PakistanToday

Pakistan’s major problems and their solutions

BY SYED ZEESHAN HAIDER , (LAST UPDATED JUNE 16, 2018)

Keeping democratic institutions strong

Pakistan has faced major challenges in its socioeconomic situation over past seventy years. However, not
all problems have been overcome. The key problems of today include: water scarcity; the lack of
sustainable development projects; an increasingly unemployed youth population; the lack of focus on
human development projects; a continuous reduction in the foreign exchange reserves; the increase in
non-developmental expenditures; the increase in public debt; the unequal distribution of wealth; the
rising deprivation in Baluchistan, interior Sindh, and Southern Punjab; unpleasant relations in the region,
especially with the eastern and western neighbours; the poor condition of small and medium enterprises
(SMEs); and the failure to effectively implement the local bodies system, which is considered the basis
for democracy.

One of the major issues the country is facing is a shortage of water. According to research by the
American University, Pakistan is among the top ten countries in the world which are suffering from a
water crisis. Handling this water crisis will not be easy. It is necessary that work on the Kalabagh and
Diamer-Basha Dams be completed at the earliest possible opportunity. According to a recent report, 40
million acre-feet (MAF) of water is draining into the sea due to lack of dams. The Kalabagh Dam has a
capacity to store 6.4 MAF of water, the Diamer-Basha Dam can store 5.8 MAF, and the Dasu Dam can
store 6 MAF of water. If these three dams are completed, then lot of water will be saved from being
wasted which may aid in reducing the water shortage.

If these dams are not constructed, Pakistan will face a drinking water crisis and its agriculture sector will
be destroyed. In Pakistan, agriculture has a deep connection with other industries, such as the textile
and pesticide industries. Due to a lack of water, both agriculture and agriculture-related industries are on
the brink of total collapse. The agricultural sector is affected by both the lack of water as well as the
government’s neglect: such as not providing reasonable support prices or subsidies on fertilisers and
seeds.

Public debt is increasing because of which we must pay attention to the value of the rupee. Ishaq Dar
has controlled the dollar due to which inflation remained under control but foreign exchange reserves
continued to be depleted

Air pollution is another major issue. The country’s climate is getting worse day by day, for which trees
must be planted. The increasing severity of floods and silting of dams is leading to decrease in their
storage capacity as a result of deforestation.

In the future, the water crisis will more serious than the load shedding crisis. While the load shedding
crisis has been somewhat overcome, our transmission lines are worn out which causes the entire power
system to keep on tripping. Timely action is needed to address this issue so that the requirements of the
growing population can be fulfilled. Today there continues to be load shading despite having no shortfall.
Thus, even if we were able to generate more electricity, load shedding would still not be reduced
because of the lack of capacity in the transmission system.

There is a lack of sustainable development projects in Pakistan. The number of youth in our country is
constantly increasing, which means that unemployment is growing rapidly as well. That is why technical
education needs to be provided. B-Tech education and other technical education should be made
available to everyone. The maximum number of youth possible should be equipped with the skills they
need to earn money abroad so that they can contribute to the gross national product (GNP).

The country’s current population is more than 210 million. The growing population has a negative impact
on the country reserves and depletes resources. Unchecked population growth can be extremely
detrimental to Pakistan’s development. For this, a family planning emergency must be triggered and
must be enforced.

The country faces an unequal distribution of wealth. In Musharraf’s era, this phenomenon increased
rapidly because most of the economic experts at the time belonged to the banking sector. This meant
that the agricultural sector was ignored and the small and medium business sector was also affected.
The rich became richer and the poor became poorer. Afterwards, the Pakistan Peoples’ Party and the
Pakistan Muslim League-Nawaz came into power which allowed this difference to be narrowed down.
This suggests that democracy is a good option to achieve equal distribution of wealth. The local bodies
system from Article 140 of the constitution states that power should be transferred to the lower levels of
government. When this transition finally occurs, it will improve the condition of the public as well.

The country’s tax net needs to expand as only a small segment of the population pays tax. Landlords, civil
and military bureaucracy, large companies, bank owners, and housing society owners are included in the
elite of Pakistan and are given special privileges in the form of tax cuts to avoid certain taxes.

Our commercial banks should invest in the SME sector. Projects like the Benazir Income Support Fund
will not end poverty, but may rather create a huge population of poor people that are dependent on
social welfare. Dr Younus’s microfinance model can be implemented to revive the country’s economy.

Non-developmental funds should be reduced. Attention needs to be paid to issues like food security,
education, and health. In our country, 3.5pc of the GDP is spent on health and 2.8pc goes to education
(as per budget 2016-17). Both of these sectors need significant increase in budget.

If the democratic government plays more proactive as well as assertive role in foreign policy, it is likely
that relations with Afghanistan and India would improve. Spending on defense could be reduced and this
money could be applied to development projects, health, and education.

Public debt is increasing because of which we must pay attention to the value of the rupee. Ishaq Dar
has controlled the dollar due to which inflation remained under control but foreign exchange reserves
continued to be depleted. Over the last five years, exports have declined by $4 billion while imports have
increased by $8 billion. In 2012-13, our exports were $24.5 billion and have now fallen to $19.20 billion,
while imports were $45.1 billion and have grown to $49.40 billion. The fiscal deficit now exceeds $30
billion. Serious measures are needed in this area to rectify the problem.

The most important thing that should be focused on is strengthening the democracy. In the past, most of
the worst decisions took place under dictators. For example, if democracy had continued after Zulfiqar
Ali Bhutto, the country would not have taken part in the Afghan war and in the Musharraf era, the load
shedding problem would have not arisen. The country’s future possibilities for development and
prosperity depend on the continuation of democracy in the country.

Socioeconomic Problems of Pakistan

March 12, 2016 in March 2016, Pak Affairs Leave a comment

socioeconomic problems of pak revised

A nation-state is built on a political philosophy that delineates the mindset of its

people. Hence, it is imperative for the state to recognize and provide its citizens
with fundamental rights. Unfortunately, over the course of years we have seen a
sheer lack of this provision in Pakistan as the country has been, and is still, facing
several socioeconomic issues which hinder our country’s way to development.

With a population of nearly 192 million people, Pakistan bears the burden of one
of the most illiterate populaces in Asia. About half of the country’s male, and two-
third of the female, population cannot even write their names. The problem of
illiteracy persists due to broad policy hurdles and some on-ground factors. In
policymaking, it is the lack of political will that can be seen in allocation of only a
paltry budget for education, delays in release of funds and institutional ineptness
and corruption. Resultantly, insufficient infrastructure in the form of school
buildings and other facilities, low professional capacity of teachers due to the non-
availability of proper training institutes, uneven teacher-student ratios, lack of
teaching aids, and last, but surely not least, low public awareness concerning the
value of education; all contribute toward pervasive low literacy rate which in
Pakistan is only 58% (i.e. 42% of our population is still unable to read or write)
thus making the country be ranked at 160th position. Even some Saarc countries
like India, the Maldives and Sri Lanka, have literacy rates higher than Pakistan’s.

Besides illiteracy, another chronic problem of Pakistan is overpopulation. Pakistan

is the world’s sixth most populous country with a growth rate of 1.92 percent. A
number of factors can be held responsible for this burning issue. For instance,
over 97 percent of people in Pakistan are Muslims and they have the firm belief
that Allah is “Raziq” i.e. The Sustainer, therefore, most of them repel the concept
of family planning and restricting family sizes to a nominal proportion.

Another critical issue, which causes numerous other problems, is unemployment.

It is, by and large, the most perilous issue because we have countless young men
and women who do not have any job or any platform to exploit their talents and
abilities. Alienated by a feeling of abandonment, they may involve in heinous
activities like street crimes, dacoities and even terrorism. Poverty is another
outcome of this menace. According to the United Nations Development Program
(UNDP), the daily income of 65.5 percent Pakistanis is below 2 US dollars a day. As
per an Asian Development Bank (ADB) report, 57.8 million people in Pakistan are
living in abject poverty.

In addition, health, education and sanitation sector in Pakistan are also poorly
managed. The reason we still are far from progressing as a nation is that our basic
infrastructure is in tatters. An even worsened social tribulation is the grip of a
landed oligarchy in Punjab and Sindh, and of tribal chiefs in Balochistan and
Khyber Pakhtunkhwa, over the rural population and it continues to be a major
cause of the ever-growing inequality in Pakistan.

These social inequities have escalated economic issues in Pakistan; the problem
that is further exacerbated by a growing import-export imbalance. Currently,
Pakistan is the 44th largest economy in the world in nominal terms of purchasing
power parity. The biggest economic setback to the country has been caused by
the unending war on terrorism. For instance, back in 2008 during Musharraf
regime, a Pakistan-Afghan trade transit route was established but it was hijacked
by militants; thus, blocking Pak-Afghan trade that could have been a source of
huge earnings for Pakistan.
Ineptness on the part of policymakers can be seen in the fact that in spite of
historic fall in oil prices, which saved billions of dollars for Pakistan, no substantial
economic benefits could be gained. The price of benchmark Brent crude has fallen
from $115 in mid-June 2014 to nearly $30. This 70pc decline alone has implied a
saving of $7.6bn between June 2014 and January 2016. The prices of other
imported commodities have also fallen sharply but Pakistan’s economy has failed
to take off.

Moreover, an increasing inflation has been making the lives of the common
people burdensome. The annual rate of inflation in Pakistan in FY2014-15 was
estimated to be 2.1 percent. In case of Pakistan, inflation is the product of a
multidimensional process. It is the outcome of two economies — open and
underground — and rampant corruption and crime, which makes it difficult for
the government or society to curtail it.

Apart from the aforementioned economic malfunctions, a poorly managed tax

system is another Achilles’ heel for Pakistan. The tax-evasion ill has permeated the
country to such an extent that all guesses, surmises and even scientific research
prove fallacious — various guesses put the figure between the range of 50 percent
and 200 percent. All taxes, whether direct or indirect, are evaded to a greater or a
lesser extent by an overwhelming majority of our countrymen.

Two definitive economic problems are commandeering Pakistan’s economy at the

moment.

First, our unceasing dependence on agriculture forces us to work limitlessly for

this sector. Nearly 60.8 percent population of Pakistan is living in more than
50,000 villages where agriculture is the major occupation of the people. This
sector contributes 29.1 percent to GDP while in advanced nations it is less than 5
percent. It employs 45 percent of our labour force unlike below 5 percent in
developed countries. Moreover, we are paying most attention to this sector which
comes at the expense of other sectors like industries and trade.

Second, underdeveloped countries (UDC) are loans- and grants-receiving nations.

Most developing countries, like Pakistan, depend on foreign loans. The burden of
foreign loans keeps on piling up. We are in a huge debt trap because of which our
economy is in shackles.

The abovementioned points bring us to a conclusion that we need to eradicate all

these socioeconomic injustices in order to progress as a nation. However, this
would be possible only if the government and we, as the citizens of this state, aim
to thrive. A few radical reforms that can revitalize our basic social and economic
structure are direly needed. To gulf the gap between the rich and the poor we
have to ensure equal distribution of wealth. There is a sheer need to curb
corruption at all levels, and therefore institutions like NAB and FIA should be
made more powerful, vigilant and free of any political intervention. Free
healthcare should be provided to the citizens, whilst simultane-ously restructuring
the curricula taught in our educational institutions. Energy crisis must be resolved
to give our economy the much-needed boost and most importantly, maximum
investments should be made in projects to empower our youth. It will not only
make them enterprising, but will also equip them with the best knowledge and
other technological advancements. This is the only way forward if we want
Pakistan to be listed among the most developed countries of the world.

Different challenges for Pakistan economy

Share:

Share

Tweet Google+ Whatsapp

Pakistan has been facing different challenges regarding its economy. The economic
situation of Pakistan is very critical and people are looking towards the solution of
these challenges. Pakistan has different opportunities which can help it to solve its
economic problem. But without tackling long term challenges and problems
decisively, the country will no longer be able to take advantages of opportunities.
Increase in debt and import and decrease in export, saving, investment, tax
collection and lack of policy implementation, excessive taxation are some of the
challenges faced by Pakistan’s economy.

READ MORE: Putin, Erdogan to discuss 'top priority' Peace Pact regarding Syria's
Idlib

Decentralization is one of the factors which can help increase the economy of the
country. Local government should report to the provincial government about its
activities and the provincial government should report to the federal government.
If our government does this, we can do more by the same resources which are
being wasted today by its direct involvement.

Interest rate is one of the factors which can increase the economy of the country.
The government can offer low-interest rate to the public so that it becomes easier
for the investors to borrow money from the banks and invest it in their business.
Borrowing at a low-interest rate and investing money will increase the level of
demand in the economy. It will increase the demand for the labor force to meet
the high production level. GDP and living standard of people will improve.

Tax collection can play a vital role to improve the economy of Pakistan. The
government should allow the Federal Board of Revenue (FBR) to work impartially,
independently and transparently which will make FBR an efficient and effective tax
administration. This will increase the confidence of taxpayers in FBR and increase
tax collection in a fair manner. This higher collection of tax can be used for the
development of infrastructure. It will help to create jobs by reducing
unemployment and generate income for the millions.

While there is a crucial need to fix persistent challenges, more innate reforms are
required to improve and attract talent to serve in the businesses and public sector.
Instead of politicians, the academics, intellectuals and community leaders should
come forward and play their role in social revolution.