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analysis Clash
of interests corruption Reconstructing
Swat Aman
ki Asha "We
need economic peace to defend ourselves" The little
peace ambassador firstperson By Shujauddin Qureshi Every time the government faces a budget deficit, Public Sector Development Programme (PSDP) becomes the first target. This time too, it is no different. The government, facing budget deficit mainly due to extraordinary expenses on law and order and security across the country as well as lack of response from foreign donors, has announced to reduce the PSDP budget.
Between a rock and a hard place Around a year ago the movement to restore the then
deposed Chief Justice was reaching a crescendo. For almost two years the
legal fraternity, political activists, students and ordinary citizens
spearheaded a movement that will no doubt inspire many in decades to come.
Some argued that Pakistan would be a changed place after the victory of
the movement, yet less than a year later justice is in scant supply and
the same judiciary which was a symbol of the struggle against dictatorship
appears to be on a collision course with the elected government of the
Pakistan People’s Party (PPP). It is important to bear in mind that the multitude that participated in the movement that rallied around Iftikhar Chaudhry was not concerned with the CJ’s person per se, but rather was committed to overthrowing and then eliminating the vestiges of military rule. Despite what the most die-hard defenders of the ‘rule of law’ claimed, many of us did not perceive the CJ to be a messiah, or a guarantor of the democracy we had struggled so hard to restore. In fact, we knew that the democracy that would follow Musharraf’s regime would be seriously flawed. It would be subject to the vagaries of the Great Game, suffer from financial insolvency, and be characterised by all sorts of intrigue. Indeed, democracy in Pakistan (or anywhere else for that matter) cannot be made to work by an activist judiciary; it requires an empowered parliament, the guarantee of political liberties, and a lot of time. At the opposite extreme of those who were — and still are — convinced that the Chief Justice had a magic wand and could fix all of our problems stood those who were – and still are – of the opinion that there was a clean nexus between the judiciary and the establishment and that eventually the lawyer’s movement would metamorphose into a conspiracy against the PPP. To a significant extent these two poles of opinion are
emblematic of the divide that has existed in Pakistani politics for the
past four decades. Those stricken by the messiah syndrome have little
tolerance for the messiness of democracy and have traditionally been
pro-military. While the support for Iftikhar Chaudhry against military
rule marked a substantial departure from the historical trend, the
impatience for democracy remains. On the other hand are those who believe that the PPP is the only meaningful anti-establishment game in town and view any and all criticisms of their preferred party as an underhanded conspiracy. While this camp is right to believe that the establishment is always keen to keep the PPP on the back foot, its blind faith in the PPP betrays an unwillingness to evolve more radical democratic alternatives. The NRO judgment has hardened the battle lines between the two camps. But is it necessarily the case that the rest of us must choose between the two sides? In the first instance, it is necessary to remind ourselves that in two provinces the tone and tenor of politics is entirely different from that in most urban centres. In Balochistan, the popular feeling is that none of the Chief Justice, the elected government, and of course the establishment, represent the Baloch people. The Baloch apparently could care less about the power struggle in Islamabad. Meanwhile, Pakhtoon-khwa is being ravaged by the fallouts of imperialist war. Ordinary people simply want peace and will support whoever guarantees it. Just as the Baloch have little faith in the major players in Pakistani politics, the Pakhtuns have also been let down by virtually everyone (in their case the elected Awami National Party government has much more to answer for than the PPP). The Chief Justice vs. PPP spat must, therefore, be put into context. This is not to suggest that the outcome of a possible confrontation will have no bearing on Balochistan and Pakhtoonkhwa but simply to note that there is a need to avoid sensationalism and to isolate the real issues from the newspaper headlines. In short, I believe it is important to protect the
right of the elected government to complete its term in office. The Chief
Justice is not the law and cannot dictate when governments (or presidents)
should come and go. At the same time, it is also important that the courts
be allowed to function freely and issue rulings with impunity. Unless it
is clear that judges are clearly acting at the behest of king-makers all
actions of the Supreme Court cannot simply be decried as conspiracies. In the final analysis, the proxy war between the CJ and the elected government is the latest phase in an unfolding and deepening contradiction within the ruling class. The sacking of the Chief Justice in March 2007 was the first obvious indicator of this growing schism within but in reality the crisis was triggered in 2001 when the state’s imperial patron decided to take a more hands-on approach to its affairs in the region. While I recognise that the PPP represents a relatively progressive alternative to military rule, I think it is important to bear in mind that the PPP is not interested in substantive changes in the status quo (but for a handful of elements within the party). With this in mind I believe that it is perfectly reasonable for those who believe neither in messiahs nor in the infallibility of the PPP to strike the middle ground by defending the right of the PPP to govern the country as per its mandate whilst also trying to forge a democratic alternative. In fact, the building of a new democratic alternative is much more likely under a democratic dispensation. It will also do us good to see the PPP complete a term in office and thereby surrender its claim to being perennially oppressed. It is another matter altogether that those old enough to remember the original PPP government under Zulfikar Ali Bhutto always lament just how little tolerance there was for dissent and other democratic politics. One hopes that today’s PPP — and its jialas — recognises the difference between conspiracies hatched in GHQ and democratic dissent. Giving space to the latter will almost definitely eliminate the possibility of the former succeeding.
If the government relies on bank borrowing, restrictive monetary policy would hardly achieve its objective By Hussain H Zaidi The State Bank of Pakistan (SBP) has retained the 12.5 percent policy discount rate (interest rate) in the monetary policy for February-March 2010. The rate was earlier reduced by 0.5 percentage points for the preceding two months. Is the decision to continue the rather high discount rate called for? In a market economy like Pakistan, the three major
instruments available to the central bank to manage the aggregate demand
are the open market operations, the discount rate and the reserve ratio
requirement (RRR). The open market operations refer to the sale or
purchase of government securities. Sale of government securities reduces,
whereas purchases increase, money supply in the economy. The discount rate
is the interest rate at which banks borrow from the central bank. Increase
in the discount rate reduces bank reserves and consequently money supply.
Reserve ratio is the minimum percentage of their total reserves that the
commercial banks are required to keep with the central bank. A high
reserve ratio results in reduced money supply in the economy. Faced with strong inflationary pressures, the SBP has adopted a rather restrictive monetary policy for quite some time. In July 2008, the discount rate was raised by one percentage point to 13 percent. In November, the discount rate was further increased by two percentage points to 15 per cent. Overall in 2008, the discount rate was pushed up by five percentage points. The Monetary Policy Statement for January-March 2009 retained the 15 per cent discount rate. In April and August 2009 the rate was cut by one percentage point each bringing it to 13. While evaluating the decision to maintain the high interest rate, it needs to be mentioned that monetary policy is determined by four factors. These are the balance of payment position (BoP), fiscal balance, inflation and the real sector growth. Both the present position and future forecast are taken into account. We begin with the BoP position. During the first half of the current financial year (H1-FY10), the economy registered a BoP surplus of $1.4 billion (bn) compared with BoP deficit of $4.8 bn for the corresponding period of FY09. The BoP surplus is due to improved performance on both current and capital accounts. The current account deficit during H1-FY10 went down to $2 bn from 7.8 bn in H1-FY09. The substantial reduction of the current account deficit is due to reduced trade deficit of $5.8 bn (compared with $8.2 bn in H1-FY09) and increased remittances of $4.5 bn compared with $3.6 bn in H1-FY09). The capital account balance went up to $3.8 bn, compared with $3.1 bn in H1-FY09, mainly due to the International Monetary Fund (IMF) credit and partly due to increase in foreign portfolio investment despite $1.4 bn fall in foreign direct investment (FDI). The reduction of trade deficit during H1-FY10, resting on 17.6 percent fall in imports, was partly on account of reduced international commodity prices and partly due to decrease in domestic demand. However, in the wake of global economic recovery international commodity prices, particularly those of petroleum products, are on the increase posting a less optimistic outlook for trade and current account deficits during the second half of the current financial year. The fiscal deficit target for FY10 is 4.9 percent of GDP or Rs740 bn. However, as the SBP notes in the monetary policy statement, the target is difficult to meet primarily due to increase in expenditure caused by the difficult security situation. During H1-FY10 the fiscal deficit was Rs224 bn, Rs30 bn higher than the Rs194 bn target. The increase in budget deficit calls for a restrictive monetary policy as the government is likely to resort to bank borrowing for deficit financing. Average inflation dropped to 13.6 percent at the end of December 2009 compared with 20.3 percent a year earlier. The fall in inflation has been due to price deflation caused by recession and weaker domestic demand. However, inflationary pressures are likely to be sticky in the downward direction partly due to surge in international commodity prices and partly due to increase in cost of doing business caused by power shortage, increase in utility charges and the precarious security environment. Hence, the SBP has forecast that the average inflation for full FY10 to be between 11 and 12 percent. The real GDP growth for FY10 is targeted at 3 percent, 1 percentage point higher than that of 2 percent during FY09. Improved performance of the agricultural and large scale manufacturing (LSM) sectors and greater demand for exports in the wake of global economic recovery may help achieve the modest growth target. However, the persistent supply side constraints and the law and order situation may serve as a drag on economic growth. As the preceding paragraphs show, though major macro-economic indicators bearing upon monetary policy have improved, the economy continues to be susceptible to shocks and uncertainties forcing the SBP to retain the rather high interest rate. Would the monetary contraction be sufficient to contain inflation? To answer this question, one needs to look at the causes of inflation in the economy. Much of the inflation that the economy is facing is supply-side, which monetary policy can be of little use in dealing with. Take, for instance, high food particularly sugar prices. The major cause of food inflation is cartelization. The cartels create artificial shortages to increase prices. Such supply-side inflation needs strong government action to curb cartels and check smuggling and, when necessary, exports as well. Hence, monetary policy by itself will not be sufficient to significantly reduce inflationary pressures. Strong administrative measures are also needed. Coming to the likely effects of the current monetary policy, a few observations can be made. One, the high discount rate will continue to put upward pressure on the market interest rates. Though nominal interest rates may be high, courtesy high inflation real interest rates are still low. Two, high interest rates would reduce consumption and investment demand, resulting into fall in output and employment. This is the main argument against the current restrictive monetary policy. When an economy slows down, jobs are lost and incomes fall. This is not to state that the monetary policy is the major cause of economic slump; however, it remains an important factor. Three, high interest rates should encourage savings. However, one must be mindful of the fact that income not the interest rate is the major determinant of savings. People with high income are willing to save even at low interest rate. Fall in inflation increases the real incomes but fall in employment has the opposite effect. Finally, as interest rate increases, the money holdings will decline and funds will be shifted to higher yield assets. This may result in a fall in the real sector investment and increase in portfolio investment. The monetary policy is a trade off between growth and stability. The decision to persist with a restrictive monetary policy means that the government prefers stability to growth. The agreement with the International Monetary Fund (IMF) also provides for tight fiscal and monetary policies. However, a tight monetary policy can bear fruit only if it has a supportive fiscal policy. If the government continues to rely on bank borrowing as the major source of financing its fiscal deficit, restrictive monetary policy would hardly achieve its objective of containing inflation. E-mail: hussainhzaidi@gmail.com corruption A story of incompetence Huzaima Bukhari and Dr. Ikramul Haq The Federal Board of Revenue (FBR) is in for criticism for inefficiency and indiscipline. It has failed on all fronts: collection targets, widening of tax base, countering tax evasion and avoidance, recovery of arrears, voluntary compliance, reform process and what not. At the end of the five-year Tax Administration Reform Project (TARP), the tax-to-GDP ratio dipped to 8.2 percent from 10.6 percent. The borrowed funds of millions of dollars were ruthlessly wasted. The standing committee of parliament on finance must conduct a thorough probe in the matter and seek the assistance of tax experts to determine the amount of loss caused to national exchequer by the FBR stalwarts during the last two decades. Despite an expensive media campaign, FBR could not make
25 million potential taxpayers to file tax declarations by the extended
date — 25 January 2010. The majority of non-filers are rich and mighty
bureaucrats, corrupt politicians, and unscrupulous businessmen. FBR has
not only failed to tap the actual tax potential — not less than Rs4
trillion — but is also guilty of shifting tax burden from the rich to
the poorer segments of society. According to FBR, on admission, 1,916,300
income tax returns and statements were received from July-January of the
current fiscal year (2009-10) as compared with 1,797,000 returns and
statements in the same period of last fiscal year (2008-09). Total number
of income tax returns received up to 25 January 2010 is only 755,671, the
rest are statements under section 115(4) — last year 642,777 returns
were received — indicating an increase of 112,849 returns. According to
the FBR Press release as of January 25, 2010, FBR has received 16,281
corporate sector income tax returns as against 14,903 returns in the same
period of last fiscal year, projecting an increase of 1,378 returns. Firms — registered and unregistered — filed just 41,863 returns. Salaried persons filed 114,495 returns for tax year 2009 as against 119,759 last year showing a decline of 5,264. Non-salaried individuals filed 583,032 returns compared to 481,961 filed last year. Salary certificates received are 18,828 as against 20,745 filed last year. Number of employees covered in statements under section 115(4) are 1,053,708 this year as compared with 1,055,954 last year. Number of importers who filed their statements is 12,262 whereas some 11,510 importers filed their statements last fiscal year. By January 25, 2010 some 8,473 exporters filed their statements as against 8,050 exporters in the same period of last fiscal year. Some 13,332 retailers having up to Rs5 million annual turnover filed their statements during July-January 2010 period of this fiscal year as compared with 18,272 retailers in the same period of last fiscal year. 581 retailers having over Rs5 million annual turnover filed their statements this year as against 830 such retailers in the last fiscal year. 24,378 contractors and suppliers filed statements during this year as against 24,030 during the last year. It is admitted by FBR that even after "great efforts" less than 2 million Pakistanis have filed income tax declarations for tax year 2009. FBR has failed to implement law even in Islamabad as out of 43000 commercial and residential rental properties in Islamabad, only 7000 owners are filing returns. In Pakistan, the number of mobile users alone, who pay more than Rs100,000 as annual bill, is about 25 million. Why have they not been compelled to file returns? FBR is taking credit of extra 119,300 declarations filed this year. However, it is completely silent about its failure to expand the tax net — we have at least 25 million persons earning taxable income, but who are not filing tax declarations. For a long time now, FBR has been apologetic (specifically before the IMF and the World Bank) that total income tax payers (referring to registered only) in Pakistan are just 2 million in a population of 170 million. This is a myth. The reality is that since July 1, 1992 all commercial electricity consumers (including about 3.2. million retail outlets in urban areas), irrespective of whether their income is chargeable to tax or not, are paying minimum income tax of Rs60 per month. The total number of persons earning interest on bank deposits is not less than 30 million. They pay 10 percent mandatory withholding tax irrespective of their quantum of income. Total number of mobile and land-line telephone users, subjected to withholding tax, in the country, is in excess of 60 million — yet FBR claims that our tax base is narrow. The reality is that FBR is incompetent as a result of which it has failed to book/register a majority of these taxpayers. Had it been done, we could today have boasted of nearly 25 million registered taxpayers. Even a petty village shopkeeper (whose total income is much below the minimum taxable limit of Rs100,000) is paying tax as high as Rs720 per annum. On the contrary, big absentee landlords, earning millions by merely leasing out orchards/lands, are not paying even a single penny as personal income tax. Out of total population of Pakistan, 43.1 percent are below the age of 15 years. The overwhelming majority of them will not have taxable income. Rural labour of 40 million earns meagre income. Thus, the total income tax paying population having taxable income of Rs100,001 can safely be around 25 million. The FBR is not only taxing all of them but even many of those whose incomes fall below taxable limits. The poor are paying not only indirect taxes but also income tax at source under various provisions of the Income Tax Ordinance, 2001 — section 148 to 156A, sections 234 to 236. Thus in reality the people — except the ruling trio — are over-taxed. In return they get nothing. It was the duty of FBR to allot National Tax Numbers (NTNs) to all those who paid tax under sections 148,149,150,151,152,153,154,155,156, and 233, 234 and 235 of the Income Ordinance, 2001. Had the FBR just issued notices for filing of return to all commercial electricity consumers, mobile and land-line users (paying bill of Rs100,000 or more) and vehicle owners, today we would have over 25 million registered taxpayers. The FBR did not bother to prepare a database of such persons though millions of rupees were spent (rather wasted) on so-called automation. FBR is guilty of criminal negligence in not taxing persons having taxable income, but extorting money from many who earn below taxable income. It has been misreporting the figures regarding income taxpayers in Pakistan. Its performance is abysmal in achieving a satisfactory tax-to-GDP ratio. It is just thriving on withholding taxes and voluntary payments — constituting 92 percent of total collection. The contribution of field officers [collection on demand through investigation or audit] is just 8 percent of total collection proving beyond any doubt how unproductive this organisation is. The small business houses and salaried persons, already heavily taxed through withholding tax mechanism, are victims of highhandedness. It is high time that the FBR should put its own house in order and tax the rich and mighty tax evaders. The writers, tax lawyers, are members of Adjunct Faculty of Lahore University of Management Sciences (LUMS).
FBR version: According to FBR, it has finally decided to bring all the persons earning taxable income in the tax net through its tax intelligence system. The Chairman of FBR referred to various proposals such as: Tax legislation will be introduced for installation of electronic cash registers at the retail outlets. Prime Minister has agreed to provide free of cost electronic cash registers to retailers to document their sales. Political support/will is requested for taxing black economy and brining informal sector into the tax net. Most of the housing schemes are involved in selling of files of plots. There is proposal to tax transfer of plots through sale of files that would be instrumental in generating additional revenues. Under new Value Added Tax (VAT) regime retailers having annual turnover of Rs7.5 million would be registered—only essential food items and life saving drugs would remain exempt and 15 percent VAT would be imposed on all other goods from July 1, 2010. The professional service providers e.g. doctors, lawyers, engineers and architects would also be brought under VAT from July 1, 2010. The implementation of the broad-based VAT would generate around Rs150-200 billion in next fiscal year. The revenue generation from VAT implementation would reach to around Rs600 billion in coming years. The importers, wholesalers and big retailers are paying Rs125 billion, which is below the actual potential. In most of the cases they deposit withholding tax collected from the consumers and do not declare their actual income, thus presumptive tax regime will be abolished. The revival and promotion of cultural activities will boost rebuilding By Rafi Ullah- Swat is once again abuzz with activity. The traditional looks of Mingawara seem to be coming back in the once restive valley. As I stepped down from the van in Mingawara I found the city open with its archetypal cheers. Of course, the recent normalcy has infused, once more, confidence and the spirit of life in the people of Swat. The activity of life going on in Swat has many aspects
and dimensions. But the reconstruction and rehabilitation work overshadows
all other doings. The people are, understandably, demanding reconstruction
as the valley has gone through devastation. But there is lack of a
comprehensive approach to the programme. Reconstruction does not imply
building physical infrastructure alone as it is generally conceived in
Pakistan both by the policy-makers and the people. Due attention is not
being given to the social, cultural as well as psychological aspect of Swat has not just seen misfortunes in terms of destruction of buildings, roads, and bridges. It is also a human trauma because of the disruption of the social and cultural side of life in the valley. People have seen destruction of their four walls, holy places, and slaughtering of their near and dear ones. Physical infrastructural reconstruction is, no doubt, necessary for social and economic development but ignoring the cultural, social and psychological rehabilitation will have serious effects on the overall reconstruction plan. Ignoring this dimension of rehabilitation programme will be tantamount to leaving the society vulnerable to a major future threat. That is the phase of revenge and retribution. The people would remain involved in deadly annihilation of each other, the seeds for which have been sown during the long Talibanisation process. People have gone through psychological trauma. The violation of their social and cultural norms and values have deprived them of their fundamental human rights. A large number of innocent people have lost their lives, leaving behind families raging with emotions of revenge. Likewise, a bulk of people has seen the destruction of their properties. Kidnappings for ransom have also antagonised a large number of people. Given that all these injustices were not compensated in a proper way Swat will be, once again, overwhelmed by violence; this time it will took the form of family reprisals. How can this imminent threat be coped with? In my opinion it can, first, be dealt with successfully by creating a social space which, in turn, could be achieved through: a) education, b) media, c) cultural activities, and d) speedy justice. The above-mentioned four-pronged mechanism would help in creating social space in Swat. This phenomenon will do away with the future threats which, otherwise, seem hanging over the society like a sword of Damocles. It seems, in the context of the present crisis in Swat, vitally important to give education the foremost importance. It is here that a peaceful transition of the Swat society could be effected successfully. The purpose is to be served by both quantity and quality education. The school and college curricula need to be completely overhauled. Till now, scholars and academics in Pakistan suggest changes in curricula. Accordingly, it is through an independent and scientific education system that the social, political, and economic evils can easily be wiped away from society. This is truer in case of Swat in the face of imminent future threats. In this way, a section of responsible citizenry would appear on the stage which would be careful about the socio-cultural norms and values of the valley. To follow Steven Sigler’s definition, civil society "finds its basis and strength in primeval kinship" while civil society as voluntary and political is catered for by "formal association centred on shared interest and collaboration". The smooth and cooperative interaction between these two types of civil societies creates a social space which is but a vibrant process of continuity and change. The reconstruction and rehabilitation pursuits in regard to Swat would only be effective if such a comprehensive approach is adopted. Traditional music concerts like mailas with the thought-provoking poetry of Rahman Baba, Abdur Rahim Roghanay and others must be held regularly. The revitalisation of the shrine culture would also serve as a path to normalcy in the area. Many outsiders unhesitatingly associate Pakhtunwali with violence and give verdicts about the incompatibility between Pakhto and Sufism. But the Pakhtun history does not support their argument. Mysticism has strong roots in Pakhtun culture as is evident from its folk tales, folk poetry and oral history. Without promoting such cultural features any attempt at realising the culture of peace in Swat would remain a dream. The purpose of creating a responsible society in Swat may also be served by both print and electronic media. Reformative dramas, films and documentaries must be encouraged, an act through which the traumatic Swatis would be successfully brought back to their normal lifestyle. Swat has a long history of journalism. Many local dailies and magazines have appeared in the valley at different times. These days newspapers such as Azadi, Chand, Shamal and Khabar Kaar are the mouthpieces of the Swati people. These dailies have been serving the cause of Swat and Swatis to a great extent. It is proposed that a Pakhto page — only for columns, essays, short stories, and purposeful poetry — may be added to these local dailies. A majority of Swatis speak Pakhto. Second, certain debates relating to socio-economic and socio-cultural issues may be initiated on the editorial pages of these dailies. Such endeavours must be aimed at leading to satisfactory relations between the people which is the foremost concern of any programme of peace and development. Thirdly, the government must also fulfill its responsibility, in this respect, in terms of providing these dailies with financial assistance both for the purpose of their wider circulation as well as keeping them within the limits of the purchasing power of the people. The role of judiciary is of paramount importance in the reconstruction and rehabilitation programme of Swat. The people’s grievances need to be addressed in a speedy and smooth way. As the crisis in Swat is generally believed to have been the result of ineffective judicial system in the wake of 1969, any further loopholes in this regard would be an instance of sheer non-seriousness. The reconstruction mantra can certainly help some people improve their tarnishing image but the problems in Swat should be ideally approached as suggested above. Once social trust, which leads to satisfactory relations between the people and which in turn is a primary condition for peace and development, is reinvigorated in the people we will have our Swat back. Development, as Steven Sigler observes "… that originates from this (social) space will have feelings of obligation attached to it that are founded in something that is stronger and more powerful than those that come from the rule of law with the result of making that development inherently more sustainable than it might otherwise be." Email: rafi_ula@yahoo.com caption The government has a huge task of re-settling the displaced.Aman ki Asha People to people to people One gets an entirely different perspective on relations
between India and Pakistan when one talks to one’s friends in India. In
sharp contrast to the war-mongering, hate-spitting image of an Indian that
we grew up with — thanks to our state-sponsored media and highly
distorted education syllabus — my Indian friends are just as human and
peace-loving as it can get. Understandably, in the current scenario, the upcoming talks between foreign secretaries of India and Pakistan in New Delhi have once again raised dying hopes of these war-hating people of the two countries. Most Pakistanis and Indians see no reason why the two countries cannot leave their bitter past behind and live in a conflict-free region where economic prosperity is a priority. Srinivasan V. Ramani, Assistant Editor, Economic and Political Weekly, New Delhi, believes people-to-people contacts have paved the way for improvement in relations, "More than making their respective governments change their ‘hardened’ stance on relations, people-to-people contacts have melted the opprobrium for each other in the country, especially among the urban communities. People-to-people contacts — through sporting ties, through student passes, and civil society initiatives — have indisputably melted away the hostility for the ‘other’ among Indians and Pakistanis." Ramani says governments have to be accountable to the people, "For the governments to change their ‘hardened’ stances, however, they have to be more accountable to the public. In my opinion, both in India and more so in Pakistan, governments are not fully accountable, nor do they impress upon foreign policy initiatives in public debates sensibly enough. Once that happens, there is good chance of the ‘hardened stances’ to melt quickly." On why the two governments have been inconsistent on
the issue of holding talks despite their stated commitment for the
composite dialogue, Ramani says, "The Indian government is unable to
decipher as to who is the real power authority in Pakistan to hold talks
with. In my personal opinion, the Indian government should keep engaging
with the Pakistani civilian government, thereby strengthening the civilian
government’s writ in the ‘external affairs’ sense. There has got to
be more effort from democratic sections in Pakistani society to lessen the
hold of extra-democratic forces in the country. On the Indian government’s
side, efforts must be made to emphasise on civilian and peoples’ ties
and not on ‘realpolitik’ or oneupmanship." Ramani sees the governments’ urge to ‘compete’ rather than cooperate as the basic problem, "There are many areas of congruence, yet governments find it compelling to ‘compete’ rather than cooperate. The Indo-Pakistan-Iran pipeline was one such golden opportunity. Or indeed, a regional caucus based progressive settlement of the mess that has been created by NATO in Afghanistan. Composite dialogue can feature all these and more while whittling away the major differences such as on Kashmir." Husain Naqi, National Coordinator Human Rights Commission of Pakistan and a senior journalist, says people-to-people contacts can influence a government in a certain direction but not the establishment, "In Pakistan’s case it is the establishment that calls the shots on critical decision-making issues such as relations with India. People can perhaps make the government listen to their point of view and make them take actions accordingly but not the establishment." Naqi ascribes this situation to the establishment’s threat perception of India, "The establishment sees India as their enemy. But the reality is that Pakistan has been its own worst enemy, hence the fact that we lost East Pakistan due to our own wrongdoings." Naqi laments the fact that India and Pakistan, along with other South Asian countries, have not been able to utilise the trade potentials under SAARC that could eventually form an economic bloc something like the Europeans have in the shape of the EU, "There are now more than 1,000 items that India and Pakistan can trade between each other. But this has not been possible due to the tension between the two countries." Muthu Krishnan, a freelance journalist and a social activist based in Madurai, India, blames it equally on the two governments, "Successive governments on both sides of the border have been insensitive to the aspirations of the people. Unfortunately, it is only the defence and external affairs ministries that seem to be taking decisions. People to people contacts have not yet formed into a considerable pressure group that has some influence on the governments of India and Pakistan." Krishnan thinks the two governments take decisions in the light of external pressure, "To me it seems that governments on both sides talk about a composite dialogue only when there is external pressure or an election is round the corner. Add to it the tension at the borders that results in the increase in defence budgets of both India and Pakistan." Krishnan says he will visit Pakistan at the first opportunity, "In my childhood days I had Nazia Hasan as my favourite singer. From then on I always love to hear about Pakistan and have read about it. That is one reason why Pakistan features in many documentaries, including Anand Patwardhan’s ‘War and Peace’." Krishnan warns against religious extremism, "The madness of reinventing a larger India by the Hindutva hooligans or reinventing the meaning of jehad is suicidal for people of the subcontinent." Krishnan gives his recipe for normalisation of relations, "Demilitarisation of Kashmir is a must. Both the governments should see that they have to win the hearts and minds of the people through a shift in their stand. Civil society’s participation is essential for harmony in the region." Syeda Diep, a social activist and Chairperson Institute for Peace and Secular Studies, says the people of Pakistan and India are victims of pre-conceived notions imposed on them through hate literature and use of state media, "The ill-will between India and Pakistan at the governments’ level or between the people is due to propagated perception about India and vice versa. I can tell from my own personal experience from the students’ exchange programme. When students from our side leave for India some of them have pre-conceived notions about India, such as that it is an enemy country or that it hates Pakistanis and Muslims. Believe me, just after a few days of talking and mingling with Indian students and other people their perception about the people of India is completely transformed. They form lasting friendships and yearn for better relations between the two countries." Diep believes we can come out of this situation by analysing issues rationally, "We talk about India blocking our share of water by building dams on the rivers in violation of international laws and the Indus Water Treaty. Instead of raising the alarm bells we should go to the UN and launch a complaint there if we have some proof. This is how it works in the rest of the world." Ruchika Talwar, Senior Correspondent, The Indian Express, says people’s coming together has instilled "this thought in the minds of the common man living on both sides of the divide, that if Indo-Pak issues are to be resolved, they cannot be resolved without their participation, however big or small. The people of both countries had been hitherto left to the mercy of the forces that be, which had never yielded impressive results. The resounding success of the historic 2004 ‘Friendship Cricket Series’ between the perceived arch rivals is an example of how the people thawed the relations between India and Pakistan and got both the countries talking again." Talwar ascribes the trust deficit between Pakistan and India to, "a cause and effect relationship between India’s unfulfilled demands (from Pakistan on the Mumbai terror attacks) and Pakistan’s consistent failure to address them to India’s satisfaction. Just as it is in life in general, when one partner does not listen to the other, the relationship is doomed or at least, unpleasant and non-committal," she says adding, "The permanent panacea to this disorder that India and Pakistan suffer from is economic interaction. If you and I influence each other’s income, we can never think ill of each other."
"We need economic peace to defend ourselves" You have to put in place a framework in which you agree on some broad principles Ronojoy Sen: What are the links between al-Qaeda and terrorist outfits in India? Steve Coll: The American intelligence community
believes that the core al-Qaeda organisation operating through their own
channels and through like-minded Pakistani groups has had independent
contact with cells in India. Would this lead to more Mumbais being
generated from inside India? Since Mumbai, you haven’t really seen a
metastasising of that pattern. I think al-Qaeda is increasingly under
pressure. They are having trouble maintaining their own local operations.
Their own focus at the moment has been operations in Afghanistan against
American troops and aiding the Pakistani Taliban in their efforts to put
the Pakistani state off balance. RS: Do you agree with the belief that Indian Muslims are not radicalised at all? SC: This idea is similar to the idea that America’s Muslim population is content, it is integrated, it is not going to get radicalised. There is a little bit of complacency in these assessments. It is not that somehow large sections of these populations are going to become radicalised and participate in revolutionary movements, but it does not take much to create violence — just a handful of groups and individuals. Every Muslim in the world is part of a common discourse about grievance, about violence. And to think that no participant in that discourse in India or the US will ever take it upon themselves to act is naive. RS: Why do you think there have been no attacks in India since 26/11? SC: In the US after 9/11, we had the same question: Why are we terror-free? First, there are always multiple explanations. Second, there is a kind of cyclical pattern. These groups do not have the capacity outside of Pakistan and Afghanistan to carry off a succession of sophisticated attacks. In the case of India I would assume that at least two factors are at play. One, the Indian security services and the government have clearly taken the imperative of domestic surveillance and counter-terrorism more seriously after Mumbai than ever before. And maybe for the first time it is become a political issue. There have been lapses in the past and the politicians did not pay a price. This time it was obvious (laughs) that you would pay a price. That gets people motivated. The system has responded to that. I also think that it is probable that the Pakistani security services concluded, however reluctantly, that they did not want to permit follow-on attacks of that sophistication and scale. I do not believe they have given up on their idea of jehadi violence in India but in their very complicated calculation of costs and benefits in their relationship with the US and the toys they are trying to pull down out of that, to be caught either facilitating or being negligent about another Mumbai cell coming up in their territory, they would have to pay such a high price that it may have caused them to tell their people to chill for a while. It is a guess but it is hard to explain this pattern of quiet without reference to the Pakistani security services. Obviously infiltration in Kashmir is continuing, and so the Pakistani state may have said to their clients, "Let’s go back to fighting on the ground." RS: We just had an incident in Srinagar... SC: Yes. One thing that was obvious about the attacks on the homeland in India is that you can attack all you want in Kashmir and the international community will not react (laughs). That conflict is its own story. But once you come down out of Kashmir into the Indian cities the whole world starts paying attention. The costs go up and the impact goes up too. That might have cautioned them at least temporarily. RS: There are many, particularly in Pakistan, who believe that if you resolve Kashmir you take out the real cause of terrorism in South Asia. Do you agree? SC: I don’t believe that at all. But Kashmir is an impediment to broader changes between India and Pakistan that are necessary to gradually eliminate the structural causes of persistent terrorism in India and Afghanistan. That is to say, change the practices of the Pakistani security services. In the medium run, how do you break the cycle of clandestine war between India and Pakistan, the use of jehadi groups? The only way you break that pattern is the same way similar conflicts have ended in other parts of the world — in the Balkans, in Southeast Asia — where economic integration and shared prosperity changes the incentive structure for the Pakistani army where they see that their own interests are better served by open, managed borders. Everybody in Pakistan knows that India’s prosperity is the big story of the region in the next 20-30 years. Pakistan can either be an impediment to that or be a part of it. RS: And that probably reflects sentiments in Kashmir too where there is growing ambivalence about Pakistan... SC: Absolutely. In fact, your newspaper (The Times of India) has quoted Manmohan Singh as saying that India was "very close to a non-territorial settlement" in 2007. I love that language. Because that is the right way to think about this. What you’re trying to do in Kashmir is to buy time for these other effects to take hold, and for both countries to share a period of war-free economic growth, middle class formation and cultural accommodation. It does not have to be peace, love and harmony. It just needs to be normalisation — the sort that you see between Serbia and Croatia. In order to buy that 20 years, you don’t have to settle every line on the map. You have to put in place a framework in which you agree on some broad principles and agree to no longer pursue those goals through violence. It is just creating a framework where the broader process of peaceful economic and cultural integration can occur. That is the only way forward. You have to be realistic though. When you announce peace, those who have an interest in the violence will react; they will try to blow it up. The question is how much capacity the Pakistani state has to do its bit. The problem is that India understandably does not believe that Pakistan has the will. If India thought Pakistan had the will, it would have a realistic approach to its capacity problems. But you cannot accept the capacity excuse when you don’t think the other side is serious. RS: Won’t the Pakistani military establishment keep Kashmir alive? SC: Musharraf brought around the (Pakistani) corps command to this deal in 2007. It was interesting when I was reporting on this in Pakistan and you asked the question: What was the winning argument in the corps command meetings? First of all, Musharraf was at the peak of his authority, but there were three winning arguments. One was that if we want to modernise an army and defend Pakistan’s territorial integrity while India modernises its army, we need more money than our current growth rates can support. We already take a huge share of Pakistan’s GDP. We need the whole pie to grow. We need economic peace just to defend ourselves. The second argument was that we can achieve acceptable goals in Kashmir by political means that we cannot by guerilla violence. Let’s accept it, our strategy is not working. The Indians have defeated the insurgency; they have been able to create enough political normalcy in their part of Kashmir. We can keep throwing rocks, but why not create an outcome that history will recognise as just through political negotiations. The final argument was international legitimacy. The Pakistani army for all of its crazy self-defeating policies also craves recognition as a legitimate army, an unusually good fighting force. Musharraf personally wanted to go to Oslo and be awarded the peace prize with Manmohan Singh (laughs). These factors are still there in the psyche, but the problem is that the Pakistani government is in no position to come back to that. RS: How do you see the future of US policy in the Af-Pak region? SC: Despite the signaling that Obama did to American audiences about 2011, actually American policy is constructed for the long run in Afghanistan and Pakistan alike. The model that the American establishment has in mind is Egypt or Colombia or Philippines or other areas where long-standing alliances had to endure hostile public opinion and bad governance in the host country. The model is one where you just endure and you keep working on it. It does not mean that you give money unquestioningly. In Afghanistan, all that it means is preventing revolution and civil war. And in Pakistan it means help creating conditions in which Pakistan can succeed alongside India. RS: Having attended a few hearings in Capitol Hill, I get the sense that the US Congress is getting fed up with giving aid to Pakistan. SC: That is an important anxiety. I think it is constructive because it is a legitimate set of questions to ask and it also puts some leverage on the Pakistanis. The Pakistani government has to take account of these concerns. These are American Congressmen who question whether the Pakistani government is sincere about this partnership. There is a lot of manufactured outrage in the US-Pak relationship that is a negotiating tactic. Pakistanis manufactured a lot of outrage about the conditionalities (in the Kerry-Lugar Bill). It was not even conditionalities. So why do they manufacture the outrage? So that the Americans will feel guilty and send them more helicopters! Do you think members of the Congress might be aware that their complaints are a sort of counter-force against this Pakistani outrage? I think they are. Both sides have legitimate grievances. Neither side wants to blow up the relationship. The problem is more energy is wasted in manufacturing these grievances for negotiating than is actually directed towards fixing the problems. The full version of this interview appeared in The Times of India on February 6, 2010
Noor Fatima did what diplomats and politicians of India and Pakistan could not By Mazhar Khan Jadoon Throughout my journey from Lahore to Gujranwala, the
plight of a little girl — now recovering after a complex heart surgery
— had me perturbed. I kept wondering what would coming back to life
meant to her and those who love her dearly. I was in for a pleasant
surprise when I found a healthy and bouncing Noor Fatima playing with her
elder sister Mahrukh and brother Tehseen. Noor Fatima was just 30-month old when she underwent this breakthrough surgery on August 4, 2003. She had been diagnosed as having holes in her heart. Besides, two of her arteries were choked. It was a tough fight for survival for the little kid as well as her doctors in Pakistan who advised that she should be taken to the US or Bangalore, India, because the complications involved in the surgery could not possibly be dealt with here. Noor’s parents opted for India and flew her to Bangalore where a team of three doctors operated on her at Karnatika Hospital in a surgery that lasted over six hours. It was the longest day for the worried parents who did, however, have the support of their relatives as well as an entire lot of people from around India, Pakistan, and elsewhere, who called in to show their deep concern. Dr Shetty and Dr Sharma, the surgeons at the private hospital in Bangalore, had made the horrific declaration that the surgery was not going to be easy. But they put in their best energies and resources before they succeeded in sending a healthy and smiling Noor back to Pakistan. The little Noor did what the diplomats and politicians of the two countries could not. She brought the peoples of the two neighbours close to each other at a time when armies of both the countries were facing each others with fingers on triggers after a terrorist attack on the Indian Parliament on December 13, 2001. Noor Fatima turned out to be an ambassador of peace and love, ending the divide in the hearts of two great Asian neighbours. As we sat for a cup of tea at Noor Fatima’s house, Noor ran out of the house along with her brother and sister to play – they were pushing each other and bickering over one thing or the other. Flashback of her ordeal and the time spent in India made Noor’s mother emotional when I asked her about how she felt after having her child back. With tears rolling down her cheeks, she said, "I fail to find words for the feelings that gush forth from the heart of a mother when she is handed back a dying child healthy and smiling. We will never forget the love and hospitality we got in India. We got our life back in India." She said Noor is leading a normal life – she is doing great at school and home. Nadeem Sajjad, Noor’s father, recalled, "Relations between Pakistan and India were tense when we boarded Dosti Bus and we had this fear at the back of our minds that something bad would happen — maybe an attack on the bus; a crowd attacking Pakistani passengers with knives and sticks. But once in India, our fears gave way to comfort when we got a warm reception there. We found a lot of encouragement and love in India for Noor Fatima’s treatment. For that we are grateful to Indians. The love we found in India outmatched our expectations. Children carrying placards wishing Noor Fatima well lined up the Bangalore streets during the surgery and strangers visited the hospital to present bouquets to us. We were impressed by the love and care we got there and felt at home thousands of kilometres away from home." "We used to get phone calls from people all the time. There was a pile of well-wishing cards and flowers for Noor in the hospital that housed a mosque, a church, and a temple. Muslims, Hindus, Sikhs, and Christians were all praying for Noor, and we became part of a larger community with love as the joining spirit," he said. Tehseen, 14, and Mahrukh, 12, said they used to weep when they saw their little sister on TV channels. "We did not know what was happening. We were very upset because our parents were away and Noor was in hospital. All we did was weep and weep and pray for our little sister. Now we are very happy to have her back," they described their experience smilingly. caption ‘Say cheese. "Muslims must advance technologically" Dr Hasan Ali Yurtsever was born in Ankara, Turkey in
1967. He has a doctorate in Mathematics and has taught in leading
institutes of the world, including the Faith University, Istanbul, Turkey
and Florida International University, Miami, US. Besides, he spent five
years at the Georgetown University as a visiting professor from 2004 to
2009 and during the same period also presided the Rumi Forum (a
think-tank), both the institutes based in Washington D.C., US. Currently,
he is instructional coordinator at Niagara Educational Services, a
non-profit organisation funded by Turkish businessmen and an executive
member of The American Islamic College, both based in Chicago, Illinois,
US. Yurtsever is a strong proponent of Gulen movement — a civic
initiative inspired by the teachings of Turkish Islamic theologian
Fethullah Gulen. He was invited by the Rumi Forum Pakistan where he
delivered lectures in different cities and explained the motives and
achievement of the Gulen movement. TNS interviewed him during his visit.
Excerpts follow: The News on Sunday (TNS): What are the objectives of Gulen movement? What difference has it made over the years? Dr Hasan Ali Yurtsever (HAY): Gulen Movement was founded in the early 1970s by Muhammad Fethullah Gulen, a prolific Islamic writer and theologian in Izmir, Turkey. It can simply be described as a civic service without borders. The idea is that good educational institutions, influential media, inter-faith centres and good businessmen to support such initiatives can transform society and promote the true image of Islam. Gulen is a great motivator and knows how to put his words into practice. It was he who went to the Turkish businessmen and convinced them to invest in these sectors. As a result, they donated money and founded 300 schools in Turkey and 300 in Central Asia after the collapse of former USSR in 1991. Today, the Gulen community has more than 1,000 schools and 20 universities in 120 countries of the world. The Niagara Educational Services, that I am looking after, also comprises Gulen schools. Gulen believes education is the most important element that can help people get rid of bigotry, hatred, and prejudice prevailing among Muslims. In Western countries, Gulen community sets up inter-faith centres where people from different religions come and hold discussions. There are 50 centers in the US alone. Then there is the media part of the movement. Zaman, a Turkish language daily, is owned by the movement and has a circulation of 800,000 in Turkey alone. This newspaper is published in 15 other countries in their respective languages. Besides, the movement owns five channels and around 35 different journals. TNS: What is the process of setting up Gulen schools in different countries and what type of curriculum is taught there? HAY: The process is very simple as nothing is centralised. Whenever there is a need to set up Gulen schools in an area, the community of that gets together and raises funds for the purpose. Countries where we intend to set up such schools normally do not have problems with us as we teach the local curriculum of the country. However, we stress a lot on the noble qualities that a teacher must possess. We ensure they are well-behaved, respect moral values, refrain from smoking and drinking, and never lie. They are supposed to be the best possible role models for their students and must respect universal moral values. The focus is also on the teaching of both science and religion to the students as they complement each other. Fethullah Gulen believes that faith and reason must go together. There are two types of schools — those which are run on donations as well as those that are able to sustain themselves financially after some time. TNS: How effective your inter-faith centers have been in improving relations between Muslims and the West in the post 9/11 scenario? HAY: What happened on 9/11 was very bad and it totally changed the world as we see it today. But one good thing that followed it was that everybody started exploring Islam and searching for true interpretations of its teachings. Our centers have regularly held discussions on various issues regarding inter-faith dialogue and peace between the people of different cultures and beliefs. People of different faiths get a chance to socialise at these centers. For example, Christians are invited to iftars and dinners hosted by Muslims where they interact with each other and exhibit the spirit of mutual understanding. TNS: How strong is your community as a political entity in Turkey? Besides, do you face any resistance from any quarter? HAY: Gulen movement is not a political entity and neither is there any record of the exact number of its members. As I said earlier it is a civic movement funded by donations of Turkish philanthropists. The members are spread out all over the world and often work in the form of groups. It is the common inspiration that binds them together. The community is liked by the majority of the population which thinks it is promoting peace in the world. Only the ultra-secularists and ultra-Islamist groups in Turkey may not like us for the philosophy we follow. Outside Turkey, we have been well-received everywhere except a few countries where we do not have Gulen inspired schools. Sometimes it happens that a country suspects our intentions in the beginning but later on cooperates with us. There have been cases where such countries have donated lands and buildings for Gulen schools. Though we are not a political force we believe Turkey has great potential if it can solve problems with its neighbours, especially those in Central Asia and the Middle East. Some people think this way it can lead this region, rather being at the tail, in case it joins EU. TNS: What are your observations about Pakistan and the challenges it faces? HAY: I have been to different cities and universities of the country where I delivered lectures on the concept of "Ideal human in the thoughts of Iqbal, Maulana (Rumi), and Gulen". I heard that unfortunately, in Pakistan, people are fighting each other on the basis of sects and have little tolerance for those who differ with them. This is totally opposite to what these great scholars had taught. I also see the country lagging behind in the field of technology — a problem quite common with Muslim countries. In order to progress in the highly competitive world of today, Muslims must advance technologically. The Gulen community is there to play its role in Pakistan where it runs Pak-Turk schools in seven cities in the four provinces, i.e., Islamabad, Lahore, Karachi, Multan, Peshawar and Quetta. We hope these schools will address these issues and set a good example for others to follow.
This is not the first time that government’s axe has fallen on PSDP to meet its budget deficit By Shujauddin Qureshi Every time the government faces a budget deficit, Public Sector Development Programme (PSDP) becomes the first target. This time too, it is no different. The government, facing budget deficit mainly due to extraordinary expenses on law and order and security across the country as well as lack of response from foreign donors, has announced to reduce the PSDP budget. The Federal Board of Revenue (FBR) has also failed to
meet its tax revenue collection target due to decline in the industrial
production. Another reasons for a growing budget deficit are delay in the
arrival of funds from Friends of Democratic Pakistan (FoDP), from the US
under Kerry-Lugar Act, growing terrorism activities in the country, and
surge in expenses on military operation in Swat and South Waziristan, etc. Federal Finance Minister Shaukat Tarin, in a press briefing after federal cabinet meeting on January 28, informed the media the cabinet had allowed major budgetary adjustments, including diversion of Rs170 billion from development and income support programme for the poor towards security expenditure. Interestingly, the same cabinet meeting decided to increase salaries of armed forces by 20 percent with immediate effect. Thirty percent of the PSDP allocations would now go for maintenance of law and order. The government had set aside Rs70 billion for Benazir Income Support Programme (BISP) in the annual budget 2009-10 for providing financial assistance to the poor people. The recent cut on public expenditures would also hit the BISP funding. Economists believe that after its failure to contain current account deficit, the government always makes heavy cut on PSDP, which would further increase poverty level in the country. "I can see a repeat of the 1990s period when the economy was IMF-driven. GDP growth was lower (around 4.6 percent), development activities were less, and poverty was increasing," says Dr. Shahida Wizarat, an economist. Wizarat says the 1990s was termed the "lost decade" in which there was no public sector development in the country and, according to an Asian Development Bank report, more than 50 percent population was living below the poverty line. Even in rural Sindh, poverty situation was the worst with 85 percent people living below the poverty line during the 1990s. That resulted in social unrest and created a law and order problem. Dr. Wizarat says the government should contain current account deficit to meet the budget deficit instead of reducing spending on the poor masses. "We can see the government is not controlling its expenditures and public money is being spent on the purchase of bullet-proof vehicles for ministers, government officers’ foreign trips and decoration of the government offices." According to the government, cut in the annual PSDP is aimed at containing the growing budget deficit, which has surged to 5.1 percent in the first seven months of the fiscal year 2009-10. The budget deficit is further expected to grow in the next five months due to increasing expenses on law and order resulting in borrowing by the government. According to Shaukat Tarin, even after mid-year adjustments, the budget deficit could touch 5.3 percent of the GDP instead of 4.9 percent targeted at the time of budget announcement. In the federal budget 2009-10, the government had earmarked Rs646 billion for PSDP, which was claimed to be the highest ever allocations for the public projects. These allocations included federal share of Rs421 billion, provincial share of Rs200 billion whereas Rs25 billion were kept for reconstruction and rehabilitation of earthquake-hit areas. The ongoing military operations in different parts of the country have disturbed the budget estimates. Khurram Shahzad, Research Head at InvestCap Securities, says the government’s spending on IDPs has put a heavy burden on budget allocations. He says there is a big shortfall in the government revenue collection from taxation. The budget target of taxation was around Rs1377 billion, and the six-moth recovery was reported at Rs550 billion by the end of December which was to be Rs688 billion. "This indicates the government has to borrow more by the end of fiscal year," says Shahzad. Foreign donors, including the Friends of Democratic Pakistan, had pledged to provide funds equivalent to 1.2 percent of the GDP (Rs178 billion), but after a passage of seven months the government has not received the required funds committed by foreign countries and other institutions. About 22 donor countries and international development institutions are part of the FoDP, which included Japan, US, UK, France, Germany, Italy, Canada, China, Saudi Arabia, UAE, Turkey, EU (European Commission), Australia, Republic of Korea, Netherlands, Norway, Sweden, Spain, United Nations, World Bank, Asian Development Bank and Islamic Development Bank. Friends of Pakistan donors pledged to give Pakistan 5.28 billion dollars to stabilize its economy at the Tokyo conference on April 17, 2009. This amount included one billion dollars each from the United States and Japan over two years, while the EU promised 640 million dollars over four years and Saudi Arabia had committed 700 million dollars. The controversy over Kerry-Lugar Bill, which had committed 1.5 billion US dollars annual grant to Pakistan for the next five years on account of social sector development, has also delayed the funding. Moreover, the tension between Pakistan and US governments over visas has further added to the complications. This is not the first time the government’s axe has fallen on PSDP to meet its budget deficit. Last year, it had reduced Rs100 billion from budgetary allocations for PSDP during the month of February 2009. Any cut in PSDP causes increase in poverty. The United Nations Development Programme’s annual Human Development Index of 2009 puts Pakistan at 141st position among 182 countries. The country has witnessed the worst-ever increase in prices of essential items in recent months, particularly after hike in prices of petroleum products. Despite tall claims of the government to contain inflation, the inflation related Consumer Price Index (CPIU) surged to 13.8 percent in the first month of the current calendar year 2010. The government targets to reduce inflation to 10 percent. The worst sufferers are the common people who have not received any relief from the present government’s economic policies. Withdrawal of government subsidies on power rates, food items, and petroleum products in the budget has made life difficult. caption Too few: The number of development projects has decreased
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rehabilitation in the area.
