Jahangir's World Times First Comprehensive Magazine for students/teachers of competitive exams and general readers as well.
Pakistan is the second biggest country in South Asia in terms of human capital. It is also an active member of Saarc and other regional organizations but how ironic is the fact that while other nations in the region are making progress by leaps and bounds and are achieving the cherished goals of development, Pakistan is fast becoming a country that can be likened to a patient afflicted by multiple diseases. The ogre of terrorism does not devour the prospects of development in any other South Asian country but Pakistan.
Pakistan has been plagued with multiple crises that have crippled its progress bringing it to a naught. The country is now grappling with serious challenges like terrorism and economic meltdown; the issues which have raised serious concerns regarding its future. The ever-worsening economic crisis — the mother of all ills — has been a constant source of worry not only for the country itself but also for the region and the whole world at large because a country with sagging economy cannot fight the war on terror.
South Asia is home to well over one-fifth of the world’s population, making it the most populous geographical region in the world. Pakistan is the second biggest country in the region, but it is also the one fraught with the most problems and is still one of the poorest countries in the world with many of its citizens living in abject poverty.
Pakistan is, in fact, so vulnerable to crises that it faces almost every problem that restricts its progress. The issues ranging from law and order situation to energy crisis, from economic woes to political instability, from corruption and nepotism to deteriorating educational and health system, form weak democracy to the worst governance, and so on, have caused numerous problems.
Historically, whenever a new government comes into power in Pakistan, the first thing it does is to go around begging for loans to the IMF, the World Bank and other lending institutions. The crisis faced today is because of the fiscal indiscipline that has been practiced over the past many years. No government did what it promised to do during electioneering. As a result, Pakistan continues to depend on foreign aid which increases the national debt and this severely aggravates the economic crisis.
Pakistan is one of the world’s richest countries in terms of natural resources such as coal, oil, gas, minerals, agriculture, labour, skilled manpower, etc. But, unfortunately, it is also one of the poorest countries in terms of management of these resources. Efficient management of resources is vital to achieving national prosperity. The country’s political elite should learn how to use these resources in order to put the country on the path to prosperity and self-sufficiency.
Today, the country’s economic development is stunted because foreign direct investment has been in a downward spiral since long. The precarious law and order situation has denied any improvement in terms of FDI. Small businesses also find it impossible to fend with the ”start-up-cost” because of the rampant corruption.
In terms of geography, Pakistan is ideally located and while it can use its infrastructure for its own growth, it can also help other countries in this as well as adjacent regions.
The importance of a sound infrastructure for sustained growth cannot be denied. Investment is very important for any country’s economic stability. But it is very unfortunate that both local and foreign investors find the infrastructure very poor in Pakistan. Besides the severe crisis in terms of prime inputs like electricity, gas and water, the justice system in the country is also unsatisfactory, corruption is galore and there is no end to the menace of terrorism. In these circumstances, local entrepreneurs prefer to go to various regional countries especially Bangladesh, China and Sri Lanka, etc. Similarly, foreign investors do not find a favourable environment to bring their billions in the country. This reduction in infrastructure investment in turn causes more poverty ergo economic instability.
Another factor that adds to the country’s economic problems is that of foreign remittances from overseas Pakistanis. Foreign remittances make an important source of capital for a developing economy. Unfortunately, Pakistan provides hardly any or no incentive to remittance senders. Whatever incentives are given, are misused by institutions and individuals which adds to the economic instability.
Tax is the backbone of any economy. While Pakistan is an agriculture-based country, there is no tax here on agricultural production. Seen in the economic backdrop, it is important to state here that the country has the lowest tax-to-GDP ratio in the world. The taxation system is characterized as being unjust and discriminatory and is unable to generate enough revenues to break free from the shackles of the IMF and other donors. The Federal Board of Revenue has miserably failed its duty to deliver and it is really unfortunate that the country has such a corrupt, incompetent and incapable FBR with weak tax collection machinery. It is evident from its inability to collect taxes from agriculture sector.
This is a country of over 180 million people but only 2.7 million people actually pay income tax. Agriculture is the dominant sector and contributes 21.4 percent to the GDP, while it employs 45 percent of the country’s labour force and contributes in the growth of other sectors of the economy but it is not taxed. In these circumstances, economic stability would surely remain a far cry.
The import and export sector too is adversely affecting the country’s economic health. Pakistan needs to greatly increase its exports through utilization of all available resources. In fact, exporters are using legal channels for money laundering as they receive money through formal banking channels against export orders of less worth and for tax-exempted consignments. The country is importing goods of high worth and paying the cost in dollars since these goods fall under the exemption regime. As a result, Pakistan is facing a heavy trade loss of 20 billion dollars.
The factor of corruption is a complex one and though corruption is present in all other South Asian countries but in Pakistan it is an especially hurtful social, political and economic phenomenon that undermines democratic institutions, impedes economic development and contributes to governmental instability. Many big loan defaulters exist in Pakistan who borrow billions from banks and then wilfully default. According to the Constitution of Pakistan, a financial dispute cannot be stayed by a court for more than six months. But, a large number of financial cases are still pending before the courts.
Pakistan is a major South Asian country and a proud member of SAARC but it is also a country where corruption, terrorism, nepotism, injustice, etc., are evils with no answers. The country must find the right answers if it is to rise above its economic and social ills and move forward as a modern and progressive nation – something that it is completely capable of.
