The economical and psychological crisis:solution

[Slav Defence]

The Economical and psychological crisis of people of Pakistan: systematic approach and solution


Written By: Slav Defence


The people of Pakistan are facing a lot of burden and psychological pressure due to bad governance and economical infra structure, for they felt themselves in survival mode psychologically that is why their frustration is transforming into aggression, we will currently make a systematic approach to diagnoses lapses in our infrastructure and discuss suggestions in this regard. For this we need to understand all the aspect and root cause of this problem.
To understand the mentality and collective attitude of a nation, we need to follow systematic approach to deal with such crisis.
For this we first of all need to understand the mentality of a common man, what he faces, his survival, the attitude of officials etc.

Contents:

-The economical aspects
-The social and psychological aspect
-The attitude of civil regime
-The aggressive reaction of subject
-Solution

The Economical aspect:

We all are evident of current inflation and economical condition of Pakistan. Pakistan is in debt of billions of dollar from International Monitory Fund (IMF), due to various reasons behind this, few factors are as follows:
-Lack of proper planning.
-Corruption

-Ineligible ministers
-Devaluation of currency

i) Lack of proper planning:

As I have always complained that our government lacks a team of think-tanks and proper committee to sort out the solution of various problems, therefore our infra-structure is getting damage day by day, also our civil sectors are not functioning properly and they are collapsing to each other at various points.

ii) Corruption:

Now the main reason of collapse of civil sector and malfunctioning of system is corruption. As corrupted mindsets are themselves given responsibility to ‘ensure security and proper transfer’ of currency flow throughout the system, therefore, they are damaging the system by stealing money of their own.

iii) Ineligible ministers:
Such people are hired whose eligibility is questionable, they are characterless, possesses no virtue, insincere and do not work with dedication, thus their character is contrary to the criteria of constitution of Pakistan, their character completely reciprocate to the required criteria.



Devaluation of currency:

Due to above mentioned reasons; our common man is most affected and burdened, as our economical infrastructure is suffered due to such reasons that is why our currency is devalued, here are few factors:

-Martial Law:

Due to corruption and ineligibility of our ministers and other known reasons, our army imposes martial law and uses its right given by constitution of Pakistan 1973 article 2B, thus if you look at chart, you observe that before impose of martial Law, the value of Pakistani rupee was less than 65 rupee, and even after the impose of Martial law and retake of governmental body, the Pakistani rupee value was 60 as compare to US dollar.

-The Political cauldron and crisis:

After the incident of Justice Chaudhry and political crisis, the rupee value was declining, after Mr.Musharraf’s resign and in Zardari’s era, rupee value declined to R.s 99 as compare to dollar. Sadly, the value of Pakistani rupee was greater than Indian, thus Pakistan lost its currency value due to above mentioned reasons.

-Decrease in investment and Trade:

Due to above mentioned reasons, and war on terror and situation with India ie Kargil case etc, Pakistan faced huge trade loss as well, after Musharraf imposed emergency due to political crisis and seeing Karachi’s situation, Pakistan also lost investors and key role was played by media such as GEO tv die to which Mr.Musharraf banned it for some time till the political condition is balanced.
Thus due to above mentioned factors, it affected to a common man a lot, as due to devaluation of currency, we can see clearly the rise of prices on daily basis items etc. Thus this is the basic point which has triggered frustration of common man.
The Social and psychological Aspect:
Our society system very much resembles with old pattern of British social system and psychology. So Pakistan comprises of three classes of citizen.
-The upper class
-The middle class
-The lower class
i)The upper class:This class comprises of ministers, bureaucrats and high command officers enjoy dominancy over rest two classes, for them devaluation of money will not affect much.
ii) The middle class:
Now this is the class which is effected somehow of devaluation, their budget is limited, and they approach to upper class mainly, they have desires to get better position, thus they throw their full effort to get maintain themselves in limited budget.
iii )The lower class:
Hand to mouth class, the economical crisis effects them the most,1% increase in budget and they lost their control in maintain of budget, to deal with basis necessities of life.
iv) The lowest class: Includes those who have least economical facility. Such people are not in a condition to even fulfill basis everyday needs ie schooling etc, the population of Pakistan mainly consists of majority of lower, lowest and middle class who struggle day and night to reach the peak of socio-economical pyramid.

The psychological aspect?

Definitely, as all rest three classes have aim to get promoted and each made an approach to reach the peak of socio-economic pyramid which I have drawn, when faces hurdles due to mismanagement of government gets frustrated, well the middle class do tolerate to abandon their desires, but the lower class suffers the most, as they are in a state of survival, their objective is to get balance of their daily needs on the basis of limited budget they are provided with, that is why they become frustrated and disappointed.
The attitude of civil regime and aggressive attitude of subject:
We all are evident of our regime’s irresponsible attitude from 1947 till now. Due to above mentioned reasons, our economy is damaged, currency is devalued, and government suffers further trade and investment loss due to war on terrorism and has no clear policy to resolve such issues.
When corrupted mindsets form governmental body, they find themselves unable to such problems and instability which is increasing day by day and thus instead of working on solutions, they try to avoid or delay bigger issues and introduce short projects to show some performance.
As our government consists of corrupted mindsets, therefore I assume that they support corruption and refrain civil security sectors to diagnose and stop them.
This is the point on the basis of which collapse is recorded between civil security sectors and governmental regime and vice versa, I assume to continue their corruption they promote and favor ineligible people and give them important promotions to continue their task, thus tentacles of corruption is increased more than before and this virus is promoted to law and enforcement agencies, even we can see clearly in judiciary as well.
This not even damages economy, but also become a security threat, the Abbottabad incident is thus result of such collapse between law and enforcement agencies, if you analyze the report you will realize that how due to corruption OBL was succeed to form get his compound and careless attitude of NADRA and XEN companies etc lead to such catastrophe, I personally believe that internal corruption has given chance to foreign invasion and influence and it would be unfair if we blame army entirely for this.
Now returning to basic point, government is not providing an ease to subject. The ruled class is well aware of such situation and finds itself helpless, still subject keeps on giving chances to our corrupt politicians.
Now when our frustrated subject finds out that our regime is not giving them an ease and instead they are increasing burden on them, their frustration is transformed into an aggression, due to which they come on roads and damage their own stuff.
Instead of blaming them I suggest that government must take steps to fulfill their needs and work on to resolve issues.

Solution:

-Government needs to work on its budget policy, that is they need to divide taxation on the basis of eligibility of classes to pay.

Figure 1.2 which I have drawn suggests the solution to ease the burden.

-Government must work on to provide basic needs to subject.

>for poor class, education must be made free on school and government must re-active

Mr.Musharraf’s policy to send foreign student aboard on scholarship basis.

-Government must diagnose the corrupted mindsets within to stop corruption. Law and enforcement agencies must be given free hand to arrest such criminals.

-Long term procedures such as money laundering, should be kept into focus, this strategy to avoid bigger problems will not solve anything.

-Judiciary must be made approachable for all classes equally, I support Mr. Khan’s attempt to launch mobile court system in KPK. This could ease public’s frustration to some level.
Keenly waiting to see further edition of my fellow readers.

Best Regards,
Slav Defence

The Pakistan Defence Forum.

 

[Slav Defence]

@Aeronaut @nuclearpak @WebMaster @Awesome @balixd @Last Hope @Luftwaffe @Irfan Baloch @Xeric @Secur @RescueRanger @Leader @Jazzbot @niaz @developero and @Jungibaaz others....
This post is response to @Icarus post:

The right to protest is a fundamental right and guaranteed by the constitution as well but when it becomes a riot, when other people's rights are being usurped in the name of protests, it is at that moment that a line needs to be drawn. Protest should be civil and professional like the NHS protest or the Fire Department portents in the UK. They didn't burn down buildings, burn cars or refuse to show up for work, they stood at a protest camp when they were off duty. If that is the sort of protest being advocated then I see it as a very healthy part of a functional society.

I have re-checked the post carefully before posting,and while preparing this report,I have keep your interests in my mind.
Last hope,are you satisfied with current performance of our regime?
@niaz @Oscar and others...do you all agree that current regime has brought some improvement or not?why? @Secur, my best brother....would you like to elaborate the psychological aspect of poor class and upper class?

Best regards,
Slav Defence

 

[Jungibaaz]

On the economic misery point, allow me to elaborate, inflation rose as a result of some factors of cost-push inflation ie rising oil prices which we witnessed in 2008, but also due to the central bank of Pakistan cutting interests rates, due to signs of weak growth.

This leads me on to the point about the poor performance of the PKR, inflation causes devaluation of currency, so it only makes sense that that the rupee fell. Furthermore, in 2009, the floods damaged the economy no doubt, and also the exports for the agricultural sector, and that whole in the market for domestically produced goods had to be filled by imports, so in 2009, due to a deterioration of balance of trade, the rupee fell more. Another cause is the fall in investment, investor confidence fell around that period so you had capital flight in Pakistan, investors withdrew from any future plans. To illustrate the effect:

You can see the sharp fall in investment there.

And let me tell you what else, investment fell again, in 2011 to $1 billion and then again in 2012 to around half a billion in USD terms. I got this info from the World Bank.

Let me add, the level of investment I've quoted over the last 5 years is absolutely pathetic!
It also has major knock on effects and implications for future growth, investment takes a while before it starts to benefit the economy, and for developing nations, investment is one of the greatest sources to kick start growth and that is how China and India, early on, pulled off impressive growth rates.

 

[Jungibaaz]

My solution would be a bit different.

Again, speaking of the economy, only God can help Pakistan on the political front.

So, on the fiscal policy point.
More progressive tax system you've pointed out, a valid point, But in Pakistan, you've got to realize that for the lowest most aren't taxed, remember there was talk of widening the tax net? That should be the aim, the current government has made the mistake of increasing the GST (general sales tax), the problems with this is that it is a regressive tax and it ALWAYS always hits, the poorest the hardest, it also causes inflation. The aim should be to make the income tax system more progressive, go easy on the tax hikes on the GST and similar taxes and widen the tax net, get tax from both those on the lower end who aren't taxed and also on the top end you have millions of dollars worth of tax evasion.

But all this is null and void unles the underlying problems aren't dealt with, that is terrorism, energy crisis and political instability.
Get rid of that and we'll be back to the good ol' years of the mid-2000's.

 

[Slav Defence]

On the economic misery point, allow me to elaborate, inflation rose as a result of some factors of cost-push inflation ie rising oil prices which we witnessed in 2008, but also due to the central bank of Pakistan cutting interests rates, due to signs of weak growth.

This leads me on to the point about the poor performance of the PKR, inflation causes devaluation of currency, so it only makes sense that that the rupee fell. Furthermore, in 2009, the floods damaged the economy no doubt, and also the exports for the agricultural sector, and that whole in the market for domestically produced goods had to be filled by imports, so in 2009, due to a deterioration of balance of trade, the rupee fell more. Another cause is the fall in investment, investor confidence fell around that period so you had capital flight in Pakistan, investors withdrew from any future plans. To illustrate the effect:

You can see the sharp fall in investment there.

And let me tell you what else, investment fell again, in 2011 to $1 billion and then again in 2012 to around half a billion in USD terms. I got this info from the World Bank.

Let me add, the level of investment I've quoted over the last 5 years is absolutely pathetic!
It also has major knock on effects and implications for future growth, investment takes a while before it starts to benefit the economy, and for developing nations, investment is one of the greatest sources to kick start growth and that is how China and India, early on, pulled off impressive growth rates.

Very well elaborated jungibaaz,this clearly highlights an importance of trade and it's relationship with inflation.

But I ask you,besides natural disasters which you have quoted,I ask you,isn't war on terror has affected and damaged our economic infrastructure,so much that if you estimate it,you will find out on individual level every Pakistani is indebted of 200 US dollar.

to over come the issue of unpredicted natural disaster,I suggest that government must work on dams and promote such projects.
But issues like war on terror?Do you still think that it is our war?we should go on and continue to be US front line ally?

Best Regards,
Slav Defence

 

[Jungibaaz]

Very well elaborated jungibaaz,this clearly highlights an importance of trade and it's relationship with inflation.

But I ask you,besides natural disasters which you have quoted,I ask you,isn't war on terror has affected and damaged our economic infrastructure,so much that if you estimate it,you will find out on individual level every Pakistani is indebted of 200 US dollar.

to over come the issue of unpridicted natural disaster,I suggest that government must work on damns and promote such projects.
But issues like war on terror?Do you still think that it is our war?we should go on and continue to be US front line ally?

Best Regards,
Slav Defence

Natural disasters are no excuse, that is unpredictable and difficult to prepare for. Even so, the main reason for economic decline is due to terrorism, the sad state of security and the energy crisis.

Now, on the question of is it our war? Of course it's our war, The day the TTP was formed it became our war. The sooner the political establishment learns that, the better.

 

[Slav Defence]

My solution would be a bit different.

Again, speaking of the economy, only God can help Pakistan on the political front.

So, on the fiscal policy point.
More progressive tax system you've pointed out, a valid point, But in Pakistan, you've got to realize that for the lowest most aren't taxed, remember there was talk of widening the tax net? That should be the aim, the current government has made the mistake of increasing the GST (general sales tax), the problems with this is that it is a regressive tax and it ALWAYS always hits, the poorest the hardest, it also causes inflation. The aim should be to make the income tax system more progressive, go easy on the tax hikes on the GST and similar taxes and widen the tax net, get tax from both those on the lower end who aren't taxed and also on the top end you have millions of dollars worth of tax evasion.

But all this is null and void unles the underlying problems aren't dealt with, that is terrorism, energy crisis and political instability.
Get rid of that and we'll be back to the good ol' years of the mid-2000's.

exactly,very well said,even jungibaaz my friend.
I believe that increasing the taxation to resolve and support economical infra-structure as least option.
We should start our ground work from issues such as corruption and our relationships with foreign countries ie,we need to work on priorities.
even if we succeed to recover stolen money and money laundering cases are resolved,then this will help us a lot to regain stability as our reserves will get an ease,but for this we need to work on larger scales.

Best Regards,
Slav defence

Natural disasters are no excuse, that is unpredictable and difficult to prepare for. Even so, the main reason for economic decline is due to terrorism, the sad state of security and the energy crisis.

Now, on the question of is it our war? Of course it's our war, The day the TTP was formed it became our war. The sooner the political establishment learns that, the better.

Jungibaaz,it is made our war,I ask you about how TTP gets fund?who funds TTP?the same operation woodland startegy is applied on us.
Now we must change our style,we must seal our borders destroy TTp nexus,where as NATO supply and Afghan issue is concerned,we must leave US alone with Afghanistan.
I remember that Mr.Musharraf had once argument with NATO officials,because they were not allowing Pakistan forces to install protective barriers and mines,Mr.Musharraf very much wanted to install to avoid entry of terrorist and illegal smuggling of weapons via Pak-afghan border.

Best Regards,
Slav Defence

 

[livingdead]

@Slav Defence ..when was value of pkr greater than inr?

 

[Panther 57]

Putting my two cents.

As I have always complained that our government lacks a team of think-tanks and proper committee to sort out the solution of various problems, therefore our infra-structure is getting damage day by day, also our civil sectors are not functioning properly and they are collapsing to each other at various points.

We do have competent resources to act as Think Tanks but are not utilized, as it will become threat to their thrown.

Due to corruption and ineligibility of our ministers and other known reasons, our army imposes martial law and uses its right given by constitution of Pakistan 1973 article 2B, thus if you look at chart, you observe that before impose of martial Law, the value of Pakistani rupee was less than 65 rupee, and even after the impose of Martial law and retake of governmental body, the Pakistani rupee value was 60 as compare to US dollar.

Here i will tend to differ with you. During Zia's regime US$ had exchange rate of PKR18. Dollar went out of hand after him and starting shooting up. During last NS term it was PKR40 officially when dollar accounts were frozen and people were forced to withdraw dollars at PKR40 when it was touching above 75 in open market. Then it came down and settled around 61-62. It went to 59-60 after Musharraf took over. During his tenure it remained stable until PPP took over in 2008. BTW I am eye witness to PKR18/USD.

Mr.Musharraf banned it for some time till the political condition is balanced.
Thus due to above mentioned factors, it affected to a common man a lot, as due to devaluation of currency, we can see clearly the rise of prices on daily basis items etc.

I would recommend you check this link for inflationary comparison. World Needs A Change: The Forgotten Past

You will find some other articles also touching upon your area of concern on this blogspot.

In mid to late 70's

 

[Slav Defence]

Putting my two cents.
We do have competent resources to act as Think Tanks but are not utilized, as it will become threat to their thrown.
Here i will tend to differ with you. During Zia's regime US$ had exchange rate of PKR18. Dollar went out of hand after him and starting shooting up. During last NS term it was PKR40 officially when dollar accounts were frozen and people were forced to withdraw dollars at PKR40 when it was touching above 75 in open market. Then it came down and settled around 61-62. It went to 59-60 after Musharraf took over. During his tenure it remained stable until PPP took over in 2008. BTW I am eye witness to PKR18/USD.

oh, my dear @Panther 57 I didn't meant to say that dictators and field marshals were responsible for DEVALUATION of PKR,my main point was that Martial Law when imposed in any any country resulted in devaluation of currency due to following factors:

-Political instability
-As emergency is imposed sometimes
-Power of governance is when transferred.

But after impose of martial law,when military regimes take control back,then money value is increased again.

For example,when Musharraf imposed martial law,then value of PKR was decreased,but after few months it was recovered my friend.
and after he again imposed emergency due to political crisis of justice chaudhry,then we evident of stock exchange index points fall out,temporarily.
My main point is that transfer of power is the main event when we have noticed of economical damage.


Best regards,
slav defence

@Slav Defence ..when was value of pkr greater than inr?

http://www.defence.pk/forums/economy-development/164917-indian-rupee-vis-vis-pakistani-rupee.html

 

[Panther 57]

Just sharing the info that during last major floods, Pakistan agriculture product exports were record, so floods may not be an indicator of lesser exports.

 

[livingdead]

@Slav Defence .. that thread does not have answer.. the link to dawn shows 'not found'. Kindly tell us when pkr was stronger than inr against dollar.

 

[Panther 57]

My dear you wont find IR lower then PKR values on net. It was in 1970's

 

[Slav Defence]

@Slav Defence .. that thread does not have answer.. the link to dawn shows 'not found'. Kindly tell us when pkr was stronger than inr against dollar.

So link is not working?
Indian rupee vis-à-vis Pakistani.
From the Newspaper
9th March, 2012

THERE was uproar in India’s money market recently when the rupee hit a near six-week-low against the dollar.The central Reserve Bank of India stepped in at once with remedial measures. The rupee that had touched the level of 49.94 was able to recover and at the end of the day it closed at 49.70. Pakistani rupee which had once enjoyed supremacy over the Indian continued to shed its strength slowly and gradually over the past few decades. Now, PKR100 fetches 60 Indian rupees in the foreign exchange market.

The downward trend in the past four years is unprecedented. In 2008, when the present government came into power, the exchange rate of the Pakistani currency was around Rs60 a dollar. But it reached Rs90 plus within a short span of four years.

The government appears to be more interested in strengthening its position in the Senate rather than making serious efforts for strengthening the rupee and the country’s economy as a whole. It also appears hell bent on manoeuvring for completing its five-year term come what may.

MEHNAZ SIDDIQUI
Islamabad


Source: http://www.defence.pk/forums/econom...ee-vis-vis-pakistani-rupee.html#ixzz2cbtrlMrH

My dear you wont find IR lower then PKR values on net. It was in 1970's

Thank you panther,so nice of you.

 

[livingdead]

@Slav Defence.. I read that.. but original link not working... looks like a letter to the newspaper rather than article by newspaper (wanted to confirm but link not working)...
so, again.. do you just believe in a random lady MEHNAZ or got specific year in mind.