The recent decision of the federal cabinet to rationalise General Sales Tax (GST) and levy a one-time flood surcharge are much-needed reforms to bolster Pakistan’s elusive and perhaps unattainable ideal of economic self-reliance. A state, which has perfected the art of collecting and negotiating rents for its strategic games, is least interested in creating a redistributive welfare state.
The emergence and fortification of a rentier state, therefore, is neither peculiar nor new as phenomena. However, it has now come to haunt the future of the country due to the evolution of rent-seeking culture, which is almost a way of life. We need no half-baked perceptions-based studies from abroad to know that crude and sophisticated forms of corruption are now embedded in our public life. From the delivery of a basic service to the purchase of a submarine, this is the way the country functions. The elites have strengthened trends such as tax-evasion and made them legit mechanisms of governance and public affairs.
Tragic that the world leaders such as Hillary Clinton had to remind Pakistanis about how they were not willing to pay up in the face of the 2010 floods devastation and were continuously looking towards the West and international community at large. Such a debate should have emanated from Pakistan’s Parliament and its patriotism-obsessed media. But this did not happen as all barons are averse to paying taxes in this country. Continue reading
The colossal humanitarian tragedy and the imminent economic meltdown, will now shape a new Pakistan or rather, exacerbate its predicament in the months and years to come. Pakistan’s chronic political instability, structural economic constraints and a warped national security policy are all going to be affected by the unfolding drama of the national disaster, perhaps the severest, in the country’s history. Whilst the challenges have snowballed within a short duration of ten days, the response of the Pakistani state and society underline extremely dangerous trends and make us wonder about future of the country, as we have known it for the last 63 years.
Pakistan had reverted to quasi-democratic rule after a decade of dictatorship in March 2008. Since the resumption of the electoral process in February 2008, the traditionally powerful unelected institutions, had acquired both legitimacy and unprecedented powers. The power troika of the 1990s had transformed into a quartet comprising the army, judiciary, the media and the civilian government which was represented by a ‘discredited’ president who has been a constant punching bag for the unelected institutions of the state.
As an oddly smiling President Zardari of Pakistan stood behind a visibly concerned President Obama in the White House this week, one had to wonder what Mr. Zardari was smiling about. Seven thousand miles away, in the country over which he presides, the economy has tanked, the province of Baluchistan is in the grips of a secessionist movement, Karachi is embroiled in ethnic violence between Pashtuns and Urdu speakers, and that’s not even the most pressing problem this nation of 170 million people is facing. As I write this, tens of thousands of refugees are pouring out of the Swat valley in anticipation of a major military offensive by the Pakistani Army against the Taliban.
For weeks, headlines around the world have raised alarm about the proximity of the Taliban to the capital Islamabad, and analysts have puzzled over the curious detachment with which the civilian government and the Pakistani Army seemed to be observing the situation deteriorate. Now that the Pakistani army is finally engaging the Taliban, there is one question on everyone’s mind: Is Pakistan serious about this fight this time, or will it cut a deal with the militants, as it has done in the past with disastrous consequences? Continue reading
In Pakistan: The Economic Dilemma
By Shahnawaz Mahmood
Roti, Kapra, aur Makan — or Bread, Clothing, and Shelter — this has been the Pakistan Peoples Party (PPP)’s slogan to woo the electorate since the 1970’s. While the PPP emerged from February’s elections with the largest majority, it did not win sufficient seats to claim control of the government and was forced to form a coalition, mainly with the Pakistan Muslim League-Nawaz (PML-N). Given the still unresolved question of the restoration of the judiciary, including the Chief Justice of Pakistan and other judges who were dismissed by President Musharraf last year, the PML-N could withdraw from the coalition and the government’s center could collapse — unless the Musharraf-backed Pakistan Muslim League-Quaid-e-Azam (PML-Q) were to intercede. This political uncertainty surrounding the new government, combined with the worsening security situation, has inflicted a great toll on economic growth as investors are becoming wary. This will make providing such essentials as bread, clothing, and shelter increasingly difficult.
Record oil prices and high food prices are creating universal economic hardships. The Food and Agriculture Organization and International Monetary Fund have even warned of food shortages being catalysts for war in developing countries. Pakistan is no exception to such economic hardships; economic indicators in the country are worsening. Fiscal and current account deficits are both expanding, and inflationary pressures — particularly food inflation — are escalating at an unprecedented rate. According to the government’s Pakistan Economic Survey, food inflation reached more than 25% in April, the highest since 1980. In addition, Pakistan is experiencing a massive shortfall in the supply of electrical power, leading to power cuts which have not only affected industrial output but have also sparked riots in many parts of the country. Continue reading