It’s All About The Economy Stupid

Pakistan’s free falling economy is one of the biggest challenges to its security and sovereignty. Years of neglect has almost brought once booming textile industry of the country to a grinding halt. The Energy crisis is worsening and another  season of power outages is about to hit the country.

There is a crisis looming in almost all parts of the economic sector. Power outages in the industrial city of Faisalabad have resulted in economic death of the small industry owners and the situation will not get any better as temperature soar in the summers. In Karachi the economic nerve centre of the country degradation of security situation is forcing small traders to pull down the shutters, they were on a strike recently as this month over extortion. The worsening of economic situation only strengthens the hands of the militants who take complete advantage of the hunger that is prevalent in the society. Strengthening of economy is the only way by which the war against extremism that can be fought. Needless to say bad economic condition means lower income for the population already living a marginal existence. Inflation in food prices that has been witnessed in last few years is really unprecedented in country’s history with just the price of wheat in stores has risen to almost three times of its price in 2007.

The energy crisis in the country is projected to become more severe this year and will spell disaster for the small industries. Foreign direct investment has taken a nose dive in the country due to the security situation and there are little chances of this trend reversing in the near future. In just one year the decrease in the direct foreign investment is a staggering 45%.

On the other hand militants are not facing such a financial crunch as they continue to receive plenty of money from their donors in the Gulf and elsewhere. Whatever shortage they do face, the business of kidnapping is taking good care of their financial health. One can compare this with the limited resources of the government which is unable to fight this menace.   In Punjab the most populous province in Pakistan for close to 170,000 police officials there are only 82,000 weapons and 5000 bullet proof vests.

Tax evasion is the biggest threat to Pakistan stability at the moment. The equation is simple in a country of about 180 million there are only 2 million registered tax payers. It is estimated that about 2.3 million affluent Pakistanis are not event registered with tax authorities. This leaves a huge gap between revenues and expenditures.

There is simply a dearth of people in the government who have comprehend the seriousness of the economic condition. Even with such an economic state that is really threatening the existence of this state, it is astonishing that they still have the time to revisit murders committed three decades ago. No Supreme Court judgement is needed to tell the people of Pakistan that their first democratically elected prime minster was indeed murdered and than his dead body was left hanging. Realisation of this fact unfortunately can do little to solve the huge crisis that is faced by the country.  The Pakistan Army  wields considerable influence in the political affairs of the country cannot in  understand the kind of complexity that exists in revival of Pakistani economy today. It is faced with challenges of security, circular debts, non-existence of a sustainable tax base and the most urgent one that is the energy crisis which makes it impossible to set the economy in motion.

There needs to be an urgent realization in all the quarters of the Pakistani society including civil society , bureaucracy (civil and military), political elite and the masses that increasing our tax base is probably the only thing we can do to bring our country out this crisis.  There is no silver bullet to end this crisis what is needed is a concerted effort to increase our national revenues so we can invest in the areas most affected. The citizens of the country must now take ownership of the economic problem since the political class is still deep in its slumber.