Democratic governance and economic development in
Pakistan

M. Ali Siddiqi describes the considerable disconnect in Pakistan about the relationship between democracy and economic development

It is widely held due to incessant propaganda that democratic governance in Pakistan has failed to achieve economic development and various reasons are put forward to justify this stance. To begin with, it must be appreciated that such stance is traditionally adopted by the arbitrary forces in Pakistan that hold a firm grip over many aspects of national life in the country. It should therefore be appreciated that there is a peculiar drift in this narrative aimed at undermining the capacity of democratic governance to pair itself profitably with economic progress. It is otherwise quite clear that the process of economic development in Pakistan suffers from tremendous structural flaws and many of them have been created by arbitrary governance the country has to endure for many decades.
It is also noticed that the toughest resistance a democratic dispensation comes across during the process of removing such structural inadequacies is mounted by the same arbitrary forces that wait in the wings predatorily waiting to pounce on any amelioratory measure undertaken by the representative parliamentary governance. The recent example is the pressure put on the current dispensation to shift the burden of inflation on to the common man by increasing cost of fuel and energy though there are many other methods of arranging for the subsidised amount required to be paid for not increasing the subject prices.
It is so easily ignored by people that owing to the efforts aimed at creating some financial space for economic development, the elected government was destabilised and finally its head was removed on specious charges. The aim of that government was to restrict the unproductive expenditure on the pretext of ensuring fool-proof security for the country knowing fully well that most of the causes fueling unrest are the result of a self-conceived security paradigm that has very little to do with the actual situation on the ground. The arbitrary forces in this context went to the extent of replacing of mainstream political forces by a third force created on quasi-democratic basis but that again failed to provide answer to the question that why economic development stalls during democratic governance.
It is imperative to analyse the underlying causes of the unsatisfactory economic performance of successive democratic dispensation with a view to discern the causes determining this situation. This analysis also reflects the economic disaster faced by the current dispensation though the arbitrary forces have already started to blame it for the present situation the country is facing reflecting that they may not allow it much space to rectify the structural maladjustments the economic system suffers from. This attitude has already taken toll on the ability of the current dispensation to address the serious economic issues with complete freedom and with appropriate financial choices.
It must be kept in mind that after the 1990s, a period termed as the wasted decade, the 2008-2021 years have also witnessed democratic governance but the economic progress levels have gone down progressively. The average economic growth of the country has remained almost three per cent and it was one percentage point lower than the preceding decade. It is important to note that the average growth rate was 4.4 per cent during the 2000s when the country was under the direct military rule for the better part. However the growth remained suppressed during the democratic governance as the economic policies pursued by all three governments led by PPP, PMLN and PTI had different priorities though the basic tenet governing these policies were liberalisation and greater reliance on market forces.
In this process the PPP kept itself focused on developing the rural economy leading to a net capital transfer from the urban to rural sector and a rise in demand for cars, motorcycles and fast-moving consumer goods in the countryside. Moreover, property rates in second- and third-tier cities and leasing rates of farm land, particularly in Punjab, were said to be indicative of the priorities of PPP government. PMLN came on the crest of the wave generated by the trading and commercial classes and expectedly reversed the trend. It championed the cause of free trade and eased regulations as much as possible. The PMLN however clashed with the deeply entrenched interests of the arbitrary element and was forced out of power and all that was done right was turned into wrong by the head-on drive launched by the PTI whose main thrust was to cancel-out everything by terming it as nothing but corruption.
After the premature departure of PTI it is too early to comment on the decisive thrust of PTI economic thinking though it is now known for groping in the dark. All through the process, despite pronunciations to facilitate the private sector the industrial base did not expand anywhere close to its potential, posing limits on export possibilities. The pace of capital formation also remained slow. The development and pro-poor spending remained less than desired during the democratic decade. The fiscal policy failed to mobilise adequate resources, income gains were absorbed by consumerism and national savings rates remained depressed. The big current account deficit retarded the government’s ability to invest in human development projects.
For most of the time the economic growth rate remained anaemic despite the mega-bilateral China-Pakistan Economic Corridor (CPEC) deal, which was signed in 2014 and channelised over $28bn investment in Pakistan’s broken energy and logistic infrastructure. Moreover, external-sector vulnerabilities, particularly a burgeoning trade deficit, forced all three elected governments to turn to the IMF for support to avoid sovereign default. In all three instances however the results were unsatisfactory as IMF withdrew support to PPP half way citing deviation from the agreed path and only a little over $4 billion was transferred out of the pledged $7.6 billion. The PMLN also wriggled away though it successfully completed the programme.
PTI struggled to function with the tough conditions laid down by IMF and at the end of its tenure the IMF programme was virtually suspended. The most horrendous aspect of the PTI governance was the unprecedented inflation that has virtually eaten into the very fabric of the country. In this context it must be appreciated that both the PPP and PMLN governments managed to curb inflation and kept it on a manageable level at around 2.5 per cent. This position however radically changed during PTI’s government and it has crossed almost 15 per cent making life miserable for people. Otherwise also, throughout its stay in office PTI failed to deliver on any of its economic promises and caused an economic downturn that may take considerable time to contain and then reverse.
It is quite apparent therefore that democratic governance has failed to direct more resources to close social sector gaps and strengthen economic institutions. The fault of the perceived failure of democratic governance to bring in economic prosperity actually lies in the dichotomy of functional arrangements in Pakistan whereby the arbitrary forces apply pressure to pursue policies contrary to what prudent economic principles had laid down. The result is frequent policy interventions by such elements completely derailing the priorities designed by democratic governance resulting in chaos and mayhem as is witnessed currently. TW

M Ali Siddiqi is a writer who contributes to leading periodicals