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Government’s one year in office: performance review

Mehmood-Ul-Hassan Khan

The democratic government of PPP and its allies has completed its first year in the office. Socio-economic conditions are still going downwards. Although the government claims its first year as success since March 2008 but it is still battling to contain the political and security meltdown threatening to engulf the rulers and people. Due to weak macro-economy condition the country approached to different international monetary agencies and friends especially IMF and WB and at last succeeded to avail an international bailout. The IMF approved a stand-by loan of 7.6 billion dollars. The inflation remained in the range of 20 to 27 percent since March 2008. It is seemed It is judged through its overall performance in its first year that democratic government was high on promises but low on delivering relief to people. The prices of most basic edibles had increased..Moreover, the GDP is estimated at 2.5 percent this fiscal year, down from 5.8 percent last year.

The PPP led government in the centre first announced highly projected package for the first one hundred days. Unfortunately, it did not work for the betterment of the general masses. High ratios of inflation, poor law & order, declining of stock exchanges, and food shortage are rampantly damaged the common people and business community too. The most recent increase Floor price verifies that saga still alive. According to SBP reports (2008), the prices of POL product has increased to 45 percent, diesel 66 percent, and food inflation 30 percent.

(a) Finance

Sectors Amount Percentage %
FBR Rs.552.5 billion 27
Worker Remittances $ 6.2 billion 18.7
FDI $ 2.327 billion 12.6
Exports 14.9
Imports 29.7
Source: The Ministry of Finance (March 2009).

According to the published data of the government (March 2009), the World Bank granted $ 3.4 billion aid for development projects. The government received $ 339.1 million strategic grant. The PPP led government singed different MOUs and agreement of worth $ 2810 million with ADB during this period. Since March 2008, the central government singed different projects of health and social development $384.7 million with UNO.

Despite the increase in the collection of the FBR the tax-to-GDP ratio continues to be low and has been hovering around 10-15 per cent. Political instability is debarring inflows of foreign investments in the country too. According to SBP’s data (March 2009), net foreign investment in the country took a deep plunge of $981 million or 34.2 percent to $1.892 billion during the first eight months of the current financial year. The country had received foreign investment worth $2.873 billion in the last financial year.

Furthermore, the SBP data (March 2009) inflow of foreign investment into the country continues to decline in the current financial year because of continued political instability and to withdrawal of money by foreign portfolio managers. It is also reality that the currency has lost 10 per cent against the US dollar since the beginning of the year. Trade deficit has jumped by 50 per cent this fiscal year. Standard & Poor’s has cut its rating by a single notch to a B with a negative outlook in May.

(b) Agriculture

According to the published data of the finance ministry (2009), the government increased the support price of wheat up to Rs.950 per 40 kg. The agriculture loans disbursements increased from Rs.200 billion to Rs.250 billion since March 2008. The government started mega project of Model Village with the help of ZTBL. The allocation of agriculture sector increased from Rs 15 billion to Rs.20 billion in PSDP. The government subsided fertilizers of worth Rs.27 billion. The supply of 20,000 Benazir tractors was made easy and smooth on subsided price. Benazir agriculture card was introduced and loan of Rs five million is being carried out in the different parts of the country. It also introduced crop insurance schemes. During this period the government initiated different meaningful programs and signed many MOUs and agreements with regional countries.

Continued food shortage and its security and storage capacity negate the high claims of the government. Furthermore, the different quarter reports of the SBP (2008) indicated that agricultural productivity remained very low since March 2008. The commodity prices have come down to one-fourth in the global market but their impact in the local market was very little. The pace of reduction in inflation was very low in Pakistan.

(c) Human resource development

Being the government of people, the PPP led government initiated different programs. The minimum wage per month increased up to Rs.6000. The minimum pension rate raised up to Rs.2000. Social security network was also increased. New industrial relations act was introduced and implemented. The government established different training institutions like NTB where 187 instructors were trained. The government is providing Rs.1000 per month to needy families under Benazir income support program. According to Pakistan, Planning Commission (2009), poverty rate has jumped from 23.9 to 37.5 percent. Pakistan ranked 98th out of 134 countries in World Economic Forum’s Global Information Technology Report 2009. It was a drop of nine spots from last year’s ranking of 89 out of 127 countries.

The PSDP has already been slashed by Rs 100 billion. In the first half of last fiscal year the government had released Rs 132.6 billion, which is 39.6 percent of total allocation of Rs 371 billion. Social sector suffered a major cut as out of Rs 100 billion cut in development spending Rs 79.5 billion. Education sector Rs 20 billion and health Rs 39.7 billion would be decreased for next year too.

(d) Power production and management

Due to diversified but integrated efforts of the government the power deficit was reduced from 3500 MW in January to 1600 MW. The period of load shedding was narrowed in textile sector from 8 hours to 4 hours per day. The UAE government granted power plant of capacity 320 MW. In order to come over the energy crisis the government started different projects. The government is working on different projects of water storage up to 11 MAF. The allocation of funds for Bhasha dam was finalized.

Despite the high claims of the government the energy crunch is getting complicated and the government even shelved the construction of Kalabagh dam. The power deficit in the national network during April 2008 was reported at 3,700 MW per day that widened to 3,730 mw in May. It has increase up to 4500 MW per day and the load-shedding period has already been increased. Furthermore, the latest 1.95 per unit increase in electricity tariff has made lives of common people and business community miserable. Majority of the people and business circles labeled it deadly, anti-people, anti-trade and anti-industry move. The ongoing saga of energy crisis is supposed to be one of the main hurdles since March 2008.

According to the Federal Board of Statistics (FBS) the large scale manufacturing (LSM) slumped by 8.91 percent in January of current fiscal year. In July-January of current fiscal, the industrial output was also in negative territory as it plunged by 5.35 percent over the corresponding period of previous year. Auto, textile, electronic, petroleum and other key sectors was the worst performer in the country.

Concluding Remarks

Democracy stands for socio-economic equality. It speaks for the merit, transparency, accountability and equal opportunity. Simplicity, rule of the law, justice, and pro-investment, people, and business policies would be vital for the revival of our economy. Political harmony stability and national harmony is the need of the hour.

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