Measures for economic relief



December 3, 2022

Measures for economic relief

The Measures for economic relief conditions are getting worse by the day as the unbridled inflation has made life miserable for the people of Pakistan. It appears that the real decision makers of the country arbitrarily decided to raise the basic benchmark of the purchasing ability of the rupee to Rs.500 thereby implying that the prices were allowed to increase to such level which they actually have. This increase represents a jump of many times in the shortest possible time frame in recent memory. It is also acknowledged that the price hike never comes down in Pakistan therefore the people are now condemned to bear its brunt. The current state of economy suffers from tremendous lack of a consensual economic planning as all official agencies operate in isolation and consider cooperation with other agencies as breach of the authority entrusted to it.
The incumbent government appears anxious about the issue as it knows that it will face the wrath of the people and not the high officials of the state who have been perennially saved any public censure. It is now reported that the government has now made a policy decision not to increase the tax burden on the people but this resolve is liable to change as the government cannot resist pressure applied from certain quarters. Instead of imposing more taxes, the government is now venturing to find out-of-the-box solutions to give relief to the people. However, the problem is that there is hardly any fiscal space available with the financial policy makers to provide much needed relief to people and they continue to suffer. It is also quite obvious that the policy makers cannot escape these commitments made with the international financial lender.
It is also evident that any ameliorative measures taken are required to remain in line with IMF that is quite tough in its dealings. The financial planners are left with no option but to look into the possibility of preparing short, medium and long-term economic roadmap in the areas of energy, construction, agriculture, tourism, social sector subsidies, price stability, small and medium enterprises, foreign remittances and public private partnership. In this context, any relief proposals to be prepared are required to relate to enhancing the temporary relief facilities, expanding lending to small and medium enterprises (SMEs) and enabling demand growth through expansion of consumer lending and encouraging housing finance. The economic planners should try to evolve a consensus on macro-economic stabilisation measures and reform agenda for an inclusive and sustained economic growth after taking all stakeholders on board.
One proposal is to strengthen blue economy, need for road-to-market infrastructure development, import substitution, mechanized farming, gender-sensitive employment initiatives, harmonising tax and tariff structures, climate change, SMEs, and streamlining circular debt and other power-related issues. The planners should also try to put on fast track the utilisation of Public Sector Development Programme (PSDP) and to emphasise that the government needs to change PSDP mechanism by authorising relevant ministries for spending as currently the ministries appeared to have no spending capacity. In addition the planners are required to emphasise continuation of economic policies impressing upon the government to adhere to policies once formulated. A sustained economic policy takes particular care of economic growth, prices, interest rates and central banking, taxation and FBR, agriculture, energy social protection and governance.
The government should also devise ways to address the energy issue with a view to obtain means of sustainable sources of energy. The sustained economic growth is the outcome of continuous energy supply so that some relief is provided. The relief measures would therefore include sustained and inclusive economic growth, employment generation, price stability mechanism, tax reforms, housing sector, ease of doing business, pension reforms, rationalisation of subsidies, food security, revamping power and energy sectors, social protection network, health and improvement in overall governance. These are crucial measures as the country lacks emphasis on these matters. The inclusion of private sector is the order of the day but it should be undertaken with the concepts of mutual benefit. The government usually goes to private sector for limited goals and such an exercise is self-defeating in content. The result is that there is a clear disconnect between the private sector and the government and both of them appear to be working on cross purposes.
Any broader economic plan aimed at providing relief measures should encourage import substitution by monitoring habits of usage of people and to provide goods suitable to replace the costly exports. Another long-term measure could be mechanised farming that would increase the yield of crops as well as freeing much needed manpower to be employed in the service sector. Providing employment opportunities could be achieved by attracting the workforce towards the service sector that is more profitable in both short and long term. SMEs are one of the most promising sectors of the economy but government usually pays lip-service to this crucial area. TW


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