Saturday, April 5, 2008

Documentation a tough task for govt

Saturday, April 05, 2008
By Mansoor Ahmad

LAHORE: Te economists wonder how the present regime would deal with the issue of documentation of economy which the major coalition partners unsuccessfully tried to impose during their past tenures and opposed while sitting in opposition.

The economists the world over agree that general sales tax that documents every economic activity is the only way to fully cover the economy. Efforts to document the economy through this tax in Pakistan started in 1986 when the GST was recommended in the 1986-87 federal budget. However, the proposal was shelved after traders called the first countrywide shutter-down strike over the issue. Since then, the traders have successfully been avoiding the tax for the last 22 years. On the other side, India that decided to opt for GST or value added tax at the start of this century has finally been able to slap the levy in its states.

The Benazir-led PPP government in 1989, in its first tenure, proposed complete documentation of the economy through the General Sales Tax. However, the Nawaz-led PML-N opposition strongly opposed the move. On the same lines, the Benazir-led opposition in 1991 opposed GST proposal of the Nawaz government and the same pattern was repeated in the second tenures of both parties in 1993 and 1997.

Imposing GST would be a difficult job even for a strong coalition government in which the opponents of yesteryears have buried the hatchet and vowed to steer the economy through mutual cooperation. The military government too at the peak of its power in 2000 failed to tame the traders and had to compromise on a weak fixed tax regime.

The GST on traders has been replaced with a fixed turnover tax that has created distortions in revenue collection. According to the Federal Board of Revenue, traders’ share in the GDP is 16 per cent while their contribution to total tax revenues is less than four per cent. The traders would show their muscle again if the new government tried to impose the GST. The government would not like to open an avenue of confrontation at this juncture as it is already burdened with numerous other issues like price hike, food security, law and order and war on terror.

The experts point out that even the way of determining annual turnover is non-transparent. It has been left to the traders and the annual turnover declared by them is accepted by the FBR. Accordingly, the traders deposit 0.5 per cent turnover tax.

It is pertinent to mention that the turnover tax is imposed on all the traders running shops that have shutters. According to FBR, there are around 1.8 million such shops in the country. They say it is mandatory for all traders to pay the turnover tax but hardly one-fifth of them deposit the tax, which is nominal.

The experts point out that the GST eliminates all tax evasions if it is properly implemented during the entire cycle of an economic activity. It is basically a consumption tax that is paid by the consumers and all other individuals involved in the process simply collect the tax on behalf of the government.

For instance, they say, if a distributor gets a sales tax paid product worth Rs100 from a manufacturer and adds Rs5 as profit, he is required to add 15 per cent sales tax to Rs5 which would be Rs0.75. He charges Rs105.75, including the tax, from the retailer. Now if the retailer adds Rs5 as profit he would add another Rs5.75 to the price that would come to Rs111.50 that he will charge from the end-consumer.

The input supplier, manufacturer, distributor and retailer are required to deposit the sales tax with the ST department. The sales tax deposited reveals the gross income of each and thus tax evasion is eliminated.

Nearly half of Pakistanis ‘food insecure’: WFP


Saturday, April 05, 2008
ISLAMABAD: Nearly half of Pakistan’s 160 million people are at risk of going short of food due to a surge in prices, the World Food Programme said on Friday.

The WFP survey covering the year to March showed the number of people deemed “food insecure” had risen 28 per cent to 77 million from 60 million in the previous year.

The WFP estimates that anyone consuming less than 2,350 calories per day is below the food security line.

Sahib Haq, an official with the WFP’s Vulnerability Analysis & Mapping Unit in Pakistan, said food prices rose at least 35 per cent in the past year compared with an 18 per cent rise in minimum wages.

“There is a very big gap between the increase in prices and increase in wages ... the purchasing power of the poor has gone down by almost 50 per cent,” Haq said.

The latest findings comes a week after the World Bank urged Pakistan to make rapid adjustments and reforms to avert an economic crisis as it reels from the impact of high global prices for petroleum and food.

The price of wheat flour in January was between 24-25 rupees (38 US cents) per kg in three of Pakistan’s four provinces, compared with 15 rupees per kg in January 2007, the WFP said.

Prices have since moderated to around 17 rupees but are expected to shoot up 40 per cent or more in the coming months, according to grain industry officials.

“There will be a big crisis,” Haq said.

Wheat flour is used to make roti and naan, the flat unleavened breads that are a the central component of the Pakistani diet.

Pakistan consumes about 22 million tonnes of wheat a year.

Prices for rice, vegetables and cooking oil have also risen sharply, and the economic hardships faced by ordinary people played a big part in an election in February that resulted in President Pervez Musharraf’s political allies being thrown out of government.

The new coalition government, which took power last month, raised the support price it pays farmers to buy wheat to ensure adequate supplies, but Haq said the move would result in sharply higher flour prices in months ahead.

The consumer price index, a key indicator of inflation, rose 11.25 per cent in February from a year ago, mainly due to food prices.

Due to the previous administration’s reluctance to reduce subsidies for food and fuel, the government is saddled with a widening fiscal deficit. While wanting to alleviate the hardship of the poor, the new government will face some painful economic choices.

Tuesday, April 1, 2008

Rs54 billion loans written off in 2002, SBP tells SC


By Nasir Iqbal

ISLAMABAD, March 31: The State Bank told the Supreme Court on Monday that commercial loans of about Rs54 billion owed by businesses run by top leaders and other influential people were quietly written off in October 2002 under a scheme to “clean up non-performing loans” that had surpassed Rs231 billion.

In a reply comprising about 1,400 pages, the SBP contended that its guidelines devised in 2002 under Section 33(b) of the Banking Companies Ordinance, 1962, were aimed at providing an opportunity to the borrowers to settle their liabilities on flexible terms and, wherever possible, help them in reviving their businesses or sick units.

A bench comprising Justice Mohammad Nawaz Abbasi, Justice Mian Hamid Farooq and Justice Mohammad Farrukh Mahmud had taken suo motu notice of a press report that the SBP had approved the writing off of Rs54.6 billion loans of different banks.

“We will also look into why widows, orphans, small borrowers or the loanees of the House Building Finance Corporation (HBFC) are sent to jails on default but large defaulters are provided relief for misappropriating public money,” observed Justice Abbasi.

“Fugitives are always put at the exalted place, but honest borrowers are subjected to strict implementation of law,” Advocate Hafeez Pirzada said, adding that honest and law abiding people should not be discriminated against to favour ‘crooks’.

Attorney-General Malik Mohammad Qayyum also asked about the fault of honest borrowers who were always punished for defaults.

The court asked Advocates Pirzada and S.M. Zafar to assist it in the case as amici curaie (friends of the court) but rejected a request of Indus Valley Oil Extraction Company, Karachi, to implead it as a party.

The bench adjourned the case for April 10.

The SBP contended that one of the major problems faced by the banking industry was the huge volume of non-performing loans, the stock of which had accumulated to Rs231 billion as of June 2002, largely because of continuous accrual of mark-up on the principal amounts that had been in default. The colossal level of non-performing loans had adversely affected the financial health of banks and DFIs, affecting their profitability and creating hurdles in the process of restructuring or privatisation.

Balance-sheets of banks, especially large banks, reflected a poor financial condition as a majority of the cases had been in default for over seven years and no significant recoveries had been made despite several measures having been taken for the purpose, it said.

Recovery efforts through legal channels had also failed to show significant results, it said, adding that the accumulating burden was not only making the operations of the banks unsustainable but also unnecessarily inflating their assets.

Based on a secret report to the Public Accounts Committee (PAC) of the National Assembly, the press report had suggested that 50,427 defaulters, including political leaders, civil and military business concerns and business tycoons of Karachi, Lahore and other cities were favoured through the scheme.

It had named former chief ministers of two provinces as beneficiaries of the scheme as their families having big business concerns like sugar mills and ghee mills, respectively, also got a waiver.

Some foreign firms and multinational companies and a private bus service operating from Lahore to different cities in Punjab were also extended the facility.

Soon after the October 2002 elections, the then finance minister Shaukat Aziz and his team at the SBP approved the loan write-off scheme after succumbing to pressure from certain top leaders of the ruling party to ease financial burden on their business concerns, it said.

The SBP issued an incentive scheme to the banks and DFIs in October 2002 for waiving the non-performing loans of organisations showing ‘loss’ for three years or more. Three categories were made to deal with the cases: category A of loans up to Rs500,000, category B from Rs500,000 to Rs2.5 million and category C of non-performing loans of more than Rs2.5 million.

The big business concerns exploited the third category to get billions of rupees outstanding against them written off.

On the other hand, the banks and DFIs were asked to recover maximum possible amount to settle loans falling under categories B and C through forced sale of available assets, the report said.

The purpose of the scheme was stated to be to clean the balance-sheets of the banks and DFIs.

As a result of the scheme, the banks and DFIs settled cases involving an outstanding amount of Rs80.656 billion.

Growth rate may fall to 6pc, says SBP


By Shahid Iqbal

KARACHI, March 31: All major indicators are going against economic growth and previous government’s huge spending and ‘understatement’ have compounded the situation, says the State Bank’s second quarterly report issued on Monday.

The report presents a grim picture of economy but still sees some hope of achieving 6-6.5 per cent growth as against the targeted 7.2 per cent for the fiscal year 2007-08.

The SBP said the fiscal deficit — the gap between earning and spending — had turned into a threat and the bank found evidence that it was understated.

“The troubling aspect is that the fiscal deficit may be understated. Evidence suggests that at least a part of the subsidy on fuel prices during July-Feb FY08 was not financed from government’s account,” the report said.

Instead of making payment, the government provided guarantees to oil companies which borrowed from banks through these guarantees. This hidden spending will appear next year as fiscal deficit.

Finding reasons for the lower economic growth, the SBP report said that so far principal drag on the year’s growth had been the outcome of Kharif harvests and a slowdown in the LSM (large-scale manufacturing) growth.

The growth in LSM fell to 4.5 per cent during July-December as compared to previous year’s six-month growth of 8.3 per cent. This is alarming, especially in textile sector’s export growth which recorded a fall of 3.4 per cent during this period.

The textile sector earns over 60 per cent of the entire export earnings of the country.

Overall, the slowdown in LSM during the six months was broad-based and was seen in 11 of 15 industrial groups. Of these, paper and board, metals, fertiliser and electronics industries registered a decline in production.

In contrast to these under-performers, pharmaceuticals, POL, cement, engineering and wood industries showed a strong growth.

“Domestic as well as external factors, including continued strong increases in international commodity prices, domestic energy woes and dampened demand (particularly for textile exports), are responsible for relatively slow economic growth in the country,” the report said.

“Economic losses in the aftermath of Dec 27, 2007, have further weakened the chances of meeting the annual target.”

Sighting the inflationary pressure as the real woe to the economy, the report said risks to macroeconomic stability had increased considerably as fiscal and current account deficits turned out to be considerably wider than envisaged in the monetary policy framework.

“The rising fiscal deficit and its financing posed severe complications for the monetary policy framework for FY08,” the report said, adding that it had eroded the impact of monetary tightening measures undertaken in August last year, and increased the risks of a further surge in inflationary pressures.

The decline in country’s foreign exchange reserves, which fell to $14 billion in February from $15.6 billion in June last year, had weakened the Pakistani rupee as it could not hold its grounds against the US dollar and depreciated by 3.5 per cent during Jul-Feb FY08, the report said.The SBP reported that most indicators for the services sector showed a robust growth during the first half of the current fiscal year.

The report showed a strong growth in the electronic media and telecommunication sub-sectors on the back of government’s liberal policy and foreign direct investment (FDI) in recent years.

“In particular, expansion in cellular services is impressive as cellular density has more than doubled during the period between July 2006 and December 2007.”

The report said that the agriculture sector was likely to record a reasonable growth during the current fiscal year. However, prospects of achieving the targeted 4.8 per cent growth for the year remained dim, it added.

The SBP said that record sugarcane and maize harvests, anticipated good wheat harvest and above-target growth in minor crops were unlikely to overcome the drag from the disappointing performance of some major Kharif crops (cotton and rice). The livestock sub-sector, hit by bird-flu virus may see some slowdown in growth, it said.

Revamping of food subsidy plan proposed


KARACHI, March 31: The State Bank of Pakistan has proposed revamping of subsidised food programme for low-income groups, suggesting involvement of private sector to make it more effective.

In the second quarterly report, the SBP said due to persistent high food inflation, the contribution of food group in overall inflation increased from 55.4pc in Feb 2007 to 59.9pc in Feb 2008.

“The high food inflation implies that it is hurting low-income groups disproportionately,” said the SBP report.

Although the government is providing essential food items at subsidised rates through utility stores, a large segment of deserving population cannot avail this subsidy due to limited outreach of utility stores.

The SBP said since food prices are likely to remain high in the medium-to-long-term, the targeted food subsidy programme for low-income groups needs to be revamped to make it more effective.

“Private sector’s involvement is also necessary as it will be difficult for utility stores to cater to all needy people,” said the SBP report.

The CPI food inflation started to strengthen since September 2007 and recorded 16.0 per cent in February 2008 after reaching a local peak of 18.2 per cent during January 2008, the highest level seen since April 1995.

This persistence in CPI food inflation reflects the dynamics of international markets as well as factors specific to domestic economy, said the report.

In the domestic markets, the prices of have seen an uptrend throughout FY08.

The rise in domestic wheat prices is mainly attributed to speculative hoarding done on the insufficient stocks position of the government.

The low level of stocks impaired government’s ability to intervene in the market to stabilise the prices.

Moreover, since replenishment of government stocks needed import at substantially higher international prices, hoarders took advantage of the situation. As a result of supply shortages, domestic prices rose to record highs.

“It is also important to note that continued export of wheat flour to Afghanistan and illegal cross-border movement of wheat further aggravated the supply shortages,” said the SBP.

The report said there was an urgent need to increase the productivity of key food staples to ensure smooth domestic supply. It can be achieved through appropriate incentives to farming community, increased use of fertiliser and certified seeds, as well as research and development to develop new high yield varieties.

It said a below-target FY08 rice harvest in Pakistan, coupled with strong demand for Pakistani rice in the international market, has resulted in persistent pressure on domestic rice prices.

Similarly, high international prices of edible oil have led to an increase in domestic vegetable ghee and oil prices as its production is based on imports from the international market.

Prices of wheat, edible oil and rice are following the trend of international prices, domestic milk prices are showing a secular uptrend despite a recent downtrend in international prices.

The contribution of individual food items in the overall CPI inflation has been significant as four out of top five items contributing to overall inflation during February 2008 were from the food group.

Monday, March 31, 2008

Quality education for all

Monday, March 24, 2008

Dr Faisal Bari

Can a country compete in a global environment and develop as a fast growing economy without a literate, educated and trained workforce. The empirical evidence is clear: it cannot be done.

Then why are we hell-bent on trying to see if we can do it? Modern economies require sophisticated skills from a large number of people and it is impossible to acquire such skills without being literate. In fact, just being literate is often not enough; labour has to be educated to fairly high levels to give competitive advantage to a nation. When we say that developing countries have the advantage of cheap labour, it should be clear that it is not the money wage that matters, it is productivity, or produced amounts compared to wage given that matters. So, China is cheap to produce goods in because for the wages given to labour, the labour produces a lot and of high quality. India is able to attract some business on the same basis as well, as are a number of developing countries.

But a lot of businesses feel Pakistani labour is not cheap: though the wage rate for unskilled labour is only 2-3 dollars a day, the person is illiterate and unskilled and hence unable to provide input into producing quality products. Adding up the cost of either producing low quality products or producing high quality at an excessive cost (with high rejection rates and so on), Pakistani labour no longer remains as cheap - in productivity terms - as Chinese or Indian labour, even though they are paid more in simple dollar terms. So, how can Pakistan compete in this environment and how can we become competitive and sustain our growth trajectory?

The 'demographic dividend' that the previous government has been talking about, for the last couple of years, would be a demographic disaster if we do not invest in our people. There is a very strong non-functional argument for provision of education. Do people have a right to be educated and literate? Any notion of basic rights, that also comes with a notion that every citizen has a right to lead a life of dignity, will have to include some notion of education as a part and parcel of basic rights.

The question really is how much education should be considered a basic right: clearly as much as it takes to provide a life of dignity. And this might vary with the level of development of the society and its economy. For more advanced societies, anything below college education might not be enough, and for developing societies, education up to secondary level might be considered to be enough. But education, given the world we live, is necessary for a life of dignity: it is almost impossible to function in this world without some level of comfort with a couple of languages, the written word, and numbers.

The constitution of the country, in whatever form it is exists, recognises the rights of the citizen for access to education and health care facilities. It does not make these out to be the very basic rights, and so far we have not read the notion of 'right to life' as a right to what makes a life of dignity possible, but one feels that this is inevitable and one day the state will have to live up to the promise of providing education to all as a matter of right. The state in Pakistan not only does not recognise the right to education, if one looks at how the education policy has been implemented over the last many decades, it is also clear that the state never even intended to take the promise made in the constitution seriously. If we are going to spend only around 2 percent of GDP on education, how are we going to ensure that every child is going to be able to attend a school?

In fact the story of the last few decades is grim: the state seems to have given up on even trying to provide educational access to all. It has openly admitted, and many a time, that it cannot do it, and by making appeals to the private sector and the non-profit sector to help, it has repeatedly acknowledged its failure. And it has used the acknowledgement of failure as an excuse for pulling out of the responsibility of providing education to all as well.

But this cannot happen. It should be clear, and even empirically it is a fact that school education, the world over - in capitalist countries and others, in developed countries and others - is the responsibility of the state. It does not mean that the private sector cannot or should not participate in the education field; it can, but the ultimate responsibility for ensuring that children have decent access to education across the country lies squarely and unambiguously with the state. The Pakistani state cannot run away from this responsibility and duty.

But more is at stake here. Just opening up more schools is not the answer to the issues related to education. If the school does not have basic facilities and amenities, if the teacher does not show up, is not qualified, or does not teach properly, if the educational process, at the end (primary, middle, matric, and so on) does not provide a decent chance for the student to keep going forward to the next level and/or to become a part of the mainstream economy, it is not serving the purpose for which it was set-up.

Each and every child of this country has the right to have access to a quality of education that opens up doors for him or her to become a productive and contributing member of this society. If any child does not have that, if any school does not deliver this kind of education, we are not living up to the promise made in our constitution and we are not doing a service to the future of the country as this will just ensure that the 'demographic dividend' does not actually accrue to us. This sounds like a tall order but it is not. If Kerala can do it, if Sri Lanka can do it, if China can achieve this, and if any number of other countries, almost at the same level of development as we are, can do it, so can we.

The winning formula is not rocket science. We have, in a recent study, looked at some schools from the public sector, that, despite the poor financial and other conditions of our educational system, are still able to deliver reasonable quality of education to children and even in some of the poorest of communities. These schools had some of the basic amenities (building, roof, water, blackboards, books, and teacher and so on) that any school needs, but these were not what made the school tick.

In most cases it was a group of people who worried about the school, were committed to the school, the children and the educational process, were instrumental in motivating others about the school, were sometimes even instrumental in ensuring that the basic facilities were provided to it and were able to do all of this on a sustained and dynamic manner - providing an important feedback loop from performance to appreciation to performance. Most of the time this group had at least one or two teachers or the head-teacher in it, it usually had some members of the community in it as well, and sometimes even a committed education department employee was part of the group. And often there were a couple of people who provided leadership to the group.But these groups were organic to each school. Seldom did they come about through some fiat - like most school management committees, or parent committees that we once formed. And they helped make these schools integral parts of their communities. Many bureaucrats and politicians say we do not have the resources to provide quality education to all. It is true that we need to spend more on education, but given its importance, the more important question is, can we afford not to educate the children of the country?

Which would be more costly for the country, spending on quality education for all or dealing with an uneducated nation and work force? Equally importantly, one should keep in mind that though resources are important, they are not what are going to ensure the delivery of quality education to our children. It is developing the support, monitoring and mentoring network, at the level of each school that is going to be crucial. It is there that our main failing is occurring.

What is really needed is for a government to take delivering quality education to all as the most important challenge that it faces and then tackle it by increasing resources to education, but by also spending time to develop the networks that will be able to demand, sustain and develop delivery of quality education. Is there a government that will step forward and take this on?

The author is an Associate Professor and Head of the Department of Economics, School of Humanities and Social Sciences, at the Lahore University of Management Sciences (LUMS).

(Courtesy The Nation)

Sunday, March 30, 2008

Private moneylenders playing havoc with working class

By Sabihuddin Ghausi

KARACHI, March 29: An overwhelming majority of the earning age people, from 16 years to 60 years, are hostage to predatory moneylenders in the villages and even in the big cities like Karachi, Lahore, Multan, Faisalabad, and Peshawar. This situation is a challenge for all the political parties, more particularly for the Pakistan People Party, which got a favourable verdict for fifth time from the voters. The PPP has declared social justice as main motto in its election manifesto.

“Majority of Pakistan’s farmers, fishermen, auto-rickshaw drivers, artisans, technicians, field labourers, seasonal labour in ginning and husking units and a lot others in the cities are for all practical purpose the bonded labour because of their dependence on informal money lending,” an activist of a social service organisation observed. Failure of crop, unexpected financial losses from natural or man-made disasters, abrupt health problems in family or any other calamity bring these persons in unbreakable net of the moneylenders who claim more than a pound of flesh from their borrower victims.

“Read Munshi Prem Chand’s stories to know the social role of moneylenders in the Sub-continent,’’ advised Kashif Rizvi, who pointed out “The moneylenders have been around our cities and villages for generations.’’ Kashif Rizvi is a retired banker and is now associated with a social and religious organisation involved in some educational projects. Kashif says that these moneylenders, who operate in the informal sector and plug deficiencies of formal financial services, have gained tremendous power and pelf in last eight years. ‘’Forming a nexus with stock exchange brokers, commodity traders, private bankers, the powerful landed gentry and the bureaucracy, the moneylenders have hijacked the formal banking system and financial services for their benefit,’’ he pointed out.

In rural areas, where majority of Pakistan’s population lives, the formal financial services hardly contribute 25 to 30 per cent of the financial needs of agricultural credit. More than 70 per cent of the agricultural credit needs are provided by the informal sector moneylenders at “exploitative interest rate of 50 to 100 per cent’’ according to the findings of an official report on Rural Finance.

This report was prepared in the year 2003 for State Bank of Pakistan by a committee headed by Mr Jehangir Tareen who later became a federal minister and included members drawn from top bureaucracy and central banking and politicians.

Since the presentation of the report, the volume of agricultural loans has swelled to Rs200 billion in the current fiscal year, which according to a leader of the farming community is only one-fifth of about Rs1 trillion actual requirement. “As much as about Rs800 billion is being given by the informal sector to the farmers in the current fiscal year,’’ he estimates, and against which the moneylenders literally grab the crop much before it matures. “The farmer is paid just a pittance and remains under debt till the next crop,’’ he said.

The informal sector lending is not in cash but in form of inputs. All these inputs are given almost at double the officially fixed price on credit for which the interest is charged at 100 per cent and more. Last season, the officially fixed price of wheat was Rs425 for 40 kilograms. A large majority of small farmers in the Seraiki belt of Punjab and in Sindh could not even get Rs350. “After disposing of their crop at this price -- Rs350 for 40 kilograms -- majority of farmers are unable to clear their debt and hence have to engage themselves and their family members for service of the moneylender virtually as bonded labour.

Almost 50 per cent of Pakistan’s agricultural land is owned by hardly a few hundred families, who are in the national and provincial legislatures and have been controlling almost every government. The feudal families are closely related to military and other defence services personnel. State institutions are, therefore, geared to serve the landed gentry and a big number of farmers continue to live as indebted bonded labour.

Prime Minister Syed Yusuf Raza Gilani comes from an established feudal family of Multan, which enjoys a religious and spiritual status. But he also belongs to Pakistan’s most radical political party the Pakistan People’s Party that carried out two land reforms and introduced tax on agricultural income for the first time in July 1977.

Late Z.A. Bhutto introduced tax on agricultural income in 1977 budget which was promptly withdrawn or repealed by General Ziaul Haq. By doing so, Zia won over many feudal lords of the PPP on his side. Bhutto also introduced second land reforms in July 1977, which were declared un-Islamic by the Shariah Appellate Bench of Supreme Court in 1989.

“Now that the PPP wants an independent judiciary by way of legislation, millions of small farmers expect a judicial review of the Shariah Appellate Bench verdict,’’ a senior worker of the PPP said. He hopes that as Bhutto and his daughter late Benazir Bhutto rebelled against the interest of their class, the landed gentry Syed Yusuf Raza Gilani should also take up the same course.

The moneylenders are not only strangulating the rural population but are close to the jugular vein of a vast number of enterprising urban people. Fishermen in Sindh and Balochistan are victims of these moneylenders for ages. Fishermen need boats, tools, equipment and fuel and, therefore, need money for fishing trips in deep sea that last from two or three days to more than a week.

The terms on which all requirements of fishermen are met by the moneylenders are not different from what is being given to farmers. Just as the crop is grabbed before it is matured, the catch of fishermen is snatched before it is brought in the auction hall of the fish yard.

Auto rickshaw drivers in Karachi are another example of crude exploitation by the moneylenders. “Anyone, who owns 200 to 300 rickshaws in Karachi, is just like having more than one thousand acres of fertile farm.

The rickshaw is loaned out to a newcomer from the village at Rs300,000 to Rs350,000 on an interest rate of 100 per cent plus. The rickshaw driver is asked to pay at least Rs200 to Rs300 a day to adjust his loan and interest, which is never cleared and he remains eternally indebted to the moneylenders.

The Sindh government in its last budget announced to replace 68,000 rickshaws with new gas-driven 3-wheelers to be given on ownership basis. The powerful transport mafia saw to it that this scheme is never put into operation. The National Bank of Pakistan has offered the gas-driven rickshaws on ownership basis to the unemployed. There are people within the government and in traffic police, who are creating all hurdles to fail this scheme.

But the elections and the induction of a popular government at the federal and at provincial levels has given some hope to the downtrodden and wretched of the earth. The new rulers also come from the same old classes but in new clothes and with a new language. Can they come up to the expectations of the poor people of Pakistan?
Gilani wins unanimous trust vote: •Student, trade unions restored •Minimum wage fixed at Rs6,000 •Concurrent List to go •Wheat support price raised •Ministers restricted to 1600cc cars

By Raja Asghar

ISLAMABAD, March 29: Prime Minister Yusuf Raza Gilani on Saturday secured a historic unanimous trust vote from the National Assembly and then unveiled his coalition government’s priorities, including war on terrorism, an austerity drive, increased electricity generation and repeal of some controversial laws.

But what was dubbed as the programme for the first 100 days of his administration contained no immediate relief from people’s hardships because of food inflation and acute shortages of electricity and water for which he said there was no immediate solution.

Still Mr Gilani’s speech, after becoming Pakistan’s first prime minister to receive a unanimous vote of confidence from the lower house, came as a breath of fresh air after eight and half years of an oppressive military-led regime as he announced his decisions to repeal the infamous British-era Frontier Crimes Regulations (FCR) applicable to the Federally Administered Tribal Areas (Fata) and of the Industrial Relations Order (IRO)-2002 that curbed trade union activities, and revive banned trade and student unions.

Some other decisions likely to receive popular acclaim included a 40 per cent cut in the budget of the Prime Minister’s House and a bar on the use of cars of more than 1600cc power by his cabinet ministers as part of an austerity drive, and plans to form a ‘Truth and Reconciliation Commission’ to promote national reconciliation, particularly in references to excesses committed in Balochistan, and abolish, within a year, the Constitution’s concurrent legislative list to give provinces exclusive control over more subjects.

He said a new ‘freedom of information law’ would be brought to promote press freedom while the Pakistan Electronic Media Regulatory Authority (Pemra) would be made a subsidiary of the Information Ministry and its law changed.

The National Accountability Bureau will be brought under the control of the judiciary, he said.

The prime minister also announced his government’s decision to increase the wheat support price to Rs625 per 40kg from the present Rs510, which is certain to be popular with the farming community but could lead to increased food inflation.

In brief remarks about foreign affairs, the prime minister said his government’s policy would be based on “peace, goodwill and peaceful co-existence” and it would seek relations with all countries on the basis of equality.

“We want strong and close relations also with America and Europe,” he said. “We will promote peace and brotherhood with neighbouring countries.”

But he stressed Pakistan’s close ties with the Muslim world and China and called for peace in Afghanistan.He said his government would carry forward talks with India for a solution to the Kashmir issue and assured the Kashmiri people that their sacrifices would not go in vain. “This should be clear that confidence-building measures will be useful only when this problem is seen being resolved in the light of the aspirations of the Kashmiri people and international principles.”

The unanimous vote came after the opposition parties of President Pervez Musharraf’s loyalists agreed to vote for him, leaving behind the bitterness of the general elections.

Parliamentary leaders of all opposition parties, including the Pakistan Muslim League-Q (PML-Q), the PML-Functional (PML-F) of Pir Pagara, the Muttahida Qaumi Movement (MQM) and the PPP-Sherpao, announced support for the move as a gesture of goodwill and a step towards national reconciliation before endorsing a resolution reposing confidence in the new prime minister was moved and declared adopted unanimously in the absence of any opposition.

The move did not appear to be sudden as Mr Gilani read out a speech in Urdu in which he thanked all members of the National Assembly, including members of the opposition, for reposing confidence in him, triggering speculation over whether the opposition parties had acted on their own or with the consent of President Musharraf whose will used to be the last word for them until recently.

Mr Gilani, who is due to name the first batch of his cabinet on Monday, said his government was not afraid of “innumerable challenges” facing the country and that “the restoration of law and order and total elimination of terrorism will be (its) first priority”.

“The war against terrorism is our own war because countless of our innocent children and jawans have fallen martyrs as a result of it,” he said.

OLIVE BRANCH: But the prime minister, who discussed the future of Pakistan’s key role in the American-led war against terrorism with two senior US diplomats this week, offered an olive branch to what he described as some people who had chosen the path of violence as a means of expressing their views, asking them to give up their approach and “join us in this journey of democracy”.

“We are ready to talk to all those people who will lay down arms and adopt the path of peace,” he said.

The prime minister promised that his government would give a new package for the tribal areas some time later as an “important pillar of our strategy in the war against terrorism” and to cure what he called social evils there caused by poverty and illiteracy.

He said unemployment, inflation and poverty was the second problem for his government that, he added, would not permit an “unjust distribution of wealth” and would provide new opportunities to people for progress and prosperity.

Mr Gilani welcomed the recent announcement by Chief of the Army Staff General Ashfaq Kayani to recall army personnel from civilian departments as a step that would enhance the prestige of the army and said he hoped it would be done within two weeks while the decision could be implemented later in some institutions where such personnel were needed now.

“It is necessary for the solidarity and progress of the country that every institution fulfils its specific responsibilities,” he said, adding: “Governance is the responsibility of only the people.”

NO IMMEDIATE SOLUTIONS: The prime minister said the country was now beset with crises, on the top of the list being the crises of electricity, water, atta (flour) and high prices.

“We don’t want to tell lies, we want to take our people into confidence,” he said. “I have to say with utmost regret that no immediate solution to these crises is possible.”

He said his government would seek more power generation and plants of 2,200-megawatt capacity would be set up within this year while 500 megawatts would be saved through a conservation drive to lessen power cuts. Pepco had been directed to provide 10 million energy-saver bulbs to consumers at reasonable rates.

The prime minister said his government would cement irrigation channels to conserve canal water and would also construct small dams on an emergency basis to meet both energy and irrigation demands.

Some of the measures announced by the prime minister are:

-Ministers to travel only in economy-plus class in domestic flights.

- No unnecessary illumination of government buildings.

- No amount from the national exchequer to be spent on the decoration of government offices and official residences.

- Special counters for parliament members at airports to be abolished and the largest Pakistan flag to be flown on the parliament house.

- A prime minister’s question hour in the National Assembly to be started on the pattern of other democratic countries during which the prime minister would directly answer questions from the house members.

- An employment commission to be set up with cabinet approval to plan for the creation of employment opportunities in the private and public sectors with a Literacy and Health Corporation under it to provide employment to young people for two years after graduation.

- A National Employment Scheme to be started in 50 per cent districts under which one person from every poor family will be provided job.

- A Madressah Welfare Authority to be set up to provide a uniform syllabus for Madressahs in consultation with all stake-holders and audit their funds.

- A million housing units to be built each year along with five-marla schemes in villages where state land is available and schemes to provide flats and 80 square yards plots in cities for the homeless.

- CNG buses to be made available.

- Sunflower cultivation to be promoted to meet cooking oil needs.

- Crop insurance for small land holders.

- Provision of cheap and good seeds and cheap fertilisers to farmers.

- Poor people to given free national identity cards.


* Frontier Crimes Regulations and Industrial Relations Order repealed

* A “truth and reconciliation commission” proposed

* PM House budget cut by 40 per cent

* Special counters at airports for parliamentarians to be removed

* No money to be spent on the renovation of government buildings and residences

* A freedom of information law to be framed, while Pemra will be made a subsidiary of the information ministry

* Talks will be initiated with extremists who lay down arms and ‘adopt the path of peace’

* A new package for tribal areas promised

* Employment commission to be set up

* Madressah authority to implement a uniform curriculum

* One million housing units to be built annually for low-income groups

* Irrigation channels to be bricklined.