Amidst a continuous disarray of distractions and chaos, the emotional plight of families losing their loved ones somehow makes a better story than illustrations of the structural setbacks that are to trickledown to generations. The survival predicament that effaces post loss of family members might entail displacement, rationing down of ancillary expenditures on health and education for families in the middle class, and, a general increase in delinquency emerging from possible vows for vengeance.
A special section on the costs of war on terror published in the Economic Survey highlights that more than 38,000 citizens and security personnel have lost their lives since 2006. Grossly, that comes to about 3500 lost lives annually. Going by rough estimates, the per capita GDP for 2010-11 stood at $1254, which theoretically implies that about $4.4m worth of average household income has been lost. Stating the obvious, this amount translates into about Rs378m going by the current trends in exchange rate.
The report further highlights that the initial cost was envisaged to be Rs164b in 2001-02. However, in 2011, the total cost incurred during 2001-11 decade stands at about Rs5.04t, an overrun of about 30 times. Moreover, a YoY comparison reveals that costs of the ‘war’ have risen by about 40 per cent annually and central in the cost composition stand loss of physical infrastructure, FDI, losses due to uncertainty and decline in tax revenue amounting to Rs145b, Rs181b, Rs181b and about Rs250b respectively in FY11 alone.
Implicitly, the cost of maintaining a large military force for ‘waging’ the war should also be included while accounting for cost. In the current budget about Rs495b have been allocated, rising by about 11per cent in comparison to last year. Thus, simple calculation reveals that the government spends about Rs1.5b daily on military/defense. Predictably, it can be expected that this amount is funded through both taxes and loans (internal and external) obtained by the government. However, with the refusal of the US to provide $800m in military aid, the funding mix can be expected to get strained and more skewed towards obtaining more domestic loans, rendering a spillover effect on the already dismal level of private sector credit and investment.
There are also other opportunity costs. There are reports all over the media about PSDP being revised down to fund defense and flood-related expenditure. While broad figures stated for the slashed PSDP are being used as blanket cover, grave realties that lie under will have very significant consequences for building a strong human capital base for the country. For instance, development expenditure on health was reduced by 50 per cent, from Rs38b in FY10 to Rs19b during FY11. Similarly, from a peak of Rs 16b in FY09, dev-ex on education has been slashed down to Rs11b and Rs9b in FY10 and FY11 respectively. The reduction of Rs19b and Rs2b in health and education expenditure should also be added as opportunity/implicit costs in the monstrous sea of expenditures enlisted above.
In simplistic words, a lot of money in this country is being spent on ending lives rather than nurturing and sustaining them. Turning to religion for rescue, there were once times when wars were to be fought in a way that prohibited destruction and violation of women and children, plants, animals and infrastructure. The essential questions that then arise are: Does the ‘Islamic’ bomb differentiate?
Can humans not be persuaded, must they be ‘deterred’ and threatened?
The writer is a freelance journalist and economic researcher
