Economy in distress
THE Economic Survey released on Thursday paints a picture of an economy in deep distress. Since the period covered by the data includes mostly the first nine months of the fiscal year, meaning July 2019 to March 2020, much of what is portrayed cannot be attributed to the disruptions from Covid-19. The numbers betray troubling indicators deep inside the grooves of the economy, beyond the headline GDP growth figure, which is negative 0.38pc, a rare occurrence.
A slightly closer look shows some startling numbers. For example, credit to the private sector fell sharply from Rs554.7bn last year to Rs187.3bn this year in the July to March period. This is a marked decline and shows a sharp deceleration underway in private sector activity. The breakdown paints an even starker picture. Working capital loans, for example, dropped from Rs369bn last year to Rs28.8bn this year in the same period. Loans for fixed investment dropped from Rs83.1bn last year to negative Rs5.2bn this year, meaning on net there was negative investment in the country this fiscal year. At the same time, the amount of foregone revenue from tax exemptions jumped to Rs1.15tr this year. Only a few years ago, the figure was less than half this amount. The sharp increase in exemptions given to businesses over the two years that this government has been power has no doubt contributed to this picture.
What is noteworthy here is that despite a string of ‘incentives’ and ‘packages’ targeted at specific industries, there has been a sharp deceleration in the pace of economic activity in the country. The cost of these special incentive packages is evident at least partially in foregone revenue, but the benefits don’t show up in demand for working capital or investment. The assumption under which the government has repeatedly handed out incentives to the wealthy is that ultimately this will benefit the poor through increased employment and business activity. But it seems these wealthy investors prefer to retain much of the benefit from the packages for themselves, and very little actually reaches the poor. For the forthcoming fiscal year, the government should turn this approach on its head. Instead of the rich, it should put the poor at the centre of its economic policy agenda. Let the poor be the beneficiaries of the state’s largesse, and let the benefits trickle up rather than down. Putting money in the hands of the poor and unemployed means it will return to the economy in the form of demand, and that demand should be the signal for wealthy investors for where to invest. This approach has the added benefit of giving us more durable and organic growth rooted in the needs of the people directly. The budget provides the opportunity to make this shift. Investing in the rich is providing meagre dividends.
Ban child labour
TODAY is World Day Against Child Labour, an apt moment to reflect upon where we stand in relation to this abhorrent practice. While Pakistan has largely eliminated child labour in industries that have international exposure, such as carpet weaving, and the surgical instrument and soccer ball industries, it is not a heartening picture across the board. Consider, for instance, that there are an estimated 12m minors working in the domestic sector. Instances surface regularly of sadistic treatment meted out to these vulnerable individuals who have no agency in the conditions of their employment. Recently in Rawalpindi, an eight-year-old maid named Zahra let escape some caged birds belonging to her employers. That ‘mistake’ cost her her life, as a result of a savage beating allegedly at the hands of those for whom she was working. In October 2018, 11-year-old Kinza, also a housemaid in Rawalpindi, was found with marks of torture on her body; her employer was charged with causing the injuries. Two years previously, 10-year-old Tayyaba was rescued from an abusive household in Islamabad, her face swollen with welts and hands scarred with burns inflicted by her employers. The couple, a district judge and his wife, were sentenced to one year behind bars.
This is the tip of the iceberg, exceptions that make it into the public domain. Abuse of minor domestic workers takes place with impunity, out of sight behind high walls and the façade of ‘social respectability’. Here, these individuals wash, cook and clean, and look after the children of privilege while they are robbed of their own childhood and denied their inherent dignity. All provinces except for Balochistan have enacted laws against the employment of children below 14 years of age, but these pertain to hazardous work, which is in conformity with constitutional protections. There is no legislation specifically against child domestic labour that, as we see time and again, can also be a form of modern-day slavery. Moreover, why is 14 the minimum age for hazardous work? How can teenage boys, over 14 but below the age of 18 — when they are ineligible to vote, or even marry — be deemed old enough to work in places where their health could be compromised, such as in tanneries, car workshops and the like? The people’s representatives must revisit child labour laws in the light of reality. All minors have a right to protection from mental and physical harm.
Domicile controversy
FOR the past several days, protests have been held in different cities of Sindh over the issuance of purportedly fake domiciles and permanent residence certificates in the province. Political parties, nationalist groups and civil society activists claim the practice of issuing the aforesaid documents to non-residents of districts as well as the province is rife thanks to corrupt elements in the bureaucracy. Spurred into action, the Sindh chief minister had launched an inquiry into the matter; findings of the probe thus far, as announced by the provincial information minister, revealed that over 150 bogus domiciles and PRCs had been detected in four districts. He pledged action against the officials responsible, while announcing that an inquiry committee consisting of himself and the chief minister’s legal adviser was looking into the matter. However, the opposition MQM-P had earlier rejected the Sindh government committee, saying the move constituted contempt of court as the party had already approached the Sindh High Court regarding the matter of domiciles. The MQM’s plea is that non-residents of Karachi are given ‘bogus’ domiciles.
This is a very sensitive issue as government jobs, places in educational institutions and other official benefits are at stake. While residents of rural Sindh claim they cannot find work in their own districts and that those from other districts and provinces snap up government jobs, people of urban Sindh say they are deprived of employment and education by those from outside the cities. Perhaps the best way to address this is to reconstitute the committee probing the matter. Along with government officials, representation of non-partisan individuals — including respected names from civil society from both rural and urban Sindh — need to be on the committee to ensure that its work is transparent. With limited government jobs and places in public educational institutions, and a large, growing population, the Sindh administration will have to ensure that the process of granting domiciles/PRCs does not involve corruption, and only those eligible to obtain the documents under the law receive them.