THE increased production of goods and services in an expanding domestic economy is generally expected to improve the quality of life of its people.That explains much of the policymakers focus on economic growth as measured by GDP.

But things become a bit confusing when the same policymakers pledge to work for ‘inclusive’ growth. To deliver public goods, the quality of growth comes into play. In this given context, it is not growth alone but ‘inclusive growth’ that matters

As some critics have summed up ‘there is growth but no development’. As opposed to the growth strategy, some scholars believe that it is development that can only help improve the livelihood of the people. Implicit in their belief is that the concept of inclusive growth is inadequate to reduce poverty.

Growth may come from a variety of sources: better utilisation of existing capacity, industrial and business consolidation rather than expansion, capital-intensive or labour-intensive activities etc and may or may not produce enough jobs

Growth may come from a variety of sources: better utilisation of existing capacity, industrial and business consolidation rather than expansion, capital-intensive or labour-intensive activities etc and may or may not produce enough jobs.There is under-employment and low wages in the informal economy particularly in agriculture.

As GDP measures the value of gross domestic product or national income, some State Bank economists have suggested that ‘per capita income’ should be a better criteria to judge an economy’s performance. Perhaps, it would constantly remind policymakers where a country’s average income per person stands and the challenges they face in the sphere of public welfare.

However, the situation becomes more confusing when some respectable and creditable economists accuse governments worldwide, including that of Pakistan, of fudging figures to hike up growth rate which, according to them, does not match ground realities. The frequent resource to prolonged stability programmes supported by the IMF also demonstrates that the present economic strategy is inadequate to achieve inclusive growth.

On the other hand multinational lending agencies prescribe , as in the case of Pakistan, that a 7-8pc economic growth rate is required to achieve full employment and reduce poverty.Till the time that happens the vulnerable need to be supported by doles. How that high rate of growth will be achieved is not clear. But one thing is apparent that fudging will not deliver.

Even if the official rate of economic growth is accepted, it cannot be denied that much of the improvements have come about because of inflows of overseas workers remittances, foreign capital and external finance.

But the structural imbalances still persist. Exports are down and imports are still rising, more so with fixed investments picking up. Inflation rate is low because of a slump in commodity prices, especially oil. Agriculture is in bad shape. The tax revenue is up because of what critics describe as the government’s ‘predatory’ ways.

Such approaches in the past have brought temporary success. Foreign exchange reserves are up because of heavy external borrowings and remittances by overseas workers

Under the stability programme, policymakers have for long focused more on means rather than the ultimate objective:of improving step by step peoples’ livelihood.Producing goods and services for the needs of the people is a nature-imposed necessity from which there is no escape.

The GDP measures the value of goods and services but there is no device to ensure a fair distribution of what is produced. Ad hoc wage fixing for workers by the federal government is not fully observed by employers. The producers are also consumers. And the more prosperous the consumer market, the more is the demand for goods and services. But the government is restricting consumption by imposing a disproportionate tax burden on the consumers.

Some market observers have concluded that the economy is expanding at its own momentum and not because of government policies. This at least is true of the informal economy greased by rising currency circulation. The mode of taxation lacks social acceptability and discourages documentation.

The major challenge lies in evolving a home-grown ‘organic development’ strategy to take care of growing structural imbalances without which the fundamentals of the economy cannot improve on a durable basis; that is so vital for sustainable economic development.

Then there are issues in the composition of GDP. All spending by the government — productive or or non-productive — are treated as part of the national income. The government borrows heavily from domestic and external sources a significant portion of which is wasted or siphoned off by the corrupt.

In absence of a robust import- substitution policy, imports continue to rise though with a negative contribution to GDP.

No doubt the CPEC projects will stimulate the economy but they can not be a substitute for domestic efforts required to develop a self-reliant economy that can fend itself against ongoing global shocks.

Published in Dawn, Business & Finance weekly, July 11th, 2016