Usually, when the GDP growth rate is high, it is accompanied by general prosperity and declining employment rates. The fact that the masses are suffering from price increases due to stagnating incomes also shows that growth has been pocketed by the elite.
This matches the global trend where the wealthiest have seen their wealth double after Covid-19. Developed economies compensated their non-wealthy population with regular support to offset the impact of high inflation that also hit them.
Another revelation accompanied by an increase in total GDP is that the tax-to-GDP ratio has fallen to 8.6%, the lowest in 25 years. This again indicates an accumulation of wealth in fewer hands.
It also denies this regime’s claim that it was serious about improving tax compliance in the country. It will have to make considerable efforts to bring the tax-to-GDP ratio back to the level of the previous regime.
By simply emphasizing GDP growth, the government cannot run away from the harsh realities that debasement has exposed. Also, if the base year was changed to 2015-2016, the GDP growth of 2017-2018 should also have been incorporated.
This would have shown that growth that year was well over 6% and not 5.3% as previously reported. In this case, it would be the strongest growth of the last 14 years and not that of the year 2020-21 as claimed by this government.
Debasement reflects the reality of the economy. It also outlines the positive and negative aspects of the government’s economic performance.
Last year’s GDP growth fell from 3.94% to 5.57%. The government is proud to boost industry, but after downgrading industry’s share of GDP, it fell from 20.9% to 19.5%.
Pakistan has the lowest literacy rate in the region (excluding Afghanistan), but its allocations to education have dropped to less than 1.9% of GDP. Similarly, Pakistan’s health indicators are the lowest in the region, including average age, infant mortality rate, anemia in women and children, and stunting.
Even before the cut, health spending was only 1% of GDP, but after the rebasing, health benefits fell to 0.5%. The debasement revealed the government’s oft-repeated claim to prioritize education and health.
Regarding the health card, the planners ignored the fact that this card only serves hospital patients. It is of no use for general illnesses like fever, cough, flu, diabetes, heart disease or blood pressure that require regular medication and treatment.
Patients suffering from these diseases require regular treatment and flock to government hospitals and clinics. These government facilities would become superfluous after health cards were issued, or the state would charge for drugs.
Provinces that have not opted for health cards would probably serve their population better. After the cut, the share of the development budget as a percentage of GDP fell to its lowest level in three decades. In addition to this, the government has agreed with the International Monetary Fund to cut development expenditure by 250 billion rupees.
The deterioration of the national accounts should be a revelation for governments, who must now plan to reduce inequalities, increase education and health benefits and increase the tax base. To keep the tax-to-GDP ratio high, the oil tax was treated as tax revenue. Previously, this was non-tax revenue.
Tax revenues would increase while non-tax revenues would decrease.
Playing with statistics would not solve our problems. It is time to keep the national interest supreme. The elite must be targeted, regardless of their political weight. This government should learn from the Indian government of 1990 which made difficult decisions resulting in its ousting from power, which nevertheless paved the way for sustained growth in India.