The Economic Survey, an official document released every year on the eve of the new budget and known for its cheerful and upbeat presentation of the state of the country’s economy, has this time portrayed the performance in fiscal 1998-99 as grim. It has acknowledged the failure of the economy in attaining any of its vital targets of growth.

The statistics and salient points in the document made public on June 10 leave one with the inescapable impression that the outgoing financial year has witnessed the economy in the wrenching grip of stagnation and contraction.

This was perhaps the worst ever performance of the economy since Independence. To maintain at least a semblance of its characteristic cheerfulness, the Survey has called it “rather mixed”. Statistics however leave no doubt that it was the bleakest ever record of the economy.

The growth rate of the Gross Domestic Product (GDP) was 3.1 per cent, almost half of the target of 6 per cent. Most dismal was the performance of agriculture. It remained virtually stagnant, recording a growth of a mere 0.35 percent. This was as bewildering as it was unprecedented.

The Survey attributes the bleak performance of the economy to external factors, mainly the economic sanctions following the atomic tests in May last year. But, agriculture is largely unsusceptible to foreign aid. It was not subject to adverse weather conditions either. Yet, it recorded a shocking fall in the production of both wheat and cotton, which constitute the backbone of the country’s economy.

Wheat was as much as one million tons below the target -18 instead of 19 million tons. Cotton was about two million bales short of the target. Wheat and cotton had both to be imported to stop ‘atta’ riots and to keep the textile mills from closing down!

There was, however, an increase in the production of sugar cane. Perhaps the proliferation of sugar mills in the country over the past few years had something to do with this. In the current cultural milieu, any body who is some body in the country is rated by the number of sugar mills he owns. These ‘some bodies’ also own agricultural lands and have in all probability shifted from wheat to sugar cane to keep their mills running. Then, there was an acute shortage of fertilizers at the time of the sowing of wheat. That this demand was not met is attributable to the incompetence, mismanagement and insensitivity of the concerned functionaries.

The large-scale manufacturing, during the year, recorded a growth of 4.7 per cent as against 7.9 per cent last year. The slow down has been attributed to the sanctions leading to a substantial reduction in import of raw materials and spares for industries. Then, the benefit of the fall in oil prices on the world market was not passed on to the industry as was done in other countries with the result that our cost of production became higher and less competitive. Both exports and imports fell by about 11 per cent each.

National savings dropped from the already low level of 14.2 per cent to 11.1 per cent of GNP. Obviously, the higher costs of basic necessities have reduced the margin of savings. The overall investment declined from 17.3 per cent of GNP to less than 15 per cent during the year.

Foreign private investment stood at a little over $300 million in the first nine month of the year as against some $640 million during the same period in the preceding year. The mishandling of the Independent Power Producers, who had invested enormous amounts in the thermal power sector, had scared away potential foreign investors. The freezing of foreign exchange accounts of expatriate and local Pakistanis eroded further the credibility of the government. The whimsical decisions of the top leadership to spend enormous sums on unproductive ventures on the one hand and borrowing money on hard terms on the other couldn’t go unnoticed by the sophisticated foreign investors. Expenditures, for instance, on a glittering airport or on a $1.5 billion motorway, which would take at least 450 years to pay back from earnings the capital investment alone, did not serve to inspire confidence in the wisdom of policy makers.

The care-free, cavalier manner in which the governments of both Benazir and Nawaz Sharif have gone on borrowing on high interest rates, over the past decade, has brought the country’s debt-servicing liability to 81.5 per cent of revenue. The Survey acknowledges this as the most serious fiscal problem. It finds that poverty has intensified due to the slowing down of the economy. It accepts that the burden of taxes has disproportionately fallen on the poor. No wonder some 700 persons, mainly the poor and unemployed, were reported, according to a national news agency, to have committed suicide in 1998. That is the highest figure in the annals of the country -three times the average

That the Pakitani society is now in deep turmoil and has actually been in turmoil for a decade or so, is generally acknowledged. Social and economic inequality, illiteracy, unemployment, negligible health facilities, ethnic and parochial intolerance, wide-spread corruption, arrogance of the ruling elite, are some of its ugly features. Economic policies and fiscal measures are tied up in the IMF knot, which may or may not be in national interest. To add to the bitterness of the cup, the clouds of war are hovering thick at the Line of Control in Kashmir. Foreign Minister Sartaj Aziz’s peace mission to Delhi was brusquely disposed of with something akin to a frown.

The budget for the next fiscal year was presented by Finance Minister Ishaq Dar against such a dismal backdrop.

The immediate impression one gains from a cursory glance at the budget is that in its framework and pattern it hardly deviates from earlier budgets. The magnitude of the socio-economic problems dictated a surgical agenda. No such revolutionary change has been planned for any sector of the economy. Had the economy been moving on the path to progress, one would have indeed complimented the planners and managers for their budget proposals. But, in the prevalent objective conditions, it struck like giving an aspirin to cure cancer.

Benazir termed the budget “a mere public relations exercise which will only increase the misery and poverty of the people.” She maintained, “Only the PPP could improve the stagnant economy and provide economic security to the people.” Facts reflect the hollowness of her contention. In her two-term rule, there was hardly any structural change. The way she and her husband went about lining their own pockets at the expense of the people has landed both into unprecedented disgrace. The miasma of their corruption smells to the sky.

The breezy enthusiasm of Nawaz Sharif saw the budget as reflecting his “government’s competence, transparency and honesty.” The dismal picture of the economy presented by his own government’s Economic Survey covering his own period of governance, exposes the competence or otherwise of his government. As for transparency and honesty, one need just recall the contents of the BBC film on the Sharif family’s financial dealings, and the treatment meted out to the newsmen who had given interviews to or helped the BBC’s film team.

It is not worthwhile to examine the budgetary allocations for various sectors of the economy. For, the entire budget will have to be recast in the light of the enormous expenditure that the undeclared war has imposed on the country. The common man, the poor man, already bent badly under the weight of the high cost of living will have to eventually bear also the brunt to this additional expenditure.

The self-righteous, intolerant and rigid Indian stance on the conflict in Kargil, its aversion to settlement through talks, is equally, if not more, deplorable. No matter what the chauvinistic Indian leadership’s pretensions, India is one of the poorest countries of the world. One third of its citizens, equal to the population of the US, sleeps on streets. The government may succeed in strengthening centripetal forces among its twenty-five linguistic states by keeping the emotions of the public on the boil through border conflicts, demolitions of mosques and churches, or other problems with its neighbors. But, emotions do not provide food for the empty bellies. According to Indian press, the country has been spending $700,000 a day on maintaining its soldiers in Siachen, the highest border post of the world. That can easily feed a million mouths a day. How many time more could be fed if there was no defense expenditure in the Kargil sector?

It is silly of the leaders of both India and Pakistan to let their economies be held hostage by their paranoiac arrogance. The poor and suffering people of the subcontinent deserve a better deal, a place under the sun, and budgets diverting expenditures from defense to the alleviation of poverty.