Pakistan's slowdown

Democracy needs an economic underpinning

With all the media and public focus on Pakistan’s political problems, few are paying attention to its economic woes. After five years of 6 per cent growth, the Pakistan economy has slumped to a 2 per cent rate of growth in 2008-09, making the country the region’s worst performer. With declining manufacturing output, an inflation rate of 22 per cent and a poor harvest, Pakistan’s economic woes have been compounded by all the usual problems that other countries have faced this year. Apart from contemporaneous problems, Pakistan’s economy has been hamstrung by a low rate of savings and investment, and low tax-GDP ratio. What should worry Pakistan’s leaders is that the blame for all these ills may once again be laid at the doorstep of its squabbling democracy. Recall the fact that when General Pervez Musharraf staged his famous coup, he sought public support for it on the grounds that the country’s elected leaders had messed up the economy. General Musharraf’s first address to the nation was almost entirely focused on the grave economic situation and, to make a point, his first two years in office were focused on turning the economy around. He did, and must now feel vindicated. Apologists for Pakistan’s military dictatorships have always defended army rule on the grounds of its superior economic record. And, it is true that the Pakistan economy performed better in the 1960s and 1970s when it was largely under military rule, than the 1990s, when it mostly had a democratic government. So, will potential dictators be tempted to stage another coup?

 

Pakistan’s economic problems are structural and its economic slide has been long in coming. From independence till 1990, Pakistan’s economy performed better than India’s. In the two decades 1960-80, the former notched up 6 per cent annual growth, compared to India’s 3.5 per cent. In the 1990s, as India’s growth rate doubled, Pakistan’s slipped down to 4 per cent per annum. While growth rates picked up during the Musharraf years, Pakistan is no longer in a position to perform better than India. This should, however, not be a source of too much comfort for us. The economic distress of a troublesome neighbour creates problems in itself. But, if this were to encourage the army to return to power, the region as a whole would pay a heavy political price. Saving Pakistan’s democracy is important for the people of Pakistan and South Asia. This does not mean bankrolling bad policies, or blindly funding a bankrupt government. Nor should Pakistan hope that it would be saved irrespective of what it does in dealing with the threat of jehadi terrorism. The international community should insist on better delivery in the fight against terrorism and an end to the export of terror by Pakistan in exchange for economic support. The people of Pakistan deserve a better life. India, and indeed western powers, must extend a helping hand in exchange for a proven record of good conduct by Pakistan authorities in dealing with terrorism, including the terrorist groups that target India.