DAWN WIRE SERVICE, Section B
Week Ending : 18 May, 1995 Issue : 01-19
The DAWN Wire Service (DWS) is a free weekly news-service from
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(c) Pakistan Herald Publications (Pvt.) Ltd., Pakistan - 1995
See Section A for NATIONAL NEWS and BUSINESS AND ECONOMICS
EDITORIALS & FEATURES
The curse of stagflation By Senator Sartaj Aziz
Dangers of flawed IMF programme By Senator Sartaj Aziz
Charar Sharif sacrilege From Hassan Akhtar
Aftermath of Charar Sharief By M.H. Askari
Bureaucracy & corruption By M.H. Askari
Matrimony and the moralist From Tahir Mirza
A sinister move
Budgeting without convulsions By Sultan Ahmed
In free fall By Mazdak
Empowerment, but not quite
Misuse of bank funds By Sultan Ahmed
Farooq Umar made Olympics mission chief
Imran to marry on June 20 under Islamic tradition
Board giving me a raw deal, says Wasim
Zarak made permanent as a footballer!
Salim Malik innocent until proved guilty: CEO
Latif, Basit don't want to play with Malik
Hasib wants amicable solution to Salim's case
SECTION B, DAWN 18 May 1995
EDITORIALS & FEATURES
The curse of stagflation
By Senator Sartaj Aziz
As the nation braces itself for the next budget, it is important to
review the economic record of the PPP government and ask the pointed
question if the impending economic crisis is only because of the failure
of the cotton crop or are there deeper causes springing from faulty
management of the economy.
As the data on the main economic indicators of the economy begin to pile
up, it is clear beyond any shadow of doubt that the PPP government has
failed to achieve its main economic and financial targets announced in
the budget for 1994-95.
The GDP growth target of 6.9% has already been lowered to 5.3%. But the
latest data indicates that the actual growth rate will be even lower,
i.e. about 4.5%. "The industrial growth target 7% will also suffer a
serious shortfall and is likely to be below 5% Many more factories have
closed down during the year, adding to the ranks of the unemployed.
The inflation rate, as measured by the Consumer Price Index ( CPI), will
be at least 14%, in 1994-95, i.e, twice as large as the target of 7%.
The increase in the Sensitive Price Index (SPI) is much higher.
"The fiscal deficit, instead of declining from 5.8% of (IDP in 1993-94
to 40%, is likely to exceed 6% in 1994-95. As explained later in this
article, this will be the result of serious shortfalls in the collection
of revenues, higher expenditures and record borrowings from bank and
The export target of $ 7.7 billion will also fail to materialise. The
projected export of $ 7.5 billion will in fact mean a decline in real
term over the export level of $ 7 billion in 199192, if the rate of
inflation and deterioration in the value of the dollars is taken into
account. But imports will increase by 12.5% against the forecast of 9%.
There will thus be a basic deterioration in the balance of payments,
despite larger borrowing from international agencies and private
The stock market, which is an overall index of the health of an economy,
has seen its sharpest fall in history. The KSE index has plummeted from
2660 in March 1994 to 1530 on May 3 1995. This fall of 43% in the value
of shares means a total loss of Rs. 170 billion to. the investors.
On the face of it, the foreign exchange reserves of $ 2.5 billion can be
mentioned as positive feature of the economic balance sheet. However,
one cannot overlook the fact that these reserves have not been built up
through larger exports but by a windfall receipt of $ 900 million from
the sale of PTC shares and about $ 500 million of other short-term flows
mostly for the purchase of shares on the stock market. As the stock
market has started crumbing, some of the hot money can flow out as
quickly as it came in.
If the overall performance of the economy during the current financial
year is carefully analysed, most of the shortfalls can be traced to the
deflationary and anti-growth policies adopted by the government,
combined with the negative impact of the deteriorating law and order
situation and the worsening relationship between the government and the
When an economy is growing at a healthy rate, government can collect a
portion of the increased income as taxes. But when the economy is in a
recession, only a modest dose of additional taxation is advisable.
Totally disregarding the reality on the ground, the government
formulated a very unrealistic budget and went for increasing tax
collections by a record 41% in 1994-95. Sales tax was expected to
increase by 88% and customs by 34%, despite reduction in tariffs, and
projected increases in duty exempt items like wheat and machinery.
Growth Rate of GDP and Inflation Rate in Pakistan: (1960-1994)
GDP Growth Inflation Rate
1960-61 4.89 73.30
1961-62 6.01 0.48
1962-63 7.19 -0.60
1963-64 6.48 4.19
1964-65 9.38 4.79
1965-66 7.56 2.54
1966-67 3.08 8.58
1967-68 6.79 3.57
1968-69 6.49 1.59
1969-70. 9.79 4.11
1970-71 1.23 5.72
1971-72 2.32 4.71
1972-73 6.80 9.68
1973-74 7.45 29.98
1974-75 3.88 26.71
1975-76 3.25 11.67
1976-77 2.84 11.77
1977-78 7.73 7.79
1978-79 5.53 6.63
1979-80 7.33 10.71
1980-81 *6.40 12.36
1981-82 7.22 10.00
1982-83 6.70 4.59
1983-84 4.75 8.26
1984-8- 9.17 7.46
1985-86 6.96 4.83
1986-87 5.72 3.87
1987-88 5.82 3.96
1988-89 4.88 10.39
1989-90 4.67 6.04
1990-91 5.48 12.66
1991-92 7.68 9.62
1992-93 3.03 11.66
1993-94 4.0 11.80
1994-95 Projected 4.5 14.5
Source: Pakistan Economic Performance 1947-93
The economic managers seemed to have convinced the Prime Minister that
she must take bold measures to achieve "macro-economic stability by
resorting to heavy taxation to reduce the budget deficit, and also raise
utility charges of items electricity and gas. Some other advisors that
she must reduce subsidies on fertilisers, wheat and edible oil, by
increasing their prices. But no one explained to her that the cumulative
result of all these policies would be to further lower the growth rate,
already affected by the cotton crop failure and fuel inflationary
As if to compound its fiscal sins, the government also suppressed the
estimates of its expenditures to support its target of reducing the
deficit. Debt servicing which had grown at 24% per annum in the past
five years was allowed only a 5% increase, despite the higher cost of
borrowing as a result of financial sector reforms and the expected-
appreciation in the value of the yen and the DM. The development
expenditure was also grossly underestimated in relation to construction
contracts already awarded for approved objects.
Any sensible observer could have predicted at the very outset that in
the absence of major reforms and improvements in tax collecting
machinery and a concerted programme to accelerate economic growth in
order to enlarge the tax potential, such a large increase in tax
revenues was not possible. But this government took about 7 months to
reduce the tax collection target from Rs. 259 billion to Rs. 240
billion. In March '95 the target was again revised to Rs. 230 billion.
Even this revised target is not likely to be achieved and actual
collections may not exceed Rs. 215-220 billion i.e. Rs. 40-45 billion
lower than the tar8et. This will mean that if additional taxes of Rs. 45
billion are excluded, the taxes collected will be even lower than those
in the preceding year.
The other side of the equation which has been thrown in total disarray
by the shortfall in revenues is that of bank borrowing. Total bank
borrowing for budgetary support, upto March '95, was Rs. 40 billion
against the limit of Rs. 15 billion agreed with the IMF. In desperation,
the country's fiscal managers decided to lean more heavily on the
secondary market. Up to March 1995, the government has borrowed, in
addition to Rs. 40 billion from the banking sector, Rs. 50 billion
through various national saving schemes by raising the return on these
schemes. This will not only add to the domestic debt burden of Rs. 730
billion as of March '95 but also to the debt servicing cost of this
It addition to these two sources of deficit financing, the government
has also utilised at least Rs.13 billion from the proceeds of PTC
privatisation lout of a total Rs. 29 billion) against the IMF advice.
which waited these proceeds to be used primarily for debt retirement.
The total budget deficit financing in the first 9 months of the
financial year has already crossed Rs. 103 billion. In contrast to the
government of Mr Nawaz Sharif, when larger spending was mostly for the
development of infrastructure, over-spending by this government has been
mainly for non-development expenditures.
The main result of this fiscal mess will be a dismal failure to bring
down the budget deficit to 4%. It is more likely to be over 6%s although
government might resort to some window dressing to show a lower figure.
The higher deficit will also mean a much larger increase in debt
servicing than the 5% forecast in the budget, further complicating the
process of budget making for the coming year.
The key failures of this government are reflected in the unprecedented
price hike. The inflation rate of 14%, as measured by CPI in 1994-95
will be the highest rate of inflation experienced by the economy since
1973-75, when under PPP Mark I, the rate of inflation touched 30% and
27% respectively. The table in Annex I presents the rates of GDP growth
and the rates of inflation, since 1960-61, to show that stagflation,
i.e. the combination of low growth and high inflation, has occurred
mainly during PPP rule.
The increase in the Sensitive Price Index covers items of daily use and
reflects more fully the impact of inflation on the common man. In the
past 12 months, the price of atta has increased by 40% rice by 60%,
vegetable ghee by 40% and sugar by 22%. Price of pulses have increased
by 15-20% and those of chillies, pototoes and onions, by 50 to 70%.
Prices of beef and mutton have also gone up by 40-45%. People with fixed
incomes, like civil servants and pensioners, have been hit even more
severely by this price hike.
(To be concluded)
The writer was federal finance minister during 1990-93; currently
Secretary-General of the Pakistan Muslim League (N).
The curse of stagflation-II : Dangers of flawed IMF programme
By Senator Sartaj Aziz
This unusually high rate of inflation will also create serious pressures
for the country's balance of payments in the coming year.
Since the value of the rupee has not been adjusted in 1994-95 to make up
for inflation, a sharper adjustment would be necessary in 1995-96. With
its chain effect on prices of POL, gas and electricity, the exchange
rate adjustment will not only add to budgetary problems but would also
make it more difficult to contain inflation in the coming year.
While agriculture is affected by adverse weather or other natural
calamities, on the average, in two out of five years, industrial growth,
if sustained by the right mixture of policies and incentives, can
cushion the economy against agricultural fluctuations and sustain a
reasonable overall growth of the economy.
Pakistan's industrial sector, however, has a very narrow base, and is
largely dependent on the agricultural sector. Industries, like textile,
sugar, fertiliser and agricultural machinery account for almost 75% of
total industrial output in the country.
One of the main objectives of the new industrial policy launched by the
Nawaz Sharif government in 1991 was to accelerate the transformation
towards science-based, value-added industries like electronics,
engineering and chemicals, through both domestic and foreign investment.
It also sought to reorient the role of the government from a regulator
of business to that of a supporter of business on the model of countries
like South Korea and Japan.
This government has not only rolled back those policies but also created
a multi-dimensional crisis in the existing industries like textile and
sugar. Early signals about the failure of the cotton crop were ignored
and no remedial measures were taken either to import cotton or provide
some relief to the textile and garment sectors against the impact of the
very sharp increase in cotton and yarn prices. Countries like Bangladesh
and Thailand which hardly grow any cotton, have flourishing textile
industries and exports, whereas Pakistan which produced 8 million bales
of cotton, even in a bad agricultural year, has seen its exports of
cloth and garments decline.
Similarly, the sugar industry was pushed into a crisis by delaying the
decision on the export of sugar and allowing it to export only 300,000
ton less than half the estimated surplus of 700,000 tons. Many sugar
factories suffered losses because of huge unsold stocks, but many party
stalwarts made money by selling sugar export permits.
The engineering industry, particularly units making parts and components
for tractors have been affected by the large scale import of low quality
built-up tractors under the Awami Tractor Scheme. Similarly, the
imposition of 15% sales tax on bricks and coal created a crisis in the
The dangers of an incomplete and flawed adjustment programme of the IMF
must be fully recognised. It slows down growth and fails to infuse
confidence among investors. As a result, the economy can slip into a
prolonged period of stagflation and a decline in cement production.
The sickness of our industrial sector particularly in textiles, sugar,
engineering and cement is clearly reflected in the falling share prices
on the stock market.
The causes of the continuing industrial sickness in Pakistan emanate
both from economic and non-economic factors, but recent policies have
raised the overall cost of industrial production by raising the cost of
credit, the cost of raw material and the cost of electricity and gas.
This has also depressed domestic demand and reduced their competitive
edge in the export markets. For some Indus tries, large scale smuggling
remains a major threat.
Instead of evolving smooth working relationship with business and
industry, an essential pre-requisite for the success of a deregulated
economy, the PPP government, in keeping with its past traditions, has
taken confrontation with the business community to unprecedented
heights. In June '94, there was an unprecedented strike to protest
against budgetary measures and again in March '95 to register the
widespread outrage against the law and order situation in Karachi.
Instead of undertaking a dialogue on issues and complaints the
government sacked the main office bearers of the Federation of Chamber
of Commerce and Industry. This relationship is now in a state of crisis
The problems outlined above are complex and deep-seated. They cannot be
cured by signing a barrage of MoUs every two months.
It should be clear from the foregoing that the economic crisis we face
today is not just the result of a failed cotton crop but because of
wrong policies to manage the economy.
The adjustment programme in 1993-94 launched by the caretaker government
of Mr. Moeen Qureshi through a strong dose of additional taxation,
devaluation and increase in utility charges, won the support of IMF and
other donors, and created a euphoria about macroeconomic stability. But
neither the domestic policy makers nor the IMF experts were able to
recognise that the limited success achieved in 1993-94, would not
automatically solve the real problems facing the economy. Debt and
defence spending were high and could not be compressed. The tax
potential on the other hand had been not enlarged as economic growth had
slowed down for the third year in succession. The tax collection
machinery, notwithstanding, minor tinkering here and there, had not been
reformed either. The financial situation of the provinces was also
plagued by chronic and rising deficits.
Instead of taking concerted steps, in consultation with trade and
industry, to revive and accelerate industrial production, through a
fuller utilisation of installed capacity, the Government went ahead with
the same adjustment process in 1994-95 i.e. record level of additional
taxation, further increase in utility charges, increase.
Charar Sharif sacrilege
From Hassan Akhtar
ISLAMABAD: The attack and destruction of the Charar Sharif shrine near
Srinagar, following its more than two month long seige by the Indian
armed forces, has further heightened the tension between Pakistan and
India to an ominous level.
Although for the rulers in whelming Muslim population cannot be
legitimately claimed to be a part of the Indian Union in the same way
as, say, Uttar Pradesh or Andhra Pradesh or any of the other component
states of the union.
The wanton Indian action against the shrine of Charar Sharif is yet
another reflection of the Indian government's contempt for
internationally recognised agreements and human rights so far as the
overwhelming people of the disputed Kashmir are concerned. Indeed the
demolition of the move in Ayodhya about a couple of years ago and of
numerous other Muslim shrines and graveyards have been clear
demonstration of the Indian authorities' lack of respect and concern for
the religious and cultural traditions of the Muslims of India as a whole
in sharp contrast to its constitutional commitment to treat all its
people equally, without prejudice or bias. However, what is relevant and
important at this juncture is what Pakistan, which arrogates to itself
the role of a champion of Muslim causes and rights whether in
Afghanistan, Bosnia, Chechnya or the Central Asia, can do in case of the
ongoing bloodshed of the Kashmiri Muslims and the destruction of their
shrines and proportions, which many religious and political leaders in
the country frequently describe as the genocide of the muslim Kashmiris
by the brute Indian armed might.
Sardar Assef Ahmad Ali, foreign minister, came on the television on
Friday seeking to assure the people that he would raise the Kashmir
issue at the forthcoming OIC foreign ministers conference due to be held
in the next few days. But one would be naive to believe that such an
action, however pious it might be on the part of the foreign minister,
is likely to yield anything more than the oft repeated phraseology in
the form of yet another resolution, expressing hopes and prayers coupled
with a mild warning, but with obvious lack of any tangible action or
even a diplomatic move. Of course no one in his right mind is pleading
for military action because nothing could be more disastrous than taking
recourse to military confrontation in the present-day international
political environment and apparent ground conditions. Such actions in
the past should serve as glaring examples for the leaders and people of
Pakistan and India, if any doubt still remains in some minds.
In the given situation in Kashmir where nearly six-year old militancy
has led to barbaric bloodshed, tortured, raped and destruction of
material wealth, it is high time the leaders in government and outside
rose above their petty self-interests and employing real statesmanship,
give serious thought to workable practical steps to in the first place,
save the miserable humanity from Death and dishonour in the burning vale
and then to ponder on ways and means to resolve the problem which has
been periodically turned into senseless bloodbath. Of course, the main
responsibility of finding the way to cry halt to atrocities on innocent
people and then to resolve what has been described as the core issue,
lies with the government leaders and their foreign offices who command
the wherewithal necessary to follow up sane and sensible course in
resolving the dispute. To anyone who has been following the meandering,
complex and often frustrating course of action adopted in the last more
than four decades in seeking a solution of the Kashmir dispute, it
should be obvious that no settlement that goes in favour of one or the
other party to the dispute, could be contemplated in the near future. It
is also to be regretted that the people of Kashmir, particularly on the
Pakistan side, have had little part to play in the initial and early
years of the dispute it was initially treated as a dispute relating to a
territorial part of the divided subcontinent, with little emphasis on
the will of its people. In fact this concept was adopted by our leaders
in relation to those hundreds of Indian princely states where there were
grounds for claiming their accession to one or the other newly emergent
countries, or staying independent as in the case of Hyderabad Deccan.
While most of what is being pleaded and claimed by the leaders in
respect of Kashmir in Delhi or Islamabad, is a repetition of what is now
history, it is important that in the evolving political situation not
only in the two countries directly concerned but also on the
international horizon, innovative political thought should be directed
to find a settlement of the bleeding Kashmir problem. Mere plays Oh the
mini-screens of State-controlled television arousing the passions on
both sides which inevitably lead to more bloodshed and destruction and
more autrocities, can hardly be the answer to the present calamity
which, if not handled wisely and calmly, has the potential of turning
most of the subcontinent into an inferno with wars of various dimensions
already raging in our vicinity, with the rest of the developed world
playing their own nice game fuelling conflicts and enhancing their own
national ambitions and goals.
The alternative to armed confrontation in seeking settlement can only be
a peaceful move towards holding a dialogue. It is an unfortunate fact
that at present both the governments are faced with their own internal
problems threatening their political survival. Reactionary forces both
in India and Pakistan seem to be having a field day. Why such a
situation has arisen in the two countries is a subject for a separate
discussion some other time. What is urgently needed in Kashmir if the
worst is to be avoided is to create on a priority basis a congenial
political environment for opening a meaningful and consistent dialogue
which should first of all silence the guns and discourage the use of the
power of the barrel to settle the dispute. Although mediation or third-
party involvement is generally regarded as useful in political or
diplomatic parlays, in the case of Pakistan and India, which have had a
history of over a thousand years of interaction, the best possible
course would be to enter into direct talks with active participation of
the Kashmir leadership. During the last four decades of struggle for the
right of self-determination, the Kashmiris have matured and they have at
present a truly bold leadership. What is required is that the leaders of
Pakistan and India should have an equal level of courage and move to the
negotiating table along with the Kashmiri leadership. Results cannot be
expected to emerge instantaneously. But the participation of the
Kashmiri leaders can make a qualitative difference in trilateral
discussions. This may be a new possible road to an equitable and just
settlement and peace in the recklessly destroyed state and for its
miserable people, specially the women and children and the old poverty-
stricken millions not only in Kashmir but across the entire
subcontinent. In short, what is perhaps urgently needed is to discard
the beaten track and adopt a fresh peaceful course of action. It is
indeed a test for the leadership in both Pakistan and India.
Aftermath of Charar Sharief
By M.H. Askari
WHILE the dreadful prospect of a war between Pakistan and India is
hardly ever more than a hiccup away from happening, it would be unduly
alarmist to believe that armed hostilities between two countries are
about to follow in the aftermath of the Charar Sharief outrage. This
notwithstanding the Indian minister of state Rajesh Pilot's threat of
securing the "vacation of Pakistan-occupied Kashmir."
India is too preoccupied with its internal problems to seriously
contemplate undertaking a military adventure of any kind. Prime Minister
Narasimha Rao came under pressure in both Houses of the Indian
parliament on Monday and was called upon to resign by opposition
leaders, representing both the revivalist Hindu Bharatiya Janata Party
(BJP) and the leftists. A major reason for the demand was what the
opposition described as his inept handling of the Kashmir situation.
Even within his party, Narasimha Rao's leadership is under serious
threat. Veteran dissidents of the Congress such as Narain Dutt Tiwari
insist that the recent setbacks suffered by the Congress in certain
state elections were the result of Mr Rao's flawed leadership.
Predictably, Narasimha Rao has stoutly resisted his opponents' demands
and has given no indication of wanting to resort to mid-term polls.
Like the ostrich with its head buried in sand,
he insists upon not recognising the rapidly
deteriorating situation in occupied Kashmir
and appears determined to go ahead with the
socalled 'political process'=97negotiating for
a larger degree of autonomy for the state and
state assembly elections.
In a meeting with the leaders of the opposition on Sunday, even while
admitting his blunders with 'disarming candour' (as our Delhi
correspondent put it), Rao outlined a plan sponsoring an all-party
delegation to visit the disputed state for what he called greater
interaction with the Kashmiri people and provision of funds for
reconstruction of the township and shrine of Charar Sharief. No sooner
the latter offer had come to the knowledge of the Kashmiri leaders in
the occupied state, it was rejected outright. An unflappable Kashmiri
patriot, Yasin Malik, who has been in the vanguard of the freedom
movement, came on television personally, to declare that the Kashmiris
would not accept New Delhi's offer of funds and would rebuild the
township and the shrine by mobilising their own resources.
The Indian Prime Minister must realise the futility of his plans for
holding the state elections, for that would hardly mean an end to the
uprising in the Valley, and, in fact, would, without a shadow of doubt,
add to the suffering of the Kashmiri people. India's indomitable chief
election commissioner, T.N. Seshan, in a TV talk show the other day,
parried the question whether he would hold elections in Kashmir if asked
by the government to do, saying that this would have to be decided on
the basis of the realities on the ground. Seshan is known for not
holding out empty threats and had the state assembly elections in Bihar
postponed, despite pressure from New Delhi, as he required certain
conditions to be met first. At the same time, Mr Narasimha Rao has to
reckon with the constitutional requirement of not keeping the occupied
state under the Centre's control she has taken much notice of Mr Rajesh
Pilot's belligerence. She firmly believed that the escalating Indian
brutality would in no sense weaken the Kashmiri people's resolve to
attain their right of self-determination. Pakistan's Foreign Office
statement condemned the destruction of the holy shrine, describing it as
"an affront to the conscience of the Muslim world " Pakistan's military
high command, while putting the defence forces on a state of high alert=97
the only logical thing to do consequent upon the irresponsible
statements from the Indian side =97have given no hint that they are in a
'state of flap' over the Charar Sharief incident. In fact the Joint
Chiefs of Staff Committee and the Defence Committee of the Cabinet=97the
appropriate forum for taking decisions involving war and peace=97were not=
due to meet until May 16 and May 18, respectively, as these lines were
On the Indian side, Mr Rajesh Pilot in an apparent attempt to backtrack
from his earlier posture of bellicosity, has merely confirmed that India
had further "tightened security" at the frontiers with Pakistan and was
in a position to counter any terrorist attack by infiltrators from
across the border. The Indian foreign.
Like the ostrich with its head buried in sand, Prime Minister Rao
insists upon not recognising the rapidly deteriorating situation in
occupied Kashmir and appears determined to go ahead with the so-called
'political process'=97negotiating for a larger degree of autonomy for the=
state and holding of state assembly elections beyond July 17. The
chances of his getting an amendment accepted by the parliament, to
overcome the 5-year limitation, besieged as he is, cannot be described
Nevertheless, there has been much talk of war since the burning down of
Charar Sharief. Some speakers at a seminar in Lahore even demanded that
Pakistan should no longer yield to American pressure and not demur in
regard to the nuclear option. Fortunately, former chief justice, Dr
Nasim Hasan Shah, and Dr Javed Iqbal, who were among the principal
speakers at the seminar, did not suggest war as an option despite the
deep concern and anguish at the happenings in occupied Kashmir. The
former stressed the imperative need for ending the present political
confrontation within the country and proposed the setting up of 'a
government of national salvation' to meet the domestic crises and face
India. Dr Javid Iqbal, even while not ruling out the possibility of a
war with India, maintained that Pakistan's nuclear capability is the
main deterrent standing in the way of India's going to war.
Prime Minister Benazir Bhutto has condemned the Charar Sharief outrage
in no uncertain terms but, judging from the Press reports, minister,
even while accusing "hired mercenaries" of the burning of the Charar
Sharief shrine, has reportedly urged Pakistan to prevent the event from
becoming a hurdle in bilateral ties. In plain words, nothing has
happened on either side of the border to justify a war hysteria, not at
least for the time being. On the contrary, a leading Indian daily has
reported that Mr Rao's office and the Indian ministry of external
affairs are "in a bind" over Rajesh Pilot's outburst, which could have
"serious implications for India". Western diplomats in the Indian
capital have also been quoted as expressing the view that "the rhetoric
from both sides" are mainly for domestic consumption.
It would be a mistake, however, not to recognise the strength of the
hawk lobby in India. At the end of the 1965 war, India's prime minister,
late Lal Bahadur Shastri, was advised by several of his aides that India
should now disregard the old ceasefire line in Kashmir as there had been
"massive violation" of it by Pakistan. However, Shastri decided
otherwise and even gave up some strategic posts its army had captured
during the war.
Lately, the doyen of the Indian hawk lobby K. Subrahmanyam, contributed
an article to the Times of India which basically deals with the reported
"disclosure" by a certain aide of late Mrs Indira Gandhi about Mr Bhutto
and Mrs Gandhi allegedly arriving at a secret understanding in Simla but
reflects the thinking in an important segment of the Indian
establishment. Surprisingly, the article, published in New Delhi on
April 12, has received little attention in Pakistan before his
retirement. Subrahmanyam belonged to the Indian Administrative Service
(equivalent of old CSP) but was in effect a leading member of the
policy-making cell on India's defence plans during Mrs Gandhi's regime.
He, incidentally, had referred to the Pakistan Army's action in the then
East Pakistan in 1971 as the "opportunity of the century" and advocated
India's overt intervention to achieve the separation of the eastern
In his article under reference, Subrahmanyam has regretted the absence
of a "national security decision-making mechanism" in India. He also
accuses Pakistan of disseminating "terrorism" in the occupied Kashmir
and goes on to suggest that "their (i.e. Pakistan's) terrorism is
exacting a heavy price in terms of terrorism within Pakistan itself."
This can only be interpreted to mean that Indian agencies are behind
certain acts of terrorism which are currently in evidence in Pakistan.
However, there are also some saner elements in India who do not hesitate
to criticise the policies of their government. A eminent South Asian
scholar, Praful Bidwai, in an article which appeared in thus paper on
Monday, said clearly that the elections proposed to be held by Mr
Narasimha Rao "could not possibly produce a government (in occupied
Kashmir) possessing legitimacy and authority." Bidwai has disclosed that
the situation prevailing in the occupied state could possibly prompt
some rethinking on Kashmir among the policy-makers and that some
political leaders, including Karan Singh, a former minister and son of
the late Maharaja of Kashmir, are urging Narasimha Rao's government to
give up its "coercive approach" in Kashmir in favour of reconciliation
One would hope that such voices of sanity would ultimately prevail. And,
more importantly, they would be reciprocated by saner elements in
Bureaucracy & corruption
By M.H. Askari
OF late there seems to be a systematic effort on the part of some former
civil servants to minimise, if not actually whitewash, the role of
bureaucracy in the steady decline of the institutions of governance and
blame it all on the political leadership.
There has even been a near-eulogistic piece about Mr Ghulam Ishaq Khan,
who played a key role in the arbitrary dismissal of at least two
democratically elected governments and sat smug in the President's House
in Islamabad when one of his close relations played havoc with the law
and order machinery in Sindh.
The fact is that the bureaucracy in Pakistan unconscionably exploited
the inexperience and weaknesses of the political leadership in the years
immediately after the partition to strengthen its own hold over the
levers of power. If there is rampant corruption in the country today
that too is because some bureaucrats were always there to work the
mechanism of corruption and benefit the corruption-prone political
governments with their expertise.
What we see today, therefore, is the other side of the coin =F9 the
exploitation by an unscrupulous political leadership of a section of the
bureaucracy, to use the system to its own advantage and perpetuate its
own hold over sources of corruption. The political leadership and the
bureaucracy are in fact working in tandem to achieve ends which have
less to do with national objectives and national aspirations and more
with the fulfilment of their respective private agenda. The attempt on
both sides may not always be to acquire illicit wealth but to keep a
tight grip over state power, by fair means or foul. Power is its own
There have, of course, always been honourable exceptions on both sides
but the unholy alliance has always been there for everybody to see. The
resulting damage to the state apparatus is now virtually beyond repair.
It is a futile exercise to apportion blame. If it is half a dozen on one
side, it is only six on the other.
If the political leadership in Pakistan in the early years after
independence failed to cope with the challenge of state and nation
building, that can be traced to the weaknesses of the political
leadership in the Muslim League which spear-headed the Pakistan
movement. The party was virtually without a firm power base until a few
years before independence and was confined mostly to an elite upper
class. There was the charismatic personality of Muhammad Ali Jinnah, but
most of the leaders around him were too dazzled by his charisma to have
a mind of their own. A top leader of the Pakistan movement once
confessed to this almost in so many words in the presence of this
writer. When asked why he and other leaders of his calibre in the inner
sanctum of the Muslim League did not assert themselves if and when they
found anything going wrong within the setup of the party, he frankly
admitted: "The Quaid's charisma was like a drill which went straight to
your heart and left you dumbfounded!" Most of them did no independent
thinking and made little contribution to the job of erecting a
democratic base that could support the edifice of the party's
In the crucial years of mid-forties, when the battle for independence
entered its final phase, the strongest bastion of the Muslim League were
the students, with students of Aligarh University in the vanguard. In
New Delhi where the representatives of the British government were
engaged in last-ditch negotiations, the lobbying for the League as
representative of the Muslims was done mostly by middle-level
bureaucrats and Muslim traders while the Jamaat-i-Islami and the Jamiat-
ulema-i-Hind, who claimed to represent Islamic ethos, were firmly
opposed to the League and Quaid-i-Azam. Yet another hurdle in the
Quaid's way was the fact that until about the time of the Simla
conference in the summer of 1945, League had made little headway in
asserting itself inside the legislatures.
Even if one were to disagree with Dr Ayesha Jalal's contention that the
'magnificent seven' handpicked by the Quaid for his first cabinet were
mostly without independent bases of support in the provinces which
comprised Pakistan, there is certainly substance in her observation that
on the other hand "the administrative bureaucracy had a better chance of
putting together their own structures of command, control and
The civil servants were thus to become the "real wielders of authority."
While a former officer of the Accounts Service, Ghulam Mohammad, was to
be inducted in the government as Finance Minister another of his junior
colleagues, Chaudhri Mohammad Ali, came to occupy the pivotal post of
Secretary-General. Incidentally, both were to play havoc with the
administrative and constitutional structure of Pakistan, while there was
no comparable hierarchy of command within the structure of the Pakistan
Muslim League. It was when Mohammad Ali was the Prime Minister that if
there is rampant corruption in the country today, it is because some
bureaucrats were always there to work the mechanism of corruption and
benefit the corruption-prone political governments with their expertise.
The sinister concept of One Unit, which was to for ever alienate the
smaller provinces from the Punjab-dominated centre, was introduced.
Ghulam Mohammad, despite his obvious physical and mental disabilities
was soon to be elevated to the position of Governor-General, to subvert
the country's constitution.
As early as 1950-51, bureaucrats at the helm of the civilian
intelligence agencies had taken upon themselves the responsibility to
"certify" which Pakistani was loyal to the country and who was not.
Passports were denied to journalists by middle-level officials in the
passport office and intelligence bureau as they were believed to be a
Begum Shaista Ikramullah has recorded in her biography of the front-rank
Muslim Leaguer, Husseyn Shaheed Suhrawardy, how the eminent leader was
treated when in June 1948 he came to Dhaka to take up permanent
residence there. Within 24 hours of his arrival, he had a notice of
extradition served on him by the IG, Zakir Husain, under the orders of
the -city magistrate, Mr Rehmatullah, who had been asked to do so by the
chief secretary, Mr Aziz Ahmed. The last two were officers of the old
ICS who had opted for service in Pakistan. Whether they acted on their
own or on a directive from above is not clear. However, they acted with
The appointment of Gen Ayub Khan as Pakistan Army's first Pakistani
commanderin-chief in 1951 virtually placed the destiny of the nation in
the hands of a group of bureaucrats occupying key positions. Ayub Khan
functioned in concert with the Defence Secretary, Iskander Mirza. It is
even believed that there were times when Ayub Khan and Iskander Mirza
bypassed the Prime Minister, Liaquat Ali Khan, in their efforts for
securing aid and supplies from the Americans. Ayub Khan has recorded in
his autobiography, Friends Not Masters, that since he found it too
cumbersome to get "clearance" from Karachi, which he described as "a
hotbed of intrigues", he took decisions affecting the army on his own,
800 miles away from seat of the political government. In Ayesha Jalal's
words, after Pakistan survived the assassination of its first prime
minister (October 1951) "those holding executive authority and
answerable to parliament (i.e. the political leaders) were able less and
less to influence government policies while real power came to rest with
state officials unencumbered by such constitutional niceties as
accountability to the people (emphasis added).
In the 10 years of Ayub Khan's Presidency, after he captured power
through a military coup, his chief aides were two officers of the civil
service in succession. The political devastation caused by Ayub Khan's
policies is only too well known. Kazi Anwarul Huque, a Bengali, who
began his career as a police officer but in later life rose to be a
Cabinet Minister, has expressed the view in his In Quest of Freedom (p.
1991) that after assuming power under martial law," Ayub Khan found the
civil service not only the most appropriate instrument for the
management of the bureaucracy but also a willing agency to uphold his
The role of senior West Pakistan-based bureaucrats functioning out of
Islamabad as managers of the country's finance and development plans in
the ultimate alienation and breakaway of East Pakistan is no secret. It
has been said that the top economic planners in Islamabad maintained two
sets of reports and statistics concerning the country's economy, one for
the information of the international aid-giving agencies to assure them
that the development of the eastern wing was not being neglected, and
the other reflecting the actual position, which was that there was
proportionately a much greater quantum of resources being ploughed into
the development of West Pakistan. They had mentally already written off
The authoritarian regimes of Bhutto and Gen Zia-ul-Haq also had civil
and military bureaucrats playing a key role in the making of their
policies. Bhutto leaned too much on certain serving or retired police
officers and on civil servants such as Waqar Ahmad and Afzal Saeed Khan.
Zia-ul-Haq had Mr Ghulam Ishaq Khan at his elbow, promoted to the
position of Finance Minister in the first civilian Cabinet formed after
the deposition of Bhutto.
It is, perhaps, not possible to fix the responsibility for the rampant
corruption which exists in Pakistan today either to the bureaucracy or
to the political leadership. Shahid Javed Burki and Craig Baxter have
put the matter in what can be called a realistic perspective. In their
study of Pakistan during the Zia regime they observe: "One area that is
difficult, if not impossible, to document and quantify is corruption in
government. There is no question that it exists at all levels. It
appears to be systematic in that, in certain government departments,
officials know exactly what percentage of a project's funds are for
their taking." That the entente between the bureaucracy and politicians
in positions of power is a perquisite to corruption is undeniable. The
pattern set in the past regimes has only become more sharply delineated
over the years.
Matrimony and the moralist
From Tahir Mirza
LAHORE: The first lesson Mr Imran Khan must be in the process of
learning is that if you have pretensions to a career in politics or in
the service of the people in any other capacity, your personal life
cannot be divorced from your public life.
The second lesson he should learn is: Don't preach. Don't fall into the
trap of moralising and sermonising. Do whatever you have to do, build a
hospital or set up a pressure group, without constructing a Taj Mahar
around it. And don't bring religion into everything.
Now that it has been confirmed that he is marrying an aristocratic
English girl, who will remain English whatever her religion or the
clothes she wears, it is inevitable that all the words with which Mr
Imran Khan has been flooding newspaper columns in recent months will be
recalled to mock him. Those who always thought that there was something
a little bogus and hypocritical about his conversion to Pakistaniyat
will say: We told you so.
In one of his articles, he had said: "All in all, I was smoothly moving
to becoming a pukka Brown Sahib. After all I had the right credentials
in terms of the right school, acceptability in the English aristocracy,
something that our Brown Sahibs would give their lives for. So what led
me to do a lota on the Brown Sahib culture and instead become a desi?"
What will he say when he is told that he has taken advantage of what he
had decried, namely, acceptability in the English aristocracy, "some
Sahibs would give their lives for"? And what kind of a 'lota' has he
done in the final analysis? The uncharitable will say that his
credentials have worked.
Mr Imran Khan should realise that the parameters he had set out for the
debate initiated by him as a prelude to entering public life were always
naive and simplistic. Pakistan's main problems have nothing to do with
the impact of Western culture or civilisation but absolutely every thing
to do with our own feudal values which dominate all sectors of life. The
symbol of the feudal is not jacket and trouser but shalwar and kameez.
He is often uncouth in his behaviour and not very literate: indeed a
dose of Western civilisation would do him a world of good. The criminal
who terrorises the citizen is not Westernised either, and even the gun
he carries is a Russian one imported from the Afghan Mujahideen. The
corruption that permeates society is our very own, as is the serfdom and
the oppression encountered in the rural areas and at the hands of the
police in the cities. The only people for whom wearing Western clothes
is actually mandatory and who find it not at all distasteful, are our
military men and policemen about which Mr Imran Khan had nothing to
say. Marry of Dur political attitudes, not least the lack of tolerance
for opposing viewpoints, are coloured by feudalism.
If the Iranians crusaded against Western culture, that formed only one
strand of a revolutionary upsurge which involved the overthrowing of
deeply entrenched and sinister monarchy. It was not something adopted in
isolation, merely for the sake of being different.
Dress has lithe to do even wit the sense of national identity, which can
come only from a feeling of full participation in the governance of
one's country and the knowledge that the life, honour and property of
the citizen are being protected by those elected to do so. The sense of
nationhood should not in an case be confused with wearing one's
patriotism on one's sleeve or being chauvinistic. If M Imran Khan had
tried to tackle some of these issues as well the religious bigotry that
has enveloped us, instead of railing against the brown sahibs, he might
have evoked a more sympathetic chord among those who read him. He
allowed himself t be involved in irrelevancies, an now stands in danger
of being described as a lost cause. Which is a pity because he has been
on of the most charismatic personalities produced by Pakistan. H should
have confined himself to quietly building and running his hospital
instead of fulmination against politics and politicians, getting himself
hooked on the likes of Gen Hameed Gul and telling us ordinary mortals
what grovelling creatures we are.
But good luck to him in hi marriage. May he have the courage to say 'to
hell with you to his critics. That would b more like the Imran Khan who
A sinister move
IT IS, perhaps, still not too late to hope that for the mere expediency
of appeasing the American Jewish lobby the United States Congress would
not embark upon the disastrous course of alienating the entire Muslim
world. For that is what would inevitably happen if the legislation,
proposed by certain pro-Israel Republican members of the US Congress
calling for the transfer of the US embassy in Israel from Tel Aviv to Al
Quds (Jerusalem), were to become law. President Clinton would be well
advised to nip the mischief in the bud and heed the warning sounded by
the PLO Observer in the United Nations that the proposed shift would be
seen as a hostile act and lead to 'catastrophic consequences.' Recalling
the relevant directives of the Organisation of Islamic Countries (OIC),
the executive committee of the Islamabad Council of World Affairs has
issued a timely statement, warning the US that the Islamic countries
would have no option but to sever diplomatic relations with any country
that transfers to or establishes its embassy in Al Quds. It is not for
sentimental reasons alone that such a consequence would be logical
although sentiment, too, is a strong factor since Al Quds is the third
holiest place for the Islamic fraternity. There are also compelling
reasons under international law for the Muslim nations to expect that
the US would not take the fateful step.
Washington does not need to be reminded that East Jerusalem is an
occupied territory and that its occupation and annexation by Israel in
the 1967 war has remained unacceptable to the Muslim world. The act was
also in clear violation of the Geneva Convention of 1949, the UN General
Assembly resolutions of July 1987 and several specific resolutions of
the UN Security Council. Under the UN Charter as well as international
law and convention, acquisition of territory by conquest is
inadmissible. There is in fact a clear mandate from the UN General
Assembly calling upon Israel to rescind its annexation of the Holy City.
Besides, Islamic countries are bound by the directives of the OIC
Jerusalem Committee, which, meeting in Morocco immediately after the
great fire in Masjid Al Aqsa in 1969, resolved that the establishment of
its embassy by any country in Al Quds would be tantamount to extending
diplomatic recognition to Israel and endorsing its annexation of Al
As it is, President Clinton's decision to place an economic embargo on
Iran has been widely seen, and generally resented by the Muslim
countries, as a move on his part to appease America's Jewish lobby, in
preparation for next year's presidential election. For the same reason,
he now appears to be yielding to pressure from the Senate Republican
leader, Bob Dole, and the House of Representatives Speaker, Newt
Gingrich, who are behind the move for the transfer of the US embassy to
Al Quds. The US President must know that the moment the proposed
transfer takes place, the Arab-Israel peace process, brokered by
Washington would go up in flames.
In that event, the gains of the peace process made so far would be lost
and, in all likelihood, the Middle East would once again become a
flashpoint of tensions and conflict. Washington must realise that its
turning a blind eye to the land-grabbing by Israel in the occupied
territories is making a mockery of the exercise in peace-making in the
Middle East. This can only be seen as a betrayal of the trust placed in
Washington by the PLO in regard to its role in promoting Arab-Israeli
Budgeting without convulsions
By Sultan Ahmed
THE government is blowing hot and cold in regard to the next budget to
be presented on June 14, which means not enough time will be allowed for
its discussion in the National Assembly.
Meanwhile, the speculators have, as usual, begun hoarding the items
likely to be taxed higher beginning with costly cigarettes. And
President Farooq Leghari, who has been taking considerable interest in
the next budget so as to prevent an adverse political fallout, has
spoken of the real economic crunch the country is facing again and of
tougher times to come.
But the budget will not be tough, says Makhdoom Shahabuddin, Minister of
State for Finance, who loves to sound reasonable and reassuring. He has
spoken of relief measures which can be deceptive in the light of such
past assurances. What matters is what they are, how much they are, and
to whom they are addressed.
We are told there will be no rise in POL prices. That statement is the
outcome of our belief that the revenue-hungry government will push up
administered prices everywhere, and POL has been one of the major hobby
horses of the revenue-raisers. Sometimes petrol prices are raised, and
at other times prices of oil products, like lubricants. When world
prices of POL do not rise we are told the exchange rate of rupee has
gone down and oil costs more in rupees.
The government has neither of the alibi now. World prices of oil have
not gone up. And the exchange rate of the rupee instead of going down
has nominally improved following the fall of the dollar by 15 per cent
in relation to the Japanese yen and 10 per cent in relation to the D-
Malk and Swiss franc. Hence the Arab oil producers are talking of fixing
oil price in a more stable currency. In fact there is a valid case for r
educing oil prices at home as the government is committed to do that
when oil imports cost less.
But if POL prices are not to rise, gas prices are to be increased by 20
per cent, as has already been indicated. Price of compressed gas has
already been raised by 19 per cent. And that is to come following the
rise in electricity rates by 20 per cent on an average, with 35 to 45
per cent rise for industries. Both have a multiplier effect on prices as
a whole. Higher gas prices would mean rise in prices of items from bred
and confectionery to fertilisers and cement.
The government tends to ignore the fact that what matters for the people
is not only the direct and indirect taxes they have to pay but also the
enhanced prices and rates for utilities. When utility rates are
increased, prices of all manufactures rise. Payments for all these have
to come out of a single pocket, and it matters little to the citizen
whether he pays more as a tax or higher prices for essential items.
Governments in developing countries are now separating the taxes from
user's charges to minimise the tax burden of the masses. But if the
rates for power, water, gas, POL and telephones, and even passports,
keep on rising and even ah-travel comes under heavy taxation, how can
the people feel they are not heavily taxed? Such deceptions are
permissible if they are moderate but not when they come with the kind of
excesses for which they are marked. And such practices are far worse for
higher rates, as for water, power and telephones, coexisting with poor
service or frequent and prolonged breakdowns, forcing the people to pay
heavily for alternative supplies.
The government is under two kind of compulsions now. It has to reduce
the budgetary deficit to four per cent next year under the IMF
compulsion, having failed to achieve that target this year, and it has
to reduce import duties on an average by 45 per cent next year from 70
per cent. It has also to reduce inflation next year, having failed to
achieve the seven per target set for the current year, and exceeding
that by almost loo per cent.
On the other side, after failing to achieve the tax collection target of
Rs. 258 billion for the current year and scaling down the targets to Rs.
222.48 billion a fall of Rs. 35.6 billion the government may not be in a
mood to overshoot this time. And Mr. Leghari is keen on preventing such
absurd excesses. So how is the government going to find additional
resources to meet its ever-expanding expenditure, of which a great deal
The government has already done a good deal of smart load-shedding by
asking various autonomous bodies to borrow directly from the banks and
DFIs instead of depending on development funds through the budget. A
good deal of the development activities including infrastructure
development is being passed onto the private sector, including foreign
companies. The Prime Minister now wants the private sector to build the
highways, while Chief Minister Abdullah Shah wants that sector to
develop the infra-structure in Sindh despite its convulsions. All that
Those in power and the senior officials are not aware of the hardships
caused by high taxes and inflation as they themselves do not experience
them. They are given free houses, cars, drivers and domestic servants.
Unless all these perks are abolished and they are paid clean salaries,
they will never come to know the reality of life in Pakistan, nor make
better budgets reduce the pressure on the budget a great deal and
increase the pressure on public sector banks.
And yet the budget has been showing large deficits, though it is far
less than the peaks reached earlier, and the government is under
compulsion from the IMF to reduce that sharply during the coming last
year of the three-year Extended Structural Adjustment Facility.
Then President Clinton in the richest country in the world is emphatic
that the ultimate solution for saving the shrinking dollar lies in
reducing the U.S. budget deficit and the government borrowing far less,
the government in Pakistan cannot afford to follow a contrary course
after the rupee now gets just about a tenth of a dollar compared to what
it used to in the 1950s when it was Rs. 3.35 to a dollar.
In the prevailing circumstances a strong rupee which is imperative for
the health of the economy and image of the country, could be achieved by
slashing the non-productive expenditure and the vastly wasteful ways of
the administration with its mega cabinets marred by the small merit of
its ministers and advisers. The lavish external expenditure of the
government could be cut a great deal instead of too many delegations
going abroad to achieve too little. In a set-up in which the ruling
class will not pay taxes on its incomes or agricultural wealth the
government has no other option but to cut its wasteful expenditure,
particularly when its revenue collection departments are too leaky and
have been known for promoting and profiting from smuggling instead of
As the budget proposals are being finalised the central question now is:
will the government repeat the folly of over-estimating the revenues
committed in the current year? The over-budgeting was done despite the
saner counsels of the middle-level of the Central Board of Revenue that
increase in income tax revenues could not be more than 15 per cent this
year, customs revenues could not rise -above seven per cent because of
the tariff concessions to be given this year sales tax on imports could
not rise above seven per cent and on domestic manufactures above 12 per
cent, and excise revenues may not rise above 12 per cent, which was
But instead of the 15 per cent income tax revenue target was raised by
27 per cent and of other direct taxes by 36 per cent, customs target was
raised by 15 per cent instead of 6.8 per cent which followed, and the
sales tax target were raised by 23.23 per cent instead of the 12 per
cent which has followed.
And now even the revised revenues of Rs. 22.48 billion is far from
certain as too many industries have closed down or are working
partially. Earlier 2,000 industrial units were sick, and then their
number rose to 3,000 and now Mr. Iftikhar Ali Malik, who has been
restored as vice-president of the Federation of Chambers of Commerce and
Industry, says 500Q units are sick. That would mean far less revenues
despite the draconian measures adopted by the taxation authorities under
the directive of the PM.
What is amazing is that those in the CBR who counselled against over-
budgeting or unduly high taxation targets have been punished as they
failed to mobilise the high collection targets arbitrarily given to
them. And those who were too bullish about the targets were promoted.
And now that their projections and the actual collection which followed
have failed dismally, they are not being penalised. Instead those who
came up with prudent counsel remain punished or shot out of the CBR,
while the new CBR team is adopting draconian measures at one end and
complaining of the very high target at the other. This is grossly
unfair. The government should now make amends for the wrong course it
chose and not continue with punishing those who gave it the right
What the government now needs is a rational and realistic approach to
budgeting instead of over-budgeting because some computer company comes
with large assumptions of revenues based on simulations. In fact even in
this case the final simulations were more realistic than the earlier
ones, but then it was too late. The targets were then scaled down not
only because the computer company came up with more modest projections
but also following the wide-spread protest in the country, including the
one called by the FPCCI.
Unfortunately, those in power and the senior officials are not aware of
the hardships caused by high taxes and inflation as they 'themselves do
not experience it. They are given free houses, cars, drivers, domestic
servants and their utility bills, including heavy telephone bills, are
paid by the public. They go for holidays and treatment abroad at public
expense with their families and do their shopping there and perform Haj
too at public expense. Unless such perks are abolished and they are paid
clean salaries. they will not know the reality of life in Pakistan nor
make better budgets.
In free fall
YOU can skip this paragraph if you've heard this one before, but there
was this guy who jumped off a thirty-storey building. As he hurtled past
the tenth floor, he said: "So far, so good!"
This is the way our economy seems to be heading, and its managers seem
to have the same carefree attitude towards its fate. As all indicators
point towards the pavement, the government insists that all is well, and
getting better every day. If the stock exchange is taken as the
barometer of the national economy, then we are in for a very stormy
season indeed: over the last year, the Karachi Stock Exchange Index has
fallen 1,100 points from 2,600 to the current 1,500. This represents an
erosion of well over a hundred billion rupees in market capitalisation.
Thousands of small investors have seen their savings wiped Out, and
institutional portfolios have suffered huge declines.
At the same time, inflation has been eating into the savings accounts of
the middle class and the liquid assets of the well-to-do. As the prices
of essentials have shot up, there is less money than ever before to put
into savings accounts. This translates into less invisible funds for
banks, and will lead to lower levels of industrial activity. According
to a recent study carried out by the Pakistan Institute of Development
Economics (and quoted in an editorial in this newspaper last week),
inflation is currently running at 19%. This is considerably higher than
the 12 Mo claimed by the government. And as the budget looms large on
the horizon, the rate of inflation is bound to rise still higher.
None of these and other portents requires great insight into economics
or high finance. Anybody with an ounce of sense will have seen the blood
on the floors of our stock markets, and felt the agony in the shops
where the common man buys articles of his daily needs. But despite the
present and clear danger from (and to) the national economy, there is no
expression of concern, no suggestion that those at the helm of affairs
give a single solitary damn at this state of affairs.
Had the government been worried or concerned, there would have been some
activity to indicate that there was a genuine desire to turn the economy
around. Instead, there is the daily boasts of yet more MoUs signed. The
thing to note here is that quite apart from the deteriorating law and
order situation, specially in Sindh, the other factor that is likely to
deter foreign investors is the depressed state of the stock market. The
rupee component needed for power plants and other projects will have to
be largely raised on the stock exchange, and given the battering
investors have received, it is extremely unlikely that even the most
promising stock will be fully subscribed.
The other area that appears to be a blind-spot with the government is
its lack of concern over its abysmal relations with the business
community. Recently, Farooq Sumar, a leading industrialist, came out
into the open with some startling allegations of robbery, extortion and
blackmail against the MQM (Haqiqi). We had heard rumours of these
activities, but to have them substantiated by a person of Farooq Sumar's
credibility came as a shock. What was even more shocking than the
Haqiqis' alleged involvement in such criminal conduct, however, was the
indifference of everybody in authority
Mr Sumar turned to for help. Farooq is an old friend, and not somebody
given to exaggeration or hype. Nor is he of suicidal bent. For somebody
like him to go public against a lethal outfit like the Haqiqis requires
courage of a high order. It also needs desperation. In this kind of
climate where successful businessmen are ripped off without getting any
help from the government, one would have to be living in a fool's
paradise to imagine that foreign investors will come flocking in.
In the wake of the recent government-FPCCI confrontation, there is a
widespread feeling of insecurity among the business community. The
arrest of Riaz Shafi (and the needless delay in granting him bail
despite the fact that he has been accused of no criminal activity) and
the placing of many industrialists on the Exit Control List has
heightened the sense of persecution. Hopefully, the government will
break this deadlock and talk seriously with representatives of trade and
industry to restore some modicum of confidence. Currently, the actions
being taken by the government have reinforced the PPP's image of an
anti-business party. Surely it would be in the government's interest to
dispel this notion and get the economy moving. But so far, there are no
signs that anybody in authority is even remotely interested. All the
talk emanating so far from Islamabad is about deals and commissions.
Indeed, the rumour doing the rounds regarding the crackdown against
Mansha and his business interests is that he is being pressured to sell
his shares in Muslim Commercial Bank (of which he is Chairman).
Hopefully somebody in authority will one day wake up to the fact that in
a free economy, industrialisation can only take place in an environment
of mutual trust between the government and the business community. There
has to be constant interaction between the two, and policies affecting
the economy (and which don't?) should ideally be evolved after a process
of discussion and give-and-take. For instance, the plastics industry is
reeling from the decision to lower duty on finished products while
raising it on imported raw material for this sector. Overnight, the
local products have become uncompetitive, and half the factories have
closed down. Manufacturers complain that their representations to the
CBR and the Finance Ministry have fallen on deaf ears.
The engineering sector, too, has been hard hit by contradictory policies
that seem to be aimed at favouring imports at the expense of the local
industry. The Awami Tractor, Scheme is a case in point. Instead of
sitting down with the local manufacturers to work out the modalities of
supplying cheap tractors to farmers, somebody in a tearing hurry went
and ordered thousands of tractors from technologically backward East
European countries which were, happy to dump their obsolete equipment at
throwaway prices. The result is that local manufacturers and their
overseas partners, as well as their downstream parts suppliers, are in a
quandary. Despite the government's promises to lower duty on imported
components to make them participate in this scheme, they are still
waiting for CBR's written instructions.
Politically, this government is well entrenched, with the opposition
reeling, and the GHQ and the President solidly behind the PDF coalition.
Its only danger lies in a rapidly unravelling economy. It is high time
that this slide were arrested.
Empowerment, but not quite
ALTHOUGH the ordinance empowering the Pakistan Banking Council (PBC) to
make public the names of the bank loan defaulters is unexceptionable as
a step towards meeting the requirements of accountability, the practice
of bypassing the Parliament in matters of important legislation, as in
this case, could be frowned upon. However, in this case the deviation
from the constitutional norm can be condoned because the government had
promised to discuss cases of default in the next session of the Assembly
and before that the compilation and publication of the list of
defaulters was imperative. The ordinance, by amending take Bank
(National station) (Second Amendment) Ordinance of 1995, removes the
cover of secrecy in regard to those who have had outstanding loans of
one million rupees and above for more than one year. In actual practice,
however, the enabling power will come into effect after the lapse of one
full year of the loan installments having fallen due. This is fair
enough as it allows ample time to the borrower to tide over any
temporary or unforeseen difficulties-in meeting the repayment
Providing full information about the nature and circumstances of
sanction of loans and the subsequent defaults has been a source of
conflict between the finance ministry and the banking authorities on the
one hand and the accountability agencies on the other. The information
required for investigation into certain suspected irregularities in the
sanction of loans was denied to the federal Anti-Corruption Committee
and the Federal Ombudsman on the plea of confidentiality provisions in
the law. The general impression has been that most of the defaulted
loans were rooted in irregularities at the initial stages, giving rise
to suspicions of involvement or connivance of senior bank officials and
bureaucrats. The withholding of information of protection the erring
The ordinance still does not fulfil the full requirements of
transparency. It stipulates that the Banking Council will publish a
complete list of defaulters of loans from banks, DFIs and cooperative
societies, "as and when directed by the federal government". This
provision may become another weapon in the armoury of the government to
use selectively to keep members of legislatures and difficult
politicians in line. Fairness and transparency demand that the
publication of the list become a regular feature at specified intervals.
Misuse of bank funds
By Sultan Ahmed
PUBLIC sector banks and development financial institutions with their
eroded capital base are to embark on an intensified drive to recover
large defaulted loans of Rs 80.28 billion. Since the publication of
lists of defaulters in August 1993, the recovery of loans exceeding Rs
one million has been only 11.38 billion or under 15 per cent.
An ordinance enabling the banks and DFIs to publish new lists, to bring
the tally of defaulters up-to-date, has been promulgated by the
President following expiry of the earlier ordinance promulgated when Mr.
Moeen Qureshi was caretaker Prime Minister. How large is the total
default now will be known only after the lists are out. Meanwhile we
have been told the number of sick industrial units has risen from 2,000-
3,000 to 5,000 units due to excessive financial constraints.
At the centre of the recovery drive is the State Bank of Pakistan (SBP)
which was earlier said to be less enthusiastic about publishing new
lists and more about effective recovery as has been achieved to an
extent by the privatised MCB and Allied Bank with far less default than
the big three, National Bank, United Bank and Habib Bank. And now that
the threat of a new list is to hang over the defaulters, will that pay
better dividends before the disclosure of their names or immediately
Meanwhile, following the arrest and trial of Mr Yunus Habib of Mehran
Bank, Khalid Latif of Allied Bank and Mr. Khairati, Punjab chief of
Habib Bank and dissolution of a private sector bank immediately after
the public had subscribed to it capital, the central question now is:
how to save the banks from the bank chiefs themselves, both in the
public and private sector?
The federal cabinet in July last decided to take action against bank
officials who had sanctioned loans without securing proper security or
guarantees and blacklist the defaulters for seeking new loans. Action
was to be taken particularly against those who had committed such
offences between 1991 and 1993.
What is at issue right now is not only the vast misuse of the bank funds
or loans by senior bank officials but also the politically-motivated
appointment of bank chiefs and politically directed large bank loans
even in the face of defiance or reluctance on the part of bank chiefs.
The dual flaw can do serious damage to the banks and result in far
larger defaults, with heavier liabilities in the case of some individual
The State Bank came up with the comprehensive Prudential Regulations for
banks and nonbank financial institutions, and has been ready to relax
them for a period in cases where it is absolutely essential. But the
regulations as a whole have to be implemented by the bank executives,
and permitted to do by their political bosses.
At issue right now is the appointment, promotion and transfer of top
bank executives and actual freedom for them to act according to the
Prudential Regulations and in conformity with the relaxation permitted
by the SBP to meet the current exigencies. Such protection from
arbitrary political intervention is essential in view of the fact that
the deposits in the banks are usually the savings of low and middle
income groups, while the borrowers are the rich men.
We now face a situation in which large politically-directed loans are
given on the basis of small collateral in disregard of the Prudential
Regulations in reality, and later when the State Bank or another
government is seized with the problem it may be too late.
What is at issue right now is not only the vast misuse of the bank funds
or loans by senior bank officials but also the politically-motivated
appointment of bank chiefs and sanction of large bank loans for
political favourites even in the face of objections from bank officials. =
In fact in the case of the prevailing context, it may be imperative to
have a pre-loan audit or verification by the State Bank before large
loans are given, although that could mean delaying the loaning process
to an extent. But in a country where the defaults have been excessive
and the capital base of the banks has been wiped out after
nationalisation, such precautionary steps are essential if the situation
is not to get far worse.
Of course, privatisation of the public sector banks and DFIs is the lone
solution in our context as combination of political leaders and senior
bank executives have been instrumental in giving too many bad loans
since nationalisation in 1974.
In such a banking world where the impact of globalisation of monetary
movements is increasing, we cannot have a light-hearted or convential
approach to banking in Pakistan, which can take a triple hit from the
political bosses, senior bank executives and the mighty bank unions.
While the leading banks of the world are punishing their executives for
fraud or other malpractices, in Pakistan the chief of the National Bank
in Britain, Zahid Khurshid, who caused a loss of 40 million dollars was
not punished. Instead his promotion was delayed by 3 months, says Malik
Qasim indignantly. Such large losses were caused to the UBL and MCB too
in Britain but hardly any action followed as the guilty had plenty of
All this makes it irnperative that presidents of public sector banks and
major DFIs are not appointed by an individual, however high but by a
board of persons inclusive of the governor of the SBP, chairman of the
Banking Council, and possibly the chairman Federal Public service
commission as well-to insulate such appointments from political
intervention. Very large loans should also be scrutinised by the SBP
before they are given instead of futility objecting to them when it is
Farooq Umar made Olympics mission chief
KARACHI, May 8: The Prime Minister of Pakistan has appointed the
Managing Director of PIA and President, Pakistan Hockey Federation, Air
Vice Marshal Farooq Umar, as Chief de mission of Pakistan for the 1996
The Chief de mission from all over the world are having their first
meeting on May 20 at Atlanta, USA. Pakistan is also requested by the
Pakistan Chief de mission AVM Farooq.
Imran to marry on June 20 under Islamic tradition
By Samiul Hasan
KARACHI, May 12: One of the world's most eligible bachelors Imran Khan,
marries Jemima Goldsmith on June 20 in London, family sources confirmed
According to the sources in Lahore, the marriage ceremony will strictly
be according to Islamic tradition and culture.
The Nikah ceremony will take place in London's Islamic Centre and will
be followed by a sumptuous dinner. However, the exact time of the Nikah
is not confirmed though as is usual in the subcontinent if is expected
to be in the evening.
The Valima reception, date and venue of which is yet to be finalised,
will be held in Lahore in the first week of July.
The wedding of the former Pakistan captain, 41, who once enjoyed the
reputation of a raging playboy in sports, will be attended by his
immediate relatives who leave for London in the second week of June.
Family sources stated that Sir James Goldsmith has asked Imran to invite
as much relatives or friends as he desires. "But it is extremely
difficult for all of us to travel to England to attend the marriage,"
Imran's cousin Hafeezullah said, adding: "However, some of Imran's
friends living in England will definitely grace the occasion."
The relatives, Hafeezullah continued, who will be unable to attend the
function will, however, attend the Valima reception which will be held
in Lahore in the first week of July. "Since Imran's schedule after
marriage is not confirmed, the Valima date has not yet been fixed. But
it will be held in Lahore."
The sources, nevertheless, confirmed that immediately after marriage,
Imran alongwith his bride, will proceed for Umra before returning Lahore
around June 28.
Hafeezullah said he did not know the fact that when Imran met Jemima
Goldsmith but stated that the marriage proposal was made through the
'proper channel'. "Imran's father approached Sir James who, without any
hesitation or inhibitions okayed the proposal."
While the proposal was made in the second week of March, a simple
engagement ceremony was held in London a week later where Imran
exchanged rings with Ms Jemima. "The engagement ceremony was only
attended by a few people. They included Jemima's family and a couple of
Imran's family members."
Asked if there were any objections in the family to the marriage,
Hafeezullah replied in the negative.
"There is no reason for anyone to raise objections. The lady has
embraced Islam and is now a Muslim girl. Moreover, she will live in
Lahore and will also follow Islamic ways of life.
"The family is not concerned at all if Jemima's family is Christian or
Jew. Jemima matters us and she is now a Muslim. Besides, marriage with
al-Kitab is allowed in Islam."
Hafeezullah also disclosed that after embracing Islam, Jemima's new name
is Haika. "For us, she is Haika now and will be called Haika Imran after
Hafeezullah was not sure what Jemima, half the age of Imran at 21, will
do after marriage. "What I have gathered is that she will participate
with Imran in social work, including fund raising and looking after the
Shaukat Memorial Cancer Hospital.
Board giving me a raw deal, says Wasim
KARACHI, May. 9: Pakistan Test all-rounder Wasim Akram who lost the
reins of Pakistan team's captaincy because of the players revolt against
him over a year ago, is now blaming the cricket authorities for ignoring
him for the job.
"The cricket board did not make me captain (for Asia Cup at Sharjah)
because they probably were scared of player power and fear I might argue
with them and have my own team. They don't want this to happen and the
best way is not to make me captain," said Wasim Akram in a recent
The interview appeared in India's well known sports weekly," The
Sportstar" about a week after the conclusion of the Asia Cup at Sharjah
in mid-April and the copy of which is now available here.
"No one is a born leader. You learn with experience and I have learnt
so much while playing international cricket for so many years. I think I
can be a good captain but the authorities in our countries seem to think
otherwise," said the all rounder responding to a question about his
It is worth mentioning here that Pakistan's top seven players, including
his new ball partner Waqar Younus, openly revolted against Wasim Akram
before the team's departure for New Zealand about a year and half ago
and demanded his ouster otherwise they threatened they will not make
themselves available for the impending tour. Consequently Wasim lost his
job as captain.
During the course of the interview the former Pakistan skipper touched
upon many issues, including the Board's decision not to allow his wife
to stay with him in Sharjah, betting in Pakistan cricket and politics in
He admitted that his first decision not to play for Pakistan in Asia Cup
was because of the board's refusal to allow his wife to stay with him.
Akram said he was for the policy to allow wives to stay with their
player husbands during long or short tours.
"We play for 12 months a year and are out on long tours playing for the
country. Let us see how many Board members stay away from home for six
months. For them, it is easy to sit in a cosy room and make rules for
players who sweat it out on the field. I think they are being stupid
Answering a question what ails Pakistan cricket, he said: "Politics.
Petty politics. It is in the game in Pakistan, this politics. Not just
the game, it is in the administration. The cricket administration
depends on the party in power. Which ever party is in power, the Board
should be from that party's people".
In reply to a query, don't you think you can overcome this politics in
your cricket, he said, "No. I don't think. Because it is ingrained now
in the system. It is sad but what you can do about it. We would have to
live with it."
Commenting on the allegations of offering bribe to two Australian
spinners by Pakistan=92s former skipper Salim Malik, he said the Board was=
not fair to Salim Malik.
He agreed to the question that the bribery allegations against Pakistan
was part of the campaign to take the 1997 World Cup away from Pakistan
"I wish India and Pakistan play together. It is my dream to go and play
in India before I quit playing cricket".
Of stories now circulating in the subcontinent about betting and
bribery, Wasim said, "I have also heard so much and been reading about
it but honestly no such thing had happened in front of me. No one ever
approached me for betting or bribing someone. I have no idea about it
really because I too have been just hearing about it."
Zarak made permanent as a footballer!
By A. Majid Khan
KARACH[, May 9: After serving as a contractual player for several years
the world renowned squash star Zarak Jahan Khan has been permanently
absorbed as a footballer and not as a squash player.
The appointment of Zarak Jahan Khan who played for Pakistan which
regained the World Team title at Karachi in 1993, now as a football
player is said to be the biggest joke not only in Pakistan squash
history but might be in international sports.
The letter issued by the PIA Sports Department says Zarak Jahan Khan has
been absorbed in Group Three in the Sports Department.
A shocked Zarak, who has improved his world ranking from number 11 to
ten announced on May 1, has yet to sign the appointment letter as a
Salim Malik innocent until proved guilty: CEO
By Samiul Hasan
KARACHI, May 14: The Pakistan Cricket Board (PCB) will be dispatching
its reply to the International Cricket Council (ICC) in the next few
days in response to the sworn statements submitted by three Australian
cricketers to the game's supreme body at Lord's.
Abbasi, who returned Saturday evening from New Delhi where he signed a
record 8 million pound sterling sponsorship contract with Indian Tobacco
Company (ITC) for the 1996 World Cup, however, refused to disclose the
contents of the letter.
"The inquiry into the charges made by the Australian cricketers against
Salim Malik is still continuing. Therefore, any official thing cannot be
made public," Abbasi responded.
"The only thing I can tell you is that that we have stressed in the
letter that Salim Malik should be given proper hearing. He(Malik) is
under tremendous pressure and the reputation of Pakistan cricket is also
at stake. Therefore, the situation demands that the law should take its
natural course of dispensation," Abbasi said.
Arif Abbasi added that as far as the Pakistan Cricket Board (PCB) was
concerned, Salim Malik was innocent until proven otherwise. "These are
only accusations and no action can be taken on these bases alone."
"Previously, the documents were not signed. But this time, they have
been initialled by the concerned players," he said, adding: "But the
statements cannot be termed sworn statements. No signed document is a
"Moreover, Salim Malik cannot be punished simply because the documents
submitted are sighed. Both the parties will have to be cross-examined by
the Disciplinary Committee before a judgment of guilty and not guilty is
Latif, Basit don't want to play with Malik
By Our Sports Reporter
KARACHI, May 14: Rashid Latif and Basit Ali on Sunday dropped a
bombshell when they said they will not play with Salim Malik in future.
The two, who delayed announcement on their future plans today, stated
that if Salim Malik would be in the Pakistan team, they will pull out.
"We are friends with him(Salim) but as far as cricket is concerned, we
will not play with him anymore," the two told Dawn.
Rashid, who was Salim Malik's deputy on the African safari where he
announced his retirement alongwith Basit Ali, was more specific, saying:
"He has already caused a lot of damage to Pakistan cricket.
"I feel sorry that I played cricket with him. But after knowing
everything, I will not play with him."
Rashid, an outspoken cricketer, added: "Salim's era as Pakistan captain
is the darkest period of Pakistan cricket."
Rashid stated that if he had any intentions of playing with Salim Malik,
he would have travelled to Kuwait to represent the World Eleven.
"I withdrew from the match despite signing the contract because Salim
Malik was included in the team. I was being paid US $ 4,000 for one
game. But for me, money is secondary. My principles take precedence over
everything." Rashid said.
Rashid and Basit, asked if available for the country, said if Salim
Malik is ousted, they are available.
Rashid and Basit again appealed that former Pakistan captain Javed
Miandad be brought back to the team and in the role of captain. "His
experience is -invaluable. He can be the scattered team."
Hasib wants amicable solution to Salim's case
By Walter Fernandez
KARACHI, May 8: "The Pakistan Cricket Board (PCB) should come forth with
a sound reason as to why Rashid Latif and Basit Ali have announced their
retirement from Test and international cricket. Were they forced into a
corner to take such a drastic step and have the PCB officials set the
ball in motion to resolve the issue by asking the two to withdraw their
decision," said: former Chairman of Cricket Selectors Hasib Ahsan in an
exclusive interview to 'Dawn' here on Monday.
"With both Rashid and Basit having taken the ultimate step prematurely,
the matter has become public property as the two cricketers are national
heroes. On this rationale alone, the public have every right to know the
underlying motive that prompted the two into the act," opined Hasib
"Coming to the captaincy issue. The crux of the dilemma is that the,
should not be kept hanging in the balance. After all, we are the world
champions and the captain should be appointed much in advance so that he
can play an active part in the selection of the squad," added the former
"But the way it is being handled spanks of an amateurish approach. The
PCB is hell bent to please the Test and County Cricket Board (TCCB) and
the Australian Cricket Board (ACB) even at the expense of the total
destruction of the team -and the losing of its status as the world
champions," explained Hasib Ahsan.
"Then, come to think of it, the Salim Malik case is being referred to
the International Cricket Council (ICC) for a solution. By and large it
sounds ridiculous. No way it is a Kashmir issue that has to he sent to
the United Nations for a resolution but a purely internal matter,
requiring an answer to be found by the PCB," opined the former Chairman
of Cricket Selectors.
"Nor has the ACB any justification to intervene in the affair. Just
because two of their players who failed to live up to their billing as
the best spinners in the game at the moment on the tour of Pakistan,
came up with a trumped up bribery charge to camouflage their
ineffectiveness. It will not stand good in any court of law," stated
"The present Chief Executive Officer of the PCB and the outgoing
Chairman of the Board of Control for Cricket in Pakistan (BCCP) are
agents of the TCCB and ACB. If they cannot find anamicable solution to
the Salim Malik case they should call it a day and go home," demanded
the former Chief Selector.
"Without a shadow of doubt, Salim Malik is the best batsman in the world
and he just cannot be dislodged by mediocre spinners like Shane Warne
and Tim May on Pakistani tracks, they want him removed at all cost from
the international scene, so that Australia can assume the mantle of the
best team in the world," opined Hasib Ahsan. "Both Rashid Latif and
Basit Ali have levelled allegations that many players in the Pakistan
team were actively involved ill betting. If that be so, an investigation
should be held and if anybody is found guilty he alongwith all the
undesirable elements should be banished from the team for ever,"
stressed the former Chief Selector.
"Yet another mess is being created in the National Stadium (Karachi) and
Qadhafi Stadium (Lahore) renovation work. The job has been given to
favourites of the officials of the PCB, without even resorting to the
time-tested method of securing open tenders. A colossal sum of Rs 22
crores is being spent on the work," alleged Hasib Ahsan.
"Is this not a waste of public money on the Qadhafi Stadium which at
most will hold only the final with a capacity crowd. The match will not
draw any foreigners but only spectators from home," claimed the former
Chairman of Selectors.
"What should be done is to save this kind of money and build five small
staid in Karachi, another five in Lahore and 15 others around the
country. This would help enormously in improving the infrastructure for
the game in the country," opined Hasib Ahsan.
"I hope, Senator Malik Mohammad Qasim, Chairman of the Public Accounts
Committee, probes the matter.
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