Pakistan’s multidimensional crisis, which way to solve it?

Multidimensional crisis is going on in Pakistan at different levels. Especially in the country, the imbalance of the economy has arisen due to many reasons. Its structure is burdened by excessive government involvement. Incompetence of political leaders and involvement of military leadership in decision-making is a major hindrance to the country’s economic dynamism. Pakistan, on the other hand, has a large informal economy, which remains unprotected and out of control. The role of the agricultural workforce is very large in this economy, the economy is highly concentrated in cotton-related manufacturing activities.

It can be seen that there are no dollars in the banks of Pakistan. There is no flour in the store. There is no fuel to run the power plant. There are no jobs as the factories are closed day by day. Thus, apart from the daily commodity crisis, various crises have arisen in Pakistan. All in all, the seeds of Pakistan’s economic crisis lie within its very structure. If an economy has structural problems, it will be unbalanced. There will not be sustainable growth of the economy. Such an economy is itself a barrier to its own development.

Latest news on The Daily Star Bangla Google News Channel.

Cycles of low investment and low exports, low savings rates in government policies and low productivity growth characterize Pakistan’s economic structure. Coupled with this is inadequate investment in human resources, failure of the government to collect adequate tax revenue, neglect of small and medium industries. Above all there is ineffective governance and lack of institutional framework and absence of accountability.

The pitfalls in which the economy is currently mired are heavy military burden, low growth, high inflation, unemployment, continued decline in investment, huge fiscal deficit. The country’s economy stands on an apparent balance that is fragile and decaying. It is well known that Pakistan’s foreign exchange reserves are running low. Because capital inflows from abroad are low, huge debt repayment burden is on its head and foreign earnings are slow.

How will Pakistan’s economy increase efficiency, attract entrepreneurs and ensure technological progress in the current reality? How will he eliminate the imbalance? Therefore, there is no alternative to reforms. When the cyclical macroeconomic system no longer works, the drivers of the economy must turn to fundamental structural reforms. Pakistan now stands at the crossroads.

Pakistan’s dwindling reserves, inability to attract foreign capital and dwindling remittances are mainly due to failure to resolve the structural problems of the economy on time. The stability of social sectors is under threat due to lack of continuous inclusive growth. Savings levels continue to decline relative to the amount of money required for investment in various sectors. And mainly because of this Pakistan has to depend on foreign capital. When foreign capital is not available, the rate of investment tends to fall. As a result, the growth of the economy is disrupted, as well as employment is hindered. Private savings levels are also low in Pakistan. Reasons behind this include income instability, lack of savings culture, usury, low level of education, high inflation and large number and size of dependent households.

It is not because the energy sector is not being subsidized that the country is reeling under energy crisis. Rather, untargeted subsidies themselves have become a problem. Associated with this are circular debt, distribution problems and mismanagement and continued theft. The government has to subsidize mainly the needs of distribution companies. Because the price of fuel that they fixed, has become more than the production. As a result, the price of fuel has to increase, or the government has to give subsidies. But why is the cost of production so high despite the availability of cheap labor? If you look for the reason for this, you will get a picture of mismanagement and multi-faceted corruption. Electricity prices in Pakistan have gone up a lot. The reason? It is generally said that higher oil prices, theft and more signal loss increase electricity prices. But I think the bigger reason is inefficiency in power generation, use of outdated technology by power generation companies, their wastage and frequent breakdown of plants.

Demand side system should have been introduced long ago in Pakistan. Supply needs to be ensured by judging realistic aspects of demand. But the opposite is happening. Policy verification process of demand is not active here.

A large part of Pakistan’s illicit economy remains outside the purview of national laws and regulations. This economy has an unwritten nature. As a result, many of them do not find a place in the official statistics. As a result, official economic indicators are often in a disappointing position. Documenting the informal economy is also important for the government.

The government’s failure to manage fully or partially state-owned enterprises or SOEs is glaring. Loss-making SOEs are on the one hand incurring huge debts, as well as taking on large and uncontrolled budgets, straining public finances and stalling economic growth. But why is SOE falling into losses? Because of corruption, inefficiency, excess manpower, and unskilled workers. The government wants state enterprises to continue, so it gives money to SOEs. good talk But its productivity should be increased along with efficiency, driving them towards sustainable development, so no effective efforts are noticed. As a result, the government has to use and spend a huge amount of money to sustain these projects every year.

Pakistan’s tax system is sick despite reforms. He is not proficient enough to give proper results. The government was vacillating on tax reform. Couldn’t take a hard decision. It did not reflect enough commitment. Time and again Pakistan resorted to withholding tax system. Which shows the government’s lack of efficiency in tax collection, lack of goodwill. There are many loopholes and loopholes in the tax system. Certain activities are left out of the ambit of taxation. And that without any public debate.

Most of the services and businesses are outside the ambit of the tax. Agricultural income tax is not collected. Formal sector industries collect sales tax from consumers on behalf of the government. But the government is not paying it properly. Tax defaulters or evaders are often exempted under the amnesty scheme. Every government is maintaining this scheme. It is important to overcome these serious problems in the tax system. But for this there is no substitute for reflection of true commitment, goodwill and skill.

The economy is suffering in many ways due to the weakness of the regulatory system. Institutional capacity here is weak, enforcement of laws and regulations lax. As a result, tax laws and competition laws are not showing their strength. Big Raghabboals are evading taxes regularly. Tax officials are in collusion with them. There are also a lot of loopholes in the system, so people are getting away with not paying taxes or paying nominal taxes.

Competition laws in Pakistan are largely inapplicable. It is this law that facilitates the fraud of sellers by its weakness; What about price, what about quality. This means that at the root of Pakistan’s economic crisis is a complex and deep problem of economic management. Reform of the economic structure there is absolutely necessary. That reform must be planned, practical and strategically far-reaching.

In the case of reforms, unemployment, environmental degradation, economic displacement should be kept in mind. In this case the social implications must also be taken into account. Reforms should be carried out without discriminating against any province. The goodwill and advice of the central and provincial governments is essential for this. Greater national unity is essential.

If higher investment is desired, encourage it with structural reforms in trade, SOEs and business environment. SOEs need to be restructured to restore financial stability, boost Pakistan’s future economic prospects and boost investor confidence. This will ensure economic growth and increase employment. There will be no bias towards anti-export policies on trade questions. Export markets should be diversified. Exports should be promoted to compete internationally. Which will enhance Pakistan’s competitiveness in global and regional markets. Making the business environment friendly, simplifying start-up procedures, internationalization of companies, education of entrepreneurs, reduction of administrative burden and introduction of excellence awards are needed.

Greater and inclusive growth is imperative for Pakistan. For that, the private sector has to cooperate. But Pakistan has a non-cooperative policy towards this sector. He must ensure cooperation as well as an effective, appropriate regulatory environment and the government must streamline revenue management. Waste must be prevented. The fiscal decentralization framework should be strengthened by reducing non-priority expenditure. Public money should provide security and mobility. Government involvement in the economy should be reduced. Rather, the government should be more active in ensuring social infrastructure and social security of poverty. Special consideration should be given to removing indifference and non-cooperation towards the non-agricultural and non-textile sectors.

Overall, it is seen that the people are struggling for the supply of daily essential food and fuel. As a result, in order to solve the crisis, the energy sector should be reformed and the stability of the financial sector should be ensured quickly by stopping the aimless subsidies. Financial policy should be implemented quickly. Inflation should be reduced. But these processes will take time. But starting should not be delayed. So long to pay…