The quest for a rule-based economy – Concept

During the Eid holiday, a simple graph went viral, depicting a secular decline in Pakistan's economic growth since the 1990s, compared to India's, as fifteen years rolled by. The frequency of low growth phases is growing. Meanwhile, the period of economic recovery shrinks to a shorter period in each cycle.

Anemic economic growth is the biggest challenge in a country dominated by a young and growing population. In today's scenario, poverty is increasing and the middle class is shrinking.

This is in stark contrast to what is happening in neighboring India. One can see the middle class vibe in India from the size of the crowd in the stadia during the IPL matches, which is a stark contrast to the (lack of) enthusiasm of the crowd during the recent PSL matches in Pakistan.

The good news is that the country is reeling from the long-standing economic crisis. Political pressure from a growing youth electorate and media is putting pressure on the powers that be to focus on sustainable economic recovery. basically. Young people want economic prosperity and security. Now the attempt to make Pakistan a bastion of Islam needs to be reduced with a big pinch of reality.

However, the youth are disillusioned and disillusioned by the actions of different forces from underground realities. They still focus on the bandage approach. The idea is to keep the economy current, even if it fails, based on the support of allies and international financial institutions (IMF, WB, etc.) while preventing drastic reforms.

Vibrations from the US and Saudi Arabia will keep the country afloat by ensuring adequate balance of payments support through bilateral injections and the next IMF program without allowing the country to default. This is comforting news. However, on the other hand, it provides a lifeline to those in control of the leadership to continue the status quo.

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The country needs a rule-based economy and a rule-based system. Now, there is a rule, that is, strength is right. Investment is sought under the umbrella of SIFC (Special Investment Facilitation Council), which avoids other hurdles like NAB (National Accountability Bureau) and courts. Those who navigate through the SIFC are kosher, and the rest must face all obstacles. Bureaucracy will shy away from doing anything that does not come under the purview of SIFC, otherwise they will fear NAB and its likes.

The new rule requires investors to knock on the SIFC door to ensure the safety of the company, while others may choose not to invest. What is missing is a rules-based economy, an economy that considers all investment opportunities on their merits.

The country desperately needs private sector-led investment, which ensures that Pakistan is in a position to run a healthy current account deficit, while FDI is used to build reserves. This is the economic model that fueled India's economic growth following reforms in the 1990s. And broad-based investment requires stability in the political system, which is poor in Pakistan.

Lack of investment in mining, agriculture and information technology is not the only reason for the country's secular decline. In addition to the above mentioned factors, lack of human development expenditure is another reason. The country should spend badly on human development – ​​health and education. This should be the priority for long-term course correction.

If people have skill sets and education, they can innovate. The private sector can do wonders in mining, agriculture and information technology once it has the will and space to finance entrepreneurship and manufacturing.

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Time is running out as the next 3-5 years are crucial to change the economic trajectory. The economy is on a gradual decline. The forecast for the next few years is grim. This will lead to breakdown of law and order and further polarization as the state writ is focused against selected elements. It's not sustainable and can explode if things don't get back on track.

Copyright Commercial Recorder, 2024

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