Mian Nawaz Sharif’s ‘relief’ package for loan defaulters has provoked bitter comment from Benazir Bhutto. Ms Bhutto is outraged that loan defaulters of over 7 years (which include the Sharif family, scores of PML stalwarts and the super-rich with hefty bank accounts abroad) should have been “rewarded” for financial misdemeanour by being asked to pay only 5 per cent of the interest that has accrued on their loans.
This criticism seems fair. The Sharif package condones the worst defaulters and penalises the trivial ones — the longer the period of default, the bigger the concessionary write-off. This is a remarkable travesty of justice. That is why the caretaker government spurned this approach when it sought to address the problem of loan defaults through an ordinance whose provisions were even-handed (it went back to 1985) but tough: failure to cough up within a stipulated time would have led to the recovery of dues as arrears of land revenues. The ordinance (now expired) gave government the right to confiscate the property of defaulters and auction it for purposes of clearing the default.
In Mr Sharif’s defence, however, it must be acknowledged that his package is consistent with his general “supply-side”, class-based philosophy in which far-reaching incentives have been offered to the business and trading classes to increase production, stimulate growth and revive the economy. The government’s package is based on certain assessments of the ground situation: (a) many of those who defaulted on their loans did so because the projects for which the loans were taken became unprofitable and had to be closed down; (b) past experience has shown that the process of law is so cumbersome, convoluted and time-consuming that no new law would have succeeded in resolving the problem of default in a hurry (c) both private and public sector banks are ready to make out-of-court settlements quickly because they believe that “some money in the hand now is better than more money in the bush much later”. Indeed, the banks even appear ready to lower interest rates by a couple of points immediately if billions of rupees of the principal amount is returned quickly. Is this strategy going to work?
Many businessmen say this is a one-off “bonanza” which they intend to seize with pleasure. Senior bankers confirm that the package has stimulated considerable interest among the defaulters who are lining up to pay back the principal amount plus the small penalty. If it works, it is thought that the banks will be richer by about Rs 20-30 billion or so in the next six months. If it doesn’t, the government can always dig out the caretakers’ ordinance and put the squeeze on the defaulters.
There is, however, one aspect of Mr Sharif’s policies which merits criticism. This refers to the Ehtesab Cell’s cases against those who used the power of their public office to dish out or receive plots of land from the government at throw away prices during Ms Bhutto’s tenure as prime minister from 1993-1996. Is this prosecution or persecution? Consider the facts.
Mr Moeen Qureshi’s interim government in 1993 took a dim view of government patronage. It passed laws to stop this discretionary abuse of authority. However, Ms Bhutto allowed these laws to lapse and reverted to the practise of granting valuable plots of land to friends and cronies in 1995. Mr Manzoor Wattoo, Mr Arif Nakai and Mr Abdullah Shah did much the same during their tenures as chief ministers of their respective provinces. Therefore when the caretakers came along in 1996, they decided to take a different approach. An ordinance (Recovery of Illegal Gains) was duly passed which empowered the government to recover the “illegal gains” (in the case of plots, the difference between the allotment price and the market price at that time) made by various people at the behest of public officials through loan write-offs, cheap plots, etc, from 1985 onwards as arrears of land revenue. This was a practicable, desirable and non-discriminatory law. It was based on the same approach (recover the financial loss to the public exchequer quickly) which Mr Sharif has now taken in reference to bank loan defaulters. However, that ordinance too has fallen by the wayside, without, it may be mentioned, as much as a murmur from the “watch-dog” press.
In the meanwhile, the Ehtesab Cell has conveniently launched criminal proceedings against a handful of persons in high office during 1995-96 for dishing out or receiving valuable plots of land at cheap rates. The period before 1990 when Mr Sharif, as chief minister of the Punjab, indulged in similar patronage on an unprecedented scale has been ignored because it is outside the pale of the new Ehtesab Law. This is victimisation. Worse, the persecution is based on the evidence of persons who are being paraded before PTV and coerced to become government approvers.
Mr Nawaz Sharif discredits his government and undermines its legitimacy by such naked double-standards. One day, as surely as night follows day, he will be out of office. If he wants to be treated fairly then, he must set a precedence for fair-play today.