Archive for May, 1987
The American Movie-Star Sylvester Stallone (along with a few other superstars) runs his restaurant PLANET HOLLYWOOD far better than we have been running our economy, which exercise is more akin to living in a fantasy world of figures, most of them fudged to fool everyone and his uncle, Uncle Michel Camdessus of the IMF among them. If we thought last year’s growth rate of 4.6% was bad enough, compare it to the 3.1% for this year. The macro-economic situation remains under tremendous pressure because of a number of deep-rooted structural failures as well as policy weaknesses. Economic performance has been short of targets for some years, the pressures on prices have continued unabated, fiscal deficit have remained stubbornly high and balance of payments deficit have been on the increase as a percentage of the GDP. Even last year’s growth rate of 4.6% was attributable more to divine nature than anything else, a bumper cotton crop and increases in the production of a number of minor crops. Really scary was the slump in manufacturing, small scale manufacturing registered 8% plus to offset the huge decrease of 1.25% in large scale manufacturing, a negative growth. The major pressures originated in the high budget deficit of 6.3% of the GDP, balance of payments deficit in excess of 7% and the alarming increase in prices plus of 13%. To put it very bluntly the state of the economy is abominable despite all our efforts at getting additional resources and some real progress in controlling expenditures. The challenges before our economic managers are very serious, the ability to meet these challenges depends upon identifying the root cause of the economic imbalance, that remains the substantially large fiscal deficit. Government revenues in last year’s Budget, in particular tax revenues, are insignificant in relation to the GDP despite all the additional taxation efforts. The success of Mr Sartaj Aziz’s proposals made on Friday evening depends not upon rhetoric alone but on reciprocity by the business community to the liberal concessions and on strict implementation of the reduced taxation measures. Unless we can increase the numbers in our tax net and get those who are already in the tax net to pay their actual dues, we will remain economically adrift searching for friendly shores who will disburse easy loans.