Our latest Prime Minister and economic czar, Shaukat Aziz, claims that in five years he has so turned the economy around that we don’t need the crutches of the IMF any longer. This is partly true. Mr Aziz was certainly quick to exploit the marvelous economic opportunity provided by billions of dollars in financial relief from a grateful international community following General Musharraf’s political turnaround after 9/11. But if General Musharraf’s politics hadn’t overnight become right, no amount of economic wizardry by Mr Aziz would have yielded such a bonanza. Undeterred, Mr Aziz has now set his sights higher. He says that the agricultural sector will grow by 8% this year and thereafter. Is he whistling in the dark?
In 57 years of Pakistani history, except for three abnormal years (1884-85, 1991-92 and 1995-96) when the agricultural growth rate was above 8%, the average rate of growth of the agricultural sector has been 5.1% in the Ayubian “green revolution” 1960s, 2.4% in the Bhuttoist “socialist” 1970s, 5.4% in the Ziaist “Islamic” 1980s, 4.4% in the Nawaz-Benazir “democratic” 1990s and only 1.2% in the last four years (2000-04) under the stewardship of Messrs Musharraf & Aziz. How on earth does Mr Aziz now expect us to visualize an 8% leap of faith in the agricultural sector in 2004-05 and thereafter?
Mr Aziz has offered the usual homilies about how 60% of the population lives in the rural areas and must be looked after. There is talk of improving the infrastructure of the agricultural sector, of building dams and reservoirs. There is mention of increasing rural credit and raising support prices of agricultural crops. And so on. But all this is old hat. It is tinkering at the margins of rural society like every “Economic Czar” has done down the line from Ishaq Khan, Mahbub ul Haq, V A Jaffery and Sartaj Aziz. And “trickle down economics”, as we all know, is not the answer to our problems of poverty and human underdevelopment – over 30% of all Pakistanis still live below the poverty line and about 25% are barely above it.
Agricultural growth is dependent on three broad factors. The first, of course, is the weather. In the absence of adequate water control resources to offset draught and floods, this element can shift the average growth rate up or down by as much as 2% any year. But there is not much that Mr Aziz can do about this in the short term other than pray for manna from heaven.
The second is the social and political power structure in the rural areas – roughly translated as ‘semi-feudal’ – that acts as a powerful institutional brake on the forces of market production. Absentee landlordism, rentier crop-sharing systems and land fragmentation – in short, oppressive pre-capitalist farming systems and repressive social class structures – remain a millstone around the neck of the Pakistani peasant. But no economic czar to date has ever dared to talk about land reform in order to unleash the productive potential of the peasant. Mr Aziz is no exception to maintaining this status quo.
The third is economic incentive policy. Mr Aziz certainly has some leverage here but it is circumscribed by the pressure to reduce price and export subsidies and lower import tariffs on agricultural products. What else is there?
Finance ministers and prime ministers love to talk about rising development budgets as panaceas for poverty alleviation and economic growth. Mr Aziz is no exception. Every year in the past four years he has told us that the development budget is going up substantially. But the true picture has turned out to be somewhat different. Development expenditure was 7.3% of GDP in the 1980s and 4.7% in the 1990s. Under Mr Aziz’s stewardship, it has fallen from 3.4% of GDP in 1998-99 to 3.0% in 2003-04. On the other side of the equation, current expenditures (or the money spent by the government on preening itself) have remained consistently high at 17.6% of GDP in the 1980s and 19.4% in the 1990s. These current expenditure percentages are 18.7% of GDP in 1999-2000, 17.2% in 2000-01, 18.8% in 2001-02, 18.6% in 2002-03 and 17.5% in 2003-04. Howwzat?
Mr Aziz has said that his government has placed human development at the centre of economic planning. He insists that the three key areas of human development, namely education, health and population welfare, will attract “significant attention” from the government. We welcome this sentiment. But, in view of our past experience at the hands of economic czars echoing their respective masters’ voices, much more than words of wisdom will be needed to steer Pakistan’s predominantly agricultural economy up to a self-sustained and consistent growth rate of over 8% a year. The latest news is that the Indus River System Authority (IRSA) has issued an unusual warning that Pakistan cannot ignore. It says that the country’s water reservoirs contain only half the water they should contain on the eve of the ‘rabi’ sowing season; and this has happened for the first time in the country’s history or at least since the construction of the Tarbela Dam. Good luck Mr Shaukat Aziz.