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Pakistan is the worlds second largest Muslim country.

It has a population of 180 million


people which is growing by the day with the Government of President Zardari totally
unwilling and completely un-prepared for the economic and social disaster that lies
ahead due to the population explosion.. Out of 180 million people approximately 55 per
cent or 95 million people fall in the young age group. In any other country, with
adequate investment, they would have formed the engine of growth. The people of
Pakistan are however unfortunate. They are governed by men who lack both vision and
leadership. The luminaries who grace both the houses of Parliament and the Provincial
Assemblies do not tire of expressing their pain and anguish over the plight of the
masses. Yet the very same masses are left to grapple with multiple challenges to their
very existence. Apart from unemployment, rising poverty and lawlessness, the masses
are confronted with rampant militancy, a fragile economy that is surviving on oxygen
provided by the IMF, a crisis in governance and a society deeply divided along ethnic
and religious lines.

Of the multiplicity of problems that threaten Pakistan, the most fundamental threat to its
existence arises from the adverse economic governance of President Zardaris
government. Despite the IMFs Standby Arrangement (SBA) the flight of capital
continues (even Salman Taseer, the Governor Punjab, and a die-hard jiyala to boot
prefers to take his money out of the country and invest in the Colombo stock exchange
where reportedly he is a major player). In the face of inconsistent policies, rampant
corruption, damaged infra-structure, absence of law and order and the high cost of
doing business keeps foreign investors away. It would take a very long time for their
confidence to be restored. As a consequence, the investment rate has plummeted to
the lowest level since the 1950s. The falling investment rate has adversely affected the
economic growth rate. The floods have only served to aggravate an already
deteriorating economic situation. Given the countrys high population growth rate
notwithstanding the Population Ministrywhose Minister spends more time on
television channels than in her Ministry, the real per capita income is likely to decline in
the current financial year. On the basis of current performance, it can be held that
President Zardaris government will be unable to correct the sectoral distortions and
improve governance. The per capita income is likely to increase only marginally during
the next couple of years. This eventuality contains serious security implications for the
country given Indias impressive economic performance and Pakistans inability to
match this growth.

Taking a dispassionate view of the economy, we can see a persistent leadership and
public management deficit which has been aggravated by the saga of Wikileaks. The
polarization of political parties over the GST issue is seen as a precursor to a renewed
round of political instability. Political parties opposing the imposition of GST have
argued that the Government of President Zardari must take steps to end corruption and
introduce good governance. Lack of governance and corruption are causing peoples
loss of faith in democracy. Demands are being made for a new social contract.

The combined menace of corruption and poor governance is posing a serious threat to
the countrys well being and the survival of democratic institutions. The very large
reduction in revenues can be attributed to corruption. It is estimated that due to corrupt
practices in the FBR, Rs. 500 billion are lost annually. An additional amount of Rs. 300
billion has to be extended annually to the public sector corporations to keep them afloat.
The heads of these corporations are cronies and friends of yesteryears many of whom
are now in jail facing trial for embezzlement of public funds. This loss contributes to the
fiscal deficits in the budget The existing income in-equalities are due to various
economic policies as well as corruption. The record rise in the price of sugar which the
Government of President Zardari attributed to the sugar mafia was in fact due to
corruption which distorted the market and caused enormous hardship to the poor
consumers.

Taking a very optimistic view, it can be said that the people of Pakistan have an outside
chance of a better tomorrow. For this to happen, many things will have to change. The
lack of investment in education by the government of President Zardari makes it
impossible for Pakistan to emulate other emerging economies most notably that of India
which has become a high tech hub. Heavy and sustained investment in the education
sector will have to take place as a matter of national priority. The current expenditure of
1.3% of the GDP on education is unlikely to take Pakistan anywhere. Our youth enrolled
in colleges and universities are simply not prepared to work hard. They will have to be
motivated to meet the challenge. Their current attitudes will have to change. Societal
norms will have to change as well. Herein lies the challenge and the opportunity for the
countrys leadership.

In meeting the governance challenges ahead, it does not help that the population is
growing at a high rate of 2.9% and that the youth bulge in its demographic profile shows
few signs of abating. This factor seems to be having negligible impact on policy makers
of President Zardaris government who have successfully managed to remain in a state
of permanent trance.

As and when the policy makers are shaken out of their stupor, they would recognize
that the countrys youth bulge provides them with a God send opportunity. If necessary
investments are made in their education, training and employment and they are
motivated to work hard, they could provide the countrys economy with a demographic
dividend long after the equivalent bulges in China and India have aged and retired.
Pakistan has an opportunity to leverage its domestic consumer market to attract
multinationals and build up competitive economies of scale in industries like food,
electronics, autos and engineering for the export market. It is up to the political
leadership of the country to seize this opportunity and realize the dream that went into
the making of Pakistan.