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Archive for February, 1998

The Hindutva elections

For Hindu nationalists ranging from spaced-out RSS leader Bal Thackeray to the more human face of BJP’s PM nominee Atal Behari Vajpayee, these elections are a make-or-break scenario to take the veil off secularism and get acceptance from the world for their extreme right wing colours. Confronting the Bharatiya Janata Party (BJP) juggernaut are a collection of disparate regional parties misnamed as the United Front (UF) and the once-mighty Congress, brought to its knees by internal feuding and infighting. Analysts earlier had pointed to an easy BJP walkover, by election day it had become a three-way horse race, a resurgent Congress brought back to life by Rajiv Gandhi’s widow Sonia, rapidly closing the electoral gap, albeit most of it at the expense of the UF but poised to garner enough seats to deny BJP a chance to make the Central Government. For BJP, which had run a sophisticated sleight-of-the-hand campaign by seemingly deviating from its Hindutva ideology (one people, one nation, one culture) to woo regional parties on one hand and the large Muslim bloc on the other, failure to acquire power may have unfortunate consequences, including possible disintegration. Laloo Prasad Yadav’s alienation in Bihar and formation of another UF-clone alliance will severely cut UF seats in Parliament. Predictions were 240 seats for BJP in Parliament, almost 50 more than the last elections. Sonia Gandhi may drastically reduce BJP’s original estimate to less than 215.


The US$ 82 question

Pakistan’s economy has two major fundamental problems that don’t seem to go away, viz (1) more than 90% of the economy is not documented and thus are out of the tax ambit and (2) of the 10% that does pay taxes, only the salaried class pay anything close to their actual dues, the self-employed (i.e. businessmen, trades-people like doctors, engineers, etc) do not pay even 10% of what they actually should. Of the 90% undocumented, more than half are in the rural sector i.e. almost the entire tax burden today is on the shoulders of the unfortunate salaried class who make up about 50% of the 10% who do pay. And they pay only because most of it is deducted at source. This principle of deduction at source can be applied elsewhere though in different mode and style. The other area of major loss of revenues are the Customs and Excise duties, customs rebate being an open scandal. If Pakistan has to survive economically a major effort has to be made to raise revenues so as to have money to meet not only our non-development and development expenditures but also the amount needed annually for debt-servicing. As the PM explained quite graphically in a recent Investors Conference, we are borrowing money externally to meet our foreign debt commitments and internally to meet our recurring governmental expenditures, paying out from one hand what we are receiving on a beggar’s platter. Unless we simplify our tax laws which are presently confusing (and as such very fair game to be circumvented) and bring down taxes, customs and excise duties into simple, affordable slabs, the problems will persist as it gives the tax collectors enough room both in volume and ambiguity to manoeuvre pilferage.


Barbarians at the Gate?

Facing a very serious economic situation internally and beset by the proximity of one externally, Pakistan must be thankful that the rather creditable efforts of the present government as well as the Governor State Bank of Pakistan, has kept us from going under. Kudos are also in order for former President Farooq Leghari, for if he had lacked courage in sending the Bhutto regime packing in late 1996, we could never have survived Zardarinomics — every person in his pocket, every pocket his own — a few more weeks. In the bad economic environment of Asia, economic survival has taken some doing. We may also thank our lucky stars that George Soros probably considers it beneath his contempt to play around with our meagre foreign resources. As for financial analysts, they are no different than weather pundits, how many eulogizing the so-called “Asian Tigers” a year ago predicted the Asian financial crisis? Given that economic forecast, particularly with false or unreliable indicators, is risky business, given that the present global electronic environment where flight of capital takes seconds only is hardly conducive, one thing is very predictable, the leaders of Pakistan have to put in a seven-days-a-week, 24 hours-a-day superhuman effort to escape economic apocalypse. The present 9-to-5 hours-a-day six days-a-week syndrome is hardly conducive to economic amelioration of the masses. Lip-service with flourishes of the ZA Bhutto-type rhetoric will not do, deeds are much more appropriate to the times, as far pragmatic and as much related to the need as possible. A recent presentation to the PM in Zurich by a group of Pakistani financial experts based in the US (who came all the way to Zurich on their own time and expense) brilliantly identified the causes of Pakistan’s economic woes, they also suggested pragmatic remedial measures. Where they got stumped in was in the implementation of the proposals made, that is our greatest failing, a continuing lack of success in executing plans well-laid. And even the plans fall short of being revolutionary, to quote the PM “it will take a revolution, to take us out of this mess”. Mr PM, if the situation leads to anarchy, that may well-bring about a street revolution beyond the means of any government to contain.


The Davos Principle

Approximately 150 kms from Zurich high up in the mountains nestles the Swiss winter resort of Davos. Surrounded by beautiful mountains, literally brimming with ski slopes, the entire region is a playground of the rich and the unscrupulous, the beautiful and the not-so-beautiful. Switzerland has many locations that can match the spectacular landscape surrounding Davos, it has become host to an annual international cosmopolitan event that makes it unique. No comparable town or city in the world can boast a similar collection of world leaders, intellectuals, politicians, industrialists, financial experts and commercial chief executives assembling on a yearly basis at one place at one time to engage in intellectual discourse. The initiative of private enterprise, the World Economic Forum created an opportunity for a combination of such leaders to tackle the world’s current problems, evoking analysis and debate in congenial non-partisan surroundings. The session at Davos is called the Annual Conference, regional forums are held throughout the year in locations within various target regions. It also gives an opportunity for developing countries to have the undivided attention of a broad spectrum of decision-makers of the First World, to put across their viewpoint in a dialogue that is at once informative and thought-provoking. Many misconceptions are laid to rest at the Davos doorstep.