemented as elaborated in a study, Towards Flat, Low-Rate, Broad & Predictable Taxes [Prime Institute, 2016].
Instead of blaming the tax machinery, Imran Khan must take his non-elected economic advisers to task. The challenge of administrative reforms has not been undertaken effectively though in initial days, Imran Khan declared it a top priority. It is high time that Prime Minister reverts to forgotten comprehensive reforms the PTI unveiled on August 24, 2012, especially revitalizing the tax system. This vital area has been ignored/delayed, courtesy the influence of the constellation of advisers imposed by foreign lenders, old-DMG-clique and FBR’s Revenuecracy. That is where the real problems lie. So long as they prevail, Imran Khan cannot hope to succeed.
The writer, lawyer Supreme Court of Pakistan, is Adjunct Faculty at Lahore University of Management Sciences (LUMS).