Stunted development

Almost 62 percent of children in Pakistan suffer from stunted growth, according to the National Nutrition Survey, of whom 40 percent are stunted and 22 percent severely stunted. Malnutrition in early years is the major cause of this stalled growth. In many ways this is similar to the stunted development the country is going through for the last decade. This realisation becomes starker when we analyse the latest World Bank report and find that in the world’s fastest growing region, South Asia (growing on the average at six percent), Pakistan’s growth has stunted to just over four percent. This is below not only India and Sri Lanka but also Bangladesh, Bhutan, Nepal and Maldives, all growing between five to seven percent plus. We are presently just above Afghanistan but the projected growth for the next year predicts Afghanistan overtaking Pakistan.
Comparisons with India have historically been rejected on the basis that all major industries were deliberately given to the Indians at the time of partition and that Britain deliberately created the Line of Control (LoC) issue to keep us unsettled. But the most shocking part of this analysis is that Bangladesh, which was East Pakistan till 1971, had inherited the same problems as West Pakistan but has overtaken us with a growth rate of 6.2 percent. This was a region that was considered as not being blessed with natural and infrastructural resources like West Pakistan and was languishing in growth compared to its western wing. For Bangladesh to move ahead of Pakistan shows how the problem lies within and not externally as many times attributed by conspiracy theorists.
Ironically, this low growth rate has persisted despite some favourable external factors. The major expense bill component is the import of oil and during the year oil prices nose-dived 55 percent. Despite floods there was a better harvest of cotton, wheat and rice crop. However, the macro economic variables hardly changed. The fact that Bangladesh, as part of Pakistan, was going down and now under different leadership is going up, is evidence of mismanagement and absence of governance that have been a feature of our governments in the last decade or so. Pakistan’s growth rate averaged between five to seven percent between 2002 and 2007, and even in 2008 it was 5.6 percent. Thereafter, it has averaged between three to four percent.
What is the reason for this constant downward spiral while the whole region is galloping ahead at the fastest rate in the world? Two of the main areas that stand out in this comparison are economic management and human development. On the economic management level we suffer from high fiscal deficits, budget deficitsand trade deficits that make us a nation constantly living beyond its means. These deficits stem from the simple factor of not having enough revenues to pay for expenditures. Pakistan’s budget deficit has been recorded at Rs 651.8 billion during the first half (July-December) of the ongoing financial year, which, according to the finance minister, may turn out to be higher than the agreed 4.9 percent to the IMF. Similarly, despite a significantly large growth in remittances, the country’s current account deficit widened by $ 95 million in January, reaching $ 2.307 billion in the first seven months (July-January) of this fiscal year. The reason? Low exports and high imports.
When a country continues to spend more than it earns, deficit is filled by either further borrowing or cutting back expenditures. Unfortunately, in both cases, our economic managers have taken the easier but counterproductive route. Borrowing domestically is done from commercial banks, thus squeezing room for lending to the private sector, which is really the engine for growth. Combine this with the addiction to IMF borrowing and the classic growth decelerator trap becomes self-evident where new loans are taken to pay off earlier loans. The other option is to cut expenditures and, unfortunately, the axe falls on the development budget that has already been shaved off by 15 percent to pay off debt and expenses.
The reason given for this anti-development fiscal management by the finance minister is not having any other recourse for revenue. Tax collection every year falls short of its targets and so will it this year as well. If you keep on taxing the same people, revenues will decline. Successive governments have failed to broaden the tax net despite the fact that less than a million people pay taxes in Pakistan. That is the root cause for all deficits and the huge tax burden on poor people. The data available of 3.5 million people in the Federal Board of Revenue (FBR) on who can be brought into the tax net has never been taken seriously as that would mean taxing the rich and those people that cannot be touched as they are connected to the various lobbies of government loyalists. Even if 30 percent of the people from this data are brought into the tax net it will make a substantial decrease in the deficit.
The other reason behind why the country’s growth has retarded is due to the fact that the human developed is under nourished. UNESCO’s latest report on education for all reveals that investment in education in Pakistan in the last 15 years has actually decreased, making Pakistan comparable to Niger, Chad and Burkina Faso. Also, the latest trends in Pakistan’s statistics on education show that out of school children have increased from 2.5 million to 2.9 million, making every fourth child out of school in the world a Pakistani child.
This reversal of development has affected every sector of development and has permeated in every part of our social interaction. The World Bank report talks about the lack of energy hitting industrial development. With very little institutional reforms and investment in these key areas this virus of underperformance has become endemic in sports as well. From being world champions in hockey and squash, Pakistan barely qualifies for big tournaments; from being a cricketing force, Pakistan today has been thrashed by Bangladesh to nose-dive into being eighth in ranking.
The type of structural changes needed to set the country on the right path requires unbending and across-the-board commitment to reforms. When 70 percent of our parliamentarians evade or misreport taxes it is very difficult for them to broaden the tax net and punish non-taxpayers, when most institutional appointments are made on an exchange of favour basis, the PIA, Pakistan Cricket Board (PCB) and so many other institutions will become national embarrassments, and when development decisions are based on kickbacks and ostentatious projection it makes the country vulnerable to internal and external exploitation. As for stunted physical growth the only long-term solution is focused nutritional intake. For stunted economic growth the only long-term solution is a focused pressure on government accountability for economic and human development.

The writer is secretary information PTI Punjab, an analyst, a columnist and can be reached at andleeb.abbas1@gmail.com