Pak economy: curing cancer with anti-fever medicines?

The following article has been published in Daily Nation, dated 4th May 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-05-04/page-9)

(Onlinehttp://nation.com.pk/business/04-May-2015/pak-economy-curing-cancer-with-anti-fever-medicines)

Pak Economy: Curing Cancer with Anti-Fever Medicines?

 Prof Dp

By: Omer Zaheer Meer

Due to some personal engagements, a write-up dated 22nd March 2015 by Mr. Ejaz Wasti, a gentleman working for finance ministry, questioning my 16th March 2015 article published in The Nation, titled “IMF-Driven policies: Destroying Economy & inciting revolts?” missed my attention. Recently it was brought to my notice. The initial thought was to let it be but the lack of substance all but forced this scribe to pen this piece in the hopes that it may be taken not as a rebuttal but as constructive feedback aimed at helping the decision makers improve for the betterment of our beloved Pakistan. For, while we appreciate the positive endeavors of our policy makers as evident from the past articles of this writer, pointing out the shortcomings is also our moral obligation.

Unfortunately Mr. Wasti ignored important questions raised in the original article of 16th March and instead focused on inking a column seemed to have been compiled in a rush. What’s more tragic is that just days afterwards the denial penned by the gentleman, World Bank as well as Asian Development Bank issued damning reports vindicating this writers’ perspective while blowing off the lid of the misconstrued arguments of the finance ministry employee/consultant. It’d therefore be surprising to see how any neutral economist could possibly justify the worst growth rate in the region even below the likes of Afghanistan and Bhutan as outlined by the above mentioned reports?

It’s tragic that the stats often shared by certain quarters of the ministry reminds us of Mr. Shaukat Aziz who pursued similar gimmicks, building an economy on a bubble rather than on solid foundations of increasing GNP and GDP by focusing on national output. Remember, Shaukat’s bubble got busted not long after the end of his Government. This time around we don’t want a similar “feat” from a Government famous for its economic achievements.

Coming back to the 16th March write-up, some of the major questions were left unanswered including the fact that why the whole 500 billion payment to IPPs was made in one go without ensuring the availability of the loudly trumpeted “40%” unused capacity? Why the payment of this huge sum was not done in installments with ensuring availability of additional capacity in the national power system at the release of each tranche, particularly considering Pakistan went to IMF for a $ 6.7 billion installment based bailout package, 75% of which was paid to IPPs?

Furthermore, I humbly dare to question why has the circular debt again reached Rs. 600 billion, surpassing the previous level? Would it not have been better to focus on structural reforms and cutting the line losses as proposed earlier by this writer instead of treating it as a matter of wounded ego?

Furthermore as to the claims of adding 1700 MW “additional” capacity in the system by “IPPs”, can Wasti provide any evidence to this since it has not even been claimed by the IPPs or even the finance ministry represented by him. Having said that, the claims of forensic audits and verification by Ministry of the huge payments are commendable and should be released to the public, but the question of bypassing AG office was still left unanswered.

Next the scribe from finance ministry referred to income tax notices issued with the aim to broaden the tax base. Perhaps he should spare some time to check the ground realities. Never mind, let us try to assist our decision makers here.

Recently notices claiming no existing tax registration based on “economic activities”, usually citing vehicle purchases were sent out to masses. Sounds good? Hang on, what if it’s shared with you that many of those receiving these notices were not only tax payers already registered but paying millions in Income Taxes annually? This exemplifies a total lack of coordination within the systems and functions of FBR. Missing out on the records already held by FBR simply reinforces the misconceptions that Government policies are to bother the already registered tax payers and not to act as a facilitator or initiator of genuine drives to catch tax evaders. Instead of helping the underlying objective, the manner in which this drive is performed is actually pushing genuine tax payers on the brink of undesirable actions.

What’s tragic is that while on one hand such steps are undertaken citing the need to broaden the tax base but on the other hand proposals with huge potential to achieve a larger tax base such as brining agricultural income within the tax net as well as allowing use of CNIC as National Tax Numbers (NTN) and Sales Tax Registration Numbers (STRN) have been falling on deaf years for almost a decade now. Of late, there has been news that CNIC may finally be allowed as NTN. If done, this will be a step in the right direction.

Similarly the question about the petrol crises was also conveniently ignored. While repeating the point outlined by this writer that the incumbent Government did pass on some of the benefit of reduction in Oil prices in international market owning to political pressures, he again preferred to ignore the question of how much? As per last available data, Government of Pakistan amassed a benefit of $ 2 billion by the price reduction and as per most mainstream studies (as the government has not shared the exact data), not more than a quarter of this was passed on to the people of Pakistan. Perhaps the finance ministry can share exact data about this to enlighten us all in this regard.

To sum it up, let’s examine an extract from my original 16th March article: “While we can give some space to government’s economic team citing the tough challenges they inherited and are facing, what is unfortunate though is that even the steps possible within the ambit of Finance Ministry are not taken ……. the painful but obvious fact remains that the necessary reforms required to revamp the tax system and structures are not been followed either. Instead of extending the tax base by bringing in Agriculture and other exempt areas in the tax net the existing base is being taxed more along-with higher indirect taxes imposed on the common citizen, both of which are disastrous in the long run. Had we actually taken the tough but necessary decision to broaden our tax base and executed proper financial management especially in the power circular debt payment we would not need to go to the IMF. The lack of these reforms has led to exorbitant borrowings, with the internal borrowings alone reaching the mark of a trillion.”

With this, let’s conclude by asking whether those officials representing the present Government will review the IMF driven economic policies and carryout the necessary reforms while providing relief to the ordinary citizens or will they continue to focus more on short-term cosmetic measures without any bearing to the economic condition of a common man? Perhaps even more important is the question whether these officials have the stomach to digest constructive criticism and engage positively to ensure beneficial proposals for the national economy?

Links to both articles are as below:

http://nation.com.pk/business/16-Mar-2015/imf-driven-policies-destroying-economy

http://nation.com.pk/business/22-Mar-2015/pak-economy-the-right-perspective

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, chartered financial analyst, fellow chartered certified accountant and certified anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Kashmir: The Forgotten Jugular Vein

The following article has been published in the Sunday Edition of Pakistan Today, dated 31st August 2014
(For online version: http://www.pakistantoday.com.pk/2014/08/30/comment/kashmir-the-forgotten-jugular-vein/ )

(For Published Version, Page 9:   http://issuu.com/abidoon/docs/dna_issue_39/9?e=3820687/9123742 )

Kashmir: The Forgotten Jugular Vein

What it still means to Pakistan

Prof Dp

By: Omer Zaheer Meer

The author is a Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, qualified accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer  or omerzaheermeer@hotmail.co.uk

Just like all beautiful things in this world, Kashmir, the heaven on Earth has been a victim of its own charm. While most people in the sub-continent and world over know of the miseries of Kashmiris since 1947, their hardships and slavery has dated back long. It was the fateful year of 1820 when tyranny took over the beautiful region with Ranjeet Singh annexing it. However it was yet to see the worst. In 1846, following the defeat of Sikhs in the first Anglo-Sikh war, the so-called “Maharaja” Gulab Singh “purchased” Kashmir along with all its inhabitants for a paltry 7.5 million Rupees from none other than the torch bearer of civilization and human-rights, the then British Empire. After the worst possible atrocities and subjugation a nation has been subjected to in human history, Kashmiris saw ray of hope with the arrival of 1947.

A new Muslim state was been carved out in the subcontinent named Pakistan. The region comprising this new state shared natural, logistical, economic, cultural, religious as well historic ties with Jammu and Kashmir. The overwhelming majority of Kashmir at the time, according to some studies over 80% was Muslim. The masses believed it was their democratic right as well as natural to become part of Pakistan. However there was a catch. According to the Independence Plan the Indo-Pak region was divided on the basis of religious majority of Muslims and Hindus but the independent princely states were to decide their own faith but encourage to join India or Pakistan while taking into account geographical contiguity and the wishes of their people. Any disputes were to be resolved by holding plebiscites.

The subjugation of Kashmiris ultimately led to an internal revolt in the “Poonch” region against the “Dogra Raj” resulting in declaration of “Azad” Kashmir government. The cries for support against the ruthless Dogra oppressors were answered by the poorly armed Pashton tribes from the mountainous terrains of Pakistan, sharing a strong bond of religion. As a result Hari Singh asked for help from India and was forced to sign an alleged accession document as per Indian claims despite having already signed a “standstill” agreement with Pakistan.

Worried by Indian aggression, Quaid-e-Azam ordered the British commander-in-chief of Pakistan Army, General Gracey to send in Pakistan Army units to aid Kashmiris but he refused setting a despicable blot on his name. A few low-ranking Pakistan Army officers voluntarily joined the warring tribes and reached the outskirts of Srinagar. However unnecessary changes of command, lack of proper arms and ammunitions and deficiency in numbers of the rag-tag militiamen meant they were no match materially for the regular Indian Army. However their passion, skill and bravery they fought with led them to not only liberate a vast region but inflicted such damage that the Indian Prime Minister Mr. Jawaharlal Nehru himself took the matter to the United Nations (UN) requesting a cease-fire and asking for a plebiscite in Kashmir under the UN watch, accepting it to be a disputed territory.

Before proceeding further, let me share an interesting excerpt from a historic address with you: “It (Kashmir) is a people with a soul of its own and an individuality of its own. Kashmir is not the property of either India or Pakistan. It belongs to the people of Kashmir, and the people of Kashmir alone will decide as to what their future affiliation and course of action will be”. The excerpt you just read is not said by any Pakistani or Kashmiri leader but these are words of the Prime Minister of India Mr. Nehru himself.

It is a sad tragedy that the so-called largest democracy in the world has enslaved an entire people against their will and back-tracked on its own commitments to not only them but the whole world for the seventh decade now. What’s more pitiful is the hypocrisy practiced by India. It annexed Hyderabad and Junagargh, both ruled by Muslim rulers despite the first declaring independence and the latter signing accession to Pakistan. India claimed that since the majority of the population was Hindu in both states, the independence and accession agreement do not hold. But when it came to Kashmir which was exactly a mirror image with a majority of Muslim population ruled by a non-Muslim ruler, India changed its own stance claiming the alleged accession agreement was to hold in this case. In effect, India practiced imperialist hypocrisy null of any principles. What’s more it even refuses to date to honor its own pledge of a plebiscite in Kashmir, which it made to the international community.

As of today, despite the partially successful 1948 liberation war and subsequent events including 1962 Indo-China war, the state of Jammu and Kashmir stands divided into three regions, the Indian-Occupied Jammu, Kashmir Valley and Ladakh, the Pakistan-administered Azad Kashmir and Gilgit–Baltistan and the Chinese-administered regions of Aksai Chin and the Trans-Karakoram Tract.

On its part, Pakistan fought several wars with India over the Kashmir dispute but missed some golden opportunities. During the 1962 Indo-China war, Kashmir was virtually “empty” of Indian Army and Pakistan was sent a message by Chinese to move in and take over what was rightfully theirs. However the dictator at the time, Field Marshal Ayub Khan let the opportunity slip. Earlier during the 1948 liberation war, Pakistan accepted a ceasefire when its tribal militia without support of regular Pakistan Army was inflicting serious damage to regular Indian Army, letting an opportunity to liberate Kashmir slip away.

Reading this all, you may be wondering why is Kashmir still so important to Pakistan and do Kashmiris still want to join Pakistan? While the latter can be determined by a plebiscite we can examine the first. All of Pakistan’s rivers flow from Kashmir. The Indian occupation has pursued controversial projects to implement a water control strategy designed to starve Pakistan of its lifeline of water supplies. The consequences of water scarcity require a detailed write-up but it can be safely said that it’ll put the very existence of Pakistan at risk.

It was not without reason that the wise Quaid-e-Azam said “Kashmir is the jugular vein of Pakistan and no nation can allow its jugular vein to be held by the enemy”. Even if one was to think beyond the atrocities by Imperialist India warranting a compassionate response, an independent Kashmir with defense pacts would be better for both Kashmir and Pakistan compared to an Indian Occupied one. Pakistan should therefore continue to stand beside the brave Kashmiris who have given unprecedented sacrifices for freedom and lend all the support possible for their just cause.