Denial and bad governance

LAHORE: There is no room for improvement if the state brushes aside its own statistics and rubbishes the credible global reports on its performance. One needs to take statistics seriously to plan better economic policies.

You are running away from reality by boasting that corruption in Pakistan was eliminated in the first 90 days of PTI rule, after the latest Transparency International report that revealed otherwise. If what our chief executive said is true then we will have to continue tolerating corrupt practices in government contracts, corruption in the power sector, recurring huge losses in the public sector companies and petty corruption at the lower levels as well.

If the government continues to brag that the loans that it has taken in the last 40 months were to service the loans taken by the previous governments then it ought to explain why the foreign loans have increased from $96 billion left by the previous regime to $127 billion now.

We are eating foreign exchange at a fast pace. We take loans of two or three billion dollars at high interest rates every four to six months because we consume the previous loans in that period.

If the loans were taken to pay back the previous loans, the total loans should not have increased. One can argue that the new additional loans were taken for development work. Here again the government fails to show any new development projects.

The development expenditure during the tenure of this regime has in fact declined drastically. The domestic loans of this government have also increased to record levels. Austerity is the buzzword of this government. The budget outlay has increased every year much more than the additional resources that were generated.

Austerity means putting a stop on unnecessary expenditures. Is the electricity consumption of government offices lower than what it was in the previous regime? The answer would be negative.

Have the landline telephone bills curtailed or increased? The fuel consumption of government departments increased or declined? A look at every budget document would reveal that there is a constant increase in the expenses under these heads. The mobile phone bills of government servants have reached new heights.

Our prime minister and his ministers live as lavishly as the rulers in the previous regime. The reduction in budgets is on paper only. Maybe the expenses of the huge entourage of vehicles accompanying the VIPs is paid by other departments.

This government has facilitated the exporting sectors and results are out there. But this government has also marginalised the domestic industries catering to the needs of the domestic consumers.

This is the reason that the process of de-industrialisation in the country continues unabated. The large-scale manufacturing sector posted a growth of 3.5 percent in the first five months of this fiscal.

When industry flourishes, it averages over 7 percent and goes up to 13 percent. High-power rates have booted the small and cottage industries out of production. Those that are surviving are most probably stealing power. To top it all, imported items are better and cheaper despite regulatory duties and massive decline in rupee value.

There is no evidence to back up the government claim that the wages of labour have increased by up to 40 percent. Labour wages are always subject to the principle of demand and supply.

If there is shortage of labour, the wages increase and if the labour is surplus, the wages either stay put or decline as many laborers compete for few jobs. Every city and town in the country has distinct places where laborers sit on the road hoping to get work.

They are masons, carpenters, plumbers, electricians, painters, and unskilled laborers vying for any laborious job. The government functionaries should pay visits to these sites and see how many get engaged. Since there is abundant supply, the average engagement rate of labour varies from one week a month to 15 days, depending on the demand on a particular day. In this scenario how can we expect the employer to pay more or a labourer bargaining a higher wage?

Anyone with a rudimentary knowledge of the economy knows that the prices increase more when inflation is high and are relatively stable in low inflation. Inflation during the 41 months tenure of this regime has averaged over 10 percent (any inflation above 5 percent is considered high).

This has brought miseries to the population at large. The price hike was much higher than the average growth rate of 2.3 percent (1.9 percent plus -0.2 percent plus 5.37 percent) in the first three years of the regime.

The average incomes cannot increase above the growth rate (even if all get the same increase). How can the rulers claim that the public at large is better off than in the previous regime?