Economic Survey of Pakistan 2008-09 tells us that the economy is crumbling, even if it hasn’t collapsed fully. We all understand that. Like previous such documents, this year’s survey also tells us about the huge gap between the tall budgetary targets our planners set each year and what they actually achieve. What do they hope to gain by making unrealistic claims? We remain in the middle of a huge economic crisis and yet don’t know who to blame for it: the global recession, economic mismanagement of the previous government under Gen Pervez Musharraf or the deteriorating security environment. The government argues that all three factors have contributed to the country’s economic slide. True. But it must also acknowledge its failure to take timely action to stop the decline, which did complicate the situation.
Like many previous years, the government has missed almost all the targets for the outgoing fiscal: growth has slowed down, tax revenue collection is feared to fall far short of the target, private investment is down, inflation is yet to be controlled, external debt liabilities are rising, foreign investment is falling, exports are dwindling, and so on and so forth. The massive cut in development spending to rev up the macroeconomy has hit the public healthcare system hard. Education too remains underfunded. Millions are still without piped water and other public services. The economic infrastructure is in a shambles and the energy crunch is taking its toll on industry. If it weren’t for agriculture, we might have posted negative economic growth this year. As a result, hundreds of thousands of jobs have been lost and millions pushed below the poverty line.
Yes, there have been certain improvements in some areas during the last one year. The fiscal deficit has also been brought down a little. Nevertheless, the improvements in the fiscal picture achieved at the cost of social and economic development cannot be sustained for very long. The current account gap has narrowed a bit. But the possibility of rising imports and stagnating exports and foreign inflows continue to pose a serious risk to the balance-of-payments position. There is little possibility of sustainable improvements in the economy unless the government decides to tax the big fish irrespective of the source of their income. At the same time it will have to learn to live within its means. But will it? We’ll soon know when the budget for the next year is announced.