The author is a Director at the World Bank. The views expressed in this
article are his personal views and do not represent those of the World
Bank, its management or the Executive Directors.
The typical scenario runs like this. The political leadership makes a well-meaning
policy announcement with a big bang and a lot of rhetoric. The actual translation
of
these announcements into real action invariably remains incomplete, partial
or
selective.
This happens for a variety of reasons. First, the leadership itself may
be weak and
not resolute and is easily dissuaded by those who stand to lose from the
announced
change. Second, the legal or regulatory underpinnings of the policy are
so full of
loopholes, exemptions and concessions that the full impact is seriously
impaired.
Third, those entrusted to execute it deliberately mar it by repeated instances
of
favouritism and uneven application that the end result is extremely flawed.
Fourth,
even if all the above factors are missing, those who are likely to lose
use their money
and wealth to influence the legislators and the media to put pressures
for reversal
and withdrawal.
The history of public policy-making in Pakistan is replete with well-intentioned
reforms, a lot of rhetoric and lip-service but a failed record of implementation.
The
results are quite obvious. Every next round of policy changes are greeted
with
increased cynicism, a lot of indifference and total disregard. If you know
that no
action will be taken against you if you do not pay back your loans, what
difference
the circulars from the State Bank or the ministry of finance do make. It
is popularly
believed that these changes will be in the news for a few days and then
pass into
oblivion just like many of their predecessors. They have a short shelf
life.
A cursory count of the reports prepared by various commissions, committees,
working groups, panels, task forces, etc, on all aspects of the economy
since
independence runs into thousands. This excludes the hundreds of seminars
and
articles like this one which are produced every month. In the field of
administrative
reforms alone there are more than 50 such reports - some of them full of
sensible
and practical suggestions. But despite this proliferation of analyses and
diagnoses,
the basic structure, processes, recruitment, training, career progression
and
incentives for the administration remain unchanged. Every new government
announces a dozen new packages of their own but when they leave the office
most
of the objectives set out in these packages remain unmet.
This long prelude is, in fact, meant to make a respectful plea. Prime Minister
Nawaz
Sharif, in his recent address to the nation, has announced some very critical
decisions. If these are fully and sincerely implemented they can help reverse
the
deteriorating economic performance of the last decade. What are these critical
measures which will make the difference? Let me recapitulate them for the
sake of
completeness of exposition.
First, the political leaders at the top will behave just like common citizens
and will be
subject to the same rules and laws as are applicable to everybody else.
If, for
example, they are unable to service their debt as agreed with their banks
or pay the
taxes on time and evade public dues they will yield their movable and immovable
assets to liquidate their liabilities. The state apparatus has so far been
used by
political leadership to accumulate personal assets and enrich themselves.
It will be a very healthy and desirable tradition if our leaders, including
the elites,
begin to enrich the state at the expense of their own personal and family
interests.
This will serve as a powerful signal for setting a different standard of
behaviour for
those occupying public offices throughout the country. Examples from the
top will
be emulated by others.
Second, the ruling party will not discriminate in taking actions against
those who are
found violating laws and regulations of the state. The recent moves to
apprehend the
defaulters of various kinds without any considerations of party affiliations,
familial or
kinship ties, personal friendships or loyalty augur well and should be
continued
doggedly. To many observers this appears too good to be true and the trick
is to
take this to its logical culmination. Understandably there will be uproar
and agitation
from among the party loyalists, family members and, in some cases, they
may leave
the party. But this risk is worth taking rather than abandoning this process
in the
mid-course.
Third, the prime minister's decision to vacate the posh secretariat and
the PM
House is a gesture of great symbolic importance. But in a society littered
with the
obscenities of opulence exhibited by a privileged few, symbols, images
and
perceptions do count for a lot. These decisions by the PM should now be
followed
through and all the federal lodges, the lavish residences occupied by the
governors,
chief ministers, ministers, senior civil and military officials, and heads
of public
corporations should be put to auction. The huge fleets of cars and jeeps
in the
government pools and in the public sector corporations should be disposed
of. The
salaries of all those affected by loss of these benefits should be adjusted
so that they
can make sensible choices about where to live, what to drive but save the
government from waste and extravagant expenditures. The symbolic value
of simple
and austere living (which is a fundamental tenet of our religion) far exceeds
the
paltry financial savings in public expenditures.
Fourth, the principle of equal burden of taxation from all sources of income
is a
sound principle which has been initiated but has not yet been practised.
The general
sales tax should be assessed and collected from all traders, manufacturers,
importers, etc, above a given threshold level of taxable income. Agriculture
incomes
have so far been used by a small upper class of landlords to conceal their
true
taxable incomes. This convenient conduit of leakage can be plugged by imposing
the
same threshold level of income for taxation purposes. The revenue collection
effort
has become so crucial that the newly formed Pakistan Revenue Service should
be
given full authority and powers without any political interference to assess
and
collect taxes and penalize those who fail to comply with the law. The flip
side is that
the accountability of the PRS should be as transparent and heavy as permitted
in a
civilized society.
Finally, the government has realized that a strong and dynamic agriculture
sector is
the cornerstone of a viable and equitable economy. This sector provides
maximum
employment opportunities, creates domestic demand for labour-intensive
industrialization, fuels export growth, substitutes imports of food and
other
agricultural products, generates backward (fertilizers, chemicals, tractors,
etc) and
forward (agro-processing, consumer goods manufacturing, etc) linkages throughout
the economy. Proper incentives and infrastructure to increase agricultural
production
will also reduce the incidence of poverty and income disparities. International
experience no longer supports the capital-intensive commanding heights
of import
substitution industrialization which has wrecked many economies of the
developing
world.
These five measures are most welcome provided they are put in place. The
biggest
fear is that the past will repeat itself. Despite the difficult economic
circumstances
faced by the country in the post-nuclear era, most commentators have observed
that nothing will change significantly and the habits and attitudes of
the past will
remain ingrained. In the weeks after the explosions the killings in Karachi
have
intensified, the divisive tendencies among the various provinces have become
sharply etched on the issue of Kalabagh Dam, the power struggle in Balochistan
has
become acute and the powerful and influential classes are busy exploring
all possible
means to somehow avoid the freezing of their foreign currency accounts.
About
$200 million are reported to have already left the shores illegally.
Are we so incorrigible and self-destructive that we cannot see the writing
on the
wall? I can only give the benefit of the doubt and hope that the leadership
has
woken up to the new realities of life, that they will sincerely and willingly
follow
through all these beneficial measures to their completion, that they will
not reverse
them under any kind of pressures and thus prove the prophets of doom and
gloom
wrong. They should review the progress of implementation at periodic intervals
and
take the public in confidence by disclosing the failures as well as the
achievements.
They should hold the ministers and heads of organizations accountable for
the
results. In other words, the management of the process is more important
than the
act of initial policy announcements.
It we are able to see that these measures are implemented in letter and
spirit the
credibility of the government will be restored, the sanctity of the institutions
re-established, the forces of cynicism and negativism will suffer a rude
shock and
the direction of the economy will take a turn for the better. The present
rulers will
earn a place in the history of Pakistan that they made the defence of the
country
impregnable while, at the same time, laid the foundations for a strong,
stable and
equitable economy. In doing so, there is no doubt in my mind, that they
will certainly
alienate a large number of their close party supporters and workers, friends
and
family members. Which path would they choose?