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The Acid Test of Disinvestment
In the face of one of the most far reaching economic decisions of the last two decades, that of allowing commercial banks in the private sector, the Nawaz Sharif Government has simultaneously decided to go whole hog for disinvesting the Nationalised Commercial Banks (NCBs), using Muslim Commercial Bank (MCB) as the guinea pig. Leaders of Third World countries are known to usually try and search for windmills off the beaten track to tilt against, another sorry example of negating an excellent decision by a bad one. The NCBs must compete in a free financial market atmosphere and if they fail to stand the heat, to die a natural death by themselves. Given that Mr. Sartaj Aziz has stated that a comprehensive economic reform package revolutionizing Pakistan’s economy would be announced in 6-8 weeks, this unholy, unseemly rush to offload a commercially viable NCB from public sector aegis becomes more mystifying, to say the least.
The State, Industry and Commerce – III
Among the designated HIT LIST of the Disinvestment Committee for Privatisation are the Trading Corporation of Pakistan (TCP), the Rice Export Corporation of Pakistan (RECP) and the Cotton Export Corporation of Pakistan (CECP). The performance of TCP, except for a brief period under Mr Yousuf as Chairman during 1983-85, has been more or less atrocious, more due to mala fide intervention (or benign negligence) of the Ministry of Commerce (MoC) as opposed to its own shortcomings. RECP and CECP could have performed much better, in the final analysis they have more than served the national purpose. The efficacy of top management and national requirement may have varied directly proportional to the quality of bureaucrats posted in but Pakistan has had a world position for the last two decades in rice and cotton because of the monopoly situation created by RECP and CECP.
The State, Industry and Commerce – II
The Nawaz Sharif government has made some very laudatory and swift moves towards freeing the economy, speeding up the process started by Junejo in 1985 and continued by Ms Benazir. Open-ended incentives for locating projects in the rural areas can only encourage rapid industrialisation. Demographically speaking, it will initiate population shift back to the rural areas. Bureaucracy’s control over the granting of permissions having been reduced in the “sanctioning of” part, the Empire will strike back (to reassert their authority), probably by making utilities unavailable. The politicians ability to cope with the bureaucracy’s capacity to filibuster will be the acid test of the economic will of the new Administration, a hard rock on which the PPP wave floundered.
The State, Industry and Commerce – I
History records the after effects of takeover of the assets of the British East India Company by the British Government in the name of the Crown subsequent to the 1857 War of Independence as a sordid example of the excesses of private enterprise being replaced by the inadequacies of bureaucracy’s lack of enterprise. Economics aside, it took almost a century for the foundations of the British Indian Empire to crumble, the residual of Imperial rule still afflicts South Asia, most particularly in ethnic and religious tension that sweeps the region. Our bureaucracy, no match for its British antecedents, particularly in honesty and sincerity of purpose, adds to its Atlas-like Administrative burden by ham-handed attempts to guide the economy of the nation, concentrating everything in the public sector, at the cost of private enterprise. Under the garb of a misguided sense of socialism that became the fashion of politics of the world in an era of slogan-mongering politicking in the 50s and 60s, more particularly the new emerging nations of the Third World, the State became a major (and dominating) participant in industry and commerce in Pakistan rather than acting to simply regulate the process in a laid-back manner, a sure recipe for disaster manifest in the despondency and hunger afflicting the masses of one of the Superpowers of today, the Soviet Union and its former proteges and client-nations of Eastern Europe. People who talk about the Marxist-Leninist type of socialism should be made to stand in queue in the bread lines of the USSR and the former COMECON countries.
Challenging the issues
Nawaz Sharif has been elected PM at a particularly difficult economic period, aggravated and complicated by the Gulf Crisis. The journey to becoming the executive head of the government may have been a political obstacle course, incumbent PM has now to apply his entrepreneurial background and experience in taking Pakistan out of its present economic doldrums.
Bipartisan economic agenda
The democratic will of the people has been manifest in the new elected Government in Pakistan, the greatest priority of the new incumbents is to come to grips with the rapidly deteriorating economic situation. Pragmatic policies and lofty rhetoric about principles adopted by PPP at the outset of their tenure were waylaid at the altar of greed, mostly by those who were in the Party for convenience or by the circumstances of marriage. In sum total the 20 months of the Benazir Government contributed heavily to the economic tailspin that we are in now but we should not become guilty of tarring everything they did with a broad brush. The PPP, to their credit and in utter contrast to their manifesto, had opted for privatisation, knocking out the main prop of their own socialistic order (and ardour). The journey from the theoretical left brought the PPP to somewhere right of the middle and into line with the economic mainstream of the world. By outright abandonment of her father’s economic philosophy, Ms Benazir exposed Z.A.Bhutto’s serious economic mistake of nationalisation. In actual practice though, lip-service rhetoric did not translate into Thatcherite reality. A consensus on economic issues has, however, evolved which will stand the Nawaz Regime in good stead in coalescing national support for its economic initiatives, unless the Opposition decides to go “opposition for the sake of the opposition” route. Ms Benazir showed no magnanimity in victory 20 months ago, uptill now she has shown amazing lack of grace in defeat.
Clear and Present Danger
To deal with the situation in Karachi, the PML(N) threw out its own Chief Minister to impose Governor’s Rule. With disorder rapidly descending into anarchy, the Army was brought in “aid of civil power” under Article 245 of the Constitution, Military Trial Courts (MTCs) being set up to deal with cases that qualified as falling under the head of “terrorism”. Military Appellate Courts were set up as a last resort of appeal, two persons whose appeals had been rejected have been hanged. In the meantime the Supreme Court, having been approached to define the legality of a “parallel” judicial system in the country, has suspended the further carrying out of the extreme punishment of death imposed by the MTCs till the case is pending in court is decided one way or the other. With the MTCs “teeth” clamped for the moment, their deterrent effect has been put in suspended animation.
Looting of the Public Till
The main reason for nationalising the banks in 1974 was that credit was never available to the masses, it simply got circulated among the wealthy coterie of few families. Bhutto was absolutely correct in his premise and, to an extent, successful in spreading credit to a broad spectrum of aspirants. Nationalisation created its own inherent ills to go with its advantages. With the bureaucracy’s discovery of the potential of financial strength as a source of power, a new mixed elite of banking executives and financial bureaucrats came into existence, answerable to nobody. The result has been unbridled loot of the banks for the last decade or so that has surpassed standard corrupt practices of kickbacks and graft in the Third World by miles.
Houses of Commerce and Industry
Every institution in this country seems to be self-destructing at an alarming rate. During 1989, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) enjoyed its most prestigious year since inception, by Mid-1990 FPCCI has sunk lower than it would care to admit. Essentially the same GROUP holds sway over the elected management, only a change of personalities having taken place, in actual fact a sea change of fortunes has occurred.
The Economic Year in Review
A populist Government is always torn between two widely dissimilar choices, whether to go the popular route in avoiding the levying of taxes or to impose such taxation as may be necessary to offset necessary development. Ms Benazir’s Government chose the politically pragmatic route of avoiding taxes in fiscal 1989-90 and almost got away with it, one dare says that all conditions remaining equal, the Federal Government would not have had to resort to increasing fuel prices in the last quarter of the Budget year. The gamble did not come off, a combination of bad financial discipline, worsening world-wide economic situation, internal circumstances particularly strife affecting the port city of Karachi and the increasing threat perception from India because of the escalating situation inside Indian Held Kashmir (IHK) have combined to put all plans into an economic flat spin. The Government, therefore, resorted to a last gap fuel-hike but luckily for them the month of Ramzan timing coupled with the present apathy of the masses towards widespread protest, force multiplied by mass concern at the immediate Indian threat, has paid off.