ISLAMABAD, Aug 15 (APP): Pakistan Institute of Development Economics (PIDE) in its recent research study has highlighted the importance of focusing on growth with special focus on investment, productivity and exports.
According to the ‘One Year Growth Strategy for Pakistan’ launched to mark country’s 75th anniversary of independence says that historically the country had been focusing on taxation, not on growth.
“We have to shift the focus on growth; for that, we need to shine a light on investment, productivity, and exports,” the report says, adding that for this purpose there was need to remove bottlenecks.
According to the report, Pakistan was having the lowest investment rate in neighboring countries and the policy was totally focused on the tax rate and revenue collection, with no priority to investment and growth.
Pakistan’s debt to GDP ratio was another concern which continuously been rising over the last decade. There is a negative linear association between debt and economic growth regardless of the types of debt and the countries’ income levels. Moreover, since 1965, Pakistan approached International Monetary Fund (IMF) twenty-two times; the recent engagement with the fund makes it the 23rd time, it adds.
The report terms problems in energy sector as chronicle that eight governments were not been able to resolve. Due to mismanagement and weak governance in the power sector, huge transmission and distribution losses occurred (Rs.473 billion during 2021, out of which Rs. 402 recovered through tariff and Rs. 71 billion was added to circular debt).
PIDE report suggests a decentralized billing system at the DISCO level and need to bring pre-paid meters to the market, which consumers will buy themselves. This will create the possibility to minimize losses.
It also highlighted the importance of empowering the National Electric Power Regulatory Authority (NEPRA) to facilitate ‘wheeling’ at the marginal cost to make it attractive for sellers (generation companies) and buyers (bulk power consumers).
The PIDE’s research also suggests reforms in taxation for sustainable growth, adding there must be a mandatory tax filing, need to abolish the distinction between filers and non-filers.
It also recommends introducing joint return filling instead of individual, and Income tax should be universal and not segmented. The division of income based on agriculture, dividends, and so on must be abolished. An integrated, fair value single VAT-based system of Sales Tax is the need of the hour.
Besides these four areas, the study suggests to focus on market spaces.
It proposes that Pakistan must grow at 7-9 percent, adding the other crucial issues would settle through the spillover and the ripple effect of that much growth.