‘The Economy of Modern Sindh’ – A Multi-pronged Strategy To Address The Province’s Socioeconomic Problems

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‘The Economy of Modern Sindh’ – A Multi-pronged Strategy To Address The Province’s Socioeconomic Problems

M Ziauddin reviews a book from the Oxford University Press addressing the socioeconomic issues of the Sindh province. It identifies the particular issues that require reforms at the sectoral and micro level. The analysis on each aspect of Sindh’s economy is juxtaposed with the performance analysis at the national level.

Sindh – the odd man out in the context of current national political equation – according to some of country’s eminent economists of international repute, has the potential to rescue the country, almost single handedly, from the socio-economic depths it has descended into in recent years.

But for exploiting this potential without much loss of time and wholesomely it is necessary first, for the province’s two warring ethno-linguistic groups to join hands for mutual benefit and second, the political divide that presently exists between the centre and the province is bridged for the common good of the entire nation. The two seem to see the 18th Constitutional Amendment, the forthcoming National Finance Commission Award and sales tax on services from opposite angles, to say the least.            

Dr. Hafiz A. Pasha, former finance minister and former assistant secretary general of the UN at the launch of his book Growth & Inequality in Pakistan (Volume one) last year (April, 2018), said Sindh is the fastest growing province of Pakistan followed by Punjab and Khyber Pakhtunkhwa.

Now Dr. Ishrat Husain, former governor the State Bank of Pakistan and formerly of the World Bank, Prof Aijaz Qureshi, an educationist and development professional and Nadeem Hussain, a visiting Research Fellow at the Institute of Business Administration (IBA), Karachi have joined hands with Oxford University Press to produce a 500-page study on The Economy of Modern Sindh, and discussed “opportunities lost and lessons for the future”.

The study delves into the different aspects of Sindh’s economy—from geography, topography, climate, administrative history, and demographics, to the political landscape, education, health, labour force and employment, poverty and inequality, agriculture and water issues, infrastructure, industries, energy resources, and public finances—each is covered in a separate chapter. The book highlights the socioeconomic problems that have beset Sindh, arresting the province’s economic potential, and proposes a multi-pronged strategy to address these challenges. It offers an incisive and objective assessment of the various policies enacted and pursued by the Sindh government over the years. It also attempts to identify the particular issues that require reforms at the sectoral and micro level. The analysis on each aspect of Sindh’s economy is juxtaposed with the performance analysis at the national level as well as a comparison with Punjab that allows for a relative appraisal of Sindh’s socioeconomic standing.

The Study is a must read for PPP’s top leadership and that of the political leadership of urban Sindh (PTI+MQM P).

The authors draw upon both official statistics and civil society researches — by Arif Hasan and Hafiz Pasha, for instance — while analysing Sindh’s potential and problems.

The deep divide among the two large communities living in the province remains a matter of serious concern for realizing the future prospects of Sindh’s economic and social development. The continuous tussle for control of local governments between the two political parties illustrates the gravity of this problem. A dysfunctional system for the delivery of public services is creating disaffection and frustration among the public at large. This is most apparent in case of the largest city of the country, Karachi.

And at the very beginning, the authors take note of the Federal-Sindh conflict over licensing for oil and gas exploration, and differences with the Higher Education Commission over the formation of the provincial HEC. While they are prepared to concede that the “effective implementation of provincial autonomy will take some time”, they don’t hide their disappointment over the missing “third tier of the government — local governments”.

The following are some pertinent excerpts from the study:

Sindh is the most urbanized and educated province of Pakistan with the highest per capita income in the country. On the whole, the province enjoys certain advantages that are not shared by the other three provinces; two major seaports of the country, a rich pool of talent produced by high quality educational institutions, vast tracts of irrigated land that can be taped to reach their potential, significant reserves of natural gas, coal and minerals, a dynamic private sector, strong financial and industrial infrastructure, and the wherewithal to mobilize revenues for its development and public services make it an attractive place for private economy.

The province is blessed with 352 Km long coastline, which contains around 71 per cent pf Pakistan’s fishery resources. This sector needs to be improved. The fisheries sector produces merely 0.7 million tonnes of fish, which is valued at $300 million while the overall catch is estimated to be at 400,000 metric tonnes, of which only 20 per cent is exported; it is worth around $200 million. This means that we have yet to tap into a potential of $800 million, which will help increase the worth of our fisheries export from $200 million to one billion dollars. This is achievable mainly due to Pakistan’s low per capita fish consumption—under two kilos—compared to that of the Far East—12 to 13 kilos. This target is also realistic because the total world fisheries market is valued over $95 billion. Despite the potential and supporting natural environment in the country and provinces, especially in the Indus Delta and coastal belt of Sindh, fisheries contribute a meagre one per cent to the GDP, although it employs one million people in the country—two-fifths directly and three-fifths indirectly. This means that if the full potential were to be realized, then the labor employed can be expected to increase three-fold, given the levels of technology, efficiency, and output remain the same.

Livestock

There are certain areas of potential for the livestock as well, which can help Sindh grow economically and create infrastructure and jobs—both in urban and rural economy. Similarly, in spite of the fact that Sindh’s domesticated animal population is of superb quality, changes in the execution of breeds and misuse of their hereditary potential have reduced profitability. The accessibility to feed materials is declining instead of expanding, attributable to the steady weight of expanding the domesticated animal populace, frequent dry spells, and more noteworthy weight on cultivable land for agricultural produce. There is also a need for an expansion of facilities offered to domesticated animals which incorporate access to present-day information sources, innovation, and domesticated animal well-being.

There is a system of veterinary healing centres and dispensaries at the dehi and tehsil levels, which provide health facilities and preventive immunization to live-stock as well as domesticated animals. These facilities must be improved further so as to ensure healthy live-stock that is free of diseases.

Furthermore, dairy towns ought to be set up on barred rural lands for raising of dairy wild oxen, with adequate access to business sectors through dairy associations and ensuring satisfactory setups for commerce and support in territories that have dairy support centres.

Tourism

The vast coastline of Sindh is not only well-suited for fish-farming, it can also revive tourism industry and improve the image of Pakistan all over the world. It is also ideal for marine life because of its salinity and temperature characteristics. Moreover, the coastline and high temperatures make Sindh suitable for resorts, which will not only help increase foreign exchange, but also create jobs and sustain the economy. The revival of the tourism industry is indeed possible because the province has internationally renowned historic sites such as Mohanjo Daro, Kahujo Daro, Ratto Kot, Ranikot, mangrove forests, etc.

New firms are likely to enter the rural areas and market products if education levels, quality of physical infrastructure such as electricity, roads, water and sanitation, and telecom become available as the relative margins in these untapped markets is high. Small scale agro-processing and marketing firms would be able to take advantage of better connectivity and higher volumes of output and thus absorb some of incremental labor supply. This may diminish to some extent the push factors for migration to urban areas.

Youth bulge

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The demographics of the youth bulge can prove to be a boon if these younger cohorts can be educated, trained, and skilled to meet the demands of the economy or those of the labor deficient countries in the Gulf. The same cohorts can become an explosive time bomb if they remain, illiterate, unemployed and economically and socially disadvantaged. In the absence of an adequate number of job openings available and equitable sharing of economic opportunities by both the urban and rural youth, the existing ethno-linguistic division is likely to deepen adding mistrust, social disharmony, and political fragmentation.

To rule out the possibility of this scenario, it is imperative that economic growth should be balanced lifting the fortunes of the urban and rural segments of the population and at the same time rapid enough, so that it can create jobs, businesses and livelihoods on sustained basis. The sharing of prosperity by these two segments of the population and equitable access to public goods and services by the majority, particularly the poor and disadvantaged, is the only sure way to keep harmony and social cohesion in the province. That social capital, in turn, would reinforce the impulses for higher growth rates.

Food security

The second big challenge has to do with the problem of food security, irrigation water shortages, and lower crop yields arising from global warming in the face of increasing demand from the urban middle class for meat, poultry, marine products, vegetables, and fruits. Water requirements, therefore, could register a steep rise in the coming decades. Improvements in water use efficiency, rationalization of water pricing, water conservation techniques, substitution of flood irrigation by drips and sprinklers, drought resilient and high yielding varieties, rainwater harvest, construction of storage dams and reservoirs, better animal husbandry, and use of genetics and biotechnology could help in boosting the agriculture sector and the overall economy of Sindh.

The exports from the revived sectors will improve the cash flows of the country and curtail the already bleak foreign exchange reserves. This will further help bridge the urban-rural divide and lower migration by reducing the inter- dependency of the rural population on the urban centres as the only job markets.

Other constraints

A provincial economy faces many more constrains than the national economy as its degrees of freedom are more limited. Microeconomic stability, and prudent fiscal, monetary, trade and exchange rate policies fall within the domain of the federal government but have a powerful impact on the economic outputs of the province. Another important interdependency is the mobilization of tax revenues by the Federal Board of Revenue which are then distributed among the provinces. Sindh drives 80 per cent of its revenues from the divisible tax poll and therefore the collection efforts of the FBR is a critical determinant of the fiscal management of Sindh. As these variables are taken as given, the province has to design and adapt its development strategy within these given parameters. The province has, however, control over land, labor, and agriculture output markets. It can facilitate farmers and firms in doing business, reducing inefficiencies, waste, and leakages, and allocating public sector development expenditures to overcome infrastructure and human development deficiencies.

The Provincial Finance Commission should give higher allocations to the backward districts of the province while provide incentives to advanced districts to mobilize resources on their own. Public-private partnership should be encouraged for investment in infrastructure and human development.

Sales tax on services used to be controlled by the FBR and the actual yields were quite low. Since the province has taken over this function, there has been a tremendous jump in the amounts collected. This example should convince the decision makers that the closer the authority is to the payer, the larger the yield (tax revenue) will be.

Therefore, urban areas would be in a position to mobilize additional revenues which are evaded at present and not at the cost of rural areas as the beneficiaries would be able to see for themselves the impact their taxes would be making in their communities and districts. The success of this strategy depends upon the following critical question: how quickly and responsibly the two major ethnic communities can come to realize that, given their interdependence and strong linkages between the rural and urban economies of Sindh, a more symbiotic relationship between them would help in maximizing economic potential of the province and thus derive benefits for the constituent of both the groups? Their leaders have to forego narrow parochial considerations and take bold initiatives to work together in removing the political fragmentation, social polarization, and economic distance that have resulted in underperformance. A common bright future is ahead for the province only if they can get their act together.

Local governments

Given these stark disparities, a sensible policy initiative was to empower the local governments to address the specific challenges faced by each of the districts. The devolution of powers and decentralization of the resources from the federal to the provincial governments should have been taken to its culmination point, i.e. the local governments. What has happened after 2008 is completely opposite.

The new law enacted has enabled the provincial government to resume and centralize the power and functions previously allocated to local government system under the 2001 law. The concentration of powers and financial resources has weakened the system of delivery of public services to the citizens especially in the backward districts which require more attention.

Growth strategy

The six pillars of the proposed growth strategy for Sindh should consist of:

  • Improving the governance and institutional capacity of the provincial and district governments by enhancing accountability, transparency, and rule of law.
  • Introducing citizens’ feedback system and a robust freedom of information law.
  • Making the urban economy more competitive and efficient by removing distortions in land, labor and goods markets and removing infrastructural bottlenecks.
  • Raising the productivity of water, livestock, and agricultural land through water course lining, precision land levelling, new varieties of seeds, improved crop and animal husbandry practices, promotion of fisheries and marine products, and value-added horticulture, vegetables, and oil seeds.
  • Mobilizing province’s own revenues by reforming urban property tax, agriculture income tax, local cesses, and user charges on irrigation water.
  • Improving access of the poor, particularly the rural female population and those living in the backward districts, to basic services, such as education and health by giving scholarships, free lunches, and conditional cash grants for female students, subsidies, free medicines etc.
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Muhammad Ziauddin

The author is a senior journalist and editor.

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