The leading lights of business that had gathered the other day in Lahore under the aegis of the Pakistan Business Council had some rather sound suggestions to make to the government. Lacking the twin attributes of condescension and self-entitlement that is generally expected of some within the business community, these captains of industry and commerce actually had some proactive ideas on how to get out of the rut the economy is.
To state the obvious, business does well when the economy does well. But in our case, issues of public finance itself are of fundamental importance to the private sector. Government borrowing from the central bank is acting up like a text-book example of the crowding out effect; private investment is being curtailed as a result. Furthermore, government attempts to keep inflation in check have lead to an interest rate at a level that makes credit provision for the private sector very difficult. Principal amongst the suggestions was the need for evolving a multi-party consensus on the issues of the economy. These included an overhaul of the taxation framework, a restructuring of the public sector corporations, power sector reform, abolition of untargeted subsidies etc. Now these are some very contentious issues. The reformed GST regime was a rather clever attempt to overhaul the tax network but it has become a political rallying cry. The restructuring of our dilapidated public sector organisations is yet another scandalously overdue step that shortsighted politics is making impossible to take. The abolition of untargeted subsidies (which includes the subsidy on petroleum products and doesnt include income support programs like, say, the BISP) is also going to be a tough act. A multi-party consensus rather than unilateral government action, therefore, is of principal importance.
The Pakistan Business Council recommendations were as much an appeal to the opposition and (wayward members on the treasury benches) as they were to the government itself. It is hoped that both are listening.
