Fiscal highs and lows

THE annual budget of a country reflects the built-in features of its fiscal system which evolves through historical processes, precedents and practices. An efficient and equitable fiscal system is one which helps achieve the basic economic objectives defined by a country for a given period of time.

These objectives generally include ensuring a sustained growth of real GDP, maintaining a high level of employment, containing inflationary pressures, improving income and assets distribution, reducing mass poverty and accumulating adequate foreign exchange reserves.

When one looks critically at the fiscal system of Pakistan, one finds that its basic norms and practices both on the side of resource mobilisation as well as public spending have remained by and large unchanged for the last half century. On the other hand, the social demands and economic needs of the country have changed in a fundamental way over the last five decades, with the result that the fiscal system has been rendered out of sync with changing demands.

The disconnect between budgetary practices and national needs is the outcome of numerous social, political and economic factors. Focusing only on the economic side, it is realised that one clear cause of this disconnect is related to the continuous reliance on ‘fiscal incrementalism’ as the central approach of budget-making in Pakistan. Under this approach, at the time of budget formulation, the different heads of revenue (taxes and non-taxes) and the current expenditure of different state agencies are increased by a certain margin ranging from 10 to 15 percentage points while accommodating the impact of newly introduced policy changes. Since the policy changes are generally incremental in nature, the overall structure of the fiscal system continues to retain its traditional-cum-historical form.

It is interesting to observe that most fiscal variables for the period prior to the year 1999-2000 show remarkable mapping around their historical averages. For example, total revenues on a consolidated basis (federal plus provincial) have moved around the average of 17 per cent of GDP with consolidated taxes at around 13.5 per cent and non-tax revenues of 3.5 per cent of GDP. The current expenditure has fluctuated around the average of 19 per cent and development expenditure at 4.5 per cent of GDP, giving an average of 23.5 per cent for the total expenditure. The consolidated budget deficit has varied around the average of 6.5 per cent of GDP.

The base of national income accounts was changed by the Federal Bureau of Statistics from 1980-81 to 1999-2000 and the nominal GDP increased significantly from the year 1999-2000 onwards. As a result of higher GDP, the magnitudes of most fiscal variables for the years 1999-2000 onwards when measured as a ratio of GDP have decreased by a margin of two to three per cent. Therefore, all variables of the fiscal system in the post-1999-2000 period show substantive reduction.

For example, the total revenues of Pakistan in the post 1999-2000 period have fluctuated around an average of 14 per cent, the tax revenues have slid downwards to an average of 10.5 per cent, total expenditure has come down to about 19 per cent of GDP, current expenditure has an average of 15.5 per cent and development expenditure has fluctuated around an average of 3.5 per cent of GDP, even through it shows a rising trend in the last four years (2003-04 to 2006-07). In fact, the entire budgetary system now looks further squeezed and retrenched as a consequence of the rebasing of national income accounts.

Even in the absence of rebasing the national income accounts, the budgetary system of Pakistan does not show any major vacillations and historically it is caught up in an extremely low level of stabilisation. The economy of Pakistan suffers from fiscal fatigue which means that the components of the budgetary system fail to show movement to match the growing demands of national economy or to meet the external challenges of globalisation and internal challenges of poverty, unemployment and high inflation.

Development expenditure during the last 25 years has continued to drift downwards. In 1980-81, development expenditure was as high as 9.3 per cent of GDP which fell to 6.4 per cent in 1990-91 and 3.3 per cent in 1998-99 and 2.1 per cent in 2000-01. The persistent decline in development spending apparently reflects the impact of what can be termed as the philosophy or approach of ‘fiscal monolithicism’ under which all adjustments are made in the development expenditure to meet the specified targets of budgetary deficits.

Given the inelasticity of tax revenues and the major heads of current expenditure, such as debt-servicing and defence which together account for more than 70 per cent of total current expenditure, the final burden of adjustment has to be borne by development spending.

Over time, the budgetary system of Pakistan has come under increasing pressures. The system consequently has developed the ‘syndrome of asymmetries’ under which the seven key fiscal variables which should be quite high have assumed a low magnitude and seven variables which should be low have actually grown disproportionately. The seven lows are tax-GDP ratio, non-tax-GDP ratio, revenue surplus, share of development expenditure in the total expenditure, spending on social and economic services in the current expenditure, spending on education, health, agriculture and industry in the Public Sector Development Programme (PSDP), and the overall size of the budget.

The seven highs of the national budgetary system which have emerged over time can be identified as the share of indirect taxes in total taxes, share of withholding taxes in direct taxes, dependence on surcharges for revenue generation, share of federal taxes in the total tax revenue i.e. high ‘vertical imbalance’ in resource (tax) mobilisation, share of public debt in financing budgetary deficit, level of current spending on debt-servicing and defence, and the mismatch between sectoral GDPs and tax contributions. Fiscal transformation is an urgent but a long-term task. It must focus on reversing the set of seven critical variables of the fiscal system which are very low in value and reversing the seven sensitive variables which have assumed high magnitudes in a historical perspective.

The writer is chief (WTO), ministry of industries and production. The views expressed here are personal to the writer, and not of the Government of Pakistan.

Why not Pakhtunkhwa?

A NUMBER of letters in the press and statements from the Awami National Party leaders make it clear that the Pashto-speaking people of the NWFP, or at least the supporters of ANP, want that the province be renamed Pakhtunkhwa.

Another possible name would have been ‘Pakhtunistan’ – ‘tan’ being used for ‘the land of’ — but the Pakistani establishment has reservations about it since it was associated with an irredentist movement of that name in 1947. Both names are connected with ethnic identity, so let us refer to that in passing.

Pashto became the identity symbol of the Pakhtuns during the British period. Khan Abdul Ghaffar Khan used this in his anti-British movement. He published a journal called the Pakhtun from 1928 onwards and in this he kept emphasising that a nation is recognised by its language. By calling the Pashto-speaking people a ‘nation’, Khan Ghaffar mobilised them as a group. They were supposed to transcend tribal, or local, loyalties, and language was a means of doing so. The ordinary Pakhtun, of course, was proud of being a Pakhtun — of Pakhtunwali — and the pride of language must have grown in this period.

Khan Ghaffar became associated in Pakistani eyes with Afghan irredentism — the Afghan claim to Pakistani territory. Khan Ghaffar had, indeed, demanded an autonomous Pakhtunistan earlier but on September 4, 1947, he said that he only wanted a loose confederation of the ‘six settled districts’ of the NWFP. Later on, the National Awami Party went even beyond that — all it wanted was more power, more autonomy but all within the federation of Pakistan.

Pakhtun ethnicity actually declined in intensity as Tahir Amin pointed out first in his pioneering study of the ethno-national movements of Pakistan. I, too, reached the same conclusion. As the Pakhtuns got jobs in the army and the bureaucracy and got into business, they did not want to separate from Pakistan. What they wanted was that they should be recognised as a nationality in their own right and for this they wanted their living place to be given their name — Pakhtunkhwa. It was not a small matter for them because pride, self-esteem, identity and related issues are never trivial. So why the opposition?

The reasons for the state’s opposition are given in many books. Briefly, the ruling elite of the centre believes that Pakistan can become stronger by denying the various ethnic identities (and so languages) of the people of this land. Among the symbols of integration which the state emphasises are Islam and Urdu. The idea is that the creation of a Pakistani identity involves the suppression of other identities. It is this thinking which sets alarm bells ringing as soon as an innocuous proposition like the renaming of the NWFP comes up.

But this alarmist thinking is gradually giving place to accommodation. The ANP is, after all, part of the ruling coalition and people seem to have understood that Pakistan’s imposition of Urdu on Bangladesh was a mistake. Now the major opposition seems to be from the people who speak Hindko, Khowar and so on. First, there are minorities in all other provinces of the country — Punjab, Sindh and Balochistan — which already carry the names of the language of the majority community, so this should not be made out to be an impediment in the case of the NWFP alone.

I am suggesting this because one argument against the name Pakhtunkwa is that it does not represent the other major languages of the NWFP which are Hindko and Khowar. Pakistan has 72 languages listed against its name in the Ethnologue. However, personally I believe the figure is 55. This means that the NWFP in common with the other provinces has more than one language.

Indeed, the fact is that there is hardly any country or province with only one language. France has over 30 languages (some that are spoken by a very small section) and not only French. For Germany, about 27 languages are listed (two being dead ones). Greece has 15 (two are extinct). In India, every linguistic state, including Tamil Nadu, Gujarat and Punjab, have many languages besides the ones which give these states their name.

In short, giving a name to a piece of land with reference to a language does not mean, nor has it ever meant, that that should be the only language spoken in it. The name is a reflection of the democratic will of the majority. Of course, the language rights of the minority should be protected by law as they are in French-speaking Quebec, the Catalan-speaking parts of Spain or the Romansch-speaking cantons of Switzerland.

However, I would like to go a step further and propose that, like India, we too should go for more states identified, as far as possible, by ethnic identity based upon language. If this happens the NWFP will lose the Hindko and Khowar-speaking provinces but will gain the Pashto-speaking part of Balochistan.

Punjab, too, will have to become smaller since a Seraiki province will be carved out of it. This would mean that Punjab will no longer dominate politics and this will reduce the friction between the federating units. The aim is to have justice and peace and it is with reference to these ends that this solution is proposed. But such solutions are subject to the will of the people. Referendums may be one way of finding out what their will is.

In the NWFP, however, there is another ironical twist — the oldest inhabitants of the cities are Hindko-speaking people. But this should be a minor problem considering that Karachi has a huge Pakhtun population. People will learn to live with each other but I see no reason for denying them the legitimate name of their province on the grounds that this will increase ethnic tension. On the contrary, if anything, it will defuse the existing tension.

Mapping for renaissance

CULTURAL mapping creates a neutral body of knowledge that can be either used as a tool for control and subordination or as a means of consolidating national pride and facilitating development.

History reminds us that the purpose behind the hundreds of Company drawings and prints that were commissioned by colonial rulers to comprehensively document ethnic groups, traditional professions, historical monuments and natural wonders was far from benign. This was used to study the people and the vast material and natural resources of the subcontinent like anthropological specimens before policies of social and economic manipulation, loot and plunder were formulated.

Some specific replicas of the sophisticated Indian-applied design vocabulary were meticulously made for transfer to England as part of the cultural booty.

A Bangladeshi craft activist once narrated how, soon after her country was born, she accompanied a group of women that fanned out all over the war-ravaged hinterland in small boats, by train, car and on foot to document crafts for posterity. Later, the data was instrumental in the revival of kantha embroidery and jamdani weaving for income-generation in the rural areas.

The name of Kamaladevi Chattopadhyay in India is synonymous with textile craft documentation and revival as well as its introduction to western audiences.

In Pakistan, Lok Visa has consistently mapped the intangible legacy of folklore, music, songs and dances, and houses the nation’s biggest library on craft data and craft collection.

The various efforts being carried out in Pakistan will soon be able to benefit from scientific cultural mapping. This project spearheaded by Unesco and the Norwegian government with local and international experts will start from Pakhtunkhwa (the NWFP) and focus on the tangible and intangible culture including historical sites, monuments and natural heritage.

According to experts, ‘mapping’ should not be confused with ‘documentation’. Mapping is basic data collection regarding what exists where, which is then plotted on maps to give an overview of its location. Documentation usually is a more detailed study of the mapped data.

The long-term outcome expected from this mapping of cultural assets is awareness, conservation and development. Awareness created via data collection can take place at multiple levels. The involvement of the community in identifying critical cultural components can lead to an ownership of the project which is reinforced by inducting local data collectors. These actions will engage communities in a familiar legacy once they learn to see it through the eyes of the experts.

The importance bestowed by this rediscovery can create possibilities for employment both as protectors of monuments and sites and revitalisation of the craft and exponents of intangible culture.

On a national level, once the available data is disseminated via media it can debunk myths created by ideological propaganda and reclaim space for a pluralistic culture and as it renders ineffective political manipulation created by false perceptions.

The mapping agencies have to prioritise an ethical framework to ensure that the mapped material belongs to the community and is used to benefit it, just as it is extremely important that the methodology of data collection is sensitive to local conventions. Once the copyrights laws empower the community with the data, they can use it with the help of culture activists and development experts.

Most importantly, mapping gives the community a voice, particularly to the rural poor who, ironically, because of their poverty and lack of exposure, often retain the strongest links with cultural conventions and crafts. The recording of their narratives will reaffirm their place in the mosaic of national culture. The recollections of ethno-historians like mirasis and bhaands who are Pakistan’s storytellers and balladeers will be able to provide rich accounts of the people’s version of history.

This traditional knowledge of intangible culture is under the greatest threat as its keepers are getting on in age or are abandoning their profession.

Several years ago, when a group of culture activists wanted to organise a traditional puppet show at the Arts Council in Karachi, the only family of puppeteers was traced in a far-flung katchi abadi where they had given up their ancestral profession to become vegetable sellers. It took considerable persuasion to make them take out the puppets and costumes from cloth bundles lying forgotten in a corner of their habitat.

Once the kat putli ka tamasha was underway, not only were the puppeteers in their element they also brought pleasure to dozens of children and brought back memories for adults in the audience.

The urgency for mapping the disappearing natural resources of the country cannot be overstated as according to a survey in 1947 forests covered 25 per cent of Pakistan. Today, the figure is down to four per cent. It is common knowledge that desperate poverty on one side and an unchecked timber mafia on the other are responsible for this disaster that includes the deforestation of Changa Manga and the great juniper forests of Ziarat amongst others.

The coastline faces irreversible ecological damage if the rapid urbanisation of islands near Karachi and the Makran coast continues. The cultural mapping of these regions can be expected to bring visibility to hundreds of fishing communities each with its own dialect, crafts and customs.

At present, two models of cultural development exist in Pakistan. The Aga Khan Development Network with the Aga Khan Trust for Culture model has achieved unparalleled success in using mapped data as a development tool. The revitalisation of communities in Hunza and Baltistan is a result of the synergy created by development efforts and cultural revival leading to social progress.

The other model of Saidpur Village, developed as a trendy rustic hangout in Islamabad, is being termed as a failure by experts and culture activists for its blatant disregard of ecology, history and culture. This ancient village that includes a shrine, temple and traditional pottery, has been marred with an entrance façade that has no relationship to its indigenous architecture. The stream that runs through the village too is under threat as are the village houses, parts of which are being replaced with a shopping arcade.

A good question for the nation to ask would be: why does one work while the other fails? The answer is simple — when we learn to listen to local communities it is difficult to go wrong.

The cultural mapping of assets can be a step in the right direction if it can empower the communities under threat with the provision of data for development.

The writer is an art critic, independent curator and art activist.

asnaclay06@yahoo.com

All the right moves

THERE’S 3.25 minutes of my life I’m never getting back. For someone who had the chutzpah to shake his moneymaker in front of an all-powerful audience, his moves should at least have been worth the guts of Graham, the balance of Baryshnikov or the nimbleness of Nureyev.

No, Abdullah Yousuf’s dazed, convulsive star turn at a semi-private function in Islamabad last year would have made even Russ Meyers semi-blush. This wasn’t a dance, it was a seizure.

News anchors, improbable analysts and commentators seized the moment and denounced the chairman’s dance with full-bodied, finger-wagging fury. The Central Board of Revenue hath become a den of sin, they said. The CBR chairman and the overlords of the country regale themselves while the poor are starving to death, they said. Islam itself is under attack, they said. Everyone’s a critic — and a drama queen.

Mr Yousuf’s impromptu jig is forever preserved on YouTube. But while much is being made of his rather unnecessary solo at a send-off for former Prime Minister Shaukat Aziz in Islamabad last year, this was no Nero moment. Countless others claim to have also rejoiced at Mr Aziz’s departure, but far less expressively. Song and dance are a celebrated part of our South Asian tradition. Why then was this dance particularly odious to the high priests of Pakistan’s morality spluttering on the nearest available TV channel?

Perhaps Mr Yousuf’s number challenges our notions of propriety for men, especially greyed men whom we trust to run the serious and staid business of minding our tax receipts. The bunny-hopping, arms-flailing extravaganza would have passed without notice had the performer been, say, the federal secretary for culture. Or perhaps Mr Yousuf would have gotten off lightly had his moves deferred to our fondness for Punjabi machismo and been, well, mannish.

Unfairly tied to the wholesale condemnation of Mr Yousuf are two other factors: antipathy for President Pervez Musharraf, who was among the audience and is said to have cut a rug at the event himself; and our ‘how-dare-they’ abhorrence of a display of spirited public behaviour by those we expect to be perfectly morose (Mr Musharraf) and perfectly sober (Mr Yousuf) even in their downtime. It’s time to accept that bureaucrats are people, too.

At least as CBR chairman, Mr Yousuf has made all the right moves. In a hearing last March, Mr Yousuf informed Senators that the CBR had increased collections in this year’s first eight months by 23 per cent to Rs513.6bn compared to the same period in the last financial year and increased advance tax revenues by 131 per cent. This may be news to those who have decried his performance as a danse macabre for the economy and claimed that his berth owes to his extracurricular qualifications.

The economy, like Mr Yousuf’s unwitting audience, has seen worse. It has survived suicide attacks, judicial street parties and a devastating assassination last December whose ripples shook the world economy. It will surely survive Mr Yousuf’s temporary loss of equanimity. Gratuitously thrown into the attack on Mr Yousuf is his alleged disdain for what is, vaguely, proper Muslim behaviour. This is unfortunate. Islam, which has no relevance to this discussion, will also survive.

The only scandal here is Mr Yousuf’s terrible dance skills, seared into the mind forever. Yeah, thanks a lot YouTube.