Pakistan Poor economic condition-Who to blame

Pakistan is a developing country and its economy is the world’s 27th largest economy based on its purchasing power. However, the country remained impoverished due to internal political disturbances and negligible foreign investment, since independence.

With rise in developmental expenditure by Islamabad, the country’s poverty level reduced by 10% from the year 2001 to 2007. The economy grew between 2004-07 due to rise in GDP from 5 to 8%.

This was largely due to development in industrial and services sector irrespective of severe electricity shortfalls. However, the year 2007 witnessed a lot of political and economic instability leading to depreciation of Pakistani rupee. The growth of the economy was affected once again during the 2008 global economic recession.

As we analyze the economy of Pakistan we came to know that if we can correct just few things we can change the direction of the economy.

If we count the basic problems of Pakistan then we all know that it is poor law and order condition, increasing rate of inflation, lack of investment, huge budget deficits etc now can only talk of our problems will going to help our country? Or it would create a negative image of our country through out the world.

As per the new data released by the government about rate of inflation has dropped from 14% to 12%. In reaction of this State Bank has not lowered the interest rate because it thinks that it is only because of the temporary decrease in government borrowing from the State Bank .As per the report of a survey the Government is printing 2lacs/day from the State Bank just to cover his expenditures which would definitely increase the money supply in the market and lead to a more growing rate of inflation.

If we talk about the fiscal policy then it have two parts, first one is to make sure that by which ways government will raise its revenue and the second one is to draw the expenditures. The government supposed to balance its both sides. In case of imbalance the top priority of any government is to cut down the non-development expenditures to balance its budget or otherwise it would have to increase its revenue by increasing the tax rates and tax nets. Today the government has crossed all limits to hurt the purchasing power of a common man.

Despite of the worst condition of law and order we still have the potential to grow with a much better speed but the thing we lack is sincerity, ability and the political will of our leadership. Before talking about that what our government should suppose to do we have to talk about that so far where it has gone wrong?

The basic thing that all governments lacking is that instead try to see all sides of the game they all have just tried to strengthen their rule by temporary solutions. What we supposed to do is talk about some long term solutions as well as some short term. In that case we have to increase our Human Capital to increase our output in all sectors.

The term Human Capital means knowledge & our level of skills of the people. The next thing to do is to make our system transparent and make the system of accountability and prosecution stronger to build up the trust of local and foreign investors. If our system is corrupt no one will invest in our country.

Today government have again increased the prices of petroleum products which is the worst indirect tax in our country in a way that increase in the prices of petroleum will lead to the increase in the prices of all commodities as well in the rate of inflation.

This would make poor more poorer by decreasing their purchasing power. The question that if the government has not increased the petroleum prices in reaction of increase in its price in the international market then what it is suppose to do instead of that?

The answer to that question is, the government should not tax petroleum products that much because it affects all people in the economy but again what if the government have lower the petroleum prices it shows that it is the subsidy to the rich people as well which is inefficient for our economic system.

The answer of the situation is that government should keep the price of petroleum products high but it should suppose to give subsidies on the fuel only to the public transport which will make poor a slightly better off. The basic problem of our system is the inefficient divide of the tax burden. The burden should be divided among the people according to their financial strength to bear that burden.

We must have some tax reforms which may increase our tax brackets and implement new taxes like agricultural tax and tax every person who earns a good income and living a good life.

It would increase the efficiency of our economic system and make every one better off. This is not a rocket science or some new theory for our government it is the suggestion which is already given by some prominent personalities of the world like

Barack Obama, Hillary Clinton, David Cameron and many more. They all have told the leaders of Pakistan to get their aid properly they must tax the rich people of Pakistan instead shifting the whole burden to the poor.

We have some honest and prominent people who can totally change the direction of our economy in just few months but the basic thing is sincerity and the political will to bring that people on the stage.

Although I have mentioned many problems of Pakistan but I am the part of youth of the Pakistan which believes that we can write our destiny with our own hands and one day we will do so and make Pakistan one of the leading nations of the world.