ECONOMIC CRISIS OF PAKISTAN

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ECONOMIC CRISIS OF PAKISTAN

Dancing around the fire is not the solution to any problem. One should try to see beneath the

surface in order to grasp an idea about the basic issue. Deposit a stream of strong words and

announcements made by the past rulers of Pakistan, nothing concrete has been done to introduce

a proper economy revival plan. Rather the situation has taken a quantum leap for the worse.

At present the sorry state of the economy, tops the problems facing the country. Seeing the

horrible economic distress, some still suggest restoring to the begging bowl and further

subjugation of donor agencies as the only solution to it. Such an approach can not provide a way

out; it aggravates the situation and amount to commit suicide. Therefore, the present leadership

has realized that there is not option but to reshape the economic strategy altogether.

The economy of Pakistan has fallen up to this extent that it requires serious attention and

endeavor to revive its state. The revival of economy means to bring the economy on track

whereby country becomes self sufficient and economy self sustained to meet its internal

demands and fulfill foreign obligations. Sustained economy provides a balance in trade, potential

of paying back foreign loans and gradual growth in gross domestic and national product. Rise in

foreign exchange reserves, minimum inflation rate, strong local currency are a few indicators of

a sustained economy whereas better social indicators reflect its civic effects.

Developed economies are movers, developing economies are the followers and the

underdeveloped economies have no say in the scheme of things. All economic conditions are the

certain result of policies. No economy can itself produce positive results. It is the people and

their actions which steer the effects. The economy of Pakistan was not doomed for disaster. It

has become the victim of eccentric policies of our past rulers. It has been mismanaged up to this

extent that the country has virtually become bankrupt and made to dance on the tunes of donor

agencies as Pakistan has bartered its freedom with them.

For the last thirteen years there has been no noticeable addition to basic industries and the

economic infrastructure of the country. Instead the number of sick industrial units increases each

year. The public sector is shrinking and suffering losses. Although agriculture has helped the

nation to survive but the sector itself is faced with crises. In regard to oil, retrogression has set in

after a good progress.After attaining one third self sufficiency in the country’s oil requirements,

advancing steps have been retracted and the annual import of oil has increased. Exports could not

be enhanced despite repeated devaluation of the rupee.

External debt are touching new heights and the irony is that new loans are obtained simply to pay

back a portion of the earlier loans.

According to the genesis of the present situation the deterioration in economic activity is mainly

caused by weak performance of large scale industry, erratic behavior of agriculture, decline in

real investment, macro economic instability that includes large fiscal deficit, large bank

barrowing, using interest payments on domestic debts double digit inflation and personal

aggrandizement.

The economic situation of Pakistan at the time of independence was also very bleak but it

improved over the years. Its economic policies were exemplary and countries like Korea had

learned the tricks of economics from Pakistan in 60’s, while Pakistan revived meager financial

resources at the time of independence, it was deprived of Kashmir. Ever since, the Kashmir issue

has been haunting Pakistan for which Pakistan has fought several wars with India and each war

had its price paid by Pakistan. It had to maintain a large armed forces causing huge burden on

economy.

Agriculture has always been neglected. Feudalism is in vogue even today and about six thousand

families posses forty percent of the total cultivable land. There is no retrieval policy in regard to

the agricultural inputs. The cost of seed is four times higher than its cost of production. Irrigation

system is also upset. Per acre productivity of East Punjab and Haryana is four times higher than

that of West Punjab and Sindh. The level of land and human efforts are the same but the

difference in policies, facilities and other factors account for the disparity. Pakistan may become

self sufficient in agriculture within two to three years but at present twenty percent of total

imports comprise food cereals. On the one hand, there is the common cultivator who finds it

difficult to meet his expenses, on the other, there is a particular class that not only rolls in wealth

but also upholds the oppressive and unjust system.

As we are very heavily dependent on borrowing to meet the resource gap, our major donor

International Monetary Fund insists upon narrowing the revenue expenditure gap to under five

percent of the gross domestic product. Since other lenders follow the policies of International

Monetary Fund, Pakistan has no choice but to enhance its taxes and revenues. These foreign

lenders and donors also demand that we reduce taxes on international trade which means the

reduction in the custom duties which has always been the main source of our revenues. This puts

further pressure on the other taxes to make up for the loss caused by the reduction in the custom

receipts.

The real issue of our economy is how to achieve higher productively, and to strengthen and

develop the infrastructure. For this purpose the foremost need is to restore the confidence of our

businessmen, cultivators and industrials to engage them in product processes. In the past, various

Government of Pakistan have made some efforts to build up infrastructure and productive

potential of the economy, through the process of many plans which was the beginning to prepare

for future advancement. It was started by launching a six year Development Program in in 1951.

The plan was suspended two years before its completion due to the repercussions of the Korean

war. Besides this plan, five other five years development plans were drawn up. These efforts did

not prove successful due to economic, social cultural and administrative obstacles.

As majority of the people in Pakistan are poor and backward, they have always been preoccupied

mainly in meeting the basic needs. They live in unhygienic conditions. Electricity is a luxury for

them. Health services havebeen thinly spread in the country. Floods, drought or diseases affect

people and the livestock. The combination of malnutrition, illiteracy, diseases, high birth rate,

unemployment and low income has closed the avenues of escape from serious economic crises.

The most unfortunate aspect of these serious economic crises and pathetic state of affairs is not

because of the lack of natural resources but due to inefficient use of the key factors of

production.

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ECONOMIC CRISIS OF PAKISTAN Dancing around the fire is not the solution to any problem. One should try to see beneath the surface in order to grasp an idea about the basic issue. Deposit a stream of strong words and announcements made by the past rulers of Pakistan, nothing concrete has been done to introduce a proper economy revival plan. Rather the situation has taken a quantum leap for the worse. At present the sorry state of the economy, tops the problems facing the country. Seeing the horrible economic distress, some still suggest restoring to the begging bowl and further subjugation of donor agencies as the only solution to it. Such an approach can not provide a way out; it aggravates the situation and amount to commit suicide. Therefore, the present leadership has realized that there is not option but to reshape the economic strategy altogether. The economy of Pakistan has fallen up to this extent that it requires serious attention and endeavor to revive its state. The revival of economy means to bring the economy on track whereby country becomes self sufficient and economy self sustained to meet its internal demands and fulfill foreign obligations. Sustained economy provides a balance in trade, potential of paying back foreign loans and gradual growth in gross domestic and national product. Rise in foreign exchange reserves, minimum inflation rate, strong local currency are a few indicators of a sustained economy whereas better social indicators reflect its civic e ...
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