Sunday, June 12, 2005

"Musharraf's new budget" by Hasan Askari Rizvi

Here is a timely analysis by Dr. Hasan Askari Rizvi (taken from Monday's Daily Times). He writes:

"It is interesting to note that the combined federal allocation for health (Rs 9.43 billion) and education (Rs16.22 billion) is less than the increase in defence expenditure from last year’s budget. The budget for 2004-05 allocated Rs 193.92 billion to defence which was raised to Rs 223.5 billion in the budget for 2005-06."

Here is the full column:


Daily Times - Site Edition
Monday, June 13, 2005
VIEW: The federal budget and human security —Dr Hasan-Askari Rizvi
The budget is geared primarily to serve the people of the first Pakistan. It offers them opportunities to engage in economic activities and to make money. The people of the second Pakistan are advised to wait patiently till the rewards of the activities of the people of first Pakistan trickle down to themThe presentation of the federal budget to the National Assembly on June 6 has started a highly opinionated debate in political circles. The official circles are overplaying the positive aspects of the budget and describing it as the biggest gift of the Musharraf-Aziz government to the nation. The opposition is taking the opposite view. Its leaders are pointing out the lopsidedness of the budget, which they say is based on concocted figures to hide the serious deficiencies in economic management. They take exception to Pakistan’s dependence on economic assistance from the international financial institutions and several Western countries. Such polemics can continue forever because the budget does have positive as well as negative aspects. There are serious problems with the budget but this does not mean that it has no good news about Pakistan’s economy. The downward slide of the economy as witnessed after the nuclear explosions in May 1998 has been checked and, since 2001-2002, the economy has shown significant progress. However, it is difficult to decide who should get the major credit for this recovery: Pakistan’s economic managers or the US and other Western governments that have made a determined effort since September 2001 to pull Pakistan out of its economic predicament? What matters most about a budget is its underlying philosophy and the over-all direction. The most crucial question is who benefits most from it? The statements coming out of Islamabad are optimistic. These indicate that Pakistan’s economy has “taken off” and Pakistan is now well set on the road to prosperity and development; the fruits of growth have started reaching the common people whose lives will soon experience an economic transformation for the better. Interaction with the people in the lower-middle to the lowest strata leads to a very different view of the economy. Islamabad’s optimism is not reflected here. Poverty appears to have increased. Most people in the lowest strata of the society talk of unbearable economic pressures. Some complain that they cannot provide two daily meals to their families. Poverty, underdevelopment, severe economic pressures and alienation from state institutions dominate the scene.It seems that there are two Pakistans. One — the Pakistan enjoying Islamabad’s attention — consists of the affluent classes: big business and industry, senior civil and military officials and those who draw special grade salaries and perks. It includes the people who have made a fortune in the real estate business. This is a world of affluence, prosperity and abundance. Optimism about the security of their personal and family’s future pervades these sections of the populace. Their children study either in private sector institutions in Pakistan or in the United States and the UK. This saves them from the acute crisis of quality in the state-run institutions, especially the state universities. The other Pakistan belongs to the people struggling for economic survival. Their main challenge is how to meet the basic needs, i.e., food, shelter, healthcare and personal security. If their children seek education, it is in the decaying state-run educational system. Pakistan’s economic recovery has very little to offer to the people belonging to the second Pakistan. The budget is geared primarily to serve the people of the first Pakistan. It offers them opportunities to engage in economic activities and to make money. The people of the second Pakistan are advised to wait patiently till the rewards of the activities of the people of first Pakistan trickle down to them. Economic activities of the big business and industry, they are told, will create new jobs and opportunities for them. There is some resemblance between Pakistan’s current capitalist economic policies and the economic development model pursued by Ayub Khan in the mid-1960s. Pakistan registered impressive economic and industrial growth during the Ayub years. In 1968, the government celebrated the Decade of Development (1958-68) to mark its achievements and massive propaganda was launched to highlight them. The major flaw in Ayub’s economic development strategy was that it had nothing much for the poor. They were advised, as they are being told now, to wait for the trickle-down of the benefits of aggregate economic growth. The standard argument was that inequality was integral to early stages of economic development. Once enough business and industry was established employment opportunities for the poor would increase. The difficult but temporary phase would soon be followed by an era of prosperity. This did not happen. As a matter of fact, the trickle-down philosophy and advice to the poor to be patient has worked in no large-population developing country. Ayubian economics increased the disparities between various sections of population and regions of Pakistan.A similar situation of growing poverty and disparities exists today despite an impressive economic growth. However, three major differences give some breathing space to the Musharraf government. First, international financial institutions and some Western states are providing funds for social development, including poverty reduction, and institutional capacity building. This assistance is meant to provide a cushion for Pakistan’s return to privatisation, free trade and globalisation, a new and updated version of capitalism. Second, remittances by Pakistanis working abroad, especially in the Middle East and the UK, to their families in Pakistan are helping ease economic pressures on a large number of people. Third, voluntary charities and the support from the extended family provide some relief to the poor. These factors have dampened many people’s zeal for agitation. Further, a large number of unemployed youth have taken to religious orthodoxy and militancy. This has diverted their energies to ideological issues. As some of them get demobilised, economic deprivation and poverty are likely to have implications for their social and political disposition.The poor sections of population cannot be left to the mercy of the market forces. They cannot be asked to wait while the rich gets richer and till the industrialists install more industry. The state must make corrective interventions in the economic domain in support of the under-privileged section of the populace. The federal budget needs to make more resources available for societal development and must adopt effective measures to ensure human security. Currently, debt repayment, defence expenditure, law and order and administration take up most of the resources. There is a tendency to under-spend the development allocations but the state almost always ends up over-spending the defence allocations. One wonders what will happen to Pakistan’s social development programmes once international financial assistance is not available. It is interesting to note that the combined federal allocation for health (Rs 9.43 billion) and education (Rs16.22 billion) is less than the increase in defence expenditure from last year’s budget. The budget for 2004-05 allocated Rs 193.92 billion to defence which was raised to Rs 223.5 billion in the budget for 2005-06. The defence sector also gets resources through other means. These include the pensions of military personnel, which is shown as civilian expenditure, covert expenditure on defence-oriented projects, income generated by the military through its commercial and industrial activities, and foreign loans and grants for military training and purchase of hardware. Pakistan can be described as a country where poverty of resources for human needs is in sharp contrast to the affluence under which the military operates. The budget priorities will have to change drastically if the gap between the two Pakistans is to be bridged.Dr Hasan-Askari Rizvi is a political and defence analyst

http://www.dailytimes.com.pk/default.asp?page=story_13-6-2005_pg3_2

0 Comments:

Post a Comment

<< Home