Obese Government

Most donor advice to us, which most Pakistani economists slavishly accept is that revenues must increase. To this objective a number of new tax measures have been suggested and implemented without moving revenues as a ratio of GDP much.

For years I have argued that we need to look on the expenditure side of the equation if we are to control our deficit. There is little questioning of our expenditures by the media and by our citizens. Most discussion assumes that our expenditures are all for the public good. Consequently the constant refrain to increase development expenditures and expenditures for education.

My view is that we must focus on the waste in government and rationalize our expenditures so that they are truly used for public welfare.

Last year this discussion led to an article by Dr Farrukh Saleem perhaps the only article that documents a list of useless government agencies that still exist. He says,

“The government of Pakistan is fat, so fat that all the excess body fat has now put Pakistan’s cardiovascular health in extreme danger. All that accumulated fat has attracted diabetes, osteoarthritis and may be even cancer. So fat, that the airway is obstructed, breathing interrupted. Neither exercise nor dietary control is the solution. The Government of Pakistan cannot do without surgery, Bariatric surgery (weight loss surgery).

Imagine; the government owns and runs a Tomato Paste Plant and the Roti Corporation of Pakistan. There’s the Pakistan Stone Development Company, Pakistan Hunting and Sporting Arms Development Company, Pakistan Gems & Jewelry Development Company, Technology Commercialization Corporation of Pakistan, National Industrial Parks Development & Management Company, Technology Up-Gradation and Skill Development Company, National Productivity Organization, Implementation Tribunal for Newspaper Employees and Labor Market Information System and Analysis Unit. Our government spends millions of our tax rupees on each and every one of these but does anyone know what these high-sounding entities do?
Did you know that our government actually spends real rupees on the Center for Applied & Molecular Biology? The Center even has a webpage but the only things on the webpage are two rather meaningless emblems, nothing more nothing less. Then there’s the Council for Work and Housing Research (the webpage has 10 icons but the same page appears regardless of which icon is clicked), National Institute of Electronics, Pakistan Council for Science and Technology, Pakistan Council of Research in Water Technology, Pakistan Council of Scientific and Industrial Research, Pakistan Standards and Quality Control Authority, Central Inspectorate of Mines, Directorate of Dock Workers Safety, Directorate of Workers Education, National Institute of Labor Administration Training, National Talent Pool, National Training Bureau and a Pakistan Manpower Institute. What do these organizations do? What is their mission and what have they achieved ever?

Has the National Institute of Electronics ever produced something even distantly related to electronics? What good has the Pakistan Council for Renewable Energy Technologies ever done? Has the Center for Applied & Molecular Biology ever produced anything even distantly related to molecules, or for that matter, biology? Pakistan National Accreditation Council what a joke! Has the Pakistan Automobile Corporation ever produced anything even distantly related to automobiles? Has the Trade Development Authority of Pakistan ever done anything even remotely related to trade?

Dr Nadeem Ul Haque, estimates that our Ministry of Commerce must have sent some five dozen commercial counsellors around the world. Each one of these counsellors, roughly, cost the government a crore rupees per year and that’s Rs60 crore a year. Dr Haque insists that all these high-sounding organizations should at least be asked to justify their existence.

How much software has the Pakistan Software Export Board exported so far and what has the Engineering Development Board developed? How much tourism has the Pakistan Tourism Development Corporation developed?

That isn’t the end of the story. There is even more fat. PIA, SME Bank, First Women Bank, National Insurance Corporation, Hazara Phosphate Fertilizers, Printing Corporation of Pakistan, Machine Tool Factory, Morafco Industries, Sind Engineering, Lakhra Coal Mine, Khewra Salt Mine, Pakistan Steel Mills, Services International, National Fertilizers Corporation, State Engineering Corporation, Pakistan Steel Fabricating Company Limited, Pakistan Mineral Development Corporation, Ghee Corporation of Pakistan, Pakistan National Shipping Corporation, Pakistan Railways, State Cement Corporation of Pakistan, State Petroleum Refining & Petrochemicals Corporation, Pakistan Industries Development Corporation, Trading Corporation of Pakistan, Cotton Export Corporation of Pakistan, Rice Export Corporation of Pakistan, Pakistan Industrial and Technical Training Center and Pakistan Engineering Company.

Fat is bleeding the state of Pakistan dry. Obesity cuts down life expectancy. If each and every one of the entities mentioned in this article is shut down, Pakistan will be better-off, not worse-off.

Why can we not just eliminate these wasteful government agencies?

Comments

  1. Though I am a very big fan of Dr Haque and love his ideas and fortunately had a chance working with him closely at PIDE, but here I do not want to miss a chance to have a discussion on Obese Government.
    It is indeed a good article to read but I am afraid not practical. Dr Nadeem, with all due respect, it sounds like General Kiani took over last night and has laid out his plan of action against those who did not perform well lately.
    I am also a strong believer of increasing revenues but with particular focus on the business elite class and not just on increasing VAT twice a month on oil, gas and electricity. These kinds of haphazard actions increase inflation and severely affect government’s efforts in tackling social exclusion and poverty reduction, and further makes the poor’s life miserable.
    When I started learning economics, the first rule which I learnt was “efficient and effective use of limited resources to get the desirable outcome”. Here, Dr Haque has a rational thinking of cutting expenditure to control deficit and allocation of funds in the right direction however I am the last person favoring bariatric surgery. I do believe that exercise and dietary control could help reducing fat.
    Before setting out the prescription it is first important to get a complete medical examination. It is important to know the cause of the disease and not just cutting the arms and legs straightaway. It is important to know the autonomy which these organistaions have in decision making; how much funding is available for them to execute research and disseminate their research findings; how much funding is available for their annual plans; do they have enough funds to market their product; how many skilled/technical staff they have; how much training funding is available for the employees; and nevertheless, what is the role of each organization in policy making.
    If the medical examination shows ‘Low Hemoglobin’ then there is a need to prescribe some Iron and Vitamins including a dietary plan and if it shows ‘Very Low HB’ then there is a need to inject blood into the body. Honestly, to some extent, I agree that we need to shut down or merge several useless departments and organization, but on the other hand we do need specialized organizations for certain good reasons. So, instead of a surgery I would suggest good governance, better information linkages and capacity building.
    I totally agree with Dr Haque about the waste of money on commercial attaché. In 2006, during a survey with traders and exporters in Faisalabad, Lahore, Sialkot and Karachi, we came to know a lot about commercial attachés and their role. The worst experience was shared by a small leather exporter from Sialkot who was snubbed by our commercial attaché in Pakistan HC, Frankfurt and eventually was managed to get help from the Indian HC, Frankfurt.
    Summarizing the above, increasing revenue generation through revenue reforms are desirable; we do need autonomous think tanks, research institutions and specialized organizations; if they have not performed well lately then structural changes are required to strengthen these institutions; and good governance, exchange of information and capacity building is essential for better outcomes.

    By: Faheem Jehangir Khan
    Postgraduate Student
    School of Policy Studies,
    University of Bristol,
    Bristol, UK

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  2. Hmmm
    Faheem, However, it's a difference of opinion that you think we still have a chance to control everything with medicines and exercise. But Dr Farrukh Saleem thinks tha other way that we need to do surgery and comprehensive surgery of the economy not of those instituitions.
    I like your way of explaning hemoglobin thing.
    But let's first decide whether we need to increase the blood count or those are just dead wood.
    What says

    ReplyDelete
  3. Ali, it’s a pity that we are tuned too much to think like military personals who first try to solve the problem using their typical left-right and sit-stand drills and when they see no results of their useless efforts they just propose a grand operation (here like surgery you said).
    I ask how they turned into dead woods. Who will decide what a dead wood is? For instance, let us review the case of the Higher Education Commission (HEC) as a specialised organisation. What was HEC before 2000? A department named University Grants Commission (UGC), used to attest the university degrees, with no qualified and technical staff, poor infrastructure, with no autonomy and limited funds. So, we should have closed that department at that time. What happened then? UGC was transformed to HEC, with qualified and visionary leadership, great support was provided by the government in form for funding and autonomous status. Though HEC is facing a difficult time nowadays, but it is an institution which is benefiting thousands of students (like you and me) and envisages benefiting the country in return. So, vitamins and dietary plan did work for UGC which made that ineffective department into HEC. However, it is still debatable, “is HEC a success story or not?” because institutions need time to build and deliver.
    I have a strong feeling that the fault is not just associated with the specialised organisation alone – not performing well – but also related to several other factors which I have discussed earlier. In fact, apart from all that fancy vocabulary we social scientists often use, the most important thing is a “strong conviction and political-will”, required at all levels in general and at the top level in particular.
    Ali, I am still convinced on “NO SURGERY” and “NO GRAND OPERATIONS!”

    By: Faheem Jehangir Khan
    Faheem.Khan@bristol.ac.uk

    ReplyDelete
  4. I think we need to convert this “fat” into muscle instead of going for a liposuction. It seems Dr. Haque (along with one of the commentators) is looking for an easier route, as reformation is much more difficult than abolishing or shutting down anything. Just imagine if all these organisations were actually performing well what their contribution would have been-- that they are not needs us to dissect the problem not kill the organisation. Take for instance the example of Roti Corporation of Pakistan (RCP- one of the many organisations mentioned by Dr. Haque). Started during the Bhutto era, RCP was a big success and was about to have franchises in other countries, including Saudi Arabia, when the political scenario changed in Pakistan. Everything came down with a thud, and it was not the fault of the poor roti being produced at the RCP but the lack of political continuity, and as Mr Jehangir has mentioned, the absence of political will that destroyed the organisation.

    What we need is better governance and a strong political will, along with an analytical mind to dissect what ails us and our institutions. ‘REFORM’ is the way to go not shutting down!

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  5. So you do not believe that these organisations are dead wood and can be a good asset of the coountry if we literally give special attention to them.
    Hmmmm,
    Think of any two or threeorganisations mentioned in the article and just give a random 5 minute thought for a week that how would we can make them profitable organisations.
    e.g., consider the case of BOI

    ReplyDelete

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