Deteriorating socio –economic condition and escalating public debt

Asmatullah Khan

Since almost last 8 months under the umbrella of the Pakistan Tehrikey Insaf Government, WITH the slogan of “New Pakistan”, the socio –economic condition of the country is getting worse. The growing inflationary spiral, negligible investment in industrial and agricultural sectors, unfavorable balance of trade, growing unemployment, speedy devaluation of the local currency as compare to the foreign currencies, escalating public debts and its liabilities, which reached to more than Rs. 30 trillion, low per capita income, unbearable high utilities bills and worse socio –economic conditions have pushed the country into a very unstable politico -economic situation. No doubt, where the previous political and military dictators have engulfed the country under financial crisis due to their luxuries and huge debts burdens, there, the present political government has also not opted for a different strategy to free the country from the clinches of foreign debts and its liabilities. 

The following price list from 2017 and 2019 will certainly expose the performance of this government in injecting hyperinflation and poverty in the country, because higher prices of transportation further pushes the prices of all the consumer goods.

1              Petrol    Rs. 65 Per Liter  Rs. 99.50 Per Liter              

2              Gas        Rs. 100  Rs. 200    

3.            Electricity Bills    Rs. 800  Rs. 2000                  

4              Fertilizer              Rs. 2400                Rs. 3500                  

5              Floor      Rs. 600  Rs. 1550                  

6              Rice        Rs. 3000                Rs. 4800                  

7              Dollar    Rs. 100 per Dollar             Rs. 144 per Dollar               

8              Gold      Rs. 45000/ per Tula          Rs. 70000 per Tula           

Source: Daily English News Paper (April 1st, 2019)

Today in the international market a barrel Petrol is available at $ 44.52. In Pakistan including all taxes, excise duties and GST, its price becomes Rs. 57.17 per litter, but the present government is selling it at Rs. 99.50 per liter. The expectations of the common people from the new political government were that under the slogan of “New Pakistan”, the socio –economic conditions of the country would certainly get improved and facilitation and amenities of life will get better but in contrast, the socio economic situation has further been deteriorated and the living style of the common people has further been worsened. The reason is that appropriate socio –economic strategies and economic planning policies for the improvement of standard of living, human development and elimination of poverty of the poor inhabitants of the country are not devised and delivered.

All the efforts for the betterment of the socio –economic conditions are theoretical, non-focused, and immaterial. In reality the common people were expecting drastic measures and substantial practical actions under the slogans of “New Pakistan”. But in reality the growing inflationary spirals, the huge outflow of capital and unsound monetary and fiscal policies have adversely effected the country’s economic environment.

The repayment of the already taken huge foreign debts, the ineffective slow economic, industrial and agricultural activities with the injected inflationary spiral have made the balance of trade unfavorable and made the economic activities of the country noncompetitive.

No doubts, in the past, huge loans taken from IMF, World Bank, Muslim World and Developed Countries were not utilized more appropriately for income generation, employment creation, poverty elimination and productive market expansion. Therefore, its repayment further overburdened the country’s capital formation capabilities and consequently adversely affected the socio –economic growth and human development of the nation.

Furthermore, under the slogan of “New Pakistan”, under the present political government, the required economic strategies for socio –economic uplift and economic development are not substantially visible. Consequently, socio –economic deterioration, economic instability and dependency on foreign debts have very rapidly been increased, which is certainly not a good sign in any respect.

Therefore, a drastic measure needs to be taken for the improvement of the country socio –economic environment and industrial and agricultural development, and improvements in balance of trade and balance of payments. In addition, the current rapid devaluation of the local currency has further brought the country under the clinches of bankruptcy and the growing debts burden has further deteriorated the economic environment of the country. It is worth mentioning that today energy is considered the fifth factor of production and is certainly playing a key role in reducing the cost of production, transportation and also in reducing the effects of inflationary spiral. But unfortunately, the prices of oil, gas and electricity for domestic as well as industrial and commercial purposes are very rapidly increasing with multiplier effects, which are certainly adversely affecting the cost of marginal productivity in the country, due to which our industrial and agricultural production cannot compete in the world market to attract the consumers. Pakistan is certainly facing resource crunch, despite having abundance of natural resources. But unfortunately, the government unproductive expenditures are much higher as compared to its revenue generation.

Therefore, the present government need to stop blame game and must seriously take corrective practical measures to reduce dependency over foreign debts and start utilizing our own deposits of oil, gas and precious deposits and also reduce the dependability over foreign debts.

 The growing non developmental expenditures of the governmental machinery and leakages of the government revenues need to stop immediately. In addition tax evading rich could certainly be apprehended through 100 percent transparency in government affairs, because the required revenue could be generated if taxes are levied according to the capabilities of each segment of the society.

Unfortunately the managers of the new government have not yet devised any sound and tangible strategy to ensure amenities of life through appropriate planning policies, equitable taxation with justice and equality.  The taxation also needs to actually spare the poor’s and targets the affluent segments of the society, because in Pakistan the most productive measures of taxation is considered indirect taxation, which is ultimately paid by the poor consumers. It seems criminal to generate 90% of the taxes indirectly that are shared equally by the poor and the rich. Because, the petrol levies, gas surcharges, sales taxes, excise and custom duties are such taxes that are recovered from the poor by the rich with interest.

The reason is that many manufacturers conceal their actual production through various illegal ways to save their sales tax, excise duties. Furthermore, instead of taking prudent measures to put the economy on sustained growth path, the policy makers unsuccessfully try to control inflation by increasing the interest rates. But actually, this slows down investment and triggers high growth in nonproductive sectors like property, financial and capital markets. No doubt, inflation injected through oil prices have almost plagued even most of the developed economies after the recent hike in oil and commodities prices but such inflation remained comparatively lower in countries with better and transparent socio –economic systems.

Likewise, the social development programmes for poverty alleviation must also be founded on a broad based conceptual framework, which could reflect the multidimensionality and relative nature of poverty and wellbeing. But it requires a large interconnected, timely and quantifiable dataset, with a minimum risk of erroneous policy outcomes vis-à-vis poverty alleviation. But again it is worth mentioning that the more comprehensive and integrated is the database, the more efficient, effective and comprehensive would be the poverty alleviation strategy.  This certainly brings us to the importance of an integrated poverty assessment tool, which could capture the varying dimensions of poverty in its economic and contextual settings.

Therefore, the government needs to be very comprehensive and realistic in addressing the socio –economic hardships of the poor’s of this country. All the loopholes need to be blocked through realistic economic measures and justified drastic actions. Punishing the poor’s and the honest through unfair petrol & utilities bills for the compensations of the looters is not justified but is totally unfair and inhuman.