- Cutting waste or levying taxes? By A. B. Shahid
- Lo! our rulers By Anwar Parveen
- Letters to FreePakistan
- HumorWise
- Issue of the Month: Budgeting for the elite; and, Faking the law
- Basic social services to all
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Should a robber break into my house, and, with a dagger at my throat, make me seal deeds to convey my estate to him, would this give him any title? Just such a title by his sword has an unjust conqueror who forces me into submission. The injury and the crime is equal, whether committed by the wearer of a crown or some petty villain.
[John Locke, The Second Treatise of Civil Government (1690)]
The liberal who cries out for broad welfare measures and state control lacks inherent faith in people and in our free society. He treats them as though they were some type of chronic disease. As a result his approach has been one of continuous medication by the state.
[L.C. Michelon]
Government! Three fourths parasitic and the other fourth stupid fumbling — oh, he conceded that man, a social animal, could not avoid having government, any more than an individual man could escape his lifelong bondage to his bowels. But Harshaw did not have to like it. Simply because an evil was inescapable was no reason to term it a "good." He wished that government would wander off and get lost!
[Robert A. Heinlen, Stranger in a Strange Land (1961)]
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CORRECTION:
In the previous newsletter (June 1, 2010), the article titled Revolution or Rule of Law was authored by Nisar Khan, not by Nasir Khan. The error is regretted.
By A. B. Shahid
[This article first appeared in Business Recorder on June 01, 2010]
The fact that while budget-makers do the unenviable job of levying taxes, they can't ensure their optimal use results in missing the targets set in the budgets. But the budget-makers must accept part of the blame there for. In December 2004, the Ministry of Finance (the budget-maker) committed to the World Bank that it will undertake a 5-year Tax Administration Reform Programme (TARP), and received $100 million for completing this job.
The aim was to increase documentation, and through that, raise the tax-to-GDP ratio on a credible and non-disruptive basis. But very little was done in this context rendering controversial the levy of the VAT. Missing the budgetary targets was blamed on the apathy of the FoDP, though the cause was blatant resource waste. As for the FoDP view about the capacity and integrity of our institutions, it was spelled out (most undiplomatically) by the terms of the Kerry-Lugar law; Senator Kerry darkened it further via his latest demands for tightening the pre-conditions for disbursement of aid under that law.
To assess the consequences of rejection of the VAT regime (expected to provide over 50 percent of the fresh taxes) and to avoid missing the budgetary targets yet again, it was prudent to delay the budget to ascertain the extent to which the VAT regime could be enforced so that the proposed taxes appeared realistic. But speed - the killer - is being prioritised over prudence, which raises serious doubts about the regime's intentions.
Instead, rumours are that two versions of the budget - one with, and the other without VAT. This implies doubling the budget-making workload. If two versions of the budget are what the Finance Ministry has opted for, while it must be commended for the extra effort, the work overload is bound to dilute the focus and quality - both critical ingredients - of the budget.
Indications thereof are that the budget projections assume the GDP to grow by 4.5 percent and inflation to fall to 8 percent from its current level of 13.26 percent; some hope given the current global and domestic scenario! Rumours are that the GDP figures of FY09 have been 'revised' to portray higher growth in FY10 and lend credence to the projected GDP and tax revenue growth in FY11.
Irrespective of who insists on it - WB or the IMF - imposing the VAT regime is risky given the kind of groundwork done by the FBR. This move (instead of containing resource waste) may fail and force higher government borrowing, which already stands at 60 percent of the GDP, and interest payments thereon consume over 40 percent of the tax revenue.
That the sovereign debt of many countries now exceeds their GDP is a flawed defence for higher debt. Unlike Pakistan, most of such countries have a credible record of generating the repayment capacity, not seeking debt restructuring. Besides, these countries are aggressively cutting their current expenditure.
Recently, Spain's parliament resolved to cut the salaries of its speaker and members, as well as judges, mayors and municipal officials by 10 percent. Parliamentarians, receiving additional benefits for their roles as legislative officers and party spokespersons took a 12 percent cut. We heard nothing of the sort in Pakistan, and the much-publicised 'austerity plan' too hasn't been implemented.
People accuse the incumbent regime of gross mismanagement - allegations corroborated by none other than Pakistan's Auditor General. In South Asia, the IMF quiet rightly pointed a finger at Pakistan for minimal public disclosures about the use of tax revenue but, pitifully, the same IMF insists on additional taxation, neither stricter state accountability nor austerity, and in the process appears to side with an unpopular regime.
According to the latest budget estimates, the projected total tax revenue is Rs 1,667bn implying an increase to the tune of Rs 287bn over its target of Rs 1,380 set for FY10. But fresh taxes (disclosed thus far) amount to only Rs 132bn net of relief worth Rs 5bn. Where will the remaining Rs 155bn come from, is yet unclear.
In this backdrop, levying fresh taxes can't appear credible unless the budget justifies them by guaranteeing their efficient use in activities that deliver collective benefits, especially for the under-privileged. Ironically, until FY10, in the tax revenue, direct taxes that align tax incidence with ability-to-pay accounted for 39 percent and indirect taxes that impact all taxpayers regardless of their ability-to-pay accounted for 61 percent.
This tax mix may worsen after imposition of the VAT because in the proposed taxes (Rs 132bn), the share of indirect taxes is 66 percent (VAT Rs 70bn and Federal Excise Duty Rs 17bn). Yet, the budget-makers promise a 'pro-poor' budget, and that the VAT (at 15 percent) will add just 2 percent to inflation - a gross under-estimate. What they also don't admit is that this move will push up the already crippling bank lending rates.
The IMF's report on Middle East, North Africa and Pakistan opines that, although out of the danger zone, countries in these regions must increase the competitiveness of their economies and rapidly cut unemployment. Pakistan can do so only by cutting the cost of doing business, impliedly, by containing inflation, reducing interest rates, reducing power supply cuts, levying minimum taxes, and focusing on improving tax collection.
Latest reports suggest that fresh taxes also include hikes in WHT on banking transactions, excise duty on locally produced electrical appliances, and presumptive tax on goods transport. Discouraging documentation, undermining import substitution, and increasing the cost of doing business is hardly worth the insignificant benefits these taxes may yield.
The projected VAT contribution is one-fifth of the revenue (Rs 323bn) wasted in FY09 courtesy 'irregularities' in federal offices. The irregularities increased further in FY10. Remember the flawed tenders, frauds in custom duty and sales tax collection, and losses of PSML, PIA, PR, WAPDA and the rest. The question is "should resources be saved by cutting waste and corruption, or raised afresh by levying more taxes during a recession?" During the past two years, parliamentary conduct did not manifest fiscal responsibility (as per the bill passed in 2005); the coming budget must insist on it and implementation of the 'austerity plan' latest by December 2010. [Courtesy Business Recorder]
By Anwar Parveen
I am a common man and you are special;
Who made you special?
I had my dreams and hopes;
You promised to fulfil them.
I voted for you;
I made you special.
Today, you sit in your air-conditioned cars and rooms;
I walk on the roads in the scorching heat.
You enjoy all the luxuries of life;
I do not know how to survive and fulfil my needs.
I am burdened with the worries of today;
You are not bothered or concerned.
I am a common man and you are special;
But just think for a second;
The time will pass and I will wait for tomorrow;
In the next phase;
I will be special and you common;
What are you going to expect from me?
The same, or something different?
[Daily Times]
[RE: REVOLUTION OR RULE OF LAW (FREEPAKISTAN NEWSLETTER # 114)]
[Nisar Khan]
SIR YOU EMAILE ME AN ARTICLE WITH THE TITLE "REVOLUTION OR RULE OF LAW" BY NASIR. SIR THE ARTICLE HAS BEEN WRITTEN BY ME AND MY NAME IS NISAR KHAN NOT NASIR KHAH. THE ORIGINAL TITLE OF THE ARTICLE IS "ARISTOTLE VIEWS ON REVOLUTION AN D PAKISTAN". THE ARTICLE ALSO CARRIED MY EMAIL ADDRESS. SIR I HOPE THAT THE RECORD WILL BE SET RIGHT.
[EDITOR’S NOTE]
Due apologies for the mistakes! But we did change the title of the article to bring out the message of the article, i.e. revolution or rule of law. In the next newsletter, 'corrections' will be included.
TIME TO WALK THE TALK
[Hem Raj Jain, Noida, (U.P.), India]
This refers to the letter by Bashy Quraishy of Denmark and Editor’s note in response to it in May, 1 [Two Pakistans (FreePakistan Newsletter # 113] edition of Free Pakistan Newslettter (FPN).
Though, FPN is not pessimist and tries to seek solutions of the myriad problems of Pakistan by analyzing the situation realistically, nevertheless at some point of time one has to walk the talk and not to keep waiting merely for others to take the burden and pains of creativity.
Because the problems in Pakistan are similar to problems in India hence the various problems (which have been mentioned in this and earlier editions of FPN, including the problem of farm sector and mass unemployment) can be solved as given below and for which you and your friends and supporters should take the initiative and action:-
(1)- In rule of law unless judicial system works properly nothing can be achieved and for the proper functioning of judicial system I have given some suggestions in detail in May, 1 edition of FPN.
(2)- The mankind has romanticized the agriculture sector historically, but now situation has changed world over due to manufacturing and service economy. Small land holdings (as in India at an average of less than 1 Hectare) do not leave most of the farm owners and farm labors even at minimum respectable livelihood.
(3)- Therefore farm should be converted in large holdings (by cooperative farming etc.) and labor laws should be applied to agricultural sector too.
(4)- As far mass unemployment (as is in India too, where half of the population is below or hovering around poverty line because of unemployment / underemployment) is concerned it should be born in mind that the problem of contemporary world especially of developing world like SAARC counties can not be solved merely by trickle down effect of ‘free market economy’ (which is an euphemism for private capitalism). But it will be solved through ‘total capitalism,’ which is a sum total of private capitalism as well as - State capitalism, which will be used for funding employment guarantee program.
(5)- But nothing is more important than the monetary discipline, which is being violated by all the countries of the world, including Pakistan, as given below:-
(a)- Currency (High Power Money M0) is printed without equal asset back up. Here it is important to mention that asset back up need not be metallic like gold, silver etc, under physical possession of money issuing authority (federal / central / reserve bank) but it can be real estate also under constructive possession of money issuing authority.
(b)- Though federal and state governments are allowed to borrow against the security of their consolidated funds under article 166 and 167 of the Constitution of Pakistan (in India under Article 292 and 293 of the Constitution of India) but these governments borrow money much more than the worth of their consolidated funds (thus running fiscal deficits many times worth their consolidated funds and which is unconstitutional).
These monetary indiscipline of federal and sate governments can be got corrected through Supreme Court of Pakistan,
(6)- Islam has great advantage in its value system which does not grant esteem to interest earning. But for this, the Muslim countries will have to device a mechanism where the savings of the people not only can be invested in business / industries but also people have control over those enterprises in which they give equity capital. This can be done only when e-voting is allowed in limited companies. In contemporary world where electronic banking is done through ATM, credit card, debit card etc; there is no reason why all the share holders are not allowed to vote in general body meetings of the companies. [In India also all the share holders are not allowed to vote at general body meeting (only share holders physically present are allowed to vote), with the result Ambani brothers with only 27% share holdings could bifurcate the Reliance].
(7)- But nothing can be achieved in any country unless its education and health sector function on the basis of social consciousness and in this field entire Christian world and Hindu India has failed miserably. Regarding Muslim world there is a great possibility of developing socially conscious health and education sector mainly due to simple reason that Islam has history of ‘zakat’ and ‘wakf’. But Muslims in India have not been able to do any thing in this regard though it can easily be done by modernizing and integrating the ‘zakat’ and ‘wakf’ as given below:-
(8)- Schools, colleges and hospitals should be run on the basis of (a)- capital (assets) on charity basis and (b)- revenue (fees) on no profit no loss basis.
(9)- Once these “charity based educational and health institutions” are installed and made functional in Pakistan then the same can be achieved in other SAARC countries also especially where Muslims are in considerable numbers. It goes without saying that I am prepared to work on social service basis for this project (of such education and health institutions) any where in any SAARC country.
It is hoped that the team and patrons of FPN will not render themselves merely to the level of drawing room politicians and instead will become instrumental and pioneer in ushering Islamic societies into socially responsible group, commensurate with the contemporary practices of the civilized mankind.
[RE: [CRDP] FW: VIEW: DO WE NEED SECULARISM?
[Dr. Syed Ehtisham, Blog syedehtisham.blogspot.com]
Secularism is not against religion. In early Christianity priests who lived in towns were called secular priests. In Pakistan, secularists have never wanted the government to act in a "areligious way". All they have demanded, echoing Jinnah is that religion and state be kept separate. This is misinformation, due to lack of historic perspective or deliberate, I would not like to say.
[RE: DO WE NEED SECULARISM?]
[aziz_yadayada]
Very thought provoking article on ideological, philosophical conflict but natural rights can not be confined to religious or secular proponents without seeing ethical humanism as most common value therefore I would suppose the conflict is much rather driven by religious fundamentalist who view secularism in derogatory way as opposition to God, I am no constitutional expert but articles of rights and freedoms are meaningless if minorities and women are not accorded the same privilege what difference does it make if you are left or right, secularism does represents the neutral space where both can operate, I would think secularism is much needed space not be confused by outright atheism which is itself highly moral precept of natural rights, thanks for sharing, here is a related article that might interest some.
[RE: PAKISTAN'S CRISIS - ITS ROOTS (FREEPAKISTAN NEWSLETTER # 112)]
[Barun Mitra, India]
A very pessimistic prognosis!
But I also think, the issue of ethical behaviour is related to the institutional incentives operating in society. If interest groups capture the institutions, and use it for private gain, then to expect ethical behaviour may not be very realistic.
Ethical practices have to be a necessary condition for successful functioning in a society. Ethical behaviour cannot be sustained for long if it is to be only seen as a lofty ideal, but not of practical necessity.
For me the concept of Ram Rajya is very illuminating. It depended on the generosity and sense of justice in the ruler. By that token, the seed of its own destruction was held within it. Because it did not build much of an institutional mechanism, rather relied on the enlightened nature of the ruler.
In the Road to Serfdom, Hayek had written that we need institutional mechanisms, so that if the worst person came to power, he would be able to do least harm. If people are expected to be moral and just, then no institutions would be necessary.
[EDITOR’S NOTE]
Agreed, totally. That is why I focus on the present judiciary with which hope of reviving some institutions lies. But, isn't this a realistic prognosis also?
FEDERAL BUDGET – FAKE PROMISES
[Kadar Khan]
The federal budget for 2010-11 is with a total “outlay” of Rs 3.259 trillion. One should ask if Mr. Shaikh is proud of pitching this "total outlay.” In simple layman terms a con job! The federal budget! The fake promise they know cannot fulfill it.
Which of the following points from the editorials is debatable? Poor economic indicators, desperate need of more revenue and the budget has not taken any measures for recovery.
As expected, the Economic Survey for the outgoing financial year released on Friday showed poor economic indicators due to a host of factors but mainly due to war on terror and acute energy and water shortages. (Pakistan Observer)
Finance Advisor Dr. Abdul Hafeez Shaikh presented Federal Budget for 2010-11 with a total outlay of Rs3.259 trillion with 685 billion deficit before the parliament on Saturday (The Daily Mail)
“There are other, still more fundamental issues here. The budget indicates the desperate need of the state for more revenue. But we must also question the priorities of planners. As things stand today, tinkering with figures that reflect, as the finance minister put it, ‘fragile’ economic recovery will not get us very far at all. Perhaps, most of all, we need a vision; a vision for the future of our country and its diverse people.” (The News International)
The Budget has not really taken any measures that would cause a recovery to take place, or even give people confidence that one would in the near future. (The nation)
The budget outlay of Rs3.259 trillion (including provinces) is about 11 per cent higher than the Rs2.897 trillion budget for the outgoing financial year. (The Dawn)
No doubt we needed a vision for our country yesterday and its diverse people who could have gotten the country out from this hole.
PAKISTAN'S PARLIAMENT FULL OF FAKE DEGREE HOLDERS
[Isa Daudpota]
Starting in the second quarter of this decade I wrote almost 20 articles (see http://tinyurl.com/266gl9s) highlighting institutions and the fake degree holders who held high positions in Pakistan.
The Chairman of Pakistan's Higher Education Commission (HEC), Dr Atta-ur-Rahman was provided evidence about people and institutions that were involved in this racket. He and the HEC turned a blind eye to the problem. The Election Commissioner did the same; he failed to respond to my two letters that asked for all parliamentarians be asked to have their degrees verified by the HEC.
This appeal has been repeated in a recent joint letter that friend Naeem Sadiq and I wrote to both the Supreme Court and the Election Commissioner. Neither has so far responded. The lack of responsiveness of the courts to public interest issues and the emasculation of their power by successive governments is a key impediment to Pakistan's progress.
Today the issue has come to a boil, not because of the appearance of higher ethical standards but due to internal rivalries among those who seek power and their use of the media and the courts to expose the fake degrees of their potential rivals.
It is ironic that a deposed dictator unwittingly created a litmus test that has now exposed the crooked parliamentarians in Pakistan! We have now seen the smoking gun.
The question now remains whether the courts and the political system is willing to throw out forever all those who managed to enter parliament by duping the system.
MIGRATION OF CLANS
[Mahabat Khan Bangash, Peshawar]
According to Usman Manzoor’s report in The News dated 8th May, the SC of Pakistan has taken suo moto notice of Syrian envoy’s school fiasco on the application of a sacked ex-principal of Pakistan International School of Damascus (PISOD). Funny stories have been revealed regarding firing of the previous faculty and replacing it by appointing his first family member and other close kens by Ambassador Aminullah Raisani on hefty packages, by enhancing their salaries from 100% to 300%. Yet the report is silent about the appointments of Malis, Maaies, Peons and sweepers in the school.
The activities of the Ambassador give impression that in future many Ambassadors of this country would be migrating along with their clans to the countries of posting. What a shame that instead of improving the deteriorating image of this country the Ambassador is indulged in nepotism and favoritism, and transferring the germs of dirty corruption of this countries to other nations.
FREE PAKISTAN NEWSLETTER
[Robert H Appleby (Bob), Durham, NC, USA]
I receive a copy of the on-line FreePakistan Newsletter. I always find it interesting and frequently forward some article to others.
After reading the latest one, I had a question about your readers. Do you know how many people receive the newsletter? Or, what most of the political leanings are? I have a friend who is a Pakistani National, but is now an citizen of the USA and he was the one who told me about the newsletter.
Thank you for responding and publishing the newsletter.
YET ANOTHER DÉJÀ VU
[Mahabat Khan Banagash, Peshawar]
I agree with the views of Brig.(r) A.Q.Anjum expressed in his letter in the News Post dated 14th June, but at the same time totally disagree that 1965 war was initiated by India. The writer remained a senior officer in Pak Army who must know the facts behind 1965 war. It was individual act of the then military dictator Gen. Ayub Khan who was incited by some sycophants and advised him to conquer Kashmir to become national hero and then a life president of this country. But the general forgot to keep into consideration the weight of the Indian power that attacked our Eastern borders under compulsion to decrease pressure in Kashmir. Therefore, 1965 war was absolutely futile and without any national cause, which brought great disaster to this country. This also gave a chance to India to take revenge in East Pakistan crises.
I shall request the honorable writer to be fair and impartial in his views because the News Post columns are read across the world and the readers abroad are shrewder to know the realities.
[FEEDBACK] LOVE PAKISTAN]
[nadeemaziz sent a message using the contact form at http://www.hum-azad.org/contact]
we are living free Pakistan. But every person could help for Pakistan to built and strong Pakistan
long live Pakistan.
FEW QUESTIONS
[Anwar Jalal, Peshawar]
Do the powers that matter in Pakistan support Taliban? What are the reasons of this policy? What are the advantages and disadvantages of such policy? Does the US aware of such policy? What are the impacts of it for USA? Can US thwart such policy and how?
RE: FEW QUESTIONS
[Anwar Jalal, Peshawar]
Some days back i sent few questions to some pakistani political writers for their wise comments Unfortunatly. I did not recieve reply from any one except Jan Assakzai. I here by forward his wise comments of learned Jan Assakzai for the enlightment of intellectuals.
Do the powers that matter in Pakistan support Taliban?
Pakistan believes that Afghanistan falls within its sphere of influence so it needs to have a leverage in Afghanistan. It needs to create a leverage through some proxy ie, Mujahiddin or Taliban. Other countries like Iran also does the same thing in Afghanistan, Iraq, Bahrain, Kuwait, Saudi Arabia,in Lebanon through Hezbollah,in Palestine through Hammas, Egypt and elements of Pakistan shai population. China in order to pressurize India supports Maoists and Nexalits in North East of India and Bhutan. India supports Tibet rebels to have a leverage over china and also possibly elements of Baloch insurgents.
Pakistan has Kashmir proxy for India so this is how varying powers try to maintain influence in other countries through proxies.
What are the reasons of this policy?
Pakistan's hinterland is the east of Indus Basin: Punjab and Sindh with coast- it is the core of Pakistan and Pakistan's army feel threatened from India as India has only Thar desert between Punjab and Indian establishment ( Pakistan army has 6 army garrisons in Punjab out of 9). Since core of Pakistan is so close and a small stretch of land to India, it needs strategic depth: in defense parlance, it needs extended operational area so as to absorb any attack and counter attack the enemy. That depth can only be achieved by proxy in Afghanistan dominating the government enough that it can heavily lean on Pakistan in case Islamabad needs it.
What are the advantages and disadvantages of such policy?
First: This policy is meant to secure the east of Indus basis(n) while Pakhtun territories are used as buffer between the civilized Pakistani core: Punjab and Sindh, and the chaos in Afghanistan.
Secondly: keeping Pakhtun border territory strategically unsecured so as to reposition proxy in Afghanistan in case Islamabad does not have dominating influence in the government.
Third, in order to have influence in other country you have three options: military, economic and political thrust. Pakistan is using military thrust (supporting armed proxy: Mujahiddin now Taliban by all means) while India has deployed political and economic levers i.e, it has highly invested in the country over the last 9 years or so.
Fourth, Pakistan has earned billions of dollars because of its proximity with Afghanistan and leverage in that country and in process advance the interest of other powers like the US, UK/Europe, Saudi Arabia, now Turkey as well. Otherwise Pakistan does not have internal resources to keep itself economically afloat, and would have already gone bankrupt.
Fifth, military regimes survived because of Afghanistan policy as they were supported by the west against USSR, now al Qaeda, despite being hated by the West.
DISADVANTAGES
Sixth, establishment islamised the whole society creating monsters like sectarian, minority killings through hatred by madrassas with Saudi money.
Seventh, it cultivated extremisms in Pakhtuns areas on both side of the border to contain Pakhtun nationalism and progressive movements and thoughts so that they do not oppose Afghan policy; though the latter survived in Pakistan because of its history over 100 years but it was simply defeated in Afghanistan's Pakhtun belt.
Eighth, The establishment have promoted of jehadi proxy as policy tools in Afghanistan and India but now some of its members have adopted their ideology: Col Imam, Hameed Gul, Baig etc and thus promoting extremism in Pakistan at the.
Ninth, the Pakhun territory has become " Islamic Emarat of Waziristan" in Wazristan, while in other areas, militants have simply overwhelmed the state authorities killing every body who question their way of conduct.
Tenth, the state writ in Pakhtun areas is only on important urban population centers (and in rural areas there is not state writ except it holds the strategic points and transportation centers.
Eleventh, proxy strategy has increased the role of the army and has gone beyond any political or civilian insight working against democracy by controlling foreign policy on India, Afghanistan and the US.
Twelfth, the indirect cost is: democracy is weak, political class is not allowed to run the country.
Does the US aware of such policy?
Yes, the US knows but it has its own limitations: it can not impose a reality on Pakistan and fears that it is internally so weak and can implode any time. In that case it will be a big geo-political disaster for the US to handle. The US also wants to balance India with Pakistan hence needs Islamabad's cooperation. Pakistan has also cooperated on and off with the US and an important Islamic country that the US needs now when it has a problem with Iran, Syria, Hammas, removed Sadam.
Washington simply can not put a tactical ally on notice to say finish every thing as it knows that Islamabad has a threat perception of India thus has to act in its interest as well.
The US military has close relations with Pakistan's military and armed forces often have not much regard for civilian bosses. It is true of Pentagon as well with regard to State department. Yet it can not cross the line set by the President. Thus it tries to put pressure on Pakistan nudging politely /softly to wrap up militant havens.
What are the impacts of it for USA?
For the US it is not a strategic threat now that al Qaeda organisation has been dismantled and put out of its operational capacity. Yet there are al Qaeda movements like TTP, LT, al Qaeda in Iraq, al Shaab in Somalia but they do not have the sophistication of the al Qaeda that was involved in Sept 11 attacks and the lone wolf attackers like, Shezad and Najibullah Zazai in the US. They are rather a tactical threat to the US.
Rember strategic threat means: if a city is destroyed, or an attack that involves killing of more than 2000 people, or big strategic buildings collapse.
Since Sep 2001, there has not been such an attack on the US homeland showing that al Qaeda has lost that operational capability.
Tactical threat means: a small attack where few people are or few dozen people are killed. Thus form the US point of view these militants are more or less tactical threat as long as they are on the run, their plans are disrupted, elements of their core leadership are taken out every now and then. This situation is tolerable for the US.
Can US thwart such policy and how?
Oh yes, certainly, Pakistan is economically very vulnerable. The US can exploit every vulnerably of Pakistan and can make it to accept its conditions if it wish so. But its geo-political constraints as I described above puts limits on the US leverage over Pakistan.
The net result is Pakhtuns will continue to suffer because of Pakistan proxy wars in Afghanistan until they put enough pressure on Islamabad, to take their interest on board as well.
CAN SOME ONE CORRECT ME?
[Mahabat Khan Bangash, Peshawar]
In a cartoon published in The News dated 21st June, Gen. Musharaf has been shown riding on a tank with inscription APML. After consideration I took it as Army Political Muslim League. Am I right? If not would some sincere Pakistani correct me for this?
OF BURNING SHO, FAKE DEGREES OF PARLIAMENTARIANS AND SWINDLING IN MULTAN
[Mahabat Khan Bangash, Peshawar]
Three different news were reported in the media on 22nd June regarding fake degrees of parliamentarians, setting on fire an SHO and swindling of the public in Multan. In all three cases I have reservations:
1. The Police should immediately stop the habit of taking bribes because their salaries have been increased sufficiently in all the provinces. I am 100% sure that 90 % of the problems of this society would be solved in that way.
2. Degrees of many parliamentarians have been proved fake and another 150 are being probed who would lose their membership. My contention is that all the decisions and bills, including 18th Amendment Bill and the budget, passed by the sitting Assembly are null and void, which were passed by the votes of fake degree holders who do not qualify for the membership.
3. Swindling of the public is on rise in Multan these days, either by intoxicating them through food and drinks or by the false assurances and promised by the PM. Therefore the public should be very careful.
ECHO FROM DOME
[Mahabat Khan Bangash, Peshawar]
The speech delivered by President Zardari on the occasion of birth day of BB was based on illusions and “Abjads” which was like an echo from dome. No one could understand it because it did not carry any message about BB’s killers, which according to him it is certainly in his knowledge.
With hesitation I shall mention reference about the gypsies of this country who sell out their family dead bodies to the Medical Teaching Institutes.
JOKE OF THE YEAR!
[K. Bakhsh, Quetta]
The Prime Minister and cronies of PP-Z chairman are now orchestrating a new chorus, "why Supreme Court is not bringing Musharraf to dock for authoring NRO." What a silly joke being the co-author of NRO with US, UK as guarantors, biggest beneficiary of NRO, rigged elections which brought the cursed coalition of PP-Z, MQM, MMA, ANP in power as programmed, hundreds of trillion dollars corruption that bloated their illegal coffers, made country slave to drones, IMF, UK, US and ruined economy and poor. Surely the SCP should bring Musharraf to dock for 'NRO' but not alone but also Mr Zardari, PP-Z, MQM, MMA, ANP, the biggest beneficiary who sent him with 'guard of honours.' [The Frontier Post]
WISE TO THE ‘OTHERWISE’
[Salahuddin Ghazi, Dera Nawab]
A joke is often narrated as under. A house servant once told his master in a huff, “Sir! Please increase my salary or otherwise….”. Despite the ominous ‘otherwise’ in the unfinished sentence, his salary was not raised. After some time, the servant again told his master, “Please increase my salary otherwise…..” Nothing happened again. This kept on for sometime before one day his mater asked indignantly, “What would you do otherwise…” The servant meekly said “Otherwise? I will keep working on the same salary.” The MQM has protested a lot recently against the hike in price of electricity and have also said the ominous and unfinished ‘otherwise’ often enough but one gets the impression that the prices of electricity are here to stay just as MQM too is here an in the cabinet. These noises they are making are just eyewash, a way of telling the public they are fighting for it. Come what may, they would remain in the coalition. The pickings are too good to leave.
[The Nation]
CONVICTION PAYS
[Dr Irfan Zafar, Islamabad]
During the Supreme Court’s hearing on the Bank of Punjab loan scam, Justice Ramday observed that anyone who is sentenced by the court gets a higher position in the government the very next day. May I humbly request the members of the superior judiciary to convict me at the earliest on any grounds? [Daily Times]
OUR SULTAN RAHIS AND MAZHAR SHAHS
[Turbat Masih, Pattoki]
Our federal Finance Minister says that all funds, except those allocated for payment of salaries and defence, are now frozen. On the other hand, the Prime Minister has said in a recent visit to Multan, that an engineering university will be established at Multan alongside a women university.
Not only that, he also laid the foundation stones for two multi-billion rupees highways. This is besides the many other high-value brags-that are called bharraks in Punjabi-that he is so fond of making. I don’t know why whenever I hear the Prime Minister, President or any of their Ministers speak, I am reminded of Sultan Rahi and Mazhar Shah, the two famous thespians of the Pakistani Punjabi cinema. They, quite simply, lose track of what they are saying and what they are promising to the people.
Who would fulfil these promises and how, they don’t seem to know, nor care. The President’s recent speech on the birth anniversary of Benazir Bhutto was nothing but ‘a comedy of errors’. No President in the world would use the kind of vocabulary he used against political opponents, particularly with reference to Farooq Ahmad Khan Leghari, a former President of Pakistan. Mr Zardari forgave the killers of his wife but had the worst of the tongue-lash for Farooq Leghari in the same speech. He can forgive the murderers of his wife but not forgive Leghari. That’s a bit strange! [The Nation]
GRAVE STONE
[Dr Irfan Zafar, Islamabad]
The other day while visiting a graveyard, I noticed a gravestone with the name of the deceased followed by his Government BPS Grade, face book account details, email and the web page address. Power of Information Technology for sure is making it’s presence felt even for the dead ones. [Pakistan Observer]
A PLACE FOR LUXURY…AND BEAUTY
[Mir Ghulam Hussain, Kandhkot]
Funny as it might sound, the Sindh Chief Minister has created a luxury space called the Very Important Persons’ Lounge (VIPL) in the CM House Karachi. As reported in the media recently, the event was celebrated with great fanfare when Chief Minister Sindh and his senior aides inaugurated a ‘Special Lounge’ fitted with most modern gadgetry to serve the needs of ‘very special guests’.
Inaugurating VIPL, the CM gave instructions for proper security and maintenance of the facility. Perhaps, the President and Prime Minister need to take a cue from the administrator of their affairs in Sindh to establish this kind of ‘lounges’ in the Presidency and PM House. They also have very important guests to entertain which have very discerning tastes. The CMs/Governors of the other three provinces would naturally follow suit. [The Nation]
APPOINTMENT POLICY
[Dr Irfan Zafar, Islamabad]
Looking at the selection of individuals by the Government to run the State Corporations, it seems that Government is very religiously following the policy of appointment being “It’s a very responsible position, we do not need honest people running it.” [Pakistan Observer]
MECHANICAL & SPIRITUAL ISSUES
[Aisha, Jehlum]
I had heard of electronic gadgets carrying features like ‘three-in-one’. Now I know the humans also have that capacity. The avatars of Zulfikar Ali Bhutto, Benazir Bhutto and his own spirit, we are told, all reside in the body of President Asif Ali Zardari. That is why he can claim to speak for all three of them, as he did on the birth anniversary of Benazir in Larkana. All one can say is that their spirits might be in his body but their bodies must be turning in their graves, writhing in pain at what he is doing to their legacy. The billions of dollars he has looted must be recovered from him because in doing so, he has put the country’s sovereignty at stake. The corrupt of this country seem the devil reincarnate by the way of their wickedness at present but they would better beware, for the mills of God grind slow but finest. [The Nation]
RENTED DEGREE?
[M S Hasan, Karachi]
As per the records of the Election Commission of Pakistan, the minister for water and power, Raja Parvaiz Ashraf graduated from the Sindh University in 1977. The copy of the degree submitted by him, strangely enough, was purportedly issued to him, after a lapse of 27 years, in the year 2004, as clearly shown on it! Interestingly, his degree, a photocopy of which was shown by a local private TV channel, did not bear the signatures of the vice chancellor of the university. When inquired, the chief controller of examinations of Sindh University categorically stated that degrees are not issued without the signatures of the VC and any degree which does not bear the VC’s official signature is not an authentic one. It is up to the Election Commission, Sindh University, Higher Education Commission and indeed, Raja Rental, himself, to prove or otherwise, the authenticity of his degree. [The News]
PM’S AUSTERITY
[Dr Irfan Zafar, Islamabad]
Prime Minister of our “rich developed country” spent 60,000 euros on a hotel in Brussels, 120,000 euros on limos and 25,000 euros on a dinner. Can the word “Shame” be deleted from all the dictionaries being sold in Pakistan as a State policy. [Pakistan Observer]
Issue of the Month: Budgeting for the elite
BUDGET 2010-11: A REVIEW
[This review first appeared in Business Recorder on June 27, 2010. This Review was prepared by the Institute of Policy Studies, Islamabad]
Federal Budget for fiscal year 2010-11 was the third annual budget presented by the Pakistan People's Party (PPP)-led coalition government after completing half of its tenure, the 7th NFC award and 18th constitutional Amendment that has guaranteed a fresh arrangement between the Centre and the provinces.
The overall context in which this budget was presented was quite extraordinary in terms of dire internal and external challenges looming at large. The worst power crisis of the country's history that has virtually crippled the national economy and badly impacted the life in general, rising threats from within and without, depleting law and order situation and immense human and material losses in the backdrop of War on Terror (WoT), the increasing lack of trust on government, its institutions and decision-making process are some of the major issues that have their bearings on almost each and every aspect of life in Pakistan.
One of the most recent surveys conducted by PEW Research Centre reveals that an overwhelming majority of the Pakistanis are not satisfied with the government's economic policy-making and the state of the country's economy. Seventy-eight percent people consider the present economic situation as bad and 89% hold the government responsible for it. It is often contemplated that most of the decisions are made on foreign pressures and interventions both by the powerful countries and the international institutions, which are also under the influence of powerful countries.
While the budget can be analysed from a number of angles and every segment of society analyses it from its own perspective, the fundamental point for a common man is how the budgetary proposals and measures are going to impact his life. This, in turn, raises the question whether the budget has the potential of developing people's confidence in government's vision, ability and sincerity to genuinely promote a national agenda and a people-friendly approach. Indeed, this should be the central point in any analysis of the budget, which is very important policy document not only for the economy but for all spheres of life. The following analysis, prepared by the Task Force of Institute of Policy Studies, Islamabad, attempts to review the budget in this overall context.
NATIONAL ECONOMY AT A GLANCE
Before analysing the budget for the coming fiscal year, it is useful to have a look at the performance of the economy during the current year. The Economic Survey 2009-10 states that despite numerous challenges, such as turmoil in the global economy and resultantly lower demand for Pakistani exports, energy and water shortages, and above all an alarming internal security situation, the economy has shown resilience during the fiscal year 2009-10 (ending on June 30, 2010).
The provisional overall growth of the gross domestic product (GDP) has been recorded at 4.1%. Agriculture sector showed an estimated growth rate of 2% against a target of 3.8% that was recorded 4% in previous year. Industrial sector expanded by 4.9%, while the growth of services sector stood at 4.6%, as compared to 1.6% in the previous year. Foreign exchange reserves stand at over $16 billion, mainly due to the overseas workers' remittance that crossed the $8 billion mark in first eleven months of the fiscal year 2009-10.
While the provisional estimated growth rate and figures of forex reserves and remittances seem healthy, other important economic indicators do not present encouraging picture. Inflation, although contained, remains very high at 11.5%. These are official figures, but media reports from across the country suggest that actual rate of inflation, particularly in case of prices of food items that directly impact on the life of a common man, is much higher.
Foreign direct investment (FDI) decreased by 45% to $1.8 billion in the period July 2009-April 2010 from $3.2 billion in the same period last year. Trade and current account deficits, though reduced in first 10 months of the ongoing fiscal year, still remain very high at $12.2 and $6.5 billion respectively.
The tax base remains extremely narrow and tax-to-GDP ratio stands very low at 9% from the perspective of a developing country. Importantly, the taxation system is exploitative and the share of indirect taxes is 62% in total revenue collection. Only 1.7 million taxpayers, out of the population of 170 million, pay income tax - the largest direct tax.
Public debt has reached an alarming height, standing at Rs 8160 billion as of March 2010, some 56% of the GDP. Even more disturbing are the reports that bended the definition of public debt, the Economic Survey excluded the IMF lending, made for balance of payments support. Including it, the public debt would be over Rs 9 trillion, or very close to 60% of GDP, which is a limit under Fiscal Responsibility and Debt Limitation Act 2005.
The absence of any recent figures for poverty makes the Economic Survey unable to analyse the affects of economic developments of the last two years on poverty, inequality or quality of life. The survey assumes that reduction of inflation from 25% to 11.5% and increased inflow of remittances has positively influenced the poverty. The situation on the ground, however, shows that poverty has increased in all of its manifestations. The initiatives started for poverty alleviation, such as Benazir Income Support Programme (BISP) are not directed to capacity building; they are rather providing meagre cash relief and, therefore, cannot alleviate poverty. Human development level remains very low, as investments in the social services such as education and health are abysmal even by regional standards.
The two factors, the WoT and energy crisis, have carried their damaging impact on the national economy into 2009-10 and the government has also acknowledged the constraints on economy due to these factors. Between 2002 and April 2010, a total of 8141 terrorist incidents have taken the lives of 8875 people, including civilians and law-enforcement agencies (LEAs), and injured 20,675. During 2009-10 alone, a total of 1906 terror attacks caused 1835 casualties, injuring 5000 people. Besides factors. Between 2002 and April 2010, a total of 8141 terrorist incidents have taken the lives of 8875 people, including civilians and law-enforcement agencies (LEAs), and injured 20,675. During 2009-10 alone, a total of 1906 terror attacks caused 1835 casualties, injuring 5000 people. Besides taking a heavy toll of human lives, the enormous losses to properties, income and livelihood have seriously damaged the economy and hampered the economic growth. This intensity increased as the WoT entered a new phase of Pakistan Army, launching direct military actions in Swat and FATA. During the period between 2004-05 to 2009-10, the cumulative loss borne by Pakistan is $43 billion, as estimated by Economic Survey and the cost of the WoT during the fiscal year 2009-10 was estimated at 6% of GDP, about $11.5 billion. The amount payable to Pakistan under the arrangement of Coalition Support Fund has not been delivered in time and is usually used as a tool for pressurising Islamabad.
Besides the WoT choking the economy, the energy crisis has also inflicted a loss of about 2-2.5% of GDP during 2009-10. While economic survey does not comment on the issue of consistency in the government's capacity towards developing economic policies, it is significant to note that within a span of only 27 months, the finance ministry has seen four Finance Ministers, indicating the prevailing ad hocism and lack of consistency in the economic management, policy-making, priorities and vision of the present government. The melioration can hardly be expected at least in the short to medium term from a person coming from abroad to take the pivotal post of finance minister.
BUDGET 2010-11: SALIENT FEATURES
According to the budget documents, issued by the Ministry of Finance, the budget 2010-11 comprises the following salient features:
-- Total outlay is 2764 billion, 12.3% higher than the estimated outlay for 2009-10
-- Resource availability is estimated at Rs 2598 billion against Rs 2299 in 2009-10
-- The FBR revenue target is 1667 billion; capital receipts are estimated at Rs 325 billion, showing an increase of over 70% as compared to Rs 191 billion of the previous year.
-- The estimate for external receipts is Rs 387 billion.
-- The estimate of overall expenditure is Rs 2764 billion, out of which current expenditure will be 72% as against 78% in 2009-10
-- Defence expenditure will be Rs 442 billion. (However, this is direct defence expenditure, while pensions of former defence personnel will be paid from the civilian budget.)
-- The size of Public Sector Development Program is Rs 663 billion.
-- Budget deficit is estimated at Rs 685 billion, 4.0% of GDP.
The budgetary figures makes it clear that there is not much fiscal space available to the government, mainly because the resource base is not expanding to the desired levels and a major chunk of expenditures is going in to debt servicing and defence.
This situation leaves little room for changes except the jugglery of figures, and the same appears to have been done in this budget. This state of affairs raises a question: At what stage the policy-makers will sincerely think for the desired change in economic strategy, aimed at moving towards reliance on indigenous sources, manipulating the national potential and increasing the productivity. The present strategy is characterised with creating temporary fiscal space with more borrowed resources that eventually results in further tightening of fiscal space in every coming year.
IMPORTANT MEASURES AND ANNOUNCEMENTS
The budget has unfolded the following important measures for the fiscal year starting from July 01, 2010:
-- GST rates have been increased from 15% to 16% for three months.
-- Value-Added Tax (VAT) of 15% will replace GST from October 01, 2010. [Now it has been announced that VAT will not be imposed; instead GST system will be reformed and will be in place from October 01, 2010.]
-- Rs 131 billion has been allocated for hydel, thermal and nuclear energy projects.
-- Rs 40 billion has been provided for food security.
-- Rs 23.15 billion has been allocated for health sector.
-- Rs 32 billion has been allocated for education, with Rs 22.5 billion for higher education.
-- Customs duty has not been increased on any product. Federal Excise Duty on cigarettes, ACs and refrigerators increased.
-- Energy Development Fund, with an initial capital of Rs 20 billion has been set up, with the assistance of Asian Development Bank.
-- Some incentives are announced for renewable energy, manufacturing of soap and rice exports.
-- Taxable income increased to Rs 300,000 per annum.
-- Ad hock relief of 50% of the basic pay to the government employees; medical allowance increased two-fold for grade 1-16 while those in grade 17-22 can avail medical allowance of 15-20% of their basic pay.
-- Increase in pensions of those retiring before 2001 by 20% and those after 2001 by 15%. Minimum pension fixed at Rs 3,000 while the rate of family pension has surged from 50% to 75%.
ANALYSIS OF THE BUDGETARY MEASURES AND PROPOSALS
The budgetary targets seem quite difficult to achieve. Revenue target for the FBR has been set at Rs 1667. Considering the fact that the initial revenue target of Rs 1380 in the fiscal year 2009-10 was adjusted downwards three times, and even the revised target of 1330 does not seem to be achievable by June 30, this target seems unattainable. Similarly, the target to contain fiscal deficit to 4 percent of GDP does not seem realistic. The amounts expected to be received from Friends of Democratic Pakistan have also been included in estimates of external receipts, but keeping in view the track record of the group so far, these amounts are not at all predictable.
Since this is the first budget after the announcement of 7th National Finance Commission (NFC) award that has made increased resources available for the provinces, and the 18th Amendment that has increased their responsibilities, there is no thought out plan in this regard, which will certainly lead to much confusion and will impact the progress in all areas of life. Additionally, the award does not promise the true spirit of autonomy, as provinces are not allowed to mobilise resources by collecting taxes. Moreover, the implications of the abolition of concurrent list in the 18th Amendment have not been catered to in the budget.
Another extremely important issue is the financial impact of the WoT. While the budget figures indicate an estimated amount of slightly over Rs 130 billion expenditure on this war and an equal amount to be reimbursed under the coalition support programme, there appears no recognition of how the huge losses to the economy (also admitted by the government) are going to be compensated in lieu of participating in the WoT. Admittedly, this is not purely an economic question, but it needs to be realised that it is an extremely important issue in terms of building confidence in the government machinery, particularly regarding its capability of negotiating national issues with the external powers in consistent with the national agenda. Related to it are the continuing worrisome issues of security, law and order, and various international commitments such as the VAT, agreed with the IMF.
The finance minister, while announcing the budget, outlined seven main objectives: (1) stabilisation of the economy, (2) checking inflation, (3) achieving a measure of self-reliance, (4) reformation and enhancement of social protection regime, (5) reduction in the burden of public sector enterprises, (6) employment generation and (7) making the country fertile for investments.
Besides these objectives, the minister also stressed that the government would be focusing on two key areas - energy and food security - which is indeed a refreshing statement. Examining the budget in the light of these proclaimed objectives would be rather useful.
To start with, the touchstone is the question of an enabling environment that paves the way for growth and development, resulting in economic stability. No comprehensive strategy has been put forth that may incentives economic activity, investment and production as the budget document does not include any viable programme for providing effective short to medium term reprieve from the power sector crisis in the country or making some reliable and affordable power supply available, which is the prerequisite for the economic activity to flourish.
The emphasis is once again on boasting the energy conservation measures announced after the Energy Summit, involving the PM, chief ministers and others stakeholders. But conservation, despite being an extremely important area to focus, is not going to increase the production, whereas it is also known that the measures announced in the summit have seldom been observed and yielded only minimal benefits so far. The amount of Rs 131 billion that has been allocated for hydel, thermal and nuclear energy projects, relates to most of those projects, which are in very initial stages and will take years to bring results. For short-term relief, the government's focus remains on rental power plants (RPPs), which have been declared costly, increasing the burden of cost as well as debts on the national economy.
Free distribution of about 30 million energy savers is a welcome step. However, there are questions of transparency and it is not clear what the distribution mechanism will be. There is little focus on utilising the dead capacity of existing plants and improving the system efficiencies, the steps that can result in increased supply of electricity and in turn stepping up the economic activity.
With respect to stabilisation of economy and keeping the growth momentum, there is no visible incentive for the business community, particularly about promoting industrialisation, without which stabilisation will, no doubt, remain a dream. The business community from all over the country has deplored the budget for not announcing any incentives for increasing investment and economic activity in the country.
The second stated objective is to check inflation but the focus to achieve this objective is only on a tight monetary policy. In the wake of huge gap between the resources and expenditure, there are strong indications that the government will itself have to take loans from the State Bank of Pakistan, which will increase inflation. Besides, the current trends of prices, particularly of essential items, will make it very hard for the inflation to remain within the target. Importantly, since checking credit alone does not serve the purpose, the government intervention is certainly needed where issues such as cartelization, hoarding and profiteering come in to play to increase the prices. Furthermore, the increase in GST rates is bound to increase inflation.
A major determinant in prices of almost every item is the prices of petroleum products. There has been a tendency to apply heavy taxes on the price of petroleum products to meet revenue targets, which, in return increases prices and inflation and one does not find any indication that this will not happen in the coming year.
Self-reliance is stated as the third objective. Considering the estimated Rs 387 billion ($4.55 billion) from external resources, which will simply be adding to the debt burden of the country and a deficit of Rs 685 billion, this is clearly a farfetched claim. Self-reliance requires a national will and commitment at all levels, which can only be incorporated in the society by developing faith and stakes of the people in the government, its institutions and policies.
At the operational level, it can best be achieved by mobilisation of domestic resources that require widening of the tax base and making the wealthy segments of society pay proportionately. The budget does not bring forward any major proposals in this connection, either at policy level or at operational level; neither is there any move to tax agricultural income, nor are those making big fortunes from property and stocks trading in recent past made to pay in accordance with their incomes.
The self-reliance target also appears irrelevant in the context of proposed imposition of the 15% VAT across the board from October 1, 2010, [1] under the persistent demands of the IMF. It is a glare example of bowing to the external pressures despite apprehensions of its impact on economy from all walks of life.
The VAT was first to be imposed from July 1, 2010, but was delayed due to widespread protests from all over the country. It is generally believed that the VAT will bring a new wave of price hike in the country. Merits or demerits of the VAT apart, the main problem in case of Pakistan is that the economy is not well documented, and forms and documentation involved in filing of returns for any kind of tax remains cumbersome.
Moreover, a large majority of traders are not educated and trained enough to fulfil the documentary requirements of VAT. This requires proper homework regarding documentation and capacity building before imposing such tax across the board. It is also important to note here that the FBR can ensure no more than Rs 65 billion from VAT. This amount can easily be collected by checking the widespread tax evasion in the country. Some estimates suggest that an amount of Rs 100 billion can be saved from checking non-developmental expenditure of the public sectors corporations.
The fourth objective is outlined as reform and enhancement of social protection regime, but apart from a sizeable allocation for Benazir Income Support Programme, the rest of the measures announced are of small scale, and cannot be expected to make any major impact. The requirement, on the other hand, is much greater in a time when frequent reports are appearing in the media that people are forced to poison their children for not being able to provide them with food. Even the much boasted BISP is reportedly plagued with distribution of amounts on political considerations and corruption.
Reforming the public sector enterprises constitutes the fifth objective. It was expected that a serious reform package will be announced with a comprehensive scrutiny of the performance, identifying the causes of the poor state of affairs, a wide-ranging package ensuring a check on the corruption and malpractice's, clear indicators for future progress and above all exemplary punishments for those responsible for turning the national assets into loss and producing white elephants.
Regrettably, the objective was negated soon after the budget when Prime Minister announced a bailout package for Pakistan Steel Mills amounting to a mammoth 25 billion rupees.
Achievement of the sixth objective of job creation is indeed imperative. There are several structural issues, which need to be addressed in this regard both in long and short-term periods. Creation of jobs cannot be done in isolation. It is directly linked with the development of economy in general, and Small and Medium Enterprises in particular that play a very important role. The budget does not provide any major initiatives in this arena either.
Lastly, no major incentive has been announced in the budget for attaining the seventh objective, ie making the country fertile for investment. The investors, both domestic and foreign, would like to see a controlled law and order situation, uninterrupted and affordable power supply and competitiveness.
The Finance Minister has admitted himself in his budget speech that reforms are needed in Pakistan regarding cost of doing business, but the budget does not come up with any programme for these reforms. Besides these objectives, the areas that need immediate focus of the government as stressed by the Finance Minister in his speech are: power sector that has been discussed above, and food security.
Regarding food security, the agriculture sector, the mainstay of Pakistan's economy and the major source for ensuring food security, is contributing 22% to the GDP, but has been grossly neglected. As announced by the Finance Minister, the combined allocation of about Rs 40 billion for water, food and agriculture, livestock and dairy sectors seems very low for the objective of attaining food security. Agriculture sector is fraught with a number of issues, such as irrigation inefficiencies, high input prices, problems in marketing and sale of agri-produce that has not been given due attention in the budget.
The measures such as increase in salaries and pensions are indeed welcome initiative. Similarly, the increase in taxable limit of income tax to Rs 300,000 is also good for the low income groups, but the rate of income tax at the first slab after 300,000 has been doubled from 3.5% to 7%. Such steps are bound to put more tax burden on the middle income group population.
In case of pensions, those retiring before 2001, say in early 1990s, need a corresponding increase in their pensions. The major need of human and social development is to raise the expenditure on health and education considerably as a proportion of the GDP. This has not happened in Pakistan yet and the present budget is no exception either. Contrarily, there are apprehensions of further deterioration in these areas unless a proper homework and capacity building of the provinces is planned as these subjects are supposed to be under provincial responsibility from now on.
The size of Public Sector Development Programme (PSDP) is not all that important, but what matters the most is the method of utilising the resources on ground and the number of the new infrastructure projects that need to be added to the existing resources. However, there are only 10% new projects whereas around 90% of the projects for 2010-11 have been going on for the past several years. Even among the ongoing projects, 65% dates back to 2001 that further raises question whether their cost estimates are still dependable. Such small number of new projects also means that job creation capacity of the PDSP will remain very low.
The nation is passing through a time that demands austerity and living within available means. While there have been claims to check unnecessary expenditure, the situation on the ground is quite different. On the face of it, a 10% cut has been made in the salaries of the cabinet, but the actual allocations for the expenses of the cabinet have increased. Demonstration effect is very important as far as the austerity measures are concerned.
This drive has to start from the top. One glaring example of making mockery of austerity is the hiring of a chartered plane by the Law Minister for his visits to south Punjab and Quetta for apparently the political purposes. There are also reports that the President spent more than the amount sanctioned for his discretionary expenditures. Such steps, indeed, widen the trust gap among the people and the government, and give an impression of lack of will on the part of the government to make tough decisions.
CONCLUSION
A closer look at the budgetary proposals and measures shows that the budget, as a whole, is neither people-friendly as is being claimed by the economic managers, nor does it bring any forward strategy to deal with the unprecedented challenges to the country's economic and social development. The budgetary proposals do not offer anything to restore the people's confidence in the government, which is very important in the wake of dire testing time of the country. The document, at best, is an exercise of changing figures and numbers here and there and clearly lacks the vision for a much needed paradigm shift in economic policy. [Courtesy Business Recorder]
Issue of the Month: Faking the law
FAKE DEGREES
[Lila Thadani, Sindhi Adyoon Tehreek]
Heartening news came from the Supreme Court (SC) on June 16 about Mr Rizwan Gill, a former PML-N MPA, who had appealed the decision of the High Court in a fake degree case. The SC has now asked the Election Commission to initiate criminal proceedings against him for forgery. He had asked another person to appear on his behalf in the bachelor’s degree examination. Another good news in the national press is that the leader of the PML-N, Mr Nawaz Sharif, has ordered all his party parliamentarians with fake degrees to resign from their positions. Being so late in issuing this directive, one would have hoped that it was much stronger, with the party head asking the courts and the police to register cases of fraud against such members of the party.
Why did this scandal have to simmer for so long and was only attended to when it became a raging inferno? One can only assume that all political parties hoped that the issue would remain hidden. Even now the revelation has not come from government agencies digging into the muck but only because the opponents of these corrupt people made a big fuss. One would like to see the political abscess caused by the fake degree infection cleared up by giving stiff punishments to the culprits, with the minimum sentence being the removal from parliament and all government positions forever. [Daily Times]
A GROSS VIOLATION OF INVIOLABLE SANCTITY OF LAW
[Col. Riaz Jafri (Retd), Rawalpindi]
The fake degrees, it seems, are germinating in our Parliament on a daily basis. The issue is given a Machiavellian twist by the politicians who are now telling their naïve voters that an ‘usurper’ had introduced this malafide clause of graduation just to keep the more ‘seasoned’ politician out of the assemblies. Some of them even justify forgery of the affected MNAs and MPAs on one pretext or the other. This is strange, to say the least. The question is not of qualification but of character. This is about eligibility for the public office, or lack of it, of persons who acquired fake degrees by illegal means, through deceitful forging of documents. Does it behove a lawmaker to be a cheat, a forger, a fraudster, a swindler or an imposter? It strikes at the very root of the personal conduct and character expected of a lawmaker. There is an old saying, “If wealth is lost, nothing is lost. If health is lost, something is lost. But if character is lost, everything is lost”. Should such characterless forgers be trusted with the sacred task of framing laws of the nation? Incidentally, issuing of party tickets to such charlatans speaks volumes about the party leaderships too. [The Nation]
BOGUS DEGREES
[Shanawaz Soomro, Lahore]
As a Pakistani, I am deeply pained to see a daily circus of our corrupt parliamentarians being taken to the courts for holding fake degrees at the rate of almost one per week. Why should the people of Pakistan undergo the torture and misfortune of suffering these fraudulent people as our parliamentarians? Why are the Election Commission and the political parties shamefully soft on these disgraceful parliamentarians? They have committed a crime and should be put behind bars and permanently barred from taking part in politics. [Daily Times]
FAKE DEGREE HOLDERS
[Kadar Ahmad]
Obviously, Pakistan People’s Party and its coalition partners finding educated people as a challenge rather decided to protect corrupt ones who have swindled the system already on record with their fake degrees. On the one hand, speaking about strengthening democracy and on the other trying to get a bill passed to protect corruption. Intended “Corruption Protection Bill” clearly indicates the way politicians are functioning for own interests. How in world they could have strong democracy when illiterates are roaming around in the halls of national assembly? How would country be able to deal with the rest of the world when its legislators are voting on symbols instead of concepts? Political leadership needs to understand that “Corruption Protection Bill” can open up a Pandora box for them, not only internally. But do they really want the possibilities open for international agencies putting their requirements that who should be a legislator? Because, inability to govern and wide spread corruption is destabilising the country. It is obvious politicians are only seeing the reality of the bubble they live in. However, this is high time political leadership should realise it. [The Post]
FAKE DEGREES
[Dr Q T Butt, Faisalabad]
The Election Commission has just announced that it has sent 1,100 degree certificates of politicos for verification to the Higher Education Commission (HEC). This is a useful first step, but overlooks an important political reality. The previous head of this organisation, Dr Atta-ur-Rahman, was handpicked by General Musharraf and managed to build the HEC as an empire that, despite its financial strength, failed to clamp down on fake degrees or fake institutions. The National University of Modern Languages neighbouring the HEC headquarters harboured many fake degree holders, including its head, but nothing was done to them. The incumbent head of HEC, Dr Javaid Laghari, is an old PPP stalwart who was given a Senate seat while he managed the Shaheed Zulfikar Ali Bhutto Institute of Science and Technology. His performance in the Senate was characteristic of a faithful party member who said nothing that would rock the boat.
It is unlikely that Dr Laghari will be any different from his predecessor. He will bow to the pressure from his party and other forces not to disclose the names of the huge number of corrupt politicos with fake degrees. Given the poor nature of governance in the HEC, where integrity is a rare commodity, it is necessary that the National Assembly ask an independent body of retired jurists to review the findings of the HEC before making a final decision about the authenticity of the degrees held by all the parliamentarians. As an academic, I also demand that a time schedule be provided for both the HEC’s review and the oversight of the jurists’ committee. [Daily Times]
FAKE DEGREES
[Naeem, Islamabad]
The Supreme Court of Pakistan has ordered the Election Commission to disqualify parliamentarians who hold fake degrees. A common man can only regret having elected these cheats to the assemblies. It is suggested that all the people who were involved in this game of corruption - starting from a university clerk to the concerned election commission staff - should be taken to task. An inquiry committee should be set up which should visit the concerned education institutes for verification of facts. As a matter of principle, the lawmakers who are facing these allegations should resign at once until their names are cleared. But unfortunately, our politicians lack the moral courage to voluntarily resign or at least stop receiving the privileges they are entitled to as members of assemblies.
[The News]
TOUGH TIME AHEAD FOR FAKE-DEGREE HOLDERS
[Air Cdre (R) Azfar A. Khan, Rawalpindi]
According to reports, almost 140 MNAs and MPAs of the assemblies are in possession of fake degrees. These are our so-called law makers who have been entrusted with the responsibility of making laws for this country. Can these people be called sagacious, righteous, non-profligate, honest and ameen as required by Clause 62 (f) of the Constitution? Do they possess even one of the above virtues? On top of that, these people have the audacity to approach the Supreme Court to review its decision. The Supreme Court, in its detailed verdict, has directed the Election Commission to carry out criminal prosecution against parliamentarians having fake degrees, declaring possession of such degrees a forgery, which is a criminal offence and carries a punishment of up to three-year jail sentence and fine under criminal law.
In such a situation the Election Commission of Pakistan is bound to take necessary legal action against the fake degree holders. Now, the million dollar question is: Will all these law-makers with fake degrees be put behind the bars for a period of three years as per the decision of the SC? Finally, hats off to our public. Despite knowing the credentials of the person, they are again voting in his favour in the by-elections. [Dawn]
It is for the people, especially for the think-tanks and NGOs, and no doubt for media also, that the big issue for the next election should be the provision of basic social services (water supply, sanitation, public transport, roads, paved streets, street lights, libraries, parks or playgrounds, and noise and pollution free environment) to all the citizens in Pakistan not only ensured in the constitution but binding on the next government also. If achieved, that will be a great step forward towards the unification of the ordinary and elite Pakistans. Is there any political party ready to take up this at the top of its agenda? [Editor]
WATER…IF WE CAN’T HAVE POWER
[Ghulam Farooq Abbasi, Karachi]
Like every other organization of civic value, the Karachi Water Supply Board should also have a contingency plan to address a crisis situation. Every other day now, we read in newspapers that the city is facing an acute water shortage which has been compounded due to electricity failure. The KWSB, it seems, is at the mercy of KESC. As far as I know, the KWSB was provided with standby generators by the government of Sindh to effectively encounter any electricity failure. But these are not being put to use due to some unknown reasons. I suggest that a contingency plan should be developed for the KWSB by the CDGK or the government of Sindh so that Karachiites do not have to suffer the water shortage along with the loadshedding that we have to suffer anyway. That would also prevent the tanker mafia from taking undue advantage of power failures. [The Nation]
WHERE ARE SPORTS FIELDS?
[M. Bilal Soomro, Karachi]
The government has been investing an adequate amount of fund on the building of amusement parks but has totally neglected sports facilities for the young generation. I live in Clifton, Karachi. There are huge parks like Ibn-i-Qasim, Shaheed Benazir Bhutto and Sea View but I hardly find tennis courts, soccer fields, volleyball courts, etc., within the parks or anywhere around. I see teenagers playing cricket, football, etc., on streets and roads. Big lawns are maintained in these parks and most of the time they are filled with ghost visitors. There is no harm if a few areas are maintained for tennis and volleyball courts and mini-football fields. I request the government to build sporting facilities at Ibn-i-Qasim and other parks and allow youngsters to play and take advantage of the facilities. We should promote sports in the country as people who cannot join expensive clubs can enjoy sports in their respective areas. [Dawn]
UNAVAILABILITY OF WATER
[Lubna Shafqat, Multan]
Unavailability of drinking water is a serious issue. But the government is not taking necessary measures to overcome the problem. Even if water is available it is contaminated in many cases. In some localities water is supplied to residents through rusted water pipes. Almost every second man, women and children suffer from serious liver disorders due to impure water intake. A common man is not in a position to buy mineral water. A survey revealed that apprehensions of the people regarding the harms of polluted water have increased due to clinical laboratory reports which show every second patient to be Hepatitis B and C positive.
Doctors have expressed grave concern over the alarming rise of kidney disease in Pakistan due to malnutrition and contaminated water. The water sample collected from various localities indicated that 80 percent samples were found contaminated and it was not fit for human consumption. Water- related problems have always been common in our country. Pakistan has been categorised as a country under water stress. In fact, considering the global and national water scenario, the time has come to take a clear and principled stand to stop the systematic devastation of the water systems. [The Post]
SANCTITY OF PUBLIC PARKS
[Rahat Siddiqi, Karachi]
This is with reference to the order by the Supreme Court of Pakistan, ordering the CDA to demolish the fast-food restaurant constructed inside the premises of Jinnah Park located in Islamabad. The Supreme Court of Pakistan has delivered a verdict to protect public interest, although the elected government and the local administration had failed to discharge their obligations. Plundering of state assets must be checked with an iron hand. Public parks belong to the people of the city and nobody, including the prime minister, the chief minister or the mayor, has the right to give any part of it on lease for commercial purposes, except for a project involving public private participation, aimed exclusively for the benefit of the general public. These public parks are the hearts and lungs of a city, and selling or leasing any part of it for commercial use amounts to damaging the whole city and its inhabitants. The argument of a few that since the construction has already been done, therefore, this irregularity should be accepted is hollow. This defective reasoning has no feet to stand on, since any irregular sale of private or public property cannot be condoned as past and closed transaction.
If this argument is accepted, then tomorrow every private property, illegally or forcibly occupied, will assume regular status if the occupiers were to construct something on the occupied property. As it is the city of Karachi suffers an acute lack of sufficient public parks, denying its youth space for healthy activities, which has contributed to the rise of violence in the city and street crimes. Professional lobbyists, lawyers and facilitators have made it a profitable venture to use their influence for such commercial ventures by misuse of public parks for profitable business. A glaring example of this gross irregularity is the Kashmir Complex, located on Kashmir Road in Karachi, where marriage halls have been constructed on space reserved for a green park.
Even the city of Lahore, known as the city of gardens, has been subjected to the greed of these businessmen by allowing a fast-food restaurant in Lahore DHA's Sheeba Park to the same multi-national that got facilitated in the Islamabad Jinnah Park. In Karachi, Ahmed Ali Park, popularly known as Kidney Hill Park, has fallen prey to the greed and power of the land mafia as 33 acres of public property has been given to a private housing society run by influential individuals, having a history of such irregularities. It is time that all these irregularities were reversed so that a message could be sent loud and clear to the land mafia and influential people that public parts should no longer be even considered kosher for commercial ventures. [Dawn]
DRINKING WATER SUPPLY
[Hazrat Ali, Pakha Ghulam]
Water plays a vital role in human life. No body can survive without it. Through the prestigious columns of The Frontier Post, I would like to draw the attention of the concerned authorities to an important issue of the people of Pakha Ghulam. In 1995 a project of water supply was approved by the government, a huge amount was also released for the same scheme through which all the people of the area were supposed to have been supplied potable water. For this purpose a big water tank was also built and pipelines laid in each street of the area. A tube-well was also installed, but unfortunately, it went out of order, and the tanker through which the people were expecting access to the clan drinking water remained empty dashing all the hopes of the people. I think this all happened due to the lack of interest of the local political leaders who have not paid any attention to this issue yet because they have enough mineral water to drink. If the concerned authorities, pay little attention, each home of the locality could get clean drinking water. I appeal to the concerned authorities that instead of making hollow slogans help the people really and remove the grievances of the people of Pakha Ghulam and provide them clean drinking water. [The Frontier Post]
Edited and prepared by
Khalil Ahmad
[FreePakistan Newsletter, among other things, is a compilation of views and news taken from the national newspapers’ print and online editions. It is not possible to mention the source of every piece of news or view made use of herein; but as a matter of policy, where possible the source is mentioned with due thanks. However, no opinion expressed here should necessarily be taken as reflecting the view of Free Pakistan Newsletter.]
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