This document discusses Pakistan's growing socioeconomic crisis through analysis of various economic and demographic indicators. It finds that Pakistan has very low tax collection as a percentage of GDP, high inequality, a large informal economy, high population growth, low education levels, water shortages, and overspending on military compared to other countries in South Asia. As a result of these challenges, Pakistan has faced weak economic growth, heavy reliance on foreign aid, rising debt levels, and a deteriorating fiscal situation that threatens long-term economic and political stability if not addressed.
1. THE GROWING SOCIO-
ECONOMIC CRISIS.
MOHAN GURUSWAMY
DISTINGUISHED FELLOW
OBSERVER RESEARCH FOUNDATION
Pakistan: On the Road to
Perdition.
September 6, 2012Mohan Guruswamy ORF
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4. Economic growth in South Asia (2001-11).
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5. Snapshot of our old friend, the enemy.
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Pakistan has been ranked among bottom 20 of the 144
economies around the world in The Global
Competitiveness Report 2012-2013, released
Wednesday by the World Economic Forum.
According to the Global Competitiveness Report (GCR)
2012-13, Pakistan lacks a long-term view of
competitiveness.
The level of corruption and poor governance are some
of the factors slowing down Pakistan’s economic
growth, therefore ranking Pakistan at 124 among 144
other countries on the index.
16. Tax/GDP ratios of Top 10 & Pakistan’s.
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USA 28.2
China 17.0
Japan 27.4
India 17.7
Germany 40.6
UK 39.0
Russia 36.9
France 46.1
Brazil 36.8
Italy 42.6
Pakistan 10.6
17. “Much of Pakistan’s capital city looks like a rich Los Angeles suburb. Shiny
sport utility vehicles purr down gated driveways. Elegant multistory homes
are tended by servants. Laundry is never hung out to dry.
“Taxes are the Achilles’ heel of Pakistani politicians,” said Jahangir Tareen, a
businessman and member of Parliament who is trying to put taxes on the
public agenda. He paid $225,534 in income tax in 2009, a figure he made
public in Parliament last month. “If you don’t have income, fine, but then
don’t go and get into a Land Cruiser.”
Out of more than 170 million Pakistanis, fewer than 2 percent pay income
tax, making Pakistan’s revenue from taxes among the lowest in the world, a
notch below Sierra Leone’s as a ratio of tax to gross domestic product.”
From report by Sabrina Tavernise in The New York Times of July 16,2010
Tax-free prosperity!
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18. “Yet Pakistan’s fiscal troubles are antediluvian. It is
one of the most lightly taxed countries in the world.
Fewer than a quarter of the country’s firms declare
any taxable revenues, and only 11 out of every 1,000
of its citizens pay tax on their incomes, according to
the World Bank. As a result, tax revenues amount to
a mere 10% of Pakistan’s GDP.”
The Economist, January 11, 2011.
http://www.economist.com/node/17913440
Free for all economy!
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19. A survey, carried out by a reputed Lahore-based academic
institution a few years back, as a part of tax reformation drive,
concluded that mainly because of rampant corruption, in
combination with a host of other factors,
the country suffers a loss of
64 percent in income tax,
48 percent in customs, and
45 percent in sales tax .
Translated into hard cash, it means that for each hundred rupees
of genuine income tax payments of a typical Pakistani business,
the government collects only Rs 36.
The rest of the money is shared among the three parties -
assessors (taxmen), the assesses (taxpayers) and the middlemen
(tax practitioners).
Cost of walking out in the green channel.
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20. Dr Aqdas Ali Kazmi* in his paper ‘Tax
Policy and Resource Mobilization in
Pakistan’ estimates
70 percent part of economy consists of
36 percent pure black economy,
18 percent exempted economy,
9 percent illegal economy,
4.5 percent unrecorded economy, and
2.5 percent informal or unreported
economy.
*Dr. Aqdas Ali Kazmi former Joint Chief Economist
(Macro), Planning & Development Division,
Government of Pakistan, Islamabad.
Black and bleak economy.
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21. According to a US State Department report, released in 2006, the
Gini Coefficient for Pakistan is 68.0.
According to the same report, the 'Gini Index' for Japan is 14.9, for
Sweden is 21.0, for Switzerland is 21.1, for Germany is 22.3, for the
United Kingdom is 23.0, for Canada is 23.1, for France is 32.7, for
Iran is 41.0, for the United States is 46.6, for Argentina is 52.2, for
Mexico is 54.6, for South Africa is 57.8 and for Namibia is 70.7.
According to an United Nations report, from 1987 to 1999, the Gini
Coefficient for Pakistan was in the range of 0.33 to 0.43, but it
increased to 0.68 in 2006.
Comparative Income Inequality. Gini out of the bottle.
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28. Country Investment as %
GDP
China 42.60
India 33.70
South Korea 28.20
France 20.80
Japan 20.20
Russia 20.00
European Union 19.70
Italy 19.20
Germany 18.90
Pakistan 18.10
Brazil 17.00
United Kingdom 15.00
United States 12.50
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Some Investment/GDP ratios.
29. IMF’s Pakistan GDP Projections (in US$ Billions)
GDP for Pakistan in year 2015
246.234
GDP for Pakistan in year 2014
228.874
GDP for Pakistan in year 2013
213.795
GDP for Pakistan in year 2012
200.803
GDP for Pakistan in year 2011
189.971
GDP for Pakistan in year 2010
177.901
GDP for Pakistan in year 2009
166.515
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34. Demographic Highlights
Population Living in Urban Areas of 750,000+, 2005 (%) 18
Population Living in Urban Areas of 750,000+, 2005 31,795,000
Youth Ages 10-24, 2006 54,200,000
Youth Ages 10-24, 2025 64,800,000
Ever-Married Females Ages 15-19 (%) 21
Population Mid-2009 180,808,000
Birth Rate (annual number of births per 1,000 total population) 30
Death Rate (annual number of deaths per 1,000 total population) 7
Rate of Natural Incr. (birth rate minus death rate, expressed as a %) 2.3
Population Mid-2025 (projected) 246,286,000
Population Mid-2050 (projected) 335,195,000
Population Change 2009-2050 (projected %) 85
Only one thing is for sure - lots more Pakistanis to contend with.
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Nuclear weapons neither ensure security, nor do
they consolidate political power; rather they are a
threat to both security and political power. The
events that took place in the 1990s showed that the
possession of such weapons could not even
safeguard a regime like the former Soviet Union.
And today we see certain countries, which are
exposed to waves of deadly insecurity despite
possessing atomic bombs. ... Ayatollah Khamenei.
45. Water
dependence
Indus River basin is the
main irrigation source.
106 MAF.
80% is utilized in
Punjab.
The big land holdings
are situated close to
canals and water
sources. The small
holdings are mostly fed
by the capillaries.
Blame it on India.
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46. Who has got the water.
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47. The basis of Pakistan’s inequality.
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