By Javid Husain in The News, Aug 16, 2022
The writer is a retired ambassador.
Pakistan’s current political, economic and social crises call for introspection. Politically, the country has been badly destabilized because of weak and incompetent governments, which are the products of political engineering and electoral rigging.
Economically, we are in a mess marked by grinding poverty, high unemployment and rising inflation. As a society, we have become extremely intolerant and deeply polarized.
Our security and foreign policies lack realism and a strategic sense of direction. Pakistan’s decadent elite – consisting of senior members of the civilian bureaucracy, military establishment and judiciary, top politicians, feudal aristocracy and leading businessmen, who play a dominant role in policymaking – are directly responsible for the mess in which the country finds itself currently.
Historically, military governments spanning almost half of Pakistan’s history and the establishment’s alleged involvement in political engineering and electoral rigging when it was not directly ruling the country, have prevented democracy from taking roots in the country besides undermining rule of law, encouraging corruption due to lack of legal and political accountability, and promoting political victimization, intolerance and extremism.
But it would be unfair to put the entire blame for the country’s political woes at the doorstep of the establishment. Many unscrupulous politicians and senior members of the civilian bureaucracy and the judiciary have played an equally negative role in national affairs due to their greed and incompetence.
On the economic side, the country – because of gross mismanagement spanning several decades – is passing through perhaps its worst crisis evidenced by high current account and fiscal deficits, widespread poverty, and high levels of unemployment and inflation. Our average annual GDP growth rate has been woefully low over the past two decades. It was estimated to be 4.5 per cent in the first decade of the 21st century. The average annual performance in the next decade was even worse.
Compared with Pakistan, the economies of India and Bangladesh have performed much better during these two decades. Consequently, Pakistan’s GDP per head was estimated to be $1,798 in 2021-22 as against the comparable figures of $2,601 and $2,362 for India and Bangladesh respectively.
What is extremely disturbing is that whenever our governments try to accelerate the GDP growth rate, they run into unsustainably high current account deficits, forcing them to apply breaks and lower the growth rate. This happened in FY2017-18 when the GDP growth rate of 6.1 per cent led to a current account deficit estimated to be about $19 billion.
In 2021-22 again, the GDP growth rate of six per cent caused a current account deficit of $17 billion. The main reason for this phenomenon is Pakistan’s low national saving rate, which is estimated to be 11.1 per cent as against about 30 per cent for India and 36 per cent in the case of Bangladesh. Thus, the profligacy of Pakistan’s decadent elite leading to a low national saving rate is the main factor responsible for its low GDP growth rate, recurrent high current account deficits, and rapidly growing external debt.
Pakistan’s economic problems are further aggravated by the Pakistani elite’s unwillingness to pay their due share in the form of taxes, resulting in an extremely low tax-to-GDP ratio. In 2021-22, the tax-to -GDP ratio was as low as nine per cent against the average comparable figure of about 15 per cent for developing countries. Due to the low tax-to-GDP ratio, the net revenues of the federal government are estimated to be Rs4,904 billion while the total federal expenditure is expected to be Rs9,502 billion, leading to a huge fiscal deficit of Rs4,598 billion in 2022-23.
A low level of tax revenues leads to high fiscal deficits, deficit financing resulting in inflationary pressures, and rapidly mounting public debt. High levels of fiscal deficits also reduce the government’s ability to undertake developmental projects besides starving the private sector of funds needed for investment, slowing down economic growth.
Thus, Pakistan’s low national saving rate and tax-to-GDP ratio are the main factors responsible for slow economic growth, widespread poverty, high levels of unemployment and inflation, and rapidly growing domestic and external debts. It is nothing less than outright hypocrisy on the part of the Pakistani elite, who are responsible for these problems partly due to their conspicuous consumption and unwillingness to pay their due share of taxes, to blame others for Pakistan’s economic woes.
Unfortunately, the country also currently suffers from political polarization, social intolerance and religious extremism worsened by ignorance and lack of education. Here again the blame lies at the doorstep of Pakistan’s ruling classes who have historically assigned low priority to education, providing a fertile breeding ground to extremism at the cost of social cohesion and intellectual enlightenment. The culture of political victimization prevalent among our political parties and their unwillingness to resolve through mutual discussion and debate the challenges confronting the country have further aggravated our political and economic problems.
Finally, Pakistan’s foreign and security policies leave a lot to be desired as shown by the historical record since the 1950s. Foreign policy is the art of the management of external affairs by marrying the desirable with the possible, keeping in view the ground realities and their likely future evolution.
In our case, practitioners of foreign policy have often overemphasized the tactical as against the strategic, and short-term as against long-term approaches to the formulation of foreign policy. In the process, Pakistan’s vital national interests were grievously harmed as evidenced by Pakistan’s flawed foreign policies of the 1990s, whose adverse consequences continue to haunt the nation.
Our security policies have been rarely, if at all, part of a well-formulated grand strategy which could bring into a coherent whole the country’s political, economic, security, and foreign policies. The Kargil operation was a prime example of that.
The nation cannot afford to continue treading on the self-destructive course that it followed in the past few decades. We must learn from history and formulate a grand strategy for the future which will rid the country of its prevalent exploitative and oppressive system of governance, put it on a trajectory of sustainable rapid growth, and ensure a dignified place for it in the comity of nations.
https://www.thenews.com.pk/print/982612-pakistan-s-decadent-elite
Pakistan’s decadent elite: op-ed
By Javid Husain in The News, Aug 16, 2022
The writer is a retired ambassador.
Pakistan’s current political, economic and social crises call for introspection. Politically, the country has been badly destabilized because of weak and incompetent governments, which are the products of political engineering and electoral rigging.
Economically, we are in a mess marked by grinding poverty, high unemployment and rising inflation. As a society, we have become extremely intolerant and deeply polarized.
Our security and foreign policies lack realism and a strategic sense of direction. Pakistan’s decadent elite – consisting of senior members of the civilian bureaucracy, military establishment and judiciary, top politicians, feudal aristocracy and leading businessmen, who play a dominant role in policymaking – are directly responsible for the mess in which the country finds itself currently.
Historically, military governments spanning almost half of Pakistan’s history and the establishment’s alleged involvement in political engineering and electoral rigging when it was not directly ruling the country, have prevented democracy from taking roots in the country besides undermining rule of law, encouraging corruption due to lack of legal and political accountability, and promoting political victimization, intolerance and extremism.
But it would be unfair to put the entire blame for the country’s political woes at the doorstep of the establishment. Many unscrupulous politicians and senior members of the civilian bureaucracy and the judiciary have played an equally negative role in national affairs due to their greed and incompetence.
On the economic side, the country – because of gross mismanagement spanning several decades – is passing through perhaps its worst crisis evidenced by high current account and fiscal deficits, widespread poverty, and high levels of unemployment and inflation. Our average annual GDP growth rate has been woefully low over the past two decades. It was estimated to be 4.5 per cent in the first decade of the 21st century. The average annual performance in the next decade was even worse.
Compared with Pakistan, the economies of India and Bangladesh have performed much better during these two decades. Consequently, Pakistan’s GDP per head was estimated to be $1,798 in 2021-22 as against the comparable figures of $2,601 and $2,362 for India and Bangladesh respectively.
What is extremely disturbing is that whenever our governments try to accelerate the GDP growth rate, they run into unsustainably high current account deficits, forcing them to apply breaks and lower the growth rate. This happened in FY2017-18 when the GDP growth rate of 6.1 per cent led to a current account deficit estimated to be about $19 billion.
In 2021-22 again, the GDP growth rate of six per cent caused a current account deficit of $17 billion. The main reason for this phenomenon is Pakistan’s low national saving rate, which is estimated to be 11.1 per cent as against about 30 per cent for India and 36 per cent in the case of Bangladesh. Thus, the profligacy of Pakistan’s decadent elite leading to a low national saving rate is the main factor responsible for its low GDP growth rate, recurrent high current account deficits, and rapidly growing external debt.
Pakistan’s economic problems are further aggravated by the Pakistani elite’s unwillingness to pay their due share in the form of taxes, resulting in an extremely low tax-to-GDP ratio. In 2021-22, the tax-to -GDP ratio was as low as nine per cent against the average comparable figure of about 15 per cent for developing countries. Due to the low tax-to-GDP ratio, the net revenues of the federal government are estimated to be Rs4,904 billion while the total federal expenditure is expected to be Rs9,502 billion, leading to a huge fiscal deficit of Rs4,598 billion in 2022-23.
A low level of tax revenues leads to high fiscal deficits, deficit financing resulting in inflationary pressures, and rapidly mounting public debt. High levels of fiscal deficits also reduce the government’s ability to undertake developmental projects besides starving the private sector of funds needed for investment, slowing down economic growth.
Thus, Pakistan’s low national saving rate and tax-to-GDP ratio are the main factors responsible for slow economic growth, widespread poverty, high levels of unemployment and inflation, and rapidly growing domestic and external debts. It is nothing less than outright hypocrisy on the part of the Pakistani elite, who are responsible for these problems partly due to their conspicuous consumption and unwillingness to pay their due share of taxes, to blame others for Pakistan’s economic woes.
Unfortunately, the country also currently suffers from political polarization, social intolerance and religious extremism worsened by ignorance and lack of education. Here again the blame lies at the doorstep of Pakistan’s ruling classes who have historically assigned low priority to education, providing a fertile breeding ground to extremism at the cost of social cohesion and intellectual enlightenment. The culture of political victimization prevalent among our political parties and their unwillingness to resolve through mutual discussion and debate the challenges confronting the country have further aggravated our political and economic problems.
Finally, Pakistan’s foreign and security policies leave a lot to be desired as shown by the historical record since the 1950s. Foreign policy is the art of the management of external affairs by marrying the desirable with the possible, keeping in view the ground realities and their likely future evolution.
In our case, practitioners of foreign policy have often overemphasized the tactical as against the strategic, and short-term as against long-term approaches to the formulation of foreign policy. In the process, Pakistan’s vital national interests were grievously harmed as evidenced by Pakistan’s flawed foreign policies of the 1990s, whose adverse consequences continue to haunt the nation.
Our security policies have been rarely, if at all, part of a well-formulated grand strategy which could bring into a coherent whole the country’s political, economic, security, and foreign policies. The Kargil operation was a prime example of that.
The nation cannot afford to continue treading on the self-destructive course that it followed in the past few decades. We must learn from history and formulate a grand strategy for the future which will rid the country of its prevalent exploitative and oppressive system of governance, put it on a trajectory of sustainable rapid growth, and ensure a dignified place for it in the comity of nations.
https://www.thenews.com.pk/print/982612-pakistan-s-decadent-elite
Published in Pak Media comment