Identifying rock-bottom stage is tricky enterprise, hence age-old wisdom that “no matter how bad things are, they can always get worse”. But when a chronically stagflated economy’s largest employing and bread winning segment registers a truly “black year”, collapse is not far. The 35 per cent input cost increase coupled with a price drop of approximately 25 per cent (excluding wheat) has a compound impact on the overall national economy, and merely re-adjusting subsidies and support prices will not correct the domino-effect of depressing tendencies set in motion.
Immediately, drop in yields and earnings will push more people from the periphery to already overflowing city-centres. Compromising agriculture does not just affect produce and earning. It also harms agri-industry, the life and blood of our miniscule export economy, pressuring both revenue and employment to the downside. That materialises the twin dilemma of reduced consumerism as well as reined in government fiscal expansion, both mission critical to Pakistan’s chances of reverting to sustainable growth. Invariably, rising unemployment, especially when fueled by government inefficiency, impacts the social fabric in a very negative manner, increasing crime.
It does not help when agri-industry is deliberately deprived of precocious credit due to the government’s over-imposing presence in the borrowing market. That the practice continues despite widely debated and published negative effects, it is no longer difficult to ascertain whether the large borrowing constitutes simple disregard for the wider economy or actually borders on the criminal. The government no doubt realises by now that its formula for subsidy withdrawal and GSP imposition has not achieved the aim of making the agriculture sector more efficient. It has, in fact, achieved exactly the contrary. With growth slow, employment weak and industry in obvious decline, the fate of the agriculture sector ought to be a sobering reminder of Pakistan’s current state of affairs. Incidentally, it is also a good reflection of the government’s chances come election time.
