Sunday, June 10, 2012

Pakistan's Ostrich People.

Akhtar Ali's writes in his "Mirror Mirror on the Wall article" that

"Three steps could reduce budgetary deficits, theoretically speaking; reducing military expenditure, taxing agricultural incomes and reducing waste, inefficiency and profligacy in government. It is the last one which government could have done with relatively lesser threat although it may annoy bureaucracies, political and influential leaders and many other beneficiaries of such waste. Finally it robs the ruler of the only pleasure it enjoys; pomp and pleasure bought through spending free money. It is the easiest and also the most difficult job requiring discipline, expertise and self-sacrifice. Waste reduction requires a lot of technical expertise as well in addition to the political will. It is not reduced by showy acts. 

Military expenditure has remained a permanent burden and drain on national economy and resources. The FY Budget 2012-13 has allocated formally a sum of Rs 545.3 Billion towards Military Expenditure (MILEX). Reportedly, it is a 10% increase over the last year without the asking of the defence sector. A good 42.1% (Rs 229.5 Billion) go towards payroll and employment related expenses, another 26.23 %(Rs 143.5 Billion) go towards operating expenses and Rs 120.5 Billion (22%) go towards physical asset, some kind of PSDP for the defence sector. It used to be a one line budget in early days. Happily, slightly more is known now about it. There are other declared and non-declared expenditures which have been excluded from the formally declared allocation. A sum of Rs 98.2 Billion for military pension comes out of civilian budget due to an innovation in understatement techniques. Several organisations of military nature are either budgeted from civilian sector or are simply not declared. It all adds up to an estimated figure in the range of 800-1000 Billion Rupees. This should be compared with a total outlay of PSDP of a mere Rs 360 billion and net revenue receipts of Rs 1774 billion. 

On the other hand it is argued by military circles that MILEX has come down, if measured with respect to the percentage of GDP or the total budget. It is high time that transparency is brought about in this respect. That should be the first step in bringing reforms in this sector so that useful and objective discussion takes place on the subject devoid of self-perpetrating logic or emotionalism. It is often considered unpatriotic or even immature liberalism to talk of reducing MILEX. There are political parties in the countries often encouraged if not propped by the establishment, who make a strong case for a national security state, high foreign policy agenda, wresting Kashmir from the clutches of India and the like along with a welfare state and subsidised energy and food prices. To top it all, these forces and the establishment have apparently turned against the Samraj which used to be milked to finance high military spending and import of weapons"

This shows the double faced and almost bonkers mentality of the so called pseudo- religious parties like the Jamaat -e -Islami who have always benefited by this double faced stance.How can you take high end agendas like the victory of Kashmir, spending billions on clandestine, misdirected organisations like Lashkare Tayyaba (LOIT) and also give cheap electricity and other welfare state benefits to its people at the same time?The Difa -e -Pakistan Council is one such Nauveau folie. 

Elaborating on the issues of Energy Deficiency he gives the cause as 
"Oil prices hurt the economy in many ways, especially because Pakistan has become very dependent on it. All economies are dependent on oil and energy but either they produce energy or consume less of it. Most countries consume oil only for transport needs as there is no other alternative to Internal Combustion engines used in the automotives of today. It is a gift of Musharraf regime which installed or put into pipeline many oil based power plants neglecting investments in gas discoveries and putting Thar coal on a back burner. Unfortunately, he and his coterie did not know, as is usual when going is good, that he was digging a grave for Pakistan's economy. Thus high oil prices, dependence of power sector on oil and low capacity of people to pay for real energy costs resulting in theft and low energy tariff result in unpaid subsidies and circular debt; a vicious cycle that has to be broken somewhere. This can be done if a government is spared of challenges in other sectors extracting and diverting the resources from powerful sectors. A besieged government cannot do that. And all other governments which don't manage to extricate themselves from blackmailing will continue to suffer and will end up as failures in the dustbin of history. The present government had its share in adding to the crisis. It has failed to act swiftly and decisively towards the development of indigenous energy resources like Thar and local gas. It has instead tried to take soft and urgent courses. It indulged in much defamed Rental Power only to know later that the crisis was not of capacity but was of energy resource. Rental Power, through inferior efficiency would have only worsened the crisis and would have contributed to the circular debt. Fortunately, it could not be implemented in full as originally planned. And they have been wasting time and energies in pursuing LNG projects that the economy could hardly support. Already, the government has defaulted on IPPs and has been threatened of international litigation. This would not send a good message to international investors who alone are capable of financing the capital intensive energy projects. On the other hand, energy bureaucracy has been left alone to decide on its own without central policy co-ordination. Bureaucrats are enhancing and showing their personal efficiencies at the expense of the total sector's performance. This is like somebody polishing the furniture of a ship that is sinking."

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