20000130

Agriculture can get economy back on track: Burki

Ikramul Haq

Islamabad: Former finance minister Shahid Javed Burki sees a ray of hope in economic recovery if the government adopts a comprehensive package for growth via agriculture. It should be a passion for the rulers, he asserted.

Addressing a select gathering of economists and retired bureaucrats on "Current economic crisis of Pakistan and its implications for poverty and social development" at VTO premises, the former World Bank executive painted a very bleak picture of the country's economy and its future riddled, as it would be, with slow growth and increasing poverty.

The way things are going, he warned, there would be little improvement in growth and more appalling poverty would grip the country.

It would take at least ten to 20 years for the country to be on sound economic footing provided prudent and sustainable policies are adopted.

The main thrust of his address was crises of economic growth and ever-increasing poverty.

He said the country saw over six percent growth in the first 40 years of existence till late 1980s. "But in the last ten years, there was dramatic reversal in growth coupled with rapid increase in the number of the poor."

According to him, the number of poor at the birth of Pakistan was 20 million i.e. about two-third of the population, while by the end of 1980s it was 18 million i.e. 17 percent of a population of 110 million. "That was a tremendous achievement, but unfortunately, the situation got reversed dramatically from 1989 to 2000. Of the 140 million people, 50 million are living in absolute poverty."

He warned if the things continue at present pace, by 2010, when the population will be 170 million, there would be 80 million people in absolute poverty.

Even in a rosy scenario when strong poverty alleviation efforts are made, Burki suspected that at best the absolute poor would be around 55 million i.e. about 35 percent of the Pakistanis.

He presented an equally grim picture of growth, which too suffered from an acute crisis. He said growth during 47-90 was six percent and per capita income increase was 3.1 percent. Since 1990s the GDP growth is 4.5 percent but with growth in population, per capita income rose by 1.8 percent.

At present a low growth scenario of 3 to 3.2 percent in the next ten years, the per capita increase would be only 0.5 percent. "If everything is done right," he said, "the growth would be 5.5 percent and per capita increase would be 2.8 percent. "But he was pessimistic about the latter scenario.

Responding to a self-asked question why growth slowed, he listed two strong factors. First, there was no solid domestic resource but growth depended on foreign savings.

During 1947-90 period, domestic savings were between 14 and 15 percent and six to seven percent came from abroad.

Another factor for high growth was that the physical and institutional infrastructure was in place. The vast irrigation system, railways and road networks provided by the British had not suffered decay.

By institutional infrastructure Burki meant the civil service, and government departments, revenue and police, etc. There was some semblance of good governance.

Now, he noted, the physical and institutional infrastructures had dissipated. Unsatisfactory investment in physical infrastructure has been a great handicap. The improvements, he remarked, would take years.

On the basis of these assumptions, Burki stressed that at least for the next ten years, the country would not be back on the growth path experienced during 1947-90.

Posing a question if the country would have resources for growth, he replied in the negative. "It is impossible," he said adding that the Pakistanis themselves have slowed down their remittances, the prospects of foreign assistance have dwindled and foreign investors are shy of coming to Pakistan.

In the curse of his discourse, Burki admitted that he had been optimistic about growth. But to his dismay, he realised that the growth was not sustainable because the domestic resource base was fragile.

The previous growth was based on the green revolution in agriculture, high remittances and direct inflow of investment. A number of these factors were now missing. The Middle East boom is no more, while the Pakistanis in Europe and the US were not interested. Foreign investors are also reluctant to come.

Burki said that in the circumstances only agriculture could be the engine of growth if the government came out with clearly perceived policies in the next six months or so.

Even then, he opined, if the growth crisis is resolved

in ten years or so, the poverty crisis would not go away in the next ten to 20 years.

Thus, he added, "Pakistan is going to face serious problem of poverty with unpleasant social consequences for the country."

Answering how agriculture could be made a strong instrument of economic revival, he said that it would generate surpluses for exports, which should have value-addition. It would also provide employment and increase income of the poor. With forward and backward linkages, it would have salutary impact on other sectors.

For improving the sector, he urged development of infrastructure and not mega projects like motorways; building of farm-to-market roads; meaningful results oriented research, development of agri-businesses, and improvement in credit facilities and involvement of women in workforce.

For achieving these, the government must come out with a comprehensive policy package, he added.

Replying to a question as how long Pakistan would be tied down to the IMF and World Bank policies and diktats, Burki said as long as the country does not acquire the habit of living within its means. In the past and even now the resource mobilisation was woefully poor, lowest among the developing countries.

"Every year we add to the external debt, because unfortunately we do not live within our means."

Burki, who worked in the World Bank on Latin America, told the audience that Pakistanis have not seen the economic deprivations witnessed there when there was an increase of 10 percent in the poor overnight.

He suspected the nation is not doing enough to pull itself out of such a quagmire. The people themselves are contributing to the grim situation, he remarked.

Burki felt strongly on any criticism of globalisation which, he stressed, must be accepted as a reality and not opposed.

His conviction was that only those developing countries would benefit from globalisation, which accepted it and fulfilled its requirements. China, where he worked for several years, fully supported it and is very eager to get admission into WTO.

China, he added, has greatly benefitted by inviting foreign corporations and multinationals to set up businesses there.

Globalisation, he reiterated, was a positive development and any developing countries, which abides by it, would benefit.

Another issue strongly agitated him was women's education. Women's involvement in development is a must if the country is not being condemned to perpetual deprivations. For him, he stated, women's education is an obsession. Left to him, he would espouse the cause of agriculture for economic recovery too as an obsession.