Is “Daronomics” performing well? Or the economic strategies and policies followed by Finance Minister Ishaq Dar, really working as they did in his last tenure when he was performing the same role with the same job descriptions? Likeness opinions are roaming the market.
Is “Daronomics” performing well? Or the economic strategies and policies followed by Finance Minister Ishaq Dar, really working as they did in his last tenure when he was performing the same role with the same job descriptions? Likeness opinions are roaming the market. Moving forward in this article, I am presenting you with a four-year comparison of key economic indicators during the three previous governments. Before starting the comparison, we should accept that the incumbent government has taken the sinking economy from the previous regime into its own hands. And with the capability and devotion of Dar and his team. This sinking economy is now in some anchored shape. Other than that, there is nothing solid to yearn for a return of the PTI. Delicate choices were postponed until the price became intolerable; the economy was mismanaged. It is unreasonable to hold the PDM solely responsible for the current economic woes; the PTI is equally at fault. The pursuit of the corrupt continued to be an obsession with no positive outcomes for Pakistan and no results at all. Valuable time that could have been used to improve governance was wasted in pointless filibustering. There was also too much bluster against all state institutions at one point, including the Army, the Judiciary, the Media, the Election Commission, and the Bureaucracy. Finally, no effort was made to improve governance.
The first performance indicator analyzed is the rate of economic growth. This indicator shows whether the economy has expanded by producing more goods and services or contracted due to lower output. This indicator favored Dar’s performance, as GDP growth during his tenure was 4.7 percent, compared to 3.5 percent and 2.8 percent during the PTI and PPP periods, respectively. Among the productive sectors, a somewhat higher growth rate was achieved during the PPP tenure in agriculture, despite the damage due to floods in 2009–10. Industrial growth and the expansion of services proceeded faster in the five years of the PML-N government. Indeed, these growth rates are all low by historical standards. Moreover, PML-N’s previous government collected Rs 2,255 billion in revenue in its first year and Rs 3,844 billion in its last year (FY 2018). The PTI government, on the other hand, started its first year with negative growth in revenue collection by collecting Rs3,829 billion, while revenue collection in its fourth year remained at Rs6,148 billion. Currently, during the first six months of the financial year 2022–23, revenue collection increased by 17.5 percent to Rs3,429 billion compared to the same period of the previous year. It seems the current year’s target to achieve Rs7,440 billion would be nearly achieved.
Another key indicator of the performance of a government is its success in restricting the rate of increase in prices, especially of food items. Indeed, overall prices of goods and services have increased globally after Covid-19, when the world again came back to its routine. If we see our commodities, particularly our food items, as an agriculturist country, it’s alarming and should be a concern for the government to oversee the hike in the prices of those items that we are growing and producing on our own lands. The key administered prices are the prices, respectively, of wheat, motor spirit, and HSD oil. They generally reflect the movement in import prices, but when these are unusually high, downward adjustments can be made in tax rates. Alternatively, when the global prices of petroleum products are low, the petroleum levy is increased. In PPP tenure, the government made a quantum jump in the procurement price of wheat by 52 percent to raise the net incomes of farmers and boost production. As opposed to this, the PML-N government maintained a tight lid on the wheat price. Overall, it had considerable success in keeping the increase in food prices over their last tenure below 4 percent per year. More recently, there has been a big escalation in the rate of increase in food prices to almost 13 percent in 2021–22.
The trade deficit narrowed by 59.75 percent on a YoY basis to $1.461 billion in March 2023, compared to $3.630 billion in March 2022. Dar’s efforts to control trade deficits are commendable. Indeed, all the major currencies in the world performed negatively against the US dollar. Regarding our rupee’s depreciation, illicit means of currency transfers and smuggling of foreign reserves were the basic reasons behind the weakening of the currency. Pak-Afghan border smuggling is not new. New York-based media outlet ‘Bloomberg’ has revealed in its latest report that around $5 million is being smuggled from Pakistan to Afghanistan on a daily basis. It says that the smuggling of dollars provides “some support for the squeezed economy after the US and Europe denied the Taliban regime access to billions in foreign reserves.” Directing the LEAs to work on dismantling the network of smugglers should be a priority for the current regime. Indeed, it’s also reflected in the initiatives taken by the finance ministry to suppressant this smuggling. Now hope for the tangible outcomes.
The writer is an economic analyst
