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'Major surgery needed for economic stability'

Daily Times, 17 March 2014 - A major surgery is required for economic stability in Pakistan, which is facing multi-dimensional crises, former State Bank of Pakistan governor Shahid Hafeez Kardar said on Sunday.

Talking on the topic of “economic policies of the present government” at the TECH Society Club, he said that two million youth demand employment every year, but only 0.9 million of them get jobs. “We will have to increase the growth rate from 3 percent to 8 percent to provide employment to the youth. For this, we should fetch investment rate of 30 percent, which is 19 percent at present in Pakistan.”

Kardar, who has also served as the Punjab finance minister in the past, said that solution to the basic economic problems was required, as ill economy could not be treated on the basis of symptoms, rather surgery. “All problems cannot be resolved on a priority basis with limited financial resources. If we want to progress like China and India, where investment has reached 38 percent, we should bring our national savings up to 15 percent.”

The former SBP governor said, “It will be further difficult for us to enjoy foreign aid after departure of American forces from this region in 2014... After paying external debts and meeting defence expenditure, running cost of the state exceeds the available financial resources.”

He said it was shocking that there were 0.4 million industrial electricity connections in Pakistan, but only 46,800 were paying taxes to the government.

Pointing out the reasons for improvement in the stock exchange, Kardar said, “It is due to the large-scale investment by small local investors in view of growing trust in the present regime.” He also appreciated the private sector for providing jobs to the youth. 
Kardar stressed the need for adopting a strategy at the national level to provide jobs to 50 million youths in the years to come, for which “a realistic taxation system according to the paying capacity of our citizens is necessary”.

“Investment should be made in the city in which revenue collection is high,” Kardar added.

Qayyum Nizami said, “Pakistan has become a security state instead of a welfare state. Agriculture and industrialisation should be the bases of our economy.

Nizami said that ‘elite economy’ was increasing the gap between the poor and the rich due to unequal distribution of resources. He quoted a statement of former SBP governor Ishrat Hussain that formal economy was going down while informal economy was escalating rapidly in the country. Nizami also gave a reference of the FBR, according to which 4 million people should give taxes, whereas only 100 companies were paying 80 percent of the total tax collections in Pakistan. “Unfortunately, as compared to direct taxes, the government of Pakistan is collecting indirect taxes, prompting price-hike,” he added.

Engr Abdul Majeed Khan, Dr Muhammad Sadiq and Jameel Gishkori also spoke on the occasion. Dr Muhammad Sadiq said, “The government needs to reset priorities to provide basic amenities of life to the citizens, like supply of pure drinking water, health facilities, employment and sewerage system.”


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