Pakistan is standing at a crossroads where no one knows what the future of the country is, and the fate of the economy by the “Hybrid Regime” those came into power to get got rid of the corruption cases that were in their final stages. Today there is a question in front of every person who has to fix the economy. It’s by the technocrats, by the judiciary, by the establishment, or by the imported regime?
Throughout the world economic issues are seen by politicians, as they have the mandate of the people. But in Pakistan take the example of the CPEC project, which has become the worst example so far due to American pressure, no one knows how the current situation will be handled.
In today’s Pakistan, where inflation, unemployment, and economic conditions have made the life of the common man more difficult, political factions full of opposition at the public level have also created a lot of social distortion. Since the beginning of this year, Pakistan was suffering from a severe economic crisis, while the struggle and manipulation of politicians for power do not seem to end. At this time, the biggest problem of Pakistan is the crisis of the economy or politics.
In any modern state, politics and economy are interrelated and it is called political economy. If one of them is strong and the other weak, this is generally not possible. It is not reasonable to blame only the politicians for the poor economy in Pakistan. As one of the main causes of political instability is the country’s security state, Pakistan being a nuclear power is militarily strong but the political economy is also subject to military policies.
That is why human resource development is neglected unless the military, judiciary, and bureaucracy are forced to ensure the stability of the political economy, both political instability, and economic decline will continue. The major problem of the people is the source of earnings; they have neither employment nor any help from the state. The ever-increasing value of the dollar against the rupee, inflation, hikes in petrol prices, and electricity rates, and a sharp increase in the prices of food items have made life difficult.
As long as powerful constituencies do not give permission and freedom to any people’s government to use its powers legitimately, the country’s economy will continue to stand on its head and will continue to increase the suffering of the people.
Pakistan continues to be plagued by uncertainty as its political transition – untimely during the domestic and global economic crisis – has yet to stabilize. Political ups and downs have paralyzed policy during the new coalition government’s first two months in power. Pakistan’s power elite must recognize that this is an extraordinary moment in the country’s history an inflection point, both politically and economically.
In recent years, Pakistan’s middle class has been hit hard by unemployment and inflation. According to the United Nations Development Program (UNDP) Pakistan Human Development Report, 2020, the real per capita income growth of Pakistan’s middle class lagged behind the rest of the population in fiscal years 2013-14 and 2018-19. But there is a mismatch between the skills and preferences of college graduates and the demands of employers.
As the current government under IMF conditionalities reduces blanket subsidies, replacing them with targeted cash transfers for the very poor, macroeconomic stability may come at the expense of much of the middle class, and it can have political and geopolitical implications. Presently right now Pakistan’s economy is working, but only for the elite. Sustainable, rapid, and equitable economic growth has been imperiled by policy distortions that serve its civilian and military elites.
Pakistan needs a path toward sustainable, rapid, and equitable economic growth that integrates its rapidly growing population into the labor market. But Pakistan is a net energy importer with a narrow export base. Periods of economic expansion have been consumption-driven and import-dependent. Consequently, Pakistan’s economy becomes overheated once growth crosses the 5-6 percent threshold. It is also imperative to reallocate resources to improve agricultural production and meet domestic fuel production deficits. Pakistan’s agriculture sector has grown at an average rate of less than 2 percent since FY 2014-15. Declining agricultural productivity, rapidly growing population, increasing water stress, and the worsening effects of climate change are all adding to the already serious food security challenge.
The agriculture industry also contributes largely to the electricity industry’s arrears. Pakistan provides electric power subsidies worth billions of dollars annually for agricultural tube wells, particularly in edible oil is one of the top imports of Pakistan. Policy experiences in Pakistan in recent years have identified solutions to these challenges. For example, making the provision of low-interest loans for installing solar tube wells conditional on the use of high-efficiency irrigation systems or allowing net metering can promote water conservation.
It can reduce input costs, and help reduce power sector debt. The federal and provincial governments of Pakistan should also encourage private-sector innovation in the seed development industry and local production of edible oil. With domestic gas and oil reserves dwindling, Pakistan’s exposure to rising global fuel prices will increase. It needs to accelerate domestic energy exploration, promotes renewable sources, and explore the feasibility of green hydrogen and ammonia production, particularly in southern Balochistan.
Years before, Pakistan’s politicians came together to devolve powers to the provinces under the 18th Amendment, but most are against the devolution of powers to elected local bodies. Some provincial governments repeatedly delay local elections. This has left large cities orphaned when it comes to local governance and has inhibited their ability to develop and expand independent sources of revenue, including the issuance of bonds.
