Tranportation and Infrastructure Crisis

In the post-budget speech, the Pakistani government ‘advised’ the people to take a cue from the US population and start using public transport to cut their fuel costs.
Well, we are ready to take cue from the Americans and will use the public transport, but is the government ready to take cue from the US and provide us the decent public transport? The current plight of the public transport is not only pathetic, dismal and painful; it is downright like a hell ride. Whether its intra-city or inter-city transport, there is no decent service available for the commuters in any city or town of the Pakistan.
The whole public transport service infrastructure is in the hands of private individuals, who do nothing but to screw people as much as possible. Government has no control whatsoever on these transporters. Most of the drivers and conductors of these public transports are either criminals released from jail, who don’t find any other work, or they are the people who know nothing else to do because of their illiteracy and non-existent skills.
People have to wait for hours to board on the bus or wagon and then they face a traumatic journey towards their homes and offices. Public transporters use dilapidated vehicles and cram as much people as possible. Ladies are subjected to very humiliating behavior, and the drivers are conductors remain always ready to quarrel. Fares are set by the transporters and there is no say of government in it. When the fuel prices are increased, fares are also increased by the transporters, and when fuel prices decrease, nobody bothers to reduce the fares.
In Pakistan, according to a newspaper report, 70 per cent of the energy generated is thermal which is produced from imported POL products and fuel oil. The electricity charges would increase under an automatic tariff adjustment formula and the government would also not offer any subsidy or relief to the people. So, this carbon tax would not only increase the financial miseries of 170 million populations, but also apply brakes on the industrial growth, as the input cost of fuel and electricity would increase manifold. The carbon tax appears nothing else but an anti-growth tax. The CNG has never been considered as a component of the POL, but now, it has been considered that the CNG is now heavily used in private vehicles and even public transport vehicles like rickshaws, minibus, etc.
There is no denying the fact that the masses need to use the fuel efficiently and rationally, but before forcing nation to do that through Draconian Carbon Tax, the government must provide a stable and dependable and strictly regulated public transport system.

Electricity Shortages

The load shedding-driven sleepless nights and disrupted daily routines of last summer are still haunting the people as the weather turns hot. The situation has not improved since last year; indeed all the signs are that it is getting worse. Credit goes to brave Pakistanis for surviving through the winter despite 10-hour power and gas load shedding. But in the upcoming summer when the mercury is going to consistently hover round 40°C, occasionally rising to 50°C in some places, a power crisis of a similar order is going to prove unbearable. Last summer the national media reported tragic deaths due to heatstroke and dehydration. The energy crisis in winter forced thousands of industries to shut down operations, affecting industrial production and the livelihoods of thousands of families.
Two key elements of a possible solution are: categorical change in the pattern of energy consumption and change in lifestyles.
The current energy consumption trends in Pakistan are extremely inefficient, whether it be in the domestic, industrial, trade or commercial sectors. With minimal effort, well over ten per cent of national electricity can be saved by applying only the first level of energy conservation, that is a change in attitude. It is simple, instant and effective and all it requires is a stop to using energy unnecessarily.
Leaving lights and home appliances on even when they are not being used is a common practice in our society. Similarly, many businesses such as shops dealing in cloth and garments, jewellery, cosmetics, home appliances and electronics are usually extravagantly lit. It is commonly observed that shops that could do with two or three 40-watt tube lights to meet the desired level of luminance use as many as 15 to 20 tubes. Not only does this increase power consumption, it also generates heat and makes the environment uncomfortable.
The second part of the solution is a change in lifestyles. It would begin with the acknowledgement that the country is facing a national disaster and every citizen has to pitch in to overcome it. The nation has to draw a clear line between necessities (lighting, fans, TVs, computers, etc) and luxuries (air conditioners, microwaves, etc). There is not enough electricity to meet both requirements.
We will have to compromise on luxurious lifestyles in order to meet the necessities. Markets and commercial places can substantially reduce their power consumption by changing their working hours. An early start and early end to capitalise on daylight as much as possible should be recommended rather than having opening hours from afternoon until late at night.Air-conditioning, usually a sign of a luxurious lifestyle, needs to be dropped. Bearing in mind that a typical domestic AC consumes far more electricity in one hour than a fan does over 24 hours, air conditioning should not be allowed except for sensitive applications such as hospitals and research centres. The choice is between using ACs for a few hours and then doing without electricity in peak summer months or avoiding ACs and other luxury gadgets but having round-the-clock electricity available to meet fundamental needs.
Any such policy should be made at the highest level and its implementation should also begin there because charity starts at home. The common man would only be convinced of the looming crisis when he sees the ruling elite practise what it preaches.
These recommendations are neither impractical nor a step backward, as some sections may perceive them to be. If implemented they can not only avoid the collapse of a bankrupt energy infrastructure but also ensure progress. Even those who have access to easy money and can afford different gadgets such as generators to offset reduced power supply will still feel the heat one way or the other. The bottom line is, in order to safely get through the current energy crisis the nation has to differentiate between its necessities and its luxuries.

Political Instability affecting the Common Man

Despite its resilience and some strong fundamentals, Pakistan’s economy is now facing multiple challenges. In addition to strategic location, the country’s other strong fundamentals are: a market of over 160 million people, an emerging middle class and an enviable record of economic reforms and policies. Still in place, these fundamentals contributed to the economic stability and a remarkable sustained growth exceeding 7 per cent over the last four years.
What now eludes the country is political stability since March 2007. As political instability is adversely impacting the economy, it is the ardent wish of the citizens that political stability takes root in the country soon. As far as the economy is concerned, the country’s exports have stagnated for the last couple of years, while the imports are constantly rising. The trade deficit, last year, stood at $13.5 billion, whereas it is likely to be much higher this year.
The budget deficit, which was originally projected at 4 per cent of GDP (equivalent to Rs400 billion), might rise to over 5.2 per cent. The increase in the international oil prices and subsidies being provided by the government on POL products, electricity and wheat flour, the cumulative effect of which is likely to swell to Rs280 billion or 2.8 per cent of GDP. Though the increase in oil prices and power tariffs on February 29, 2007 has marginally reduced the budget deficit, but the economy still continues to be haunted by huge oil and power subsidies of over Rs180 billion.
Meanwhile, an upsurge in food prices, power outages and the inflationary impact of rising oil prices in the international markets have a direct impact on purchasing power of the common man. A deteriorating law and order situation owing to rise in acts of terrorism has further compounded the situation. To keep its balance sheet in tact, the government shall have either to increase the volume of its revenues or cut down on expenditure, both developmental and non-developmental.
The government is reportedly considering to slash the development expenditure by Rs 75/100 billion of the total that presently stands at Rs525 billion (including Rs150 billion funding to be arranged by the private sector). However, the government also needs to concentrate on the adoption of austerity measures because its non-development expenditure which has swelled by Rs400 billion during the last eight years. A rise of Rs490 billion in the tax revenues, which increased from Rs300 billion to Rs790 billion during the last eight years, which would go a long way in helping the development projects. But, the increase of Rs490 billion in tax revenues is largely nullified by the sharp increase of Rs400 billion in its non-development expenditure due to extravagance in expenditure and heavy perks enjoyed by the top hierarchy.
The situation is quite critical as the FBR is already finding it difficult to maintain its target of revenue collection, which was projected at Rs1025 billion for the current fiscal year. It has already been slashed down by some Rs150 billion. However, the FBR could only collect Rs575 billion in revenues during the first eight months (July-February) of the current fiscal year. The revenue shortfall on corporate returns till January 31, 2008 was Rs22.7 billion, as the tax authorities could only collect Rs2.3 billion instead of Rs24 billion during the corresponding period in the last fiscal year.
Further, the national exchequer continues to suffer heavy losses, which are reported to be over Rs300 billion annually. Further, there is little progress towards expanding the tax base, in particular bringing the agricultural and service sectors into the taxation net and eliminating non-standard exemptions enjoyed by the country’s elite classes.
Many services and agricultural sector are still out of the tax net despite making substantial contribution to the overall GDP growth. Though the authorities conceded this fact, they are hesitant to move towards the desired objectives because of political considerations.
The cost of tax exemptions witnessed a steep hike during fiscal year 2006-07 as it soared to Rs184.9 billion. According to knowledgeable sources, the quantum of tax exemptions has further gone up during the current year.

Justice for the Common Man

In a survey of 4000 respondents conducted in 2006 by www.trasparency.org, judiciary was ranked 3rd most corrupt institution, more than 70% declared judiciary as corrupt.
The poll results shown above represents the opinion of a much smaller number of respondents; however it is not much different from the result conducted by www.transparency.org. Any expert researcher would certify that if the respondents are random, the results will change only 5 ~ 10% even if the number respondents are multiplied many times over. The reasons for such sentiments against judiciary, in my view are due to the stark ground realities that have been prevailing since last sixty years.

According to some estimated the number of pending cases are more than 1.5 million, according to others it could be double. The status of judicial infrastructure, the total number of courts, judges, lawyers, and the level of corruption among them, and not to forget the supporting executive bodies whose corrupt conduct has also been one of the major cause of injustice to the poor man of this country. All such factors are huge challenges, barriers I would say, that needs to be crossed to keep the promise to bring justice to every one. The plans to change all this is not know. All what a common man can do is to wait and see how the events are unfolded. Hope is what has been keeping us alive, but we have started to ask our selves that till how long we can cling on to mere hope alone.

Property and Housing Issue for the Common Man

Pakistan is facing a real property crisis. There is an estimated shortage of more than one million houses which is likely to grow by 0.6 million every year. But mercifully the situation is not as bad as in India where the housing shortage is a staggering 40 million houses.
But it makes an interesting reading to understand the dynamics of the real estate market in Pakistan. One can safely assume that it is an underdeveloped market. As compared to developed economies of the world where the real estate is mostly financed through mortgage, it is a completely neglected sector in Pakistan. The presence of mortgage financing in the property sector is only a recent phenomenon and can be qualified as negligible. Even the present mortgage financing is volatile with floating interest rate, which means that the lender is unsure of the real terms and conditions of the loan and the banks are at liberty to change the terms and conditions in case of adverse interest rates subsequently. It is interesting to note that mortgage financing is more than 50 % of GDP in most developed countries whereas this ratio is less than 2% in Pakistan.
Another worrying factor of the real estate market of Pakistan is the poor land record maintenance. It is still manual and efforts to computerize it have failed in the past. Bribery is the order of the day in land record and Patwari is still the king who may temper with the record according to his sweet will and vested interests. There is also a risk of fraudulent transactions due to non-transparent land record.
Recently following a worldwide boom in international real estate business, property market in Pakistan also witnessed a sharp growth. One of the factors may also be the recent decline in interest rates. It is a standard principle of economics that in a falling interest rates regime, people tend to invest in real estate, thinking it to be safe and secure from inflation.
Another stigma on the property sector of Pakistan is the speculation mafia. With the drop of interest rates, people were uncertain about their investments in banks and withdrew to invest in the property market, which offered attractive returns overnight, thanks to speculation mafia. Many housing societies were formed to defraud people. Files were in circulation everywhere without any physical existence of the plots and houses on ground and many opportunists and speculators benefited from this panorama. And ultimately common man was the looser, who was left with the file without anything concrete as the housing societies suddenly started to disappear. One can easily remember the example of Bankers City Housing Society.
But at the end of the day, common man in Pakistan is dreaming for a small house of his own, which seems a distant dream. One way to overcome the shortage of houses in Pakistan may be the introduction of multistory buildings to avoid the heavy urban land cost. This will naturally lower the prices of houses and may bring these in the reach of a common citizen.

econmic crisis and the common man

According to the definitions in various dictionaries, a common man is one who doesn’t have an identity or title or is known as an ordinary man. Compiling all the definitions I could come across, I could give a comprehensive definition of a common man. A common man is one who represents the majority of population of his country. In Pakistan, a common man is one who is not highly or even moderately educated, who doesn’t have resources to fulfill the basic needs of life and who doesn’t have a control on things happening to him.
As we are here to discuss the economic crises for a common man, we must realize that economics is not understood or read by the common man of Pakistan. I had a chance to ask few of the people who, according to the definition, are common men of our country. For them, an economic crisis was all about joblessness, low wages, inefficient health assistance, inflation, and very few of them were concerned about educational institutions for their children and their expenses. But when I asked them why this all is happening, they couldn’t say much instead of blaming the government. Moreover, the sugar shortage was another concern that bothered not only the common men but also the elites of Pakistan, who had to take a bitter cup of coffee in their breakfasts due to the crisis.
To alleviate the situation, the government of Pakistan is needed to focus on the ever growing inequality of income in Pakistan. Although, there are programs introduced by government to support the cause such as “Benazir Income support program” but such programs are being criticized by the well known economists. It is believed that there were many other opportunities that could have been more efficient in order to shorten the inequality gap. The initial allocation to this program is Rs. 34 billion (US $425 million, approximately) with the objective to partially offset the impact of inflation on the purchasing power of the poorer sections of the society. It means that this program is catering for the temporary problem of inflation that has been created due to multiple reasons. However, what actually should be done is to use this huge sum of money to eliminate and control the sources of this inflation. Moreover, this sum of money could have supported the SME’s (small and medium enterprises) of Pakistan for their growth and stability. Only 15% of the population can benefit from the program which indicates 60 % of the population below poverty line will be left out. This program serves as a partial treatment for the crisis however; the government should focus on preventions of crisis and should deal with the root causes.
According to former World Bank economist and ex-Pakistani finance Minister, Shahid Javed Burki, Pakistan GDP may decline to 2.5 % and a sharp fall in rate of growth is likely to be observed in near future. He says that Pakistan needs a comprehensive economic program which can focus on fundamental economic restructuring. But unfortunately, that has been a route not taken. he found it alarming that 6 to 7 percent times more was being spent in the non developing sector than on development.

Introduction

In our daily lives, we often hear terms such as "Economic Crisis" but there are people who can not understand what it really means .These people are the Common Men of our country. We are here to provide them with knowledge on different issues that create economic crisis and different aspects that affect or are affected by the economic crisis. We hope our readers would have a healthy discussion on the serious topics that we will post in the near future.