Social and economic disparity: Reforms needed across the board.

Byline: AHSAN NISAR

In recent times, the country's social and economic disparity has grown to unprecedented levels. On one hand, there is dangerously high food inflation and on the other hand, there is rising unemployment. The term 'middle class' is fast eroding due to the rise in poverty levels and fall in real incomes, while lower segments of society are trying badly to make ends meet.

The irony is that consumption of luxury items by the elite class is on the rise which is creating a civil war-like situation and the most worrying fact is that there seems to be no end to it in the near future. In short, Pakistan's economic growth has been stunted because of its inability to allocate all its talent and resources to the most productive uses. This also explains why countries like China and India have not been overburdened by the population bubble.

While it may be argued under which government Pakistan suffered the most during the last 75 years, one thing is for sure: none of the governments undertook tough structural reforms as each one of them did not want to hurt their political base. Whether it is the policy of using SOEs as employment agencies, wreaking havoc with the exchange rate, or extending unfunded subsidies to the elite, all these factors have contributed to where Pakistan is standing today. The successive administrations knew all that was wrong all along but did not do anything about it. The policymakers have either been blind or did not care to enhance the overall productivity as it does not suit their purpose.

There are powerful insiders that influence the decision-making process to maximize their own benefits. For example, in agriculture, it is the large landowners that benefit from subsidies. Similarly, the policy rate of 20 percent announced by SBP to counter inflation is again going to favor the elite as they are the ones who are going to mint the profits by depositing excess cash lying with them.

Major task ahead

The primary challenges facing Pakistan are many including political instability, corruption, uncompetitive trade regime, poor infrastructure, bureaucratic red-tapism, slow pace of privatization of SOEs, tax and tariff policies, lack of uniform rules across the board and inconsistent...