OWING to the devastating fallout of Covid-19, maximising public welfare and economic self-reliance have emerged as the over-arching issues for many countries, including Pakistan. These two issues would matter a great deal in setting the course of economic recovery and social development.

Going by the official pronouncements and prior policy decisions, the 2020-21 budget will aim at shoring up the sagging domestic demand and speed up efforts to boost indigenous production to cut imports as badly hurt exports would take time to pick up.

The coronavirus has destabilised many developing and developed economies and international trade, and the ways things were done with an approaching recession.

The prime minister’s advisor on commerce Abdul Razak Dawood said on May 26 his ministry is working on reforms for inclusion in the upcoming budget that would encourage import substitution of major consumer items and promote domestic commerce. Officials see a huge potential for indigenous production as most of the identified items require simple technology.

The main focus of the reforms including rationalisation of tariffs would be to promote ‘Make in Pakistan’. The cost of local production will be reduced by slashing customs and regulatory duties on raw materials and semi-finished goods.

The key task in the realm of public welfare is to encourage entrepreneurship at the grassroots in a variety of ways that helps people fend for their livelihoods

New jobs are to be created by industrial revival. However, a report on job prospects worldwide including Pakistan by Payoneers indicates that self-employment could become more stable than full-time jobs in the post-pandemic labour market. The firm’s CEO Scot Galit says: “companies will be looking to run leaner and to do so, they need to fill the skill gap.” The virus has severally affected both regular jobs and freelance work.

On May 21, the Economic Coordination Committee (EEC) finalised a tax incentivised policy to promote local manufacturing of mobile handsets and directed the relevant ministries to engage with foreign investors to relocate their production facility in Pakistan as they are moving to the next level of industrialisation in line with the 5G technology rollout.

The target is to get this investment as soon as the coronavirus is subdued. It would reinforce the country’s efforts to move faster into the digital era. Under this policy, parts of mobile phone sets would be used for the entire range of mobile phones instead of being limited to a particular brand.

Pakistan needs to evolve policies that would ensure that external financial and capital inflows reduce and not enhance external dependence. Given the current state of the international export market, Pakistan can at best generate a trade surplus after having first met the domestic demand.

On the public welfare side, the policymakers have already taken a number of temporary measures to stimulate economic activities in order to protect and create new jobs and provide cash relief to the most vulnerable after the outbreak of the virus and as a consequence of the lockdown.

In neighbouring India, an eminent economist says let money flow into the pockets of the poor to protect domestic demand from collapsing, ignoring for the time being the leakages inevitable in the centralised distribution mode.

However, the internationally claimed Indian economist Amartya Sen holds a different view: participatory governance (community outfits, non-governmental organisations, local bodies) is unavoidable and inescapable to reassure the poor that their minimum well-being is secured. That, he argues, is needed to identify needs better.

The big developed economies are witnessing huge governmental spending to shore up the financial health of firms and households incomes. But a few smaller countries, more deeply concerned with the current and future challenges, have taken an unprecedented decision to accord first priority to their peoples’ well-being and standards of living while formulating their national budgets.

In a pioneering effort the eminent women heads of government of three countries — Prime Minister Jacinda Ardern of Netherland, Prime Minister Katrin Jakobsdottir of Iceland and Scotland’s First Minister Nicola Surgeon — have teamed up to promote what is now come to be known as a well-being budget. For quite some time well-being has been the subject matter of scholarly research in developed economies. The process of adaption of a right strategy for well-being may differ from country to country and may undergo adjustments in various phases of its implementation, but it sets the direction for a paradigm policy shift for building a better world.

In the case of Pakistan, the key task in the realm of public welfare is to encourage entrepreneurship at the grassroots in a variety of ways that helps people fend for their livelihoods. This would unleash the creative impulse of the citizens to do things differently according to their needs with wisdom and innovation, says a social scientist.

Netherland’s budget aims to address the growing inequality between the haves and have-nots. That would help boost domestic demand and spur local economic activities. Some social activists there have called the move an effort to make the country a great place to make a living.

Erratic economic growth producing social exclusion has lost much of its gloss, with aggravating problems of unemployment, poverty and inequality and lag in social development particularly since the global financial crisis of 2007-08. Many noted economists argue that GDP measures a country’s output of goods and services but fails to capture the impact of climate changes, inequality, digital services and other phenomena shaping the modern societies. As a result of the global surge in inequality, unemployment, poverty, the so-called theory of the trickle-down effect of growth has evaporated into thin air.

What has become more evident now is that economic orthodoxy has entered a twilight zone.

With the exception of PTI’s approach towards its political rivals, national debate is shifting from individual to collective and systemic failures. Meanwhile, the ruling party is struggling to build a time-worn centralised welfare state.

Many temporary official measures taken since the outbreak of virus have generally evoked a positive response, especially those provided with fiscal and other stimuli. But these short-term steps are seen as inadequate and it is strongly felt by relevant stakeholders that the PTI has to work on long-term policies to put the economy on a sound footing.

Published in Dawn, The Business and Finance Weekly, June 1st, 2020