The write is a staff member
The risks to Pakistan’s economy remain great, and so too does the need to focus on measures and steps taken by neighboring countries. It is high time for the planners and entrepreneurs to take cue from the recent measures taken by the Indian government to squeeze Pakistan economically.
The government on its part should listen to the genuine grievances of the private sector and if convinced issue necessary orders forthwith. The current practice of reaching an agreement with the private sector in the presence of bureaucracy, and delaying orders for some other date should be stopped. The bureaucracy leaves loopholes in such orders that create more issues than resolving them.
Indian media and think tanks have recently advised their government that instead of diplomacy the country’s leadership should use its economic strength to trigger a change in Pakistan. The Indian government seems to be heeding to its advice.
Sixty-year-old Indian monthly Sawarajya in its June 2016 edition has urged the Indian government to ban cotton exports to Pakistan that fetch only $381 million in exports but require substantial rail subsidy for cotton exported from Gujarat. Incidentally, the Indian cotton exporters have refused to honor confirmed letter of credits established by Pakistan spinners either through Wagah or the sea.
The magazine also asked the Indian government to extend interest subvention scheme for textile exports to cotton yarn and merchant exporters. The Indian government has declared Pakistan a target market for textile exports and provides additional subsidies ranging from three-seven percent on Indian textiles exported to Pakistan. The interest subvention scheme for textile exports should be extended to cotton. The writers also pressed the Indian government to provide subsidy to the Indian entrepreneurs who desire to acquire textile companies in India, Vietnam, and Uzbekistan, which compete with Pakistan for cotton exports.
Sawarajya article further asked India to continue extending MFN (most favoured nation) status to Pakistan irrespective of Pakistan’s stance to provide the same to India. The writers rightly pointed out that it does not make any difference to Indian trade. At the same time it provides India with a propaganda tool to show to the world that it believes in a prosperous Pakistan through enhanced trade. It asked India to erode the competitiveness of Pakistan’s economy through various measures, strictly prohibiting export of power to alleviate Pakistan’s crippling power shortages. Beef export should be banned to trigger social unrest in the country.
One unethical measure proposed is to export all items where there is high tariff in Pakistan to Afghanistan where duty is zero. This the writers say would promote smuggling from Afghanistan to Pakistan and hurt its economy and revenues. The magazine further hoped that smuggling could finance separatists in Baluchistan – whose representatives can handle distribution into Pakistan.
The media also advised India to cooperate with Afghanistan to complete hydel projects on the Kabul-Kunar river system. Kabul-Kunar contributes 16 percent of the total Indus river water available to Pakistan. Sawarajya also suggested ways to stop flow of remittances to Pakistan through a well planned move to replace Pakistani workers in the Gulf.
India is building water projects on Jehlum, Chenab and Indus in violation of international treaties apart from building huge $120 billion storage capability (national river linking project) of 178 cubic kilometre water from north to south that has environmental repercussions.
Sawarayji has rightly pointed out that as Pakistan has opened its market for majority of Indian products there is no need to push for the MFN status. Pakistan has not benefited from the MFN status granted by India because Indians have erected numerous non tariff and technical barriers to trade. It is impossible for Pakistani businessmen to break those barriers hence exports to India remain restricted. The Indian exports to Pakistan on the other hand are rising steeply as Pakistan has not erected any barrier.
Bias against Pakistan is not limited to Indian media the apex trade body of India the Federation of Indian Commerce and Industry (FICCI) on the one hand is a vocal proponent of free trade with Pakistan but at the same time it advises its government to squeeze Pakistan. In 2010, when the trade with India lobby was active in Pakistan, FICCI in its detailed advisory report on Pakistan had asked its government to use all means to control Pakistan, including surprise military strikes, denial of air space rights to Pakistani aircrafts and stopping river water from going into Pakistan by building dams. The report pointed out that water is a matter of life and death for Pakistan and the country could be brought to its knees by this tool. The report was downloaded from FICCI website by the Lahore Chamber of Commerce and Industry. A protest was launched with FICCI for its double standards of advocating trade ties with Pakistan and advising its government to destroy it. After this the report was withdrawn from the website. Copies of that report are available in Pakistan.
Indian businessmen desire to use Pakistan as a market for their products. All the Indian delegations that visited Pakistan when there was warmth in ties came to sell their products. The buyers of Pakistani products were almost nonexistent in their trade delegations. Renowned Indian businessmen Godrege, during his visit to Pakistan as a member of Indian businessmen a few years back, had said that he desired to market his products in Pakistan. When asked would he consider establishing a manufacturing facility in Pakistan, he said in case of success, he would establish a facility inside India near the Wagah border.
The Indians are also trying to isolate Pakistan regionally. They have encouraged Afghanistan to diversify its trade conducted through Karachi to Bandar Abbas port in Iran. They are not only facilitating but also financing the construction of Chabahar deep sea port in Iran in order to undermine more economically feasible Gwadar deep sea port.
Even otherwise the Indian trade regime is very restrictive. The overall trade restrictiveness index (OTRI) compiled by the World Bank, based on tariffs and NTB’s, takes the high value (the highest in Asia) of 46.7 for India with NTBs accounting for 24.5 percent of the index value (the highest in South Asia). Pakistan, in contrast relies mainly on tariffs to regulate trade. The OTRI for Pakistan is 22.2 with NTBs accounting for 5.1 percent of the index value.
Our planners should take notice of these developments and devise policies that keep our industry and agriculture growing. In agriculture, for instance, in our pursuit for free trade we have marginalised our farmers. Although free trade in agriculture can help mitigating supply shortages and the resulting price hikes, the large input subsidies given by the Indian government to agriculture gives Indian farmers an unfair advantage over their Pakistani counterparts and is therefore a major cause of concern. A comprehensive assessment of the subsidies received by Pakistani and Indian farmers is needed. Agriculture is a risk prone business. When production is higher, the prices of produce dip appreciably. When the production is lower than demand the prices rise and compensate the farmers for past failure. However, whenever there is a slightest shortage of any vegetable in Pakistan, the government allows duty free import of heavily subsidised Indian vegetables. The prices at which these vegetables are imported are much lower than the cost of production of those vegetables in Pakistan as evaluated by the agricultural departments of the provinces. The result is that Pakistani farmers have lost the incentive to grow vegetables.https://www.thenews.com.pk/magazine/money-matters/132620-Neighbours-and-beyond
Comments are closed.