Still, reactive not proactive
Granted, the prime minister’s office will take the credit for Nepra’s 47-paisa power tariff reduction. But since this was a result of fuel price adjustment, and oil fell in the international market because of politico-economic reasons far beyond or PM’s soft corner for the masses, the move is more reactive than proactive. Also, it’s not very often that the government revises down fuel price in accordance with the international market. Oil price, we have come to understand, is typically flexible upwards but rigid downwards. And there are those who still argue that the directive to lower fuel prices at home was more a result of political pressure created by the dharnas. The economy was stagnant and the oil window provided some welcome policy relief. Nepra’s move is an extension of the same window, which the government will no doubt play to its advantage.
To really improve the real economy, however, the prime minister’s economic team will need more than the odd exogenous opportunity to please the people. There is, first of all, the need to improve the budget. Simply put, we need to earn more and spend less. And the two components of revenue – tax and exports receipts – have so far received very little attention of the government. There are, in fact, disturbing reports of the tax net shrinking; something in stark contrast to the prime minister’s promises during the election campaign. And exports will need a long term policy to be turned around. And even the first baby steps of such policy are yet to be seen. There is no sign of value addition or technical machinery in our export mix.
Also, there’s an urgent need to block leakages. Sick PSEs are the perfect example. They continue to hemorrhage billions of rupees annually, yet the government’s privatisation program remains controversial and does not take into account enterprises that need to most urgent attention. And if PIA is any example, there is little hope of improvement in the near future. To really play the fuel price and Nepra move to its advantage, the prime minister must immediately order the finance ministry to take whatever steps necessary to increase tax revenue. A similar initiative must be undertaken by the commerce ministry. And privatisation – if it is to be pursued – must be done in a transparent manner. This much ought to be pretty straight forward thinking for a third time PM. Yet this is where he continues to disappoint. It is about time the PM, and his team, postured proactively instead of continuing to react to issues and events.
