It was widely expected that PTI leadership is well aware of fall out of adhocism in decision making about the economy and is keen to clear the accumulated mess of past governments. Business leaders had not only pleaded for long term policies’ formulation and their implementation from the previous government of industrialist Prime Minister Nawaz Sharif but have repeated their demand in the present government as well. But after completing its one and half year tenure, the present government has not announced long terms policies for major contributory factors of the economy and there is greater reliance on adhoc measures.
Economic coordination committee of the Cabinet (ECC) in its meeting on Wednesday approved Rs.23 billion worth subsidy for providing electricity on subsidized tariff of 7.5 cents, inclusive of all taxes, to five export industries for the remaining four months of the current fiscal year. The subsidy shall be provided from the saving of allocations that have been made for Public Sector Development Programme of the current year. The facility will not be allowed to the industries that produce goods for domestic consumption. Likewise, the ECC approved a subsidy of Rs.20 billion for provision of relatively cheap electricity to these export industries during the next fiscal year.
The adhoc measures like providing electricity and gas on comparatively lower prices for few months or a year will not help maintain a sustained growth in exports. The delay in power and gas sectors reforms to lower the tariffs of utilities has been taking a heavy toll on the economy over the past 13 years. The issue of renegotiating the power purchase agreements has not only been repeatedly agitated in these columns but also by trade bodies in their meetings and subsequent press statements. The rag-tag power transmission and distribution system is also adding the electricity tariff in the shape huge technical losses it it is not picking the additional power generation of 8000 megawatt, although consumers are paying for this unutilized surplus electricity in the shape of inflated bills. The disconnection drive started against the running defaulters is appreciable but in Khyber Pukhtunkhwa it is largely directed against domestic consumers. Defaulting industrial consumers across the country should not be left off the hook.
Technological stagnation is another major factor which make non-competitive the export oriented industries and the ones that cater to domestic consumption. The big spurt in the entry of foreign goods to domestic market and consumers’ preference for these goods over the locally produced substitutes amply explains it. The subsidy on electricity will help stem the decline in exports and achieving the target of $21 billion during the current fiscal year. But such like temporary measures may not prove instrumental in achieving the export target of $26 billion set for the next fiscal year. The announcement of long term industrial policy has missed several deadlines for the unknown reasons.
The ECC has deferred the decision of increasing wheat support price by Rs.35 to jack it up from Rs.1365 to Rs.1400 for 40 kilogram. If the decision is made later even then it will not benefit the landless tenements and owners of small and subsistence land holdings. The problems of agriculture sector are of different nature in each province of the country. In Khyber Pukhtunkhwa, feudal land holdings are just handful and majority of landowners consist of small land holdings. But out of 3 million of agriculture land 1.8 million is rain-fed. Because of water scarcity increase in minimum support price of wheat will not benefit small farmers in these areas. Because of acute scarcity of water in Baluchistan, the incentive of support price for wheat will benefit neither the farmers nor tribal Chiefs. In Punjab and Sindh bulk of agriculture land is owned by feudal class. Increase in support price of wheat will add to the income of this class and not earnings of the landless tenants in Punjab and Haris in Singh. In the Land Reforms of President of President Ayub Khan 10 million acres of land had been resumed for distribution among the landless farmers. In the so called Land Reforms of Z.A Bhutto, the owners of big landholdings were targeted in the Province of Khyber Pukhtunkhwa alone by igniting bloody battles between the land owners and farmers and inflaming it later by sending leftist cadres of PPP to trouble spots. Not a single acre of land was resumed in Punjab and his home province Sindh for distribution among the landless people. It high time to put in place sustainable policies aimed at reviving and modernizing manufacturing and agriculture sectors.
