Infrastructure deficit

LAHORE: Debating what actually growth rate will be this year is a useless debate. Whatever the growth rate, we should see whether it improves quality of life, how the institutions have been strengthened or the governance improved.

Growth is all about improved human development, creative cities, community engagement, energetic youth and vibrant markets. If these attributes have improved, we should celebrate even low growth, but even high growth is useless if there is despair in society, the youth is disgruntled, markets are static, governance level is down and the institutions generally are weak and the quality of life has deteriorated. As far as the GDP growth this year is concerned it looks like there is not much fudging. The only question mark is the wheat production figures.

Only a month back the federal government was contemplating importing three million tons of wheat after estimating the size of the standing wheat crop. After harvest, it has been reported that there was a bumper wheat crop and there would be no need for imports.

One can hope that the preliminary crop estimates are based on ground reality and not for boosting growth figures. Experts doubt the authenticity of government estimates because in 2018-19 this government declared in the Economic Survey and in the budget that the growth was 3.3 percent. But after all the facts were finally assimilated, the actual growth turned out to be 1.9 percent.

Last year it was negative due to Covid-19 impact. This year even three percent growth would have been welcomed as the World Bank, the International Monetary Fund, and even the State Bank of Pakistan estimated much lower growth in 2020-21. Let us hope that this time the growth estimates are near reality.

Growth is always subject to the proper functioning of the institutions. The new finance minister has expressed disappointment on the inability of the Federal Board of Revenue to increase taxes up to the desired level. The increase in revenues hardly covers the increase that automatically comes with inflation and higher growth rates.

Questions are also raised on the Competition Commission of Pakistan, due to increased cartelisation in recent years.

The Oil and Gas Regulatory Authority has failed to reign in the two gas distribution companies that fail to control the unaccounted gas losses. Moreover, it has not taken any meaningful action on production and use of inefficient gas burners, heaters and geysers. The decanting of LPG cylinders has become a norm although it resulted in huge loss of life in the past.

National Electric Power Regulatory Authority allows regular increase in power tariff without bothering to penalise the huge distribution and line losses not heard of anywhere in the civilized world. The regulator is not supposed to pass on the inefficiencies particularly power theft to the consumers. The power losses have slightly increased instead of declining in the past three years bringing misery in the lives of the consumers.

The governance level has continued to deteriorate this year. Bureaucracy is dysfunctional. The rates of essential items continue to increase. Routine permissions needed by citizens are delayed beyond reason. In real growth, higher inflation is accompanied by higher incomes as well.

But in growth that benefits only a few, the general public bears the brunt of higher inflation, while growth benefits only a few. The quality of life has deteriorated in the last one year. Incomes remained static. Healthcare facilities became much costlier.

Both the opposition and the ruling party are bad mouthing each other on economic statistics. One must admit that there have been signs of recovery in the economy. However, we can argue that the growth is exclusive and not inclusive.

The present regime takes pride in bringing down the current account deficit but ignores the fact that it was done at the cost of development. They blame that in the last year of the PML-N government, the current account deficit had soared to around 40 billion.

What they ignore is the fact that the entire CPEC and its related infrastructure projects were funded through that deficit. The completed power projects are paying back as well. The road network would have started paying back had this government succeeded in establishing even one special economic zone on this corridor.

This government is accumulating loans only for consumption and has totally neglected development needs of the country. This infrastructure deficit would haunt our economy for years to come.