More than half a century has passed but our economic planners have failed to comprehend the basic reasons obstructing the process of development. Some of the major reasons obstructing the economic development of Pakistan are:
In the beginning, foreign aid proved helpful and many a mega project got completed. But this easy way of fostering economic development did not last long. The tragedy that had obstructed the desired development was the fact that aid inflows were misused and tied up with certain political motives. We aware for the fact that in the earlier years of Pakistan, the element of grants-in-aid was greater than loans. With the passage of time, this trend reversed. Grant-in-aid now got transformed in to loans at high rate. The result of this cheap aid had now got confronted with the emergence of heavy public debt. This financial situation slowly but steadily became unfavorable to Pakistan. Debt servicing now accounted as % of GDP 46.07 for domestic debt and 51.09 for foreign debt (2002- 03). Pakistan has successfully negotiated a rescheduling of its external debt with the Paris Club in December 2001. This has been the third rescheduling since January; 1999.Rescheduling of the older loans has remained the only last hope to come out of the critical financial crisis. But here again the consent from the IMF and World Bank is the primary condition. Now the situation has reached a stage where neither Pakistan\u2019s exports earnings are increasing nor the revenue receipts showing any tangible improvement. The fault is not with the lack of needed management, human and material resources but the way they are being mobilized.
Basically, devaluation is a measure to correct a fundamental disequilibrium in a country\u2019s balance of payments. This may be achieved as a result of restraint on imports by making them quite expansive and the expansion of exports by making them cheap. In our case, we export primary commodities and processed material whose supply elasticities are
rather low in the short run. On the other hand, our imports consist of essential capital goods, intermediate inputs (including fuel and fertilizer) and sometimes-basic consumer goods. That is why devaluation has not resulted in resolving our BOP problem. Furthermore, not only exports of Pakistan but whole economy have been doubly affected by the events of September 11 during the outgoing fiscal year. Side by side with the unsatisfactory mode of economic management found in selected areas, lack of implementation of plans, inadequate preparatory work on projects, and lack of evaluation of plan progress there are other factors which too are standing as an obstruction in the way of self sustaining process of development.
The policy of privatization has been announced by Altaf saleem (chairman of the privatization commission, on January 22 1991), which offered 105 industrial units, four bank, and two development financial institutions for sale. This may be true that the objective of privatization is to raise direct foreign investment from the sale of 49 units of public sectors but we have some reservation against the privatization policy. There are certain profitable ventures like the PTCL, PSO, HABIB BANK Ltd etc. The major caveat being the fact that if PTCL or other such institutions are sold out to foreign bidders, the ultimate result may not prove helpful to Pakistan. As we have already seen in the case of power projects\u2019. The gains from the generation of electricity are being more than offset by the high level of profit remittances to the foreign investors. Another point going against selling of public enterprises is that most of these units will not earn any foreign exchange to meet the cost of profit remittances.
The incidence of caloric poverty after having decreased from 27% in 1986-87 to 23% in 1990-91 deteriorated to an estimated 29% in 1999-2000. The prime reason for the increase has been the low rate of economic growth, which has been accompanied by rising unemployment (about 3.25 million persons were estimated as unemployed in 2002 compared to 3.18 million in 2001. unemployment rate was 7.82 in 2002), income inequality and cost of living, social deprivation indicators, reflected in low access to food, land, health care, education, drinking water and sanitation facilities were correspondingly affected.
The population is estimated to have reached 149.03 million (population growth rate is 2.10%) in 2002-2003. Pakistan is now facing a serious problem of more food for more mouths, more families to house, more children to educate, and more people looking for gainful employment, millions more are migrating from the countryside to major cities in search of jobs, thus creating a raising pressure on urban infrastructure and giving rise to Katchi Abaadis.
and rampant inflation. An objective assessment of economy of Pakistan for the last 56 years is the crying need. Every ruling government had been claiming success stories. On the other hand, opposition to the ruling governments has all along been harping on the theme of economic failure. We all wish to know the truth of our economic performance of the past and have a yearning desire for a prosperous future.
While emphasizing the above major factors, one is reminded of the Adam Smith factors of production (land, labor, capital and management). The key to development lies in these four fundamental factors:
While looking at some of the reforms being introduced by the present government, one is hopeful that things are likely to be improved on the basic factors needed for the acceleration of economic development. All reforms are well meaning but their implementation may not be easy to be carried out for long time period. One of the much- needed requirements to attain this objective is political stability. Political stability help bring economic stability. Let us hope that the coming decade will be a period of political and economic stability under sincere leadership making Pakistan a healthy and prosperous country.
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