Imran Khan’s castle in the air

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Blindspots PTI’s economic policy

By:Aziz-ud-Din Ahmad

One had expected the PTI chief not to make unrealistic promises as is the general practice among politicians before the elections. The nation has had enough of roti, kapra, makan type of gimmickry. It badly needs a way out of the cul-de-sac where the ruling elite, both civil and military, has landed it. Most of all it needs realistic programs rather than pies in the sky. To start with, Imran Khan has promised to turn Pakistan into a “modern welfare state where the fruits of development are shared by the entire nation and not just the elite”. A welfare state ensures a social protective system that includes a national health service, safety standards, labor rights and human rights in general. It has been described as a structure built to protect the individual "from the cradle to the grave". One would need little convincing that a welfare state needs to be kept in view as an ideal. To promise it as an achievable goal within an elected tenure when the wherewithal for the system is nowhere in view amounts to using the slogan as election stunt. A welfare state requires huge financial investment by the government in social sector. A prior requirement for this is a vibrant economy, a maximum employment of productive forces and high tax-to-GDP ratio. As things stand Pakistan is a-cash starved country and has to depend on foreign assistance to continue to function. It has a vast reservoir of unemployed labor which cannot be mobilized because of internal and external reasons. The former includes lack of education and training and the later absence of employment opportunities in the country. The tax-to-GDP ratio is among the lowest in the region. The five-pillar emergency reforms program drafted by PTI ignores vital issues that need resolution before Pakistan can take the first step towards the miles long journey on way to a “modern welfare state”. The country suffers from abysmal poverty caused in the main by the skewed land propriety system. Most Asian countries on high growth trajectory had undertaken genuine and thorough going land reforms at an initial stage. In Pakistan, the two half-hearted attempts in the direction failed to produce the desired result as they were no more than eyewash. This has led to a situation where nearly 67 percent of Pakistan’s rural households are landless. This is in contrast to the decline in India’s rural poverty levels between 1987 and 2000 on account of far reaching land reforms. The PTI talks about revolution. There are, however, no radical measures in its program. Thanks the powerful landed interest enjoying dominant position in the party, the PTI feels no need for land reforms. Hence the curse of landlessness will continue to give birth to widespread rural poverty. Distribution of land through agrarian reforms can provide jobs to millions of people. What is more it can create a large market for local industry and promote trade. Big landlords use their huge earnings on foreign goods like fleets of cars, costly luxury items, travels abroad and villas constructed in Europe and US. The money earned in Pakistan creates jobs abroad while it breeds poverty at home. The small farmer who gets land will buy shoes, clothes and things of daily use and educate his children, thus promoting local production and helping raise literacy rate. The enhanced economic activity would boost state revenues. The PTI has promised to increase spending on education from 2% of GDP to 5% in five years. This is more than doubling the present expenditure. Similarly, spending on health will be increased from 0.86% of the GDP to 2.6% in a span five years. Primary health care to the poor people of Pakistan has also been promised. This is yet another unrealistic claim. Where are the funds for achieving the much desired goals? This year the government will spend Rs1.1 trillion – or more than one third of its total budget outlay – on servicing both the domestic and foreign debt. This segment of the budget has in any case to be paid under law. The next big item is defence expenditure. There is no details in the PTI program regarding how to cut down military budget. Unless this is done the promise to raise education and health spending at the proposed scale would remain moonshine. The official allocation for defence in 2012-2013 stands at Rs 545 billion which is highly misleading. Some independent estimates put the actual budget at Rs 800-900 billion, almost double the allocated amount. This is because the estimated budget does not include internal security expenditures, military pensions, debt on military loans, arms purchases, etc. A part of the defence budget diverted to education and health can do wonders. But who will bell the cat? And what does PTI VP Asad Umar mean when he says, “We want one education system for one nation.” Does he mean there will be a uniform curriculum and a single examination system? There are currently three parallel educational systems in the country. First, there are madrassahs or seminaries. In July this year, Wifaq-ul-Madaris Al-Arabia Pakistan declared that the number of students appearing in the examination was 212,490 of which 111,909 were girls and remaining 100,581 were boys. Will PTI make the curriculum of these madrassahs the standard for all students? As for as the madrassahs are concerned, they would resist any move to amalgamate them in either of the two other systems. Second, there is a government school system preparing students for Matriculation examination. Students from low income group go to these schools. The system has its own courses of study and examinations. Before Partition, the system produced outstanding students including two Nobel Laureates in Punjab. Now the system is in shambles. While it needs to be revitalized, it will take at least a decade before it is turned around. Third, there is a private school system preparing students for O and A levels. It is highly costly and only students belonging to the upper class can afford to join these schools. Should Imran Khan try to run government schools on the lines of the private schools, the expenses for the state would be unbearable. So only Imran knows what is meant by “one education system for one nation”. When it comes to improving the supply of energy, Imran Khan counts his chickens before they are hatched. At PTI’s seminar on electricity held in late February, Imran promised to halve the current power shortage and improve gas supply within two years and completely do away with gas and electricity load shedding by the completion of his five-year tenure. Many look at the promise as they do at Imran’s vow of halving the corruption within 9 days of coming to power. He has spelled out two ways to achieve self-sufficiency in power. First a “big bang governance” that would require putting all energy-related matters under a single ministry. Second, generating some 4,500MW through cheaper imported coal instead of furnace oil and achieve a total savings of Rs475 billion in the bargain. He sounds simplistic when says “right now work on Bhasha dam has been taken in hand”. Did nobody tell him that the sole work taken in hand on the Bhashja dam is a foundation stone laid by Yusuf Raza Gilani in December 2011? The World Bank continues to deny funding for the project raising the legal objection that the site of the dam is located in an area disputed between India and Pakistan. As long as Pak-India ties remain strained, there is little hope of any international financing agency or foreign bank putting its money in the project. Few believe that Pak-US relations during Imran’s tenure are likely to turn into a honeymoon. The writer is a former academic and a political analyst.