SINDH: SHRINKING ECONOMY AND RISING POVERTY

Donor agencies are now confirming what people of Sindh have known all along in their daily lives. ECONOMY OF SINDH IS SHRINKING WHILE THE POVERTY PARTICULARLY IN RURAL AREAS IS INCREASING.

I like to highlight some approximate numbers which are well known to the Government of Sindh and the Government of Pakistan.

Average growth rate of agriculture for the last five years has been 1.8% for Pakistan; 2.5% for Punjab and MINUS 0.1% for Sindh. NOTE IT HAS BEEN NEGATIVE GROWTH OF AGRICULTURE IN SINDH.

Poverty rate for Pakistan as a whole has decreased from about 47% in 1983/84 to 38% in 2001/02. In 1983/83, Sindh had lower poverty rate than Pakistan as a whole. It was about 38%. However, by 2001/02, Sindh's poverty has become worse than that of Pakistan as a whole and became 42%.

The urban rural differences have become shocking during the period. Urban poverty in Sindh was 30% in 83/84 and has come down to 25% in 2001/02. While the rural poverty which was about 47% in 83/84; decreased to 35% in 1996/97 (PPP period); but jumped to about 52% in 2001/2002. THE PERIOD FROM 1996/97 WHEN SINDHIS WERE EFFECTIVELY THROWN OUT OF DECISION MAKING PROCESS, HAS SEEN TREMENDIOUS INCREASE IN PVERTY OF SINDH.

I find this eye opening information. I believe that every justice loving citizen of the world, every Pakistani and every Sindhi should ask WHY HAS THIS HAPPENED.

I DRAW ATTENTION OF PRESIDENT MUSHARAF AND PARTICULARLY SO CALLED SINDHI CHIEF MINISTER OF SINDH TO THIS INJUSTICE. All those who are party to this SHRINKING ECONOMY AND RISING POVERTY in Sindh during a period of rising economy and shrinking of poverty in Pakistan should explain their actions to people of Sindh.

Your input and help towards development of Sindh is always welcome.

Ali Nawaz Memon
Sindh Development Institute
7204 Antares Drive
Gaithersburg, Maryland, USA 20879
http://sindhdevelopmentinstitute.blogspot.com/
sindhhouse@hotmail.com

Politics of budgeting

Politics of budgeting
By Kaiser Bengali
THE budget is a political document. It determines how much money will be taken out of whose pockets and how much of that money will be put into whose pockets. Clearly, these decisions are largely determined by the balance of political power of the various groups in society.

In a perfect democratic polity, all groups command some leverage through the electoral process and are in a position to stake some claim on the distribution of national resources. In an undemocratic dispensation, powerful groups that control the levers of state power command a degree of monopoly over decision making and are able to determine the distribution of tax burdens and expenditure benefits without meaningful reference to the people at large. The latter scenario applies to Pakistan.

Pakistan’s political arena is dominated by an elite that comprises the military officer class, civil service executives, large landowners, large traders and industrialists, up-market professionals, capital market dealers, politicians as well as the ulema. To this lot may be added a new breed of Islamabad-based middlemen, who specialize in cultivating high-level contacts and can broker any deal for a price. Collectively, they might all be labelled as the ashraafia. At the other end of the spectrum are the people at large or the awam. The ashraafia has traditionally dominated the country’s polity and economy; however, the degree of their control has gained added strength under military dictatorships.

The euphoria among the ashraafia whenever there is a military takeover and the subsequent support extended to the dictatorships need to be understood in this context. The policies pushed forward by the ashraafia over the last half a century has created two parallel economies in the country: one of the ashraafia and one of the awam. The present military-dominated political dispensation led by General Musharraf is the most pristine representative of the ashraafia in Pakistan’s history. This is indicated by the budget for the year 2005-06, which caters almost entirely to the requirements of the ashraafia and blatantly ignores the needs of the poor.

There are two unique features of the budget for the year 2005-06. One is the tax measures relating to the textile industry. They are certainly bold and highly commendable. Faced with stiff competition from China, in the wake of the abolition of textile quotas from January 2005, the measures can be expected to enable Pakistan’s textile industry to fare better in the international market.

Given that cotton and textiles have a dominating role in Pakistan’s agriculture, industry and exports, the measures can be expected to sustain the growth momentum in other sectors as well. In fact, such measures need to be extended to other industrial sectors in order to enable the manufacturing sector to emerge as the engine of growth in the national economy.

The corresponding revenue losses can be made up through taxation of wealth and through reduction of current expenditure. That, however, would require a paradigm shift in the thought processes of the ashraafia.

The other unique feature of the budget is the rank insensitivity to the plight of the poor. The absence of consideration for the poor is part of a systematic pattern in the policy choices made by General Musharraf’s economic managers; with the bulk of the cost of macroeconomic adjustment of all economic policies pursued since October 1999 being placed on the poor. Not surprisingly, seven million people fell below the poverty line in less than three years; rendering it the fastest growth of poverty in the country’s history.

Analysis of available data over 1999-2002 has shown that while the purchasing power of the richest 10 per cent of the population rose 33 per cent, that of the poorest 10 per cent declined by nine per cent. The opposing movements in purchasing power trends between the rich and the poor has widened the income gap, with the richest 10 per cent of the population expropriating 34 per cent of national income and leaving less than three per cent for the poorest 10 per cent.

The insensitivity to the poor is again evident from the fact that despite a near tripling of the inflation rate over the year, the budget proposals are devoid of a single inflation control fiscal measure. At the least, one expected a modest reduction in gasoline taxes in order to mute inflationary tendencies in the economy. Given that households earning less than Rs3,000 a month face an inflation rate that is about 10 per cent higher than the average inflation rate, such a measure would have certainly helped the poor. And given that the rate of food price inflation is about 45 per cent higher than the average inflation rate, a pro-poor orientation of the ruling ashraafia would have provided for a wheat flour subsidy and public investment in a nation-wide distribution system. No such relief for the poor is in the offing.

Perhaps, government’s economic managers have chosen to absolve themselves of the responsibility for dealing with inflation on the grounds that it is imported through higher international oil prices. This is only partly correct. Partly, responsibility for fuelling inflation lies with the State Bank of Pakistan. It may be recalled that, till recently, commercial banks in the country were loaded with excess liquidity. Funds lying idle with banks are a recipe for losses; while they have to pay interest to depositors, they are not earning interest on loans that could have been extended to borrowers. The State Bank came to the rescue of the banks with a credit policy that opened the floodgates of credit for consumer purchases, houses, etc.; resulting in a record 21 per cent growth in the banking and insurance sectors during 2004-05.

The liberal flow of credit was instrumental in escalating land and stock prices by a factor of two to three over a period of just one year. It needs to be noted that the credit flow placed money in the hands of the rich and the upper middle class, given that only they could qualify for bank conditionalities for obtaining credit. The poor and the lower middle class remained excluded from the process. However, the credit expansion led to the aggregate increase in money supply and in the velocity of money, which fuelled inflation, with the larger part of the cost borne by the poor.

The income-demand driven inflation that Prime Minister Shaukat Aziz is prone to highlight is demand for goods and services by the credit-rich ashraafia and not by the income-poor awam. The link between the balance of political power in the country and the nature of economic decision-making emerges clearly. The unrepresentative nature of the Musharraf regime and its links with the world of international finance — characterized by the fact that the regime’s economic team is led by ‘imports’ from the international financial and banking world — ensured that the demands of banking sector profitability prevailed over the imperative of economic security of the poor.

The 2005-06 budget is also silent on the employment front. The omission is meaningful, given that the 2.3 per cent growth in employment during 2004-05 has been cancelled out by the 2.3 per cent growth in the labour force. The stock of employed, concentrated in greater numbers in Balochistan and rural Sindh, remains constant. Elementary macroeconomics textbook dictum that growth must address the backlog of unemployment as well as cater to the employment needs of those entering the labour force appears to have been ignored. A regime committed to providing livelihood to the poor would have been induced to provide for some specific employment generation measures in the budget.

The cause of employment generation can be furthered through public investment in labour-intensive public works programmes that would also rehabilitate and/or create economic infrastructure. Unfortunately, the record of the regime in terms of development expenditure is dismal.

Democratic governments during 1988-99 were constrained by shrinking fiscal space, caused by the lagged debt servicing burden imposed by the erstwhile military regime of General Ziaul Haq and subsequently aggravated by the ill-conceived financial liberalization in the early 1990s. General Musharraf’s regime was blessed by the post-9/11 largesse from Washington, which provided much needed fiscal space. The year 2002-03 saw fiscal space of Rs59 billion on account of lower debt servicing expenditures and higher import duty and surcharge collections. Yet, not one single rupee of this fiscal space was devoted to development expenditure.

In fact, development expenditure during the year was Rs14 billion lower than budgeted, while (non-development) current expenditure net of debt servicing was Rs98 billion higher than budgeted. General Musharraf’s finance minister then attributed the failure to utilize the entire budgeted amount for development expenditure to ‘the absence of absorptive capacity in the economy’. This was preposterously ludicrous, given that the country’s rural and urban infrastructure needs are crying out for funds. One rural water conservation project in any one province or one urban renewal project in any one city could have absorbed at least 10 times the unspent amount.

The year 2004-05 has closed with nearly half the development budget unspent. The budget for the year 2005-06 has allocated Rs272 billion for development. However, this is merely of academic value, given that the amount is unlikely to be spent. On the current revenue-expenditure side, there is an over Rs. 100 billion deficit that is assumed to be met through improved revenue collections. If past experience is any guide, it is more likely to be met through cuts in development expenditures.

Statements have already been made to the effect that, if General Musharraf’s verdict on the NFC award necessitates additional resource transfers to the provinces, the amounts would be provided from the development budget. The pattern of behaviour with respect to development expenditure shows that the regime is committed almost exclusively to the goal of promoting the economic agenda of the ashraafia and has little or no commitment to development programmes related to the needs of the people.

Pakistan is a resource rich country and, among all the south Asian countries, is alone capable of abolishing mass poverty within the span of one generation. This would require a restructuring of the entire fiscal framework so as to ensure that resources are allocated equitably. However, the prerequisite for carrying out such an exercise is a reconfiguration of the balance of state power itself.

(Source: DAWN, http://dawn.com/2005/06/25/op.htm#3)

SDI mission, approach, resources, name, model etc revisited

Our Mission

Sindh Development Institute (SDI) will be a research, educational and promotional think tank whose mission will be to formulate and promote public and private policies and actions for accelerated economic development of Sindh.

Our Approach

We wish to find solutions to contemporary economic problems facing sindh from the ideas, principles and traditions that will accelerate economic development of all people and parts of Sindh with special focus on less developed parts. We recognize that more developed people and parts can play a very significant role in strengthening the less developed ones.

We seek to motivate and assist entrepreneurs, governments (of Sindh, Pakistan and other parts of the world), development institutions, and indeed the population of Sindh to become economic development oriented.

We want Sindh that is prosperous; where choices in employment, education, health care and housing for all residents are plentiful. We want Sindh Government, to be primarily focused on economic development. Where everybody has the opportunity to go as far as their talents will take them. We want government to protect its residents, concentrate on its core functions, recognize its limits and shows favor to none.

To this end, we want the government to have investment friendly policies resulting more jobs. We want entrepreneurs to invest. We want the government to fight for economic and developmental rights of Sindh at federal and international levels. We want political parties to unite on agenda of “prosperous Sindh”. We want special focus on employment generation. We want universities to produce market oriented graduates.

Our Resources We start with little-- with experise of our like minded volunteers. We seek more volunteers who wish to work for economic development of all of Sindh. Through discussion forums everywhere, email exchange and other means, we hope to draw on expertise of every one – Sindhis and non-Sindhis alike.

We believe that ideas have consequences, but that those ideas must be promoted aggressively. So, we shall constantly try innovative ways to market our ideas. Our ultimate goal s to build Sindh where freedom, opportunity, prosperity and civil society flourish.

Development Models for Sindh

Others have mentioned Singapore and Hongkong as models. Please look at the web site of Singapore. See how it is focused on economic development and direct welfare of its people.
http://www.ecitizen.gov.sg/inc_frame.htm?link=http://www.business.gov.sg

Here is one for Hong Kong which is a part of China
http://discoverhongkong.com/usa/media/

Pakistan Budget 2005: A review

Senator Dr. Akbar Khawaja - Budget Speech
Delivered on Friday, June 10, 2005
Budget is a statement of priorities. It sets a strategic policy direction for the \r\nactivities of the government. Once again Regime has pledged new \r\npromises. \r\n\r\nBut \r\nwe\'ve yet to see this regime set priorities when it comes to the people of \r\nPakistan.· Its true that Government doesn\'t create wealth. But the \r\nrole of government is to create the kind of conditions where risk-takers \r\nandentrepreneurs can invest and grow and create jobs by hiring new \r\nworkers.",1]


· Budget is a statement of priorities. It sets a strategic policy direction for the activities of the government. Once again Regime has pledged new promises.
But we've yet to see this regime set priorities when it comes to the people of Pakistan.· Its true that Government doesn't create wealth. But the role of government is to create the kind of conditions where risk-takers andentrepreneurs can invest and grow and create jobs by hiring new workers.
· In addition to providing basic necessities and increasing \r\nstandards of living to its citizens, Government has many vital roles in society \r\nincluding assuring stability, peace, equity, and justice.Economic Growth· Although SBP has contradicted PM\'s \r\nclaims of over 8% growth & per capita income.· It sounds good and I \r\nsincerely wish that such trend continues but the fact is that the cushion in \r\neconomic growth indicators is not an outcome of government policies in past few \r\nyears but attributed to external assistance including generous lending, debt \r\nrescheduling by the Paris Club and Int\'l financial institutions and remittances \r\nfrom expatriate Pakistanis.· Off course another factor we saw last year was \r\na change in the calculation of GDP methodology -Base of GDP was changed from \r\n1980-81 to 1999-2000. \r\n\r\nWe \r\nneed to be careful in comparing the growth rates under different base years as \r\nindicated on page 49 of Pakistan Economic Survey.· So, in addition to inflow \r\nof remittances from our expatriates, crucial turning point for the economy was \r\nintervention of the international community -- and especially the United \r\nStates.",1]

· In addition to providing basic necessities and increasing standards of living to its citizens, Government has many vital roles in society including assuring stability, peace, equity, and justice.Economic Growth· Although SBP has contradicted PM's claims of over 8% growth & per capita income.· It sounds good and I sincerely wish that such trend continues but the fact is that the cushion in economic growth indicators is not an outcome of government policies in past few years but attributed to external assistance including generous lending, debt rescheduling by the Paris Club and Int'l financial institutions and remittances from expatriate Pakistanis.· Off course another factor we saw last year was a change in the calculation of GDP methodology -Base of GDP was changed from 1980-81 to 1999-2000.
We need to be careful in comparing the growth rates under different base years as indicated on page 49 of Pakistan Economic Survey.· So, in addition to inflow of remittances from our expatriates, crucial turning point for the economy was intervention of the international community -- and especially the United States.
· Recent growth trend has been mainly dependent upon the external \r\nsector and as external support diminishes, the current economic recovery will \r\nhave to depend more heavily on the strength of the domestic \r\nsector.\r\nBorrowing· General Musharraf tells the Pakistani people \r\nthat we have broken the Kashkol. It is not true, government is still \r\nborrowing, although regime is shying away to give out the real numbers as \r\ndemonstrated in the recent press conference by Mr. Shaukat Aziz\'Advisors · But, \r\nit\'s fact that government has plenty of money because of its earlier savings on \r\ndebt service, and additional borrowings including $1.5 billion last year. \r\nIt is also true that the decision of new NFC award was intentionally delayed to \r\navoid distribution of its due share to provinces in accordance with a new \r\nformula.Agriculture Production· We are \r\nlucky that due to a favorable weather and timely winter rains, provisional \r\nagricultural estimates are very encouraging due to a significant contribution of \r\nrecord crops particularly wheat and cotton.· However minor crops indicated a \r\nmix performance. And wheat import and other agriculture items are still in \r\nthe pipeline.",1]

· Recent growth trend has been mainly dependent upon the external sector and as external support diminishes, the current economic recovery will have to depend more heavily on the strength of the domestic sector.
Borrowing· General Musharraf tells the Pakistani people that we have broken the Kashkol. It is not true, government is still borrowing, although regime is shying away to give out the real numbers as demonstrated in the recent press conference by Mr. Shaukat Aziz'Advisors · But, it's fact that government has plenty of money because of its earlier savings on debt service, and additional borrowings including $1.5 billion last year. It is also true that the decision of new NFC award was intentionally delayed to avoid distribution of its due share to provinces in accordance with a new formula.Agriculture Production· We are lucky that due to a favorable weather and timely winter rains, provisional agricultural estimates are very encouraging due to a significant contribution of record crops particularly wheat and cotton.· However minor crops indicated a mix performance. And wheat import and other agriculture items are still in the pipeline.
· Although current agricultural growth is encouraging with an \r\nexpected growth around 7%, we have left the agricultural sector growth mostly \r\nwith the nature sometime going through drought and sometime availability of the \r\nexcessive water.· The sector is especially important given that almost \r\ntwo-thirds of the population relies on farming incomes. However, the government \r\nhas failed to tackle corruption problems and effect much-needed land \r\nreform.\r\nIndustrial Production· Earlier claims of 15% expected \r\ngrowth in industrial production is down as compared to FY03 and \r\nFY04. There is a decline in large-scale manufacturing but an \r\nincrease in electricity generation and mining sub-sectors. Again rains \r\nwater helped in electricity generation.Increase in mining is due to higher \r\ngas production mainly in Qadirpur and \r\nUch.\r\n",1]

· Although current agricultural growth is encouraging with an expected growth around 7%, we have left the agricultural sector growth mostly with the nature sometime going through drought and sometime availability of the excessive water.· The sector is especially important given that almost two-thirds of the population relies on farming incomes. However, the government has failed to tackle corruption problems and effect much-needed land reform.
Industrial Production· Earlier claims of 15% expected growth in industrial production is down as compared to FY03 and FY04. There is a decline in large-scale manufacturing but an increase in electricity generation and mining sub-sectors. Again rains water helped in electricity generation.Increase in mining is due to higher gas production mainly in Qadirpur and Uch.
Investment Issues· Foreign direct investment (FDI) has \r\nnot been a main driver of economic recovery. Last year, the economy attracted \r\nbarely 900 million dollars and, in 2004-05, FDI is likely to reach no more than \r\n1.2 billion dollars. This poor performance contrasts sharply with foreign \r\ncapital inflows.· Stimulating domestic investment appears the main way \r\nforward but it is dependent upon law and order situation and the restoration of \r\nfiscal stability.· The Workers remittance is also showing some slow trend of \r\n7.3% from 2.8 billion to 3.04 billion comparing the earlier corresponding period \r\nending \r\nMarch.\r\n",1]

Investment Issues· Foreign direct investment (FDI) has not been a main driver of economic recovery. Last year, the economy attracted barely 900 million dollars and, in 2004-05, FDI is likely to reach no more than 1.2 billion dollars. This poor performance contrasts sharply with foreign capital inflows.· Stimulating domestic investment appears the main way forward but it is dependent upon law and order situation and the restoration of fiscal stability.· The Workers remittance is also showing some slow trend of 7.3% from 2.8 billion to 3.04 billion comparing the earlier corresponding period ending March.

Revenue· So there is a new fiscal space but the \r\nbudgetary revenue receipts have not risen as a share of GDP and remains at 13% \r\nof GDP as compared to 14.3% and 15% of GDP in preceding two years. (as \r\nindicated on page 56 of Pakistan Economic Survey)· Revenue administration is \r\nstill weak and compromised by widespread corruption.· It\'s a surprise that \r\nCVT - capital value tax was not changed from 0.01 to 0.02% to help a richer \r\nclass but there was no cushion to a common citizen and sales tax basically \r\ncontinues to be a tax on consumption.· It\'s regrettable that this Regime did \r\nnot want to bring the Real Estate transactions in the tax net to help the Qabza \r\ngroups and interest of the classes it represents.· There could have been \r\nadditional fiscal space to bring this group in the TAX NET but Regime wants to \r\nprotect the real estate mafia. People know well who will be the biggest \r\nbeneficiary of this \r\nscam.\r\nExpenditures· During past year, Rs. 202 billion \r\ndevelopment budget did not bring any tangible benefits to a common \r\ncitizen. Once again Regime has pledged new promises with a new development \r\nbudget of Rs. 272 billion and an additional provisions of 34 billion rupees for \r\nWAPDA and NHA.",1]

Revenue· So there is a new fiscal space but the budgetary revenue receipts have not risen as a share of GDP and remains at 13% of GDP as compared to 14.3% and 15% of GDP in preceding two years. (as indicated on page 56 of Pakistan Economic Survey)· Revenue administration is still weak and compromised by widespread corruption.· It's a surprise that CVT - capital value tax was not changed from 0.01 to 0.02% to help a richer class but there was no cushion to a common citizen and sales tax basically continues to be a tax on consumption.· It's regrettable that this Regime did not want to bring the Real Estate transactions in the tax net to help the Qabza groups and interest of the classes it represents.· There could have been additional fiscal space to bring this group in the TAX NET but Regime wants to protect the real estate mafia. People know well who will be the biggest beneficiary of this scam.
Expenditures· During past year, Rs. 202 billion development budget did not bring any tangible benefits to a common citizen. Once again Regime has pledged new promises with a new development budget of Rs. 272 billion and an additional provisions of 34 billion rupees for WAPDA and NHA.

· This amount is in addition to budgetary allocation for \r\nsubsidies as indicated on page 28 of Federal Budget in Brief. \r\nDespite restructuring of Wapda, KESC, and distribution companies, subsidies for \r\nthe losses of public enterprises are major burden on the national budget.· \r\nRespective government units must be accountable for the inefficiencies of these \r\ninstitutions.Defence· The budget projects \r\na higher defence spending and trend in the past three years indicates an \r\noverspending by defence administration without following the budgetary \r\nthresholds. Funds were taken out from the allocation of development expenditures \r\nto defence with revisions in respective budgets at the last minute.· Mr. \r\nChairman, You may recall that Defence budget in FY 2002-03 was increased with a \r\njustification of additional expenditures for movement of army personnel - which \r\nis still being carried over for the past three years.· In FY 2000-01, the \r\npension of the retired army personnel of Rs. 38 billion was transferred from \r\ndefence expenditure to civil expenditure.Masked \r\nAllocations - Hidden· Mr. Shaukat Aziz, being a member of the board \r\nof directors of NCHD should avoid allocating additional PSDP funds of Rs. 500 \r\nmillion. There is also a clear conflict of interest by the Chairman of \r\nNCHD who have collected millions of dollars for NCHD but funds were parked at \r\nhis personal NGO, Human Development Fund.· I demand a full audit of HD Funds \r\nby the Auditor General of Pakistan and an immediate transfer of these PHDFunds \r\nto \r\nNCHD.\r\n",1]

· This amount is in addition to budgetary allocation for subsidies as indicated on page 28 of Federal Budget in Brief. Despite restructuring of Wapda, KESC, and distribution companies, subsidies for the losses of public enterprises are major burden on the national budget.· Respective government units must be accountable for the inefficiencies of these institutions.Defence· The budget projects a higher defence spending and trend in the past three years indicates an overspending by defence administration without following the budgetary thresholds. Funds were taken out from the allocation of development expenditures to defence with revisions in respective budgets at the last minute.· Mr. Chairman, You may recall that Defence budget in FY 2002-03 was increased with a justification of additional expenditures for movement of army personnel - which is still being carried over for the past three years.· In FY 2000-01, the pension of the retired army personnel of Rs. 38 billion was transferred from defence expenditure to civil expenditure.Masked Allocations - Hidden· Mr. Shaukat Aziz, being a member of the board of directors of NCHD should avoid allocating additional PSDP funds of Rs. 500 million. There is also a clear conflict of interest by the Chairman of NCHD who have collected millions of dollars for NCHD but funds were parked at his personal NGO, Human Development Fund.· I demand a full audit of HD Funds by the Auditor General of Pakistan and an immediate transfer of these PHDFunds to NCHD.

Deficits· The deficits are not coming down. The trade \r\ndeficits are getting bigger.· There is a net Accounts deficit of $7.6 \r\nbillion in first 9 months ending March, reflecting a decline in trade balance \r\n($3.5 billion) with a low exports compared to jumpy imports, decline in business \r\nservices component (net deficit -- $2.4 billion) and an overall decline in the \r\ninvestment income component (i.e. $1.7 billion deficit)· The deficit of $7.6 \r\nbillion is being offset by $6.3 billion mainly by remittances, FCAs and other \r\nprivate transfers leaving a negative current account balance of $1.33 billion as \r\ncompared to $2 billion last corresponding period. Adjusted current account \r\ndeficit may further increase by the end of June.· Are we better off today in \r\ntrade or fiscal balance than last year, answer is no. That mean some thing \r\nis not right in our trade policy.Fiscal deficit is also projected to \r\nincrease 3% of GDP to 3.8% of GDP. Sustaining the past improvement remains a \r\nchallenge and the Government is already projecting a slowdown in economic \r\ngrowth.\r\n",1]

Deficits· The deficits are not coming down. The trade deficits are getting bigger.· There is a net Accounts deficit of $7.6 billion in first 9 months ending March, reflecting a decline in trade balance ($3.5 billion) with a low exports compared to jumpy imports, decline in business services component (net deficit -- $2.4 billion) and an overall decline in the investment income component (i.e. $1.7 billion deficit)· The deficit of $7.6 billion is being offset by $6.3 billion mainly by remittances, FCAs and other private transfers leaving a negative current account balance of $1.33 billion as compared to $2 billion last corresponding period. Adjusted current account deficit may further increase by the end of June.· Are we better off today in trade or fiscal balance than last year, answer is no. That mean some thing is not right in our trade policy.Fiscal deficit is also projected to increase 3% of GDP to 3.8% of GDP. Sustaining the past improvement remains a challenge and the Government is already projecting a slowdown in economic growth.
Inflation· Rising CPI to 10.3 percent with Inflation \r\nrunning at its highest annual rate since 1997 can not be masked by Prime \r\nMinister\'s economic team. Inflation has been doubled within 6 months and \r\ninflation for food items is further up to 13 percent.· We should take a \r\npause about the credibility of this statistics. Although, in reality prices of \r\nbasic necessities have almost doubled since the overthrow of the PPP government \r\nin November 1996.· Last month, International Financial institutions have \r\nwarned Pakistan to improve its monetary policy and control its high rate of \r\ninflation to avoid systemic risk on government\'s claims of economic \r\ngrowth.\r\n",1]

Inflation· Rising CPI to 10.3 percent with Inflation running at its highest annual rate since 1997 can not be masked by Prime Minister's economic team. Inflation has been doubled within 6 months and inflation for food items is further up to 13 percent.· We should take a pause about the credibility of this statistics. Although, in reality prices of basic necessities have almost doubled since the overthrow of the PPP government in November 1996.· Last month, International Financial institutions have warned Pakistan to improve its monetary policy and control its high rate of inflation to avoid systemic risk on government's claims of economic growth.

Poverty and Unemployment· Despite government\'s claims \r\nof economic growth and external assistance to the military regime in past few \r\nyears, joblessness and increasing poverty pose serious challenges to the \r\ncountry.· Regime has failed to make any inroads in cracking down on \r\npoverty.Another concern is that resources targeted for poverty do not \r\nnecessarily reach those for whom they are intended and there is bureaucratic \r\nwastage.· After the scams of cooperative savings scandals and getting their \r\nloans written off by the State Bank of Pakistan, loan defaulters and corrupts \r\nofficials are targeting to chew up safety nets intended for poor such as Baitul \r\nMall and Zakat funds.· Poor of poor is suffering a lot. Interest rates \r\nfor industrialists and rich borrowers is under 10 percent but micro-financing \r\nintended for poor, Khushali Bank is still charging 21 percent interest for the \r\nmost secure short-term loans to \r\npoor.\r\nBudget Controls and Corruption· As we enter the new \r\nbudget year, Government at all levels need improved oversight and effective \r\ncontrol procedures to enhance productivity and increase accountability.",1]

Poverty and Unemployment· Despite government's claims of economic growth and external assistance to the military regime in past few years, joblessness and increasing poverty pose serious challenges to the country.· Regime has failed to make any inroads in cracking down on poverty.Another concern is that resources targeted for poverty do not necessarily reach those for whom they are intended and there is bureaucratic wastage.· After the scams of cooperative savings scandals and getting their loans written off by the State Bank of Pakistan, loan defaulters and corrupts officials are targeting to chew up safety nets intended for poor such as Baitul Mall and Zakat funds.· Poor of poor is suffering a lot. Interest rates for industrialists and rich borrowers is under 10 percent but micro-financing intended for poor, Khushali Bank is still charging 21 percent interest for the most secure short-term loans to poor.
Budget Controls and Corruption· As we enter the new budget year, Government at all levels need improved oversight and effective control procedures to enhance productivity and increase accountability.

Inadequate budget controls and corruption is the greatest obstacle to social \r\ndevelopment. Budget 2005-06 must address remedies to the increasing poverty and \r\nrapid increase in inflation in the economy.· Citizens have been concerned \r\nabout the poor quality of public sector development spending and dissatisfied \r\nwith the pace of implementation of development projects.· There has been \r\nstrong dissatisfaction in the general public, especially the poor, with the \r\nquality and quantity of public services received. Service delivery remains very \r\nweak because of rampant corruption and capacity constraints.· The extent of \r\nthe embezzlement of public funds at provincial and district levels is going \r\nunchecked. Some Burecrats and Nazims are emerging as new \r\nbillionaires. The Auditor General\'s office should investigate allegations \r\nof fraud and corruption under the devolutionsetup.

NFC Award· It is regrettable that despite setting \r\nperformance targets for the individual cabinet members last year, the Ministry \r\nof Finance has failed for the last three years to have a consensus among \r\nprovinces on the NFC Award.· Provinces are losing faith in the federation\'s \r\nrole as funds in the "divisible pool" are being misused without any audit \r\ntrails. Due to delay in NFC Award, revenue and expenditures estimates are \r\nsuffering.· Federation is charging 17-18% interest rates on development \r\nloans - provinces want to finance from other sources at lower rates but they are \r\nnot independent. Is it a true fiscal \r\ndecentralization.\r\n",1]

· Inadequate budget controls and corruption is the greatest obstacle to social development. Budget 2005-06 must address remedies to the increasing poverty and rapid increase in inflation in the economy.· Citizens have been concerned about the poor quality of public sector development spending and dissatisfied with the pace of implementation of development projects.· There has been strong dissatisfaction in the general public, especially the poor, with the quality and quantity of public services received. Service delivery remains very weak because of rampant corruption and capacity constraints.· The extent of the embezzlement of public funds at provincial and district levels is going unchecked. Some Burecrats and Nazims are emerging as new billionaires. The Auditor General's office should investigate allegations of fraud and corruption under the devolutionsetup.NFC Award· It is regrettable that despite setting performance targets for the individual cabinet members last year, the Ministry of Finance has failed for the last three years to have a consensus among provinces on the NFC Award.· Provinces are losing faith in the federation's role as funds in the "divisible pool" are being misused without any audit trails. Due to delay in NFC Award, revenue and expenditures estimates are suffering.· Federation is charging 17-18% interest rates on development loans - provinces want to finance from other sources at lower rates but they are not independent. Is it a true fiscal decentralization.

Governance· We need to have a closer look on government \r\nclaims of good governance. We need to see whether Regime is managing our \r\neconomic and social resources with rule of law, accountability, transparency, \r\nand citizen participation.· Investors remain discouraged by widespread \r\ncorruption in the judicial system. There have been transparency \r\nconcerns in the Privatization of KESC and number of banks.· Law and order \r\nsituation and internal security has deteriorated significantly. Democratic \r\nand liberal political parties are being crushed under the slogan of \'war on \r\nterror\' that remains a significant deterrent to \r\ninvestment.\r\n",1]

Governance· We need to have a closer look on government claims of good governance. We need to see whether Regime is managing our economic and social resources with rule of law, accountability, transparency, and citizen participation.· Investors remain discouraged by widespread corruption in the judicial system. There have been transparency concerns in the Privatization of KESC and number of banks.· Law and order situation and internal security has deteriorated significantly. Democratic and liberal political parties are being crushed under the slogan of 'war on terror' that remains a significant deterrent to investment.
Conclusion· Our economy is not meeting its full \r\npotential to create new jobs at a faster rate. The current donor-induced \r\ngrowth needs to be sustained over the long term if the government is to succeed \r\nin its goal of reducing long-term poverty.· Bottom line is that the common \r\ncitizen is facing severe hardship in gaining access to basic necessities under \r\ncrippling price hike. There is no economic recovery for working poor \r\nor for those seeking jobs so that they can feed and clothe their \r\nfamilies.\r\n",1]

Conclusion· Our economy is not meeting its full potential to create new jobs at a faster rate. The current donor-induced growth needs to be sustained over the long term if the government is to succeed in its goal of reducing long-term poverty.· Bottom line is that the common citizen is facing severe hardship in gaining access to basic necessities under crippling price hike. There is no economic recovery for working poor or for those seeking jobs so that they can feed and clothe their families.

What do Sindhi leaders want?

Sindhi are blessed or cursed with many types of leaders. Most of them wish for welfare for people of Sindh. However, "welfare" has different meaning for different leaders. In many cases, "welfare" literally starts from home. However, for many others, self is not necessarily the first stop. they struggle for broader good.

At least four different groups of leaders come to mind:
Nationalist leaders,
Leaders of national political parties,
Government servants and
Leaders of religious parties.

Nationalist leaders
There are differnt types of Sindhi nationalist leaders:
Some have concluded that Pakistan has been taken over by enemy forces. Only way out for Sindhis is to become independent. They seek right of self determination.

Some seek autonomy and limited role of the federal government as promised under Pakistan Resolution.

Some are reportedly agents of Pakistani, Indian or other governments hiding under nationalist cloaks.

Leaders of National parties.

The leaders of national parties seek continuation and strengthening of Pakistan. They seek welfare of Sindhis within Pakistan. They also recognize that non-democratic forces have captured Pakistan. However, they also know that without support of such establishment, political power and authority is not possible. Accordingly, the national political party leaders give first priority to winning support of the establishment.

Then there are total stooges of establishment. Who wait for martial laws to keep entering government. With some notable exceptions, self-enhancement is primary objective. They will join any and every party. For them, being Sindhi is purely a coincidence.

Leaders of exception in this group want to help Sindhis. They seek power primarily to help others. There is struggle within them. Often, they end up compromising with the establishment.

Government officials

Sindhi government officials are probably the most powerful leaders of Sindh. They are always there no matter who the ministers are. They have the knowledge of rules and day-to-day authority to help, hurt or be neutral. Most of them tend to choose the fourth option, which is self-preservation. Of course, in the process, they become willing agents of the establishment. If one assumes that the establishment is anti Sindhi, then by definition, most of the Sindhi officials become anti Sindhis too for the sake of self-preservation.

Religious party leaders

The religious party leaders obviously give first priority to religion. For them strong Ummah and therefore strong Pakistan is important. For them implementation of Islamic law is high priority. For many of them justice is a very important part of the religion too. However, desire for justice gets burried among other priorities.

How to bring leaders of different types together?

There have been many many efforts for unity. Religious leaders of different faiths have united under one group in Pakistan. However, Sindhis have rarely come together. Some causes such as Kalabagh dam comes closes to bringing about unity. One has to keep trying.

Bottom line

The bottom line is that Sindh has too many leaders. They have different goals and approaches for achieving goals. Sindhis have not been as lucky as Punjabis, muhajirs or Pathans. In their cases, the political leaders have been able to help their own communities while staying in good books of establishment. Only rarely they have been labelled anti-Pakistan. Sindhis have not been so lucky. They have to choose Sindhi cause or establishment. Those who have chosen Sindhi cause have been labelled anti-Pakistan and have been unable to be a part of any government. Accordingly, they have been eternally outsiders.

Reportedly, many of them have ended up making compromises—openly or secretly.

I hope, that time will come, when helping Sindhis will not be considered an anti-Pakistan act. I also hope that Sindhi leaders can somehow get together for welfare of Sindhi people.

Sindh Share in Development Outlay:

Sindh Share in Development Outlay:

This is Justice inPakistan!!! And Still Sindh is to Blame!!! The MQM Finance Minister's absence from today'sinformal gathering of provincial ministers to discussNFC didn't help Sindh case at all.http://www.dailytimes.com.pk/default.asp?page=story_27-5-2005_pg1_8

But this incident is not an isolated one. The basicissue here is that the province of Sindh is not beingserved right by the rulers at the helm of affairs inKarachi or in Islamabad. Masters that be havemanufactured the present Sindh Government according totheir wishes. And it is working strictly according tothe blue print provided to it.

The people of Sindh have no representation at thedecision making Quarters in Islamabad either. There isnot even a semblance of any voice of Sindh at theCentral level. The situation is appalling and mostdisturbing. Things may erupt violently if nocorrective measures are taken immediately. Read a story by senior journalist Sabihuddin Ghausi intoday’s Dawn and see what is happening in Pakistan.

Inan startling disclosure – which actually would notsurprise anyone in present day Pakistan – he hasreported that ‘Sindh’s share in the federalgovernment’s Rs272 billion public sector developmentoutlay, being proposed for the next fiscal year, hasbeen worked out at Rs20.14 billion or 10.2 per centwhich is far below the population ratio of about 24per cent on the basis of which federal tax poolresources are distributed’.

He further says that after ‘adjusting the proposedtotal PSDP outlay of Rs272 billion with an allocationof Rs 68billion for all the provinces, the ratio ofSindh’s share in the net amount of Rs204 billion comes to a little over 19 per cent which too falls short ofits population ratio’. http://www.dawn.com/2005/05/27/ebr1.htm

And then look at the ganging up of the mullahs of MMAagainst Sindh. JI has historically been anti-Sindhi people. JUI of Mullah Fazal is not any different. He along with NWFP CM Durrani and FM Siraj have been pressurizing Sindh to give up its stand on justdistribution of resources. Now why don’t they give up their demands over theHydel power income? The Indus River passes through theNWFP. A dam is constructed on the river in thatprovince and they demand the share from the income ofHydel power. On the other hand, Sindh is blessed witha coast. It has ports. Why can’t it demand due sharefrom the income generated through its ports, natural resources, oil and gas, minerals, financialinstitutions, industries, businesses, etc.?

If locals are employed in the businesses and industries in the Punjab and the NWFP, why can’tSindhis demand jobs in all such enterprises in theirprovince? Why an apple is ‘halaal’ for one and‘haraam’ for the other? Why can’t there ever bejustice in Pakistan? Don’t we already know that unjustsystems and societies don’t last for long?

Aziz Narejo