By R Ahmad
A vivid reader of the world’s history may find it ironic that most of the battles were lost and won in the domain of perception, rather than enforcing physical defeat. The death of the leader or the loss of control over capital was perceived as a sign of defeat, and would induce capitulation/ surrender. Largely this dictum is still true even today, more so in Economic Aggression.
For quite some time, perception is being built by all and sundry; that Pakistan’s economy is in shambles and heading bankruptcy. Unfortunately, Pakistan has failed to produce an organic economist. Most of the opinions and analysis about Pakistan’s economy are based on the western perspective.
While we find no major sign of economic recession on the streets, homegrown economic wizards wonder as to what makes these so-called economists create a misperception about health of Pakistan’s economy. Their predictions about collapse of Pakistan’s economy and its currency are prompting people to buy/invest in Dollars and other foreign currencies. On the contrary, profits on of investment in domestic economy reflect that reality is different from the perception. Ironically, we do not find our electronic media presenting facts about rate of returns on investment in dollars or foreign countries compared to the rate of returns on investments in Pakistan.
The dollar has appreciated from Rs 20 in 1989 to Rs 147 in 30 years. That is to say, about only eight or nine times. Now I invite every Pakistani to compare appreciation of his investment in Pakistan in last three decades. Any property worth ten lacs in 1990 will now be valued around 3 to 5 crores, reflecting a gain of 30 to 50 times. The gains on investment in National Saving Scheme were no less impressive. Ten lacs invested in 3 decades, would soar to 2.2-2.7 Crores, ie 20 – 30 times. The income and salaries have also increased by 15 to 20 times in last three decades. The rate of return in business was certainly much higher for investors as Pakistan is a tax haven for all.
These gains on investment and rise in the income level have no parallel in the western world, including USA. However, we may find similar examples in other south Asian countries. We will ask readers to get the comparisons themselves through internet or seeking information from their relatives and friends in foreign countries regarding rises in prices of their properties or salaries in last few decades.
This profitability of Pakistani market was the sole reason that most of the Pakistani Businessmen from Karachi, who immigrated to US, Canada or England during the 1990s, returned to Pakistan to resume their business in Pakistan.
Now, let us have a look at the so-called economic indicators quoted by these motivated economic experts. Although Pakistan’s external debt is about 30% of the GDP, as compared to India’s 21%, but it is still far less than many countries in the world including Norway and Canada (debt is over 100% of GDP). Our internal debt is about 37 % of GDP but is less than India’s, which is about 48% of GDP. According to Wikipedia (quoting IMF and CIA sources) in the year 2017 Pakistan’s total debt was around 67% of GDP as compared to India’s 70% https://en.wikipedia.org/wiki/List_of_countries_by_public_debt. So, this is the reality of the perception being created about economic collapse of Pakistan. It may interesting to mention that in 2007, when Gen Mushrraf left power, Pakistan’s total debt was 56% of the GDP. Pakistan’s tax revenue is 14-15% but India is also not doing much better at 17-18%. This is despite the fact that Pakistan’s tax machinery is one of the most corrupt in the world and a little effort to rid of corruption in FBR may do wonders for the country (that is to say country has the capacity/economic strength for increasing revenue).
Of course, Pakistan has a different kind economic problem and people are suffering. The cause is Corruption, Corruption and Corruption. Nevertheless, we must also know that Pakistan’s economy is fundamentally strong as we produce food grain/ goods on ground and is unlike the paper economy of many other countries (where money multiple times reinvested on paper). Therefore, we should not allow perception to take over reality and induce economic crises by buying Dollars for no good profits on our investment.