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Old Wednesday, May 02, 2007
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Default Asian development bank overview

South Asia's Growth to Remain Strong in 2007-2008, Says ADB

TOKYO, JAPAN - South Asia’s economic growth is expected to moderate to 7.7% in 2007 and rise slightly to 8% in 2008. Tight monetary policy measures taken by several countries in the region in 2006 are expected to dampen consumption while investment and growth in developed countries ease, according to a major ADB report released today.

The services sector is expected to drive economic growth in South Asia, supported by accelerated growth in manufacturing, according to ADB’s flagship annual economic publication, Asian Development Outlook (ADO).

South Asia’s economy expanded by 8.7% in 2006, supported by growth in consumption and investment. The region has averaged more than 7.5% growth since 2003, allowing it to reduce poverty levels in India, Pakistan, and Bangladesh. Every economy in the region posted growth of more than 6% in 2006, except Nepal, which suffered in the wake of political unrest.

India clocked the highest growth of 9.2% among the large economies and Maldives grew at 18.2%, fastest among the small economies.

Tight monetary policies taken by several countries in 2006 and improved fiscal balances will help the region rein in inflation at about 5% in 2007 and 2008. High growth rates in the region with elevated interest rates will continue to attract large capital inflows.

“South Asia’s recent economic performance shows it has emerged as a new growth pole in Asia”, says Ifzal Ali, Chief Economist of the Manila-based multilateral bank. “The region can match East Asia’s exemplary growth rates, albeit from a lower base.”

ADO 2007 forecasts overall growth for the 43 countries of developing Asia at 7.6% in 2007 and 7.7% in 2008.

Afghanistan’s growth rate slowed to 8% in 2006 from 14% in 2005 as the drought dragged down agricultural growth, which accounts for about one-third of the country’s economy. Inflows of foreign aid continue to support the country’s rapid growth with construction and services being the main drivers.

Pakistan and Bangladesh are projected to post a growth rate of about 6.5% to 7% in 2007 and 2008.

Economic expansion in Bangladesh has been underpinned by private consumption and investment, spurred by substantial workers’ remittances from abroad. While it is still early to pass judgment on Bangladesh’s economic performance, conditions for doing business could improve if the anticorruption and reform initiatives taken by the caretaker government continue.

Pakistan’s growth rate slowed in 2006 to a still brisk 6.6% from an average of 8% in the preceding two years as adverse weather conditions hit key agro-industries and dragged down the growth of the agriculture sector. The robust expansion of the services sector failed to offset the sluggish performance of the agriculture and manufacturing sectors.

India’s economic growth is expected to moderate to 8% in 2007 and rise marginally to 8.3% in 2008. Domestic inflationary pressures are expected to wane as the impact of credit tightening measures implemented by the central bank takes hold. ADO 2007 cautions that the pace of economic reforms in India is slowing.

Nepal’s economy turned in a sluggish performance, growing at 2.3% in 2005 and 2006. The insurgency adversely affected manufacturing, transport, communication and tourism while inclement weather depressed agricultural performance. The rate of inflation increased to 8% in 2006. The central bank took steps to curb inflation, but the impact has not yet been felt.

The Sri Lankan economy grew at 7.2% in 2006, lifted by the agriculture sector that was spurred by post-tsunami recovery of the fisheries sub-sector and sturdy growth in the service and industrial sectors. But higher government spending, partly due to post-tsunami reconstruction, pushed up the budget deficit to 8.7% of GDP. Demand pressures and rising food and fuel prices pushed the Colombo consumer price inflation rate up to 13.7% in 2006.

Political uncertainty and security concerns in many countries in the region continue to cast a shadow on the outlook and resolution of these critical issues remains key for the region’s economic success.

ADO 2007 says the structural policy reforms undertaken by governments in the region that spurred private sector led growth should continue with focus on reducing barriers to employment growth that would reduce poverty.

A pick-up in agricultural productivity, improvement in business climate and infrastructure are key to keeping South Asia on the high growth track. While prescriptions need to be country specific, fiscal prudence, reform of the financial sector, second generation reforms aimed at developing markets and institutions that may be missing or incomplete, and sound energy policies, are key to sustaining accelerated growth in the region, ADO 2007 says.

As India accounts for about 80% of South Asia’s GDP, its rapid growth can benefit the region by policies to integrate regional economies. Expansion of intraregional trade and cooperation can help in sustaining fast growth and reducing poverty.

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Old Sunday, May 06, 2007
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Default Pakistan to be leading economic power by 2050’

‘Pakistan to be leading economic power by 2050’

By Sajid Chaudhry

ISLAMABAD: Advisor to Ministry of Finance, Dr Ashfaque Hassan Khan, has said a latest research by a UK based international firm has indicated that Pakistan along with other three economies would become leading economic power well before 2050.

Speaking at weekly briefing at the Ministry of Finance Dr Ashfaque said Gold Man Sachs had earlier included Pakistan in next 11 emerging economies with a projection that the country would be an economic power by 2050.

In a latest projection released by Grant Thorton, a British Accounting Firm indicates that Pakistan, Turkey , Indonesia and Mexico would become economic powers earlier to the projected date of 2050.

He called this development as success of the economic policies and economic managers of the country who are trying hard to convert the current growth trend into a sustainable economic growth.

He said Pakistan to hold road shows in different parts of the world for flotation of its next bond issue in the month of May. Bond having category of 144-A would be for whole world including Europe, America, and onshore US in-vestors would also be able to hold these bonds.

He mentioned that selection of lead managers had already been completed and City Group, HSBC and Douche Bank, the lead managers, were completing the documentation process for floatation of bond.

He said the size of the bond issue would be decided on last day of the road shows.

Replying to a question on next GDR, he told the media that they have successfully completed the GDR of the OGDCL and preparation for the GDR of the UBL was at an advanced stage. “We are trying to complete UBL’s GDR before the end of this fiscal year 2006-7,” he added.

He told that Pakistan would participate in 40th annual meeting of the Asian Development Bank scheduled at Kyoto, Japan during 4-7 May, 2007.

Pakistan’s three member delegation to be headed by Omer Ayub Khan, Minister of State for Finance, and Secretary Economic Affairs and Advisor to Ministry of Finance would also be the part of delegation.

The 21st century is seen as Asian century and the ADB meeting would discuss the economic growth and challenges faced by Asian economies.

At the ADB annual meeting, Pakistan, Vietnam, Philippines and India would give presentation on their state of economies and challenges faced by them. Pakistan had earlier held presentation on its economy in the year 2000, Dr Khan added.

Giving a brief overview of the economy, he said during 1st March to 30th April Pakistan’s stock market recorded increase of 1162 points in its index.

Aggregate market capitalisation of Pakistan’s stocks market increased by Rs 545 billion or 9 billion dollars during the said period, the overall aggregate market capitalisation which stood at 50.4 billion dollars at the start of March increased to 59.4 billion dollars by the end of April 2007.

He mentioned that Pakistan’s foreign exchange reserves increased by 390 million dollars during this period as at the end of April these reserves were 13.752 billion dollars.

He said exchange rate was also stable, at the start of March 2007 it was Rs 60.7 and at the end of April 2007 it continued to stand at Rs 60.7 per US dollar.
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Old Tuesday, May 08, 2007
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Default Faces of poverty


The man is relatively old, blind and not able to work. His wife is also quite old and has never worked outside of the house in her life. They have two young daughters, but they are almost illiterate and they too have not worked outside of their house in their life. Not that there is any work for them to do in the village anyway.

This is a real household in a small village in a relatively developed part of rural Punjab. The household has always been poor, but their current condition is nothing less than critical. They survive on the help that they receive from neighbours and some of the richer households in the village. But this help is barely enough to keep them out of complete starvation. It does not prevent major health issues, malnutrition issues and even issues regarding having decent clothing and so on.

When the old man could work, he used to be a muzdoor. He would work in the fields or would go to the nearby city to work as a labourer in construction industry. Even then the household was living in rather constrained conditions. But since he has gone blind, he has seen levels of poverty and deprivation that are hard to even write about. It is difficult to believe that a household can survive in such conditions.

It goes without saying that the state apparatus does not even know that such a household exists. No Zakat, Bait ul Maal, Prime Minister or Chief Minister programme has ever reached them. And his ability to go look for these programmes is very limited: limited by his lack of resources, his lack of literacy and his lack of ability to move around.

The old man comes from a caste whose members are, on average, also not very well off. Most of the people in this caste, spread over rural Punjab, are poor, lack skills, lack education and though most of them are connected to agriculture, do not own land and most of the time do not even own their homes.

But the story is much worse. Some of the research shows that most of the people from this and similar castes have not even been able to break the circle of poverty and deprivation over generations as well. Their fathers and grandfathers were as poor as they are and they expect that their children will be as poor, as deprived and as powerless as they are (interestingly, the only bright spot in their lives, from the perspective of some hope, was Bhutto's rule of the 1970s, but that is another story for another article). So, the story is not of poverty alone, it is a story of denial of rights, denial of inclusion, and denial of effective enfranchisement.

Current generation is poor as it has no education, no skills, no fixed assets (land or other holdings), no savings and very limited ability to raise credit. He/she is forced to live as a daily wage worker, or as a unskilled worker on the fields of the landlords or in the households of the richer village people. But this gives her barely enough to feed her children. She cannot afford to send her children to private schools of course.

The state has been unable to provide quality education and health services in the village and so her children cannot get education or decent health care. But even if there is a decent public school available in the area, her children are usually excluded from being able to avail the services of that school.

This exclusion, from state provided services, for some castes, has not been studied a lot, but it has been pointed out in some other research work too. It points to a very significant failure of the state. State institutions are unable to treat citizens equally and fairly: they are unable to extend the same quality of services to all irrespective of their caste, creed, religion and level of income.

There is an even more important failure here. If the state knows that certain sections of the society, castes and creeds are not being able to access state provided services, are being excluded and to the extent that they cannot even have a decent though basic life (and how can the state not know this about these castes from across Pakistan), the state should have focused their energies on bringing these castes into the mainstream and it should have made extra efforts to ensure that the excluded groups are given their fair share and more in the resources of the state, that they are able to access state provided services and are able to break the vicious circles of poverty and deprivation that they are locked into.

The failure gets more exasperating and even more exclusionary when the other organs of the state reinforce the initial failure. The local administration, the canal water official, the patwari, the local policeman, the local tax official and even the local judicial officer all support the local notables and major land holders. They feel that they would be more successful in their job and careers if they have good working relationships with the local notables.

The notables reciprocate the feeling. So the local state institutions get aligned with the interests of the local notables and landlords and the excluded castes become even more excluded. A better state would make sure that its local representatives would try to go in the opposite direction. It would try to ensure that all people, landed or not, are treated fairly and equally, and if any are being discriminated against, it would ensure that the state institutions bend backwards to ensure that any initial inequality is redressed.

But the opposite actually happens. In a village I know fairly well, a girl from a poor household and from one of the excluded castes was raped by the landlord's son and then burnt alive. Before she died she even identified the culprit. But the local police, the local administration, and the local setup made the life of the parents so difficult that they had to settle with the landlord out of court. At that time, this happened quite a few years back, the parents were forced to accept something like Rs 10,000 and shut up for good. So much for state institutions trying to level the playing field.

To address the above, the state has to ensure that its service delivery mechanisms and local level institutions are able to divorce themselves from local politics and are able to extend the same level of services to all, irrespective of their caste and income. The state has to ensure that its local representatives are able to ensure effective participation from the excluded castes and people. But this is not going to be easy for an elitist and non-representative setup to achieve.

One possible and relatively easy way to address this type of exclusion and inequality would be through giving rights over land to the excluded classes. This would give them assets to break the poverty cycle with, it would guarantee certain level of income for them, and it would give them some power vis a vis the local landed elites. It would give them some power and respectability in the eyes of local state representatives as well.

It is important to note here that I am not arguing for land reform from the perspective of raising agricultural productivity: the traditional reason for talking about land reform. But it is to allow some balance in how power is distributed in rural areas and to allow excluded people and castes to re-enter the mainstream that I am arguing for land re-distribution. This is again a larger topic and one that deserves detailed thinking and arguing. We will come back to this issue in a later article.

Poverty can be perpetuated in many different ways. And it can be killing, quite literally. Some of its faces are given above. The state has a responsibility to eradicate poverty, but its current efforts are limited and sometimes even counterproductive, and with significant consequences for many. How we handle this issue will determine the fate of millions of people existing today and many millions who will be born in the years to come.

(The Nation: May 7, 2007)
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Old Friday, May 18, 2007
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Hope for the poor S RAHMAN

ARTICLE (May 18 2007): Poverty is a curse. Yet a bigger curse is a government's apathy towards this curse. Blessed are the nations whose governments focus more on material development aimed at socio-economic uplift of the masses. One should pity those nations whose governments have no agenda other than mere reliance on self-projecting, luring slogans and impracticable programmes.

Pakistan is lucky to have made strides in the area of socio-economic development that has improved the common man's lot in reality. Not only that, things seems to be moving with such a pace and in such a direction that one can easily predict the eradication of poverty from the country within the foreseeable future. And the foreseeable future means within the next one to two decades, not beyond that.

The credit certainly goes to the Shaukat Aziz government, as much as to the President, General Pervez Musharraf, for having embarked on a mission to rid the Pakistani nation of the curse called poverty, with exceptional speed, so as to achieve this target close to the 2015 deadline of Millennium Development Goals (MDGs).

It is the year 2016, officially declared as the year of the fulfilment of the present regime's Vision, meaning the Vision of Prosperity and Optimal Development. Candidly speaking, although the country would be given a 'Visions' off and on, by many top political leaders, the Vision that is in currency nowadays is backed up by ingeniously planned, effective back-up efforts. The stress on implementation and follow-up is tremendous and that is making things work optimally.

The question certainly is not of pace or direction alone, but that of concrete figures - relevant to material progress made - that substantiate the sitting government's claims of endeavouring to bring prosperity in Pakistan.

Even a cursory look at the poverty statistics suffices to suggest that the government's poverty reduction efforts have met much success. The success has mainly come in the wake of a high growth rate, reduction in unemployment and direct transfers, all these factors collectively contributing towards a 10.6 percent decline in absolute poverty.

The poverty head count, which was 34.4 percent in 2001, came down to 23.9 percent in 2005. Rural poverty, in particular, declined at a higher pace than urban poverty. As against a 7.8 percentage point reduction in urban poverty during 2001-05, rural poverty declined by 11.2 percent.

The number of people living below the poverty line declined from about 49 million in 2000-01 to 36 million in 2004-05, or 13 million people moved out of poverty trap, of which 10 million people were in the rural areas (Table 1). During this period the total population, however, increased by about 12 million.


================================================== ==============================
2000-01 2004-05 -
Total Urban Rural Total Urban Rural
Population (mill) 142.86 47.50 95.36 152.53 52.41 101.50
Poverty HC (%) 34.46 22.69 39.26 23.90 14.90 28.10
No of Poor (mill) 49.23 10.78 37.44 36.45 7.81 28.52
Population out of 12.77 2.85 9.92
================================================== ==============================

POVERTY TRAP (MILL) For sure, these figures speak volumes of the government's sincerity of purpose and determination to do away with poverty. The fact is that ever since the present government took over, it first preference has been to deal a blow to poverty, which increased in the nineteen nineties.

One look at the figures and one will arrive at the conclusion that during the last seven years, the country has witnessed remarkable progress in the reversal of the poverty trend. This accomplishment owes much to the underlying strategy of Poverty Reduction Strategy Paper (PRSP).

More importantly, poverty reduction continues to be the all-embracing vision of the Medium Term Development Framework (MTDF) 2005-10 and MDGs 2015. Credit also goes to the government's practical approach and the steps taken thereof with fixed, reasonable deadlines to reduce poverty.

And wondrous results are expected from the government's move towards a knowledge-based economy, aimed at developing human resources to fill the growing demand for a skilled labour force. Pakistan is fortunate enough to be blessed with a sizeable human resources.

Out of its total population of 160 million, more than 100 million are of youth in their early twenties. Prime Minister Shaukat Aziz made specific mention of this positive economic indicator during his recent visit to China.

It is additionally encouraging to note that during 2001-02 to 2005-06, the country has spent approximately Rs 1,400 billion on the social sector and poverty-related programmes (Rs 760 billion on social sector development). The number of new public sector projects launched during this period by the government have increased manifold from 197 in 2002-03 to 799 in 2006-07.

The new projects initiated by the provinces and the FATA and Northern Areas during this period have also increased, from 86 in 2002-03 to 432 in 2005-06.

The government is also resolute about the effective implementation of a pro-poor growth strategy for which purpose it has taken serious initiatives. First and foremost is the agriculture sector, where most of the poor are engaged. The sector is being provided loans, better seeds, better agricultural marketing facilities and higher allocations for research and development.

Micro-enterprises, which are labour-intensive and have positive implications for income distribution, have also been taken on a top priority basis and have been provided support, particularly through provision of credit. And in order to make this sector competitive, it has been opened to specialised institutions both in the private and public sectors.

Above all, the government has paid full attention to the creation of assets. The government is fully alive to the fact that lack of physical assets such as land, livestock, housing, financial resources and rehabilitation arrangements are both a cause and an outcome of poverty.

Similarly, lack of access to social assets in terms of deficient skills, scant access to basic services - education, health, nutrition, reproductive health, water supply and sanitation and social exclusion is major constraint to reducing poverty in Pakistan.

With these specific inadequacies in view, the government has extended vehement support to initiatives to redistribute resources, especially in services that create assets, such as education, health, and infrastructure; and by implementing policy and institutional reforms to ensure effective delivery of services.

A participatory process engaging poor households and poor communities in decisions on choice, operation, monitoring, and evaluation of programmes and services that build their assets, is an integral part of the strategy.

And as for the pro-poor expenditures, as percentage of GDP, the aggregate pro-poor expenses increased from 3.8 percent in 2001-02 to 5.6 percent in 2005-06. In monetary terms, these expenditures have increased from Rs 167 billion in 2001-02 to Rs 435 billion in 2005-06, showing an average annual growth of 27 percent.

The development expenditures, during this period have increased at a much faster rate from Rs 37.6 billion (0.9% of GDP) to Rs 170.8 billion (2.2% of GDP) or 46 percent on the annual average. Current expenditures during this period increased from Rs 129.7 billion (2.9% of GDP) in 2001-02 to Rs 263.8 billion (3.4% of GDP) in 2005-06 or 19.4 percent annually (Table 2).


================================================== =
Year EXPENDITURE Percent of
Development Current Total GDP
(Billion Rupees)
2001-02 37.6 129.7 167.3 3.8
2002-03 44.2 164.3 208.5 4.3
2003-04 79.0 182.3 261.3 4.6
2004-05 112.6 203.6 316.2 4.8
2005-06 170.8 263.8 434.6 5.6
================================================== =
In all, the government's concentration on ameliorating the masses' lot, not only through the formulation of workable policies, but through the continuation of prudent macroeconomic and sectoral policies is most likely to bring about further reduction in unemployment and poverty.

Much better, positive results are expected from investments in development projects, particularly irrigation, power, agriculture and livestock that the government has launched with the idea of developing the infrastructure and creating millions of new jobs and income opportunities for the poor.
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Pains of rising inflation

GIVEN that the government’s annual forecasts are based more on guesswork than sustained research, it is not surprising that the inflation target for the current year does not reflect the situation on the ground. It is believed that inflation in 2006-07 could be as high as 7.5 per cent, well in excess of the 6.5 per cent target. What is particularly worrying is the massive growth in food inflation. While everyone in the commercial food chain — growers, livestock owners, wholesaler and retailers — can adjust to inflationary pressures by raising prices, no such option or mechanism is available to the poor and those in fixed-income groups. With the benefits of economic growth failing to trickle down to the most needy, the situation is becoming bleaker by the day. In the first ten months of 2006-07, the prices of perishable food items shot up by 17.6 per cent as opposed to 5.1 per cent in the corresponding period the previous year. Non-perishable food items also became nine per cent more costly. On the other hand, non-food inflation in the last ten months was significantly lower than what it was during the same period in 2005-06, falling from 8.8 per cent to 6.2 per cent. This decline is attributed to a tighter monetary policy which has managed to put the brakes on credit growth.

Food production is subject to the vagaries of nature but this unpredictability only reinforces the need for proper planning. Instead of building strategic reserves of items such as rice, wheat and sugar, the current ad-hoc approach is to export at a time of surplus and import during shortages. The lack of proper storage facilities and other logistical problems cannot be an excuse. At the same time, there are few checks on hoarders and cartels that corner markets, create artificial shortages and manipulate prices in the name of free enterprise. The Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970 is an anachronism in an unregulated economy and must be brought up to date. A more sophisticated and effective monitoring mechanism is needed to check unfair trade practices, particularly those that hit the poor the hardest.
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Taming the dragon

CAPITALISM with Chinese characteristics is how Beijing's high command describes its economy. Which must make its stock market a bubble with Chinese idiosyncrasies. The bubble part is familiar enough.

The market locals invest in keeps charging into uncharted territory, last week vaulting over the 4,000-point level for the first time. After a 130 per cent gain in 2006, the Shanghai index is already 50 per cent up this year. Stupendous gains mean silly prices: bog-standard manufacturers are on dotcom valuations.

What makes this bubble distinctive is its newness. Many millions are encountering shareholder capitalism for the first time - and they want in on it. A million share-dealing accounts were opened on April 30 alone, according to F&C fund managers, more than the whole of 2005. The problem of employees trading in work time is such that businesses have been forced to introduce fines.

A national headache to be sure but, like nearly everything else made in China, it can be exported.

In February, a mere hint from Beijing that it might try to rein in markets knocked 9 per cent off Shanghai stocks -- and panicked Wall Street into its biggest one-day slide since 9/11. The link is more than psychological. As traditionally happens in bull runs, investors are putting more money into exotic places.

The same thing preceded the Asian financial crisis, which began 10 years ago this summer. That was sparked by hot money, domestic and foreign, flooding into relatively primitive markets and causing wasteful over-investment. Only Dr Pangloss would see no similarity between then and now.

This is not to say the bubble will burst soon. After all, China's economy is still growing at an extraordinary 11 per cent a year. And policy-makers would hardly want a market meltdown to precede the Beijing Olympics next year.

––The Guardian, London
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Poverty alleviation through resource conservation By Mohammad Niaz

Poverty alleviation is one of the greatest challenges facing the communities and governments of developing nations, and the donor agencies working in those countries

The need for conservation of natural resources has emerged as an urgent discipline in light of the current environmental trends by integrating the concept of co-management for sustainability of resources and financial implications. Wildlife and forests are the renewable resources but can be easily exploited that render the utilisation index reaches to an extreme.

In Pakistan the rural poverty constituting about 36.3 percent is significantly higher than the 22.6 percent urban poverty. Mostly, poverty is associated with the rural set up of an area due to lack of developmental means and facilities that otherwise serves as a wheel for giving momentum to boost up the rural economy at large. In an attempt to bring the living standard up, many people leave the rural areas with a quest to find jobs in the urban areas, that has twofold effect on the rural economy; firstly, the manpower creates a vacuum in the rural economy, secondly, the manpower going out to urban areas bring good financial prospects and opportunities to earn money and utilise them in the rural set up by establishing some sort of the small scale business. The latter scenario puts up shackles onto the better prospects of all others as well in terms of sanitation, health and medical facilities.

Pakistan’s total population is estimated at over 156 million, which places it as the sixth most populous country in the world, and this population is going to be twofold by 2040 with a growth rate of 1.9 per cent per annum. With increasing households in the rural areas, the general picture of poverty gets more prominent. In order to improve the rural economy, it’s vital to boost up the economic conditions of the people by plugging their mass flow to urban areas through provision of developmental means at the threshold. Besides the rural population being 65 per cent is huge task to be provided with the basic amenities and needs.

Pakistan is bestowed with large diversity of natural resources in its different geographical regions whose weight can be gauged from the fact that these areas attract many donor agencies for the uplift of the poor rural local people in general and the environmental resources in particular. Towards the last two decades of the 20th century, adequate attention to environmental concerns at the preliminary stages has contributed significantly to pave way for the ‘sustainable growth’ i.e. by sustaining the resource base of the biosphere through community participation in different componential aspects. Poverty alleviation is one of the greatest challenges facing the communities and governments of developing nations, and the donor agencies working in those countries. Generally, most national policy to fight unemployment and generate economic growth is focused at the community level. Community engagement is indeed crucial to the success of income generation programmes focused on poverty alleviation.

Natural resources provide important platform to promote economic activities and subsequent benefits for many local rural communities. In developing countries, harvesting of natural resource products offers significant opportunity to improve the livelihoods of local communities living in rural areas. Sustainable management strategies of these natural resources are therefore the next most essential steps. Effective strategies that integrate sustainable natural resource management, micro and small enterprise for livelihoods of community will enhance both economic benefits for local people and conservation of different components of natural ecosystems.

In this grave social scenario, management of natural resources play a pivotal role in poverty alleviation in target regions both to some extent in urban and to a greater degree in the rural areas having huge potential of natural resources, through active participation of the local communities who are more dependent on these resources for subsistence. In rain-fed and upland zones, poverty forces people to exploit natural resources with short-term gain. Increase in population and fewer crops yield result in lower per capita income that worsens poverty and food security. More often they resort to only one consumptive use of the resources at the cost of depletion of resources with an unsustainable utilisation approach without any economic output and benefits in the long run.

However, to halt this degradation trend in resource utilisation more specifically in the hilly and ecologically fragile areas of the region, several projects have been implemented to ensure economic growth through incentives and developmental interventions to earn support of local people and achieve the sustainability target in resource conservation. Many projects and sectors and non-government organisations are helping the local communities in basic water supply schemes, basic infrastructures and others to improve their socio-economic condition. Local people are also hired as porters in different resource surveys that serve as a means of income generation. In many areas like Chitral and Swat the local people are facilitated to grow orchards of walnuts and apple with technical assistance and incentives to improve their earning capacity, marketable skills and expose them to better marketing techniques. Provision of small and medium sized enterprises, besides financial returns, help the local people through local level employment generation, Improved seed quality and agricultural practices help them get more crop yield and income.

International Union for Conservation of Nature (IUCN) has also promoted relevant projects for improved environmental and Natural Resource Management. It helped the local communities to explore market opportunities for local business enterprises, based on the observation of environmentally sound production methods. According to its report environmental parametres like forestry, agriculture, wildlife, fisheries, natural resource based manufacturing industries etc. has contributed 45 per cent to the national economy, 75 per cent foreign exchange earnings and 60 per cent employment of the country.

The initiatives aim at increasing and diversifying income while observing the basic sustainability elements. They also highlight the existing linkages between food security, livelihoods and sustainable management of natural resources. A number of potential business areas were identified including apiculture and other non-timber forest products (e.g. handicraft using seeds, dry fruits, burnt poles, etc.), wildlife, consortium between cash crops business and natural resource use as ensured means of income generation.

In some countries the governments actively develop community based wildlife management utilisation schemes where benefits and revenues from natural resources like wildlife may accrue directly to several communities. In NWFP (Chitral), the Markhor and Ibex (wild goats) trophy hunting programme initiated by the NWFP wildlife department for benefiting the local communities has helped the communities significantly that fetch more than US$50,000 for one trophy of Markhor and $3000 per Ibex trophy, 80 per cent of which goes to the community in wake of their support of the species conservation in the community and private owned game reserves in the area. This co-management has created a sense of resource management on sustainable basis, with a major financial outcome to benefit the community as whole through conservation initiatives as an income generation activity.

Better prospects of income generation through awareness and developmental interventions have increased the capacity of local people to earn more income as compared to the orthodox and unsound techniques. The poverty struck areas are ecologically very rich in natural resources like Non-Timber Forest Products (NTFPs) that are value added products. There are instances that the projects like Palas Conservation and Development Project and its subsequent projects in district Kohistan of the North-West Frontier Province have rendered the economic growth in the area through several income generation activities and facilitation.

The much-ignored sector of NTFPs has been focused to fetch more income to the local people through improved techniques and capacity building. Alone from the NTFPs, like Chalghoza the financial return was increased from 0.5 million which was based on crude means to 1.4 million during 2004-05 due to imparting technical support and input. Mushroom, the most important NTFP has greater contribution of Rs8 million per year in the economic growth of the area at large.

Traditionally, the extracted honey usually earned the local people less amount (Rs500/kg) as compared to the sound techniques (Rs700/kg) through better apiculture techniques that increased per hive production. Similarly, Chalghoza nut was sold earlier at Rs300/kg, which increased to Rs500/kg. Walnut, another important NTFP earned them Rs2000/40 mond, Mushkbala Rs4000/40 mond and Moral Rs6000/40 mond through improved techniques and awareness regarding production, harvesting, storing and marketing.

Development of recreational resources and facilities based on the concept of non-consumptive uses that attract tourists from far and near and boost up the local economic conditions by enabling people to establish means of income generation like restaurants, shops, hiring of tourists guides, sale of handicrafts etc. For a very small investment, rural communities can earn significant income. There are several projects like the Natural Resource Conservation Project in Galliat (1997-2003) NWFP, where local tourists guides were hired and trained to facilitate tourists by promoting the concept of ecotourism. This was a promising prospect for the people to tap recreational resources. Similarly, in the Northern Areas of Pakistan, the concept of community guesthouses had a great potential to provide financial opportunities of earning money to the local people by establishing management codes.

Over the country, other important projects like Environmental Rehabilitation in NWFP and Punjab, Kalam Integrated Development Project, Agha Khan Rural Support Programme, Malakand Social Forestry Project, Forestry Sector Project, Indus For All, Pakistan Wetlands Project, IUCN and WWF besides provincial government departments through their projects have contributed to the environmental rehabilitation with contribution to the rural economy at large in form of different sectoral interventions.

Need of the day is to achieve sustainable development through equitable distribution of benefits, encouraging community based natural resource conservation and integrating of environmental issues into socio-economic development planning.
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Default Millennium development goals

Millennium development goals: where are we now?By Zafar-ul-Hassan Almas

When UN Millennium Declaration was unanimously adopted by 189 nations and signed by 149 heads of state in September 2000, Pakistan was already committed to bring a sizeable number of populous above poverty line in the early 2000. Pakistan’s targets were even more ambitious than all developing countries at large. The Developed world had committed resources to support low income countries to achieve Millennium Development Goals (MDGs) by its target date 2015. The Millennium Declaration reaffirmed international community’s commitment to the right of everyone to reap fruits of development, peace, security and gender equality, and multidimensional nature of the poverty and its direct bearing on the whole development process brought it to the forefront of all objectives of overall sustainable development. The MDGs are intended for the member countries to further their efforts in the fight against poverty, illiteracy, hunger, lack of education, gender inequality, infant and maternal mortality, disease and environmental degradation. The Millennium declaration adopted 8 development goals, 18 time-bound targets and 48 indicators for developing countries. The development targets include:

(a) Eradicate extreme poverty and hunger

(b) Achieve universal primary education

(c) Promote gender equality and empower women

(d) Reduce child mortality

(e) Improve maternal health

(f) Combat HIV/AIDS, malaria and other diseases

(g) Ensure environmental sustainability

(h) Develop a global partnership for development

The country report on the MDGs released recently by the Planning Commission with the help of United Nation Development Program (UNDP) captures Pakistan’s achievements, challenges and policies with reference to the goals and targets and reveals that there have been substantial improvements in the lives of people of Pakistan in particular and that of developing countries in general. The remarkable success in moving forward is partly credited to the government for its role in implementing wide range of programs and policies amidst enormous and complex structural problems.

Pakistan has made significant progress in all critical areas since the year 2000. The commitment of the Government to the MDGs was first reflected earlier in its policy document Interim Poverty Reduction Strategy Paper (IPRSP-I) in 2001. It was reinforced and reaffirmed in the final Poverty Reduction Strategy Paper (PRSP) in December 2003. The Medium Term Development Framework (MTDF) (2005-2010) has especially been aligned with the Millennium Development Goals which is indicative of unflinching resolve of the Government to scale up efforts towards realising these goals by 2015.

To achieve the Goal of eradicating extreme poverty and hunger, Pakistan must reduce by 2015 the proportion of people below poverty line from nearly 34.0 percent in 1990 to about 17.0 percent. As on 1999-2000, the poverty headcount ratio was 34.5 percent with poverty gap ratio of 4.8 percent, share of poorest quintile in national consumption is 12.6 percent for rural sector and 4.8 percent for urban sector. This precarious condition of poverty demands two pronged strategy direct approach and indirect approach. The government is following both approaches. Subsistence allowance through dissemination of Zakat, food stamps and grants are part of the direct approach. Indirect approach is comprised of supporting the poor through empowerment by imparting skills and providing access to micro-credit, supporting economic growth to be more inclusive. President’s rozgar scheme is also a positive step to reduce the poverty ratio further. The target is not far away because the incidence of poverty has already been reduced by as much as 10.6 percentage points in five years and it is to be reduced by other 8 percentages points in next eight years. The encouragement for the government is coming from the fact that there is a strong concentration around the poverty line in Pakistan. A small increase in income and two or three years of higher growth may do miracles with poverty situation in Pakistan.

To achieve universal primary education under Goal-2, Pakistan should increase the primary school enrolment rate to 100 percent and wipe out the high drop-outs by 2015. The Gross Enrollment Rate (GER) for primary schools (age 5-9) has increased from 72 percent in 2001-02 to 86 percent in 2004-05. However, Net Enrollment Rate (NER) has increased from 42 percent to 52 percent in this period. It shows that the drop-out rate for primary education during 2004-05 is 34 percent which is higher than 30 percent in 2001-02. The gross enrolment ratio in primary education has tended to remain near 100 percent for boys and recorded an increase of nearly 20 percentage points in the ten years period from 1995 to 2005 for girls (93 percent). The adult literacy rate (10 years and above) has increased from 45.0 percent in 2001-02 to 54.0 percent in 2004-05. The tremendous rise in the female literacy rate is admirable both in rural and urban areas.

Regarding Goal 3, the gender dimension of current economic development is marvelous. The women rights are more protected in Pakistan today than ever before or any other developing country. Women are given a sizeable representation in the National legislature as well as in other walks of life. The government’s efforts in promoting gender equality and empowering women is commendable. In government policy making now the man seems to be ignored which is extraordinary by the level of developing countries. There are structural and cultural challenges which are hindering progress on this count, and a strong political commitment is needed to counter the challenges.

Regarding Goal 4, Reduce child Mortality by two thirds, between 1990 and 2015: the indicators to measure progress toward this MDG include under five mortality rate; infant mortality rate (IMR) and proportion of one year old children immunised against Measles (Pakistan’s target is to reduce IMR to 40 per 1000 live births and to increase measles immunisation rate to greater than 90 per cent by 2015). Child mortality has improved as a result of growing immunisation with the help of international donors. However, still facilities in far-flung areas are lacking and the government has done very little to improve health facilities.

Goal 5: Improve maternal health by reducing the maternal mortality ratio (MMR) by three quarters, between 1990 and 2015: The indicators to measure progress toward these MDGs include maternal mortality ratio and the proportion of births attended by skilled health personnel. Pakistan’s target is to reduce MMR to 140 or less and to increase skilled birth attendance to 90 per cent by 2015. The availability of health advisory services through lady health visitor has definitely increased but monitoring of extent of coverage is lacking.

To realise MDG goals the Health plan in the MTDF (Medium Term Development Framework) identifies policies and suggest allocation of resources to address Health issues. Immunisation coverage has shown remarkable progress during 2001 and 2005. Percentage of children aged 12-23 months fully immunised increased sharply from 53 per cent in 2001 to 80 per cent in 2005 depicting a substantial gain of 27 percentage points. There is no denial of the fact that access to basic facilities has definitely improved between 2001 and 2005. However, the rates are still low and poor benefit less from access to basic facilities.

In so far as Goal-6 is concerned, though Pakistan has a low prevalence of HIV as compared to other developing countries especially those are in Africa, yet the prevalence rate has slightly increased. The number of reported cases testing positive HIV/AIDS has increased from 1886 in year 2001 to 2431 cases reported until end December 2004. Similarly the number of full-blown cases has increased from 222 to 310 cases in the same time period. This increasing trend needs to be reversed to achieve MDG 6. The prevalence and death rates associated with malaria are consistently coming down. The major prevention strategies of the Malaria Control Program include the use of integrated vector control approaches in high risk districts, distribution of bed nets to pregnant mothers and children under 5 in selected RBM in 24 districts along with public awareness campaign for Malaria control. The program for controlling TB is also effective one and the death rate associated with TB has come down substantially in the country. The proportion of TB patients successfully treated has also risen from 25 per cent in 2000 to 45 per cent in 2005.

Goal-7 aims at ensuring environmental sustainability. As per assessment made in 2005, total land area covered under different forests has been less than 5 per cent instead of tall claims by the Government for its persistent efforts to preserve the natural resources. According to the UN standard the reserved and protected forests together should account for 20 per cent of the total land area to maintain biological diversity. The energy intensity has improved and clean fuel accounted for more than two-third of energy consumption. The proportion of population without sustainable access to safe drinking water and sanitation is to be halved by 2015 and Pakistan is only slightly off-track to achieve this target.

Goal-8 is basically a reminder to developed countries regarding their obligation to establish a fruitful global partnership for development. Developed Countries are required to provide development assistance to developing countries for the betterment of the environment. It is an irony that a huge gap still exists for developing countries between the development assistance required to meet the MDGs and what has been pledged by the developed countries so far.

Developing countries has too often has asked the developed countries that additional resources for implementing the development agenda should be channelised through the existing multilateral agencies. Moreover, allocations must be based on pre-defined and transparent criteria. Our own development experience clearly indicates that, ultimately, it is the availability of untied additional resources for use in accordance with national development strategies, which is most beneficial for recipient countries.
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Post A Report on Pakistan in Economist Magazine

A general state of disarray

A slaughter in Karachi, and a vengeful judge, are signs that Pervez Musharraf is struggling to remain in power

ON MAY 12th the port mega-city of Karachi, a great and seething Asian bazaar, returned to the violence that has scarred its modern history. Around 40 people were killed and scores injured in two days of gun battles. Corpses were dragged from shot-up cars and displayed on the tarmac. Along Shahrah-e-Faisal, the main thoroughfare, shop-fronts were smashed and set ablaze. As the carnage spread, 15,000 police and paramilitary troops stood by, unwilling or unable to intervene.

Many reports suggest the violence was perpetrated by Karachi's ruling party, the Muttahida Qaumi Movement (MQM), an ethnically-based mafia allied with Pakistan's president and army chief, General Pervez Musharraf. Its target was an anti-government rally planned for Karachi on May 12th, at which thousands of lawyers and opposition supporters were to protest against General Musharraf's efforts to remove the head of Pakistan's Supreme Court, Iftikhar Chaudhry. Mr Chaudhry was due to address the rally.

If the MQM meant to deter General Musharraf's opponents with violence, it failed. On May 14th opposition parties called a national strike to condemn the slaughter. They included the parties of two exiled former prime ministers, Benazir Bhutto and Nawaz Sharif, and a coalition of Islamists, the Muttahida Majlis-e-Amal (MMA). The MMA once backed the general, as Islamists in Pakistan usually have; but not any more. With an election due this year, Pakistani democracy is stirring from the coma it slipped into eight years ago, when General Musharraf seized power.

Its awakening, if that is what it is, may be traced to March 9th and a previously unimaginable event. In the presence of six other uniformed generals, at his army headquarters in Rawalpindi, General Musharraf ordered Mr Chaudhry to resign. The judge—eccentric, vain, some say incompetent—had upset his colleagues on the bench, and had given populist rulings against the government. More audaciously, he had demanded investigations into several of an alleged 400 cases where people have disappeared, mostly from his native Baluchistan, where an insurgency is flickering. These were probably the work of the powerful military intelligence agency, whose boss was one of the generals present.

Indeed, wherever Mr Chaudhry heard so much as a rumour of injustice—for example, in the reports of kidnapping and rape that fill the margins of Pakistani newspapers—he summoned officials and demanded investigations. Yet few seem to have loved Mr Chaudhry, until he refused General Musharraf's order to resign.

This was an unprecedented event in Pakistan: a civilian telling a bullying general where to get off. General Musharraf, who has no power to sack judges, has filed a complaint against Mr Chaudhry to the Supreme Court. He alleges that the judge has abused his office, for example by currying favours for his policeman son. Meanwhile, Mr Chaudhry has been reborn as a hero of Pakistan's long-dejected democracy. Egged on by black-jacketed lawyers, who were never so glamorous, he has criss-crossed the country, giving speeches on the sanctity of judicial independence. In a quadrangle of Lahore's elegant British-built high courts, beside a soothing fountain and surrounded by red-brick colonnades, some of these lawyers are on hunger-strike—or, more accurately, skipping lunch.

Ordinary Pakistanis, too, have been flocking to Mr Chaudhry. On May 5th tens of thousands mobbed his car as it crawled 300km (190 miles) from Islamabad to a rally in Lahore. In the middle of Punjab, the army's heartland, this was the first significant popular protest against General Musharraf. It was also the first by secular citizens, as opposed to Pakistan's ever-livid Muslim zealots A week later, the repercussions were felt in Karachi.

A chronology of violence

Mr Chaudhry's plane landed at noon on May 12th, and the violence began. Club-wielding hooligans charged a crowd of lawyers gathered at Karachi's high courts. One suffered a broken leg, another a broken jaw, a third had his teeth smashed in. As crowds of opposition supporters, mostly from Ms Bhutto's Pakistan People's Party (PPP), marched towards the courthouse, they were fired on with automatic weapons from rooftops and road-blocks.

Supporters of the Awami National Party, which represents Pushtuns, the people of north-western Pakistan, were also attacked. This sparked gun battles across Karachi between Pushtuns and Mohajirs—the MQM's community, comprising those, like General Musharraf, who relocated to Pakistan from other parts of British India. Most of the dead were Pushtun. Despite a curfew, this ethnic conflict continued into the next day, raising fears of a return to the tribal war that raged in Karachi in the late 1980s.

As bloodied corpses arrived at the city's main hospital, the MQM held a rally of its own. Ten thousand supporters gathered in Muhammad Ali Jinnah Street, named after Pakistan's refined founding father, to hear Altaf Hussain, the party's leader. Not that Mr Hussain was there. He has lived in London for 15 years, evading allegations of multiple murders. But his telephoned harangue was broadcast live. In the words of Farooq Sattar, Mr Hussain's top representative in the city, “The opposition wants to show that Karachi does not belong to the MQM. We have accepted the challenge.”

At the airport, Mr Chaudhry was manhandled by the police and his retinue of lawyers was ordered to leave Karachi. He returned to Islamabad, where General Musharraf was also addressing a rally. Around 10,000 alleged supporters of the ruling Pakistan Muslim League-Quaid (PML-Q) party gathered in front of Parliament House; some told journalists that they had been made to attend against their will by local officials. After praising his ally, the MQM, General Musharraf said his “heart was bleeding” for Karachi. His hometown's troubles, he said from behind a bullet-proof screen, were caused by Mr Chaudhry and his supporters. “Do not challenge us,” the former commando warned them, to general applause. “We are not cowards like you, we have the power of the people.”

General Musharraf, who has survived at least two assassination attempts, is certainly no coward. But his hold on power is increasingly open to question. Pakistan's media, united in horror at the killings in Karachi, mostly blame him, and even before the recent events his popularity was slipping. According to a poll in February for the International Republican Institute, 54.2% of respondents said they approved of how General Musharraf was doing his job; 26% disapproved. When asked which leader they thought could handle their problems best, 32% picked General Musharraf and 25% Ms Bhutto.AP

In another poll, taken around the same time and circulated privately, the general fared worse. Asked which politician they most agreed with, 29% of respondents picked Ms Bhutto and 21.6% General Musharraf. Some analysts say both polls overstate the general's popularity, since Pakistanis are afraid to speak ill of their uniformed ruler to an unknown questioner. And he is certainly less popular now than when the polls were taken.

But polls are of limited use in predicting his future. General Musharraf does not rule by the will of the people, but dictatorially within a hobbled democratic system. He ostensibly restored democracy in 2002, but meanwhile claimed huge powers for his office. As president, he can dissolve parliament on a whim. As army chief, he controls security policy—from a nasty war against Islamist militants in the northern tribal areas, to the orientation of Pakistan's nuclear arsenal.

This arrangement is cumbersome to manage. It requires a supplicant ruling party to vote through his diktats as handed down by a loyal prime minister, Shaukat Aziz (or “Short Cut”, as Pakistanis know him). And it requires sympathetic Supreme Court judges to head off any constitutional challenges that may arise. Before inviting the Supreme Court to legitimise his coup, General Musharraf felt compelled to sack half its members. Mr Chaudhry was elevated, in 2000, to fill one of the gaps.

In the coming months the judges will have other weighty business to decide. General Musharraf means to get re-elected as president by the current parliament. If he succeeds, he may then ask the next parliament to let him remain army chief, an office he is constitutionally obliged to quit at the end of this year. Long-winded challenges in the Supreme Court are assured. This is why the general's failure to rid himself of a troublesome judge is so serious.

If Mr Chaudhry is dismissed, the clamour against General Musharraf will grow. (On May 14th a Supreme Court judge withdrew from the case against his colleague, and a senior court official who was close to Mr Chaudhry was murdered.) Then again, if Mr Chaudhry keeps his job, the general can hope for no love from the Supreme Court in any constitutional battle ahead. Either way, he will have been weakened.

How to tip an election

Even with a sympathetic judiciary, the forthcoming election represents a challenge for General Musharraf. On the last occasion he was hard-pressed to ensure that a supportive government emerged. The election was manipulated in the PML-Q's favour, yet the PPP won the most votes. General Musharraf's supporters persuaded ten PPP MPs to cross the floor; but the general was still short of the two-thirds majority he needed to change the constitution, until the MMA provided its support.

General Musharraf would struggle to repeat this performance. The popularity of the PML-Q—a rabble of renegades and opportunists recruited from Mr Sharif's party—is falling with the general's own numbers. Meanwhile, the PPP is growing stronger. According to the private poll conducted in February, 22.8% of respondents said they would vote for the “king's party”, as the PML-Q is known; 31.7% chose the PPP. On May 5th, the day Mr Chaudhry's caravan came to Lahore, the PML-Q had to cancel a rival rally for lack of support.

Neither can General Musharraf count on the mullahs. His campaign in the tribal areas, which border the MMA's heartland of North-West Frontier Province, is bloody and hugely unpopular. More broadly, so is the general's pro-America stance. In the private poll, Pakistanis rated India a more trusted ally than America, though America has given Pakistan an estimated $10 billion in aid, much of it military, since 2001. This puts the mullahs in a bind. The MMA's bearded leader, Fazlur Rehman, is a lifelong accomplice of the army, a man whose alleged corrupt enjoyment of government contracts has earned him the name “Maulana Diesel”. Yet he is now turning up at rallies for Mr Chaudhry to defy dictatorship and defend democracy with the best of them.

After Karachi, the political situation is unstable and hard to predict. Some pundits predict General Musharraf will be forced to step aside, perhaps by the army itself. Failing this, he faces some distasteful choices. He can rig the election, as he did a 2002 referendum on his rule, though this would be more difficult against a pepped-up opposition. It might also annoy America, where support for him is flagging. According to Gary Ackerman, a Democrat who heads a congressional panel on South Asia, “The truth is, for our goals to be achieved in Pakistan, there should be more than one phone number there to dial.”

Alternatively, the general can amend his political system in one of two ways. He can make it more dictatorial. On May 5th Mr Aziz reminded journalists that the government could declare a state of emergency. (The Karachi stockmarket reacted by dropping 3%.) Or the general can expand his coalition, and so become a trifle more democratic.

He has been negotiating with Ms Bhutto about this for some time. She wants General Musharraf to rid her of the corruption charges, brought by Mr Sharif, that have kept her in exile. She would also like him to scrap the two-term limit that he has imposed on the office of prime minister; Ms Bhutto and Mr Sharif have each held the office twice. For his part, General Musharraf wants the PPP to support his policies as a loyal opposition.

The potential benefits of their co-operation are clear. Pakistan's military ruler and its most liberal party have a shared vision of a more tolerant society. The king's party, whose leaders are as conservative as many mullahs, does not. PML-Q has refused to back General Musharraf's more liberal initiatives, including at first his effort last year to overturn sexist laws of evidence that have ensured that over 80% of women prisoners in Pakistan are convicted of fornication, though many of them have been raped. With the PPP's support, this law was partially repealed.

Ms Bhutto, despite much noisy bluster about the sanctity of democracy, would have no principled objection to forming a partnership with General Musharraf. Another irony of Pakistani politics is that, under her leadership, the country's most anti-establishment party has been compliant towards the military establishment. On Ms Bhutto's watch, Pakistan backed the Taliban in Afghanistan and sold nuclear secrets to Iran and North Korea. Mr Sharif, by contrast, the favourite politician of a former army dictator, Zia ul-Haq, proved stickier for the generals. He drove one army chief to resign and tried to sack another, General Musharraf—at which point, the general launched his coup.

In short, if the tide has not turned against General Musharraf, a marriage between the lady and the general looks convenient. But there is a tiny snag. They loathe each other. And they would have ample opportunities for a quick divorce. If, for example, Ms Bhutto unexpectedly swept the election, she might dump the general. And he could press the charges against her at any time. A deal between the pair would perhaps be more of a dalliance, conditional and undeclared.

But how would Pakistan fare under such an arrangement? It would at least be better than if General Musharraf grabbed power, as he might. According to one of his confidants, the general has developed the usual dictator's tic of thinking himself indispensable. An alliance of convenience between him and Ms Bhutto might also be preferable to restoring the democracy Pakistanis enjoyed in the 1990s, when Ms Bhutto and Mr Sharif conspired against each other and the army conspired against them both. After a decade of the instability and misrule that resulted, many Pakistanis welcomed General Musharraf's coup.

The turn of the wheel

Such has been the political cycle in Pakistan: bad democratic government, yielding to unpopular military government and then to democratic messiness again. It is unclear whether the wheel is about to turn on General Musharraf's rule. But it is a good moment to judge it.

Many of the general's prescriptions have been excellent. In the management of the economy he has trusted sensible technocrats, including Mr Aziz. They have been blessed with an inheritance of liberal reforms and, above all, by booming capital inflows, not only from America. Yet they can take credit for strong economic growth, predicted to be 7% this year.

In foreign relations, too, right-minded policies have borne fruit. In the past three years Pakistan's relations with India have been transformed from semi-war to almost-peace. A final settlement of the two countries' problems, and above all the divided region of Kashmir, remains elusive; the rivals' demands are simply incompatible. Yet General Musharraf has perhaps done more than any leader in either country to nudge them into line.

In both cases he made progress because those most directly affected by his policies, investors and the army, supported him. Where, more often, he has had little support for his policies, they have usually failed. In Baluchistan, Pakistan's biggest and poorest province, where legitimate and longstanding local grievances are stoking an insurgency, General Musharraf's solution has been to bomb the place. In the tribal areas, where chronic banditry and Islamist militancy are now complicated by drug money from Afghanistan and global jihad, his heavy-handed intervention has fuelled terrorism across Pakistan. On April 28th the interior minister, Aftab Khan Sherpao, was lucky to survive a suicide bomb in North-West Frontier Province that killed 29 people.

Even with more enlightened policies, solving such problems will take time—almost certainly, more time than the general has. Politics cannot be banished indefinitely, as those corpses in Karachi suggest. And neither, perhaps, can Ms Bhutto.


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Default Reviving the farm sector

Reviving the farm sector By Shahid Javed Burki

PUNJAB’S agricultural endowment must be put to full use for obtaining a high and sustainable rate of growth in the provincial GDP (PGDP). Not only can agriculture provide a bounce to the provincial economy, it also has the potential to significantly reduce the incidence of poverty and improve income distribution.

There are several other benefits as well. For instance, by increasing agricultural output and productivity of the sector, the province should be able to reduce the explosive growth of its large cities. A buoyant agricultural sector should help to direct rural to urban migration towards cities and towns more closely connected with the countryside. This should release demographic pressures on such cities as Lahore and Rawalpindi.

All this can be realised by the adoption of public policies that are explicitly directed towards putting to economic and social use the enormously rich endowment with which the province started its life as the most important economic region in the state of Pakistan. This, with two exceptions, did not happen.

The exceptions were the two “green revolutions”, one in the late 1960s and the early 1970s and the other in the 1980s. In the first, Punjab saw an impressive increase in the output of wheat and rice; in the second the province increased the output and productivity of the land devoted to the production of cotton. In both cases the environment for increasing output was created by those responsible for making public policy.

The circumstances that launched the first green revolution are well known but need to be briefly recalled in order to set the stage for a discussion of what motivates policymakers.

In the 1960s agricultural scientists working in the institutions that belonged to the network managed by the Consultative Group for Irrigation and Agriculture Research, the CGIAR, were doing intensive research in several parts of the world on high-yielding seed varieties. Impressive results were produced by those working on wheat in Mexico and by those at the Philippines doing research on rice.

The government of General Ayub Khan — in fact the president himself — was impressed with the research results and decided to import the high yielding seed varieties from these research centres.

This was a good moment for bringing about change in the country’s agriculture but the high-yielding seeds needed large doses of fertiliser and greater application of water. It was not known then in Islamabad that the farming community had invested heavily in sinking tubewells in the more fertile areas of Punjab.

The technology used for the wells had come to the attention of the farmers in Punjab when the government launched its massive Salinity Control and Reclamation Programme, the SCARP. This was a fortuitous development since the tubewells eased the water constraint and persuaded the farmers that they could take the risk for switching to a new variety of seeds.

As the farmers introduced this change the government did a great deal of hand holding by using the new system of local of government, the “Basic Democracies”, to provide them with all manner of public services.

Although the Basic Democracies system became the special target of attacks by those who opposed Ayub Khan and eventually caused him to vacate his office, it played an important role in bringing change to agriculture, in particular to agriculture in Punjab. The system brought the community of farmers closer to the centres of policymaking.

The government’s interest in reviving agriculture was influenced in part by Ayub Khan’s economic and social background. He came from a middle class family with interest in land.

The army over which he presided had strong representation at the lower levels of people close to the soil. He and the constituency that supported him were less urbanised in their economic interests and social outlook than the policymakers who were replaced by the military’s takeover. Under Ayub Khan, the federal government was ready to once again to turn its attention towards the sector of agriculture.

The second green revolution took place in the 1980s and this time it affected the cotton growing areas of south Punjab and upper Sindh. This time it was the maturation of the fertiliser industry that proved to be the agent of change.

The government under Zulfikar Ali Bhutto had made large investments in the industry after nationalising it. It is hard to tell whether the reason for that was to help the cotton growers who were by far the largest consumers of this product, but that turned out to be its effect once the new capacity created came into production in the early 1980s.

Not counting these two episodes of change in agricultural policies and practices, little was done to benefit from the rich endowments that were available to the sector at the time of Pakistan’s birth. To understand why Punjab neglected its rich agricultural inheritance, we should seek help from what economists call the theory of public choice.

In 1962, James Buchanan and Gordon Tullock published ‘The Calculus of Consent’, a book that went on to revolutionise thinking about how policymakers work in economic systems and how their work is influenced by those who are likely to benefit from their decisions. They abandoned the long held belief that all individuals, no matter what their station in life, are welfare maximisers; they work to further their own interests.

Collectively, however, they manage to achieve what is good for the society at large. The revolution wrought by this line of thinking — for it was a revolution and it resulted in Buchanan winning the Nobel Prize for economics in 1986 — brought the concept of public choice into economics.

Economists now began to pay heed to the workings of special interest groups and social groups within economic systems and how they were able to influence policymaking. As a result of Buchanan’s thinking, institutions, norms or culture, or all of these, came to stand at the centre of development economics.

Buchanan’s book had an enormous impact on the thinking of social scientists who had begun to work on the role governments and institutions play in economics. His work was reinforced by that of Mancur Olson, another economist who published ‘The Logic of Collective Action’, three years after the appearance of Buchanan’s work.

Like Buchanan, Olson claimed the territory of political science for the tools of economics. He argued that policy decisions could be explained by looking at politics as a competition between the private interests of specific groups, rather than a process of delivering public goods in a neutral and disinterested way.

In other words, public policy has deep roots in narrow political and social concerns and is not necessarily the result of a careful review of larger public interest.

Equipped with this line of thinking we can begin to make some sense of why agriculture was neglected for so long by Punjab’s policymakers. In some earlier works — as well as in the earlier articles in this series — I have discussed the enormous change that came about in the structure of Punjab’s society as a result of the partition of the province in 1947 and its incorporation into the new state of Pakistan.

For almost two decades the province’s partition politically eclipsed the large landlords who, with a few notable exceptions, had opposed the creation of Pakistan as an independent state. Those who pushed back this once powerful group to the margins of political society were the members of the refugee community that came into the new country in two streams.

The one that originated in the Muslim minority provinces of eastern and central India went to Karachi and several other urban centres of the province of Sindh. The other came from Punjab’s eastern part that was separated and incorporated as a state in India.

Both groups had actively campaigned for the idea of Pakistan and both became important policy players in Pakistan’s early days. Both were more urban in their social, cultural and economic backgrounds than was the case with the group — the large landlords — who had the most influence on public policymaking during the British period.

The new state of Pakistan, therefore, spent more time, energy and resources on settling the refugees and industrialising the new country than on building on the rich agricultural endowment of the Punjab and upper Sindh. The result was the neglect of the sector of agriculture.

This neglect caused a near total transformation of Punjab’s agriculture. It lost the dynamism that was infused into it by the British who had worked hard and invested heavily into turning the province into the granary of their food-deficit empire.Nothing illustrates this change more than the fact that by the mid-1950s — in less than a decade after independence — Pakistan was unable to feed its population and became heavily dependent on food imports from the United States.

There was some change under President Ayub Khan when he created space for the landed community in his political system. This probably contributed to the launch of a series of public initiatives that brought Pakistan its first green revolution.

It is my belief that the political system and the make-up of the Punjabi society in recent times has created an environment conducive for bringing agriculture back as a major player in the economy and for using it to produce economic and social change in the province.

For the first time in the province’s history, many operating in agriculture have developed economic interests in the urban economy and many urban economic and social groups have developed stakes in the province’s agriculture. Public choice theory tells us that such a confluence of interests should lead to the formulation and implementation of policies that will further these developments.

There are many social and economic changes now in place that have brought together entrepreneurial activities in some parts of urban and agricultural economies. Among them perhaps the most significant is the rapid increase in the number of people who belong to the upper income classes — not just the very rich and the rich but also the upper middle class.

These people have patterns of consumption, supported by rapid increases in disposable incomes, that needs to be satisfied by the development of agro-processing industries. These industries now account for the most rapidly increasing industrial outputs in the country. They are also bringing in foreign direct investment into the sector once neglected by foreign entrepreneurs.

While the environment is now there to increase the output, productivity and the level of sophistication of this sector of the economy, this will happen more rapidly if the government were to lend a helping hand.

Public policy could now help the sector of agriculture to regain the place it once occupied in the economy but for that to happen the government must first understand what is required by the agents of change operating in this area. Strengthening the system of local government has to be an important part to play in this enterprise. I will turn to this subject next week.
Time is like a river.
You cannot touch the same water twice,
because the flow that has passed will never pass again.
Enjoy every moment of life.

I have learnt silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet strange, I am ungrateful to these teachers.
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