A bad case of the youth bulge, as demographers like to call it. A disturbingly large proportion of our population is below the age of twenty five. Add to that an economy that isnt growing as fast as it should be, and youve got two major catalytic ingredients of vast social unrest on your hands. The Asian Development Bank says in its recent report that the Pakistani economy needs to grow by at least 3 percent per annum to barely accommodate the large number of youth entering the workforce. As opposed to Pakistans expected GDP growth of 2.5 this fiscal year. This diminutive growth rate is sure to increase the number of people living under the poverty line.
Of the many challenges that the Pakistani economy faced during the fiscal year, the one that could not possibly have been catered to in advance was the devastating episode of floods that we had. One of the worst natural disasters in the history of the country. The long-term infrastructural costs that the floods have made both the state and the private sector incur, coupled with the more immediate supply shocks, have lead to considerable fiscal pressures in the economy. Though the price shocks within the agricultural goods market that were a result of the floods have only begun to dissipate, the overall effects will linger on for a long time to come.
It is the other aspects of our economic profile, the bit that we can change effectively, that could go a long way in fixing our troubles. The fiscal pressures could have been eased with the help of increases in revenue collection and at least the beginning of phasing out the subsidies that the government is footing the bill for. These structural reforms are indeed the where-its-at of our ticket out of the current fiscal mess. It has to be conceded that the government has indeed gone all out in trying to achieve them. However, the imposition of new taxes or a change in the current system of taxation is not an executive decision but a legislative process. The amendments have to be approved by the national assembly. The role of the opposition, and at least one party in the ruling coalition, has been unreasonably intransigent in that regard. Hence, an inability of the government to reform the GST, amongst many others. If the governments mismanagement is to be blamed for our fiscal woes, then the ill-thought out populism of the other political parties is to be blamed equally, if not more.
