What are Major Economic Challenges being faced by Pakistan? What Measures do you recommend to address it?
Pakistan’s economic woes are old and complex. These woes have kept the country in global economic dependence. Among major challenges which the economy of Pakistan faces include: failure to collect income tax, corruption, unchecked behavior of profit-mafia and debt traps.
What is Economic Challenge?
Economic challenge refers to any sort of disorder, malpractice or misuse in financial matters. At the level of state, this term usually means when government repeatedly fails to strengthen nation’s economy.
Economic Challenges of Pakistan:
Pakistan is facing following prominent economic challenges in the contemporary state of affairs:
No state can thrive economically unless it vigilantly takes care of its revenue collection. By revenue collection it is primarily meant the collection of different kinds of taxes. Pakistan’s government is effectively collecting levies like ‘Sales Tax, Withholding Tax, Registration Fees’ but it fails to collect income tax to the required level. There are two reasons behind this woe:
- Citizens of Pakistan are not accustomed to pay income tax
- The majority of Pakistani citizens are outside the tax net
- Being out of tax net has not been practically subjected to strict actions
The second major economic challenge in Pakistan is corruption. The term corruption is usually taken in economic sense. It refers to the act of stealing public money using the illegal tactics of bribery. Corruption is the fact that can be termed as ‘mother of all economic challenges of Pakistan’. This is because corruption nullifies the effect of revenue collection, its spending on public and recollecting it back from citizens.
Corruption in Pakistan is mostly associated with high rank public servants, lower rank public employees, politicians and military generals alike. Behind the reasons of surge in corruption are absence of moral fiber and lack of understanding about the sacredness of public money.
Rule of Profiteers
Governments in Pakistan are mostly dominated by the rich class of profiteers who maintain political influence in their constituencies through the money they possess. They use the money to keep citizens as loyal voters. It will not be wrong to state that voters remain commodity bought by the profiteer-politician.
When such profiteers and capitalists dominate government, they tend to make or mold economic policies in a way that benefits them more thus leaving little outcome for the people in general. This factor keeps the element of poverty intact and economic change in the lives of citizens remains a dream.
Fourth major economic woe of Pakistan is debt-traps. This term refers to the economic enslavement. Owing to rampant corruption which weakened the economy, Pakistan has for decades depended on international debts and monetary supports from states like USA, Russia, China, Saudi Arabia and UAE. Not only that, Pakistan has repeatedly subscribed to the debt packages of institutions like ‘International Monetary Fund’ (IMF) and ‘World Bank’ (WB). Pakistan has failed to pay back these debts and fell into the economic trap.
Recommendations to Address Economic Challenges
The above mentioned economic challenges can be addressed by:
- Devising mechanisms to bring all citizens in tax net
- Reforming the loop holes in tax administration
- Initiating long-term corruption elimination drive
- Discouraging rule of profiteer politicians
- Practicing less dependence on foreign debts and trying self-sufficiency
Economy is essential ingredient of a welfare state. Without strong economy and transparent economic matters, no nation can thrive. Pakistan has potential to be a welfare state but for that economic challenges need to be addressed timely.