Dr Kamal Monnoo
Following up on my piece last week, the key learning is that, when it comes to economic policies, it is imperative for Islamabad to follow correct and practically pertinent examples from other global economies and not simply be duped by fancy presentations from foreign consultants or lenders—perhaps learning more from India, Bangladesh and even China in some areas, but certainly not from countries such as Morocco or Norway.
As we know, a Comprehensive Economic and Trade Agreement (CETA) deal between India and the United Kingdom (UK) came into effect last month, being the latest among the raft of free trade agreements that India has inked since 2021 to reset long-held assumptions about the Indian economy and its industrial structure.
The pattern we see is that, over the last five years, India has not merely changed its strategy and vision on trade policies, but, in a much larger context, it also seems to be resetting its very theory of growth. Essentially, from merely seeking rebated market access, such as GSP+, poverty alleviation special tariffs, etc., it now seeks to strike trade agreements on an equal footing, like a quid pro quo between nations—always a much better position from which to negotiate than begging for access on sympathetic grounds.
Also importantly, its altered overall economic policies for growth and development appear to be working. In the latest index of poverty released by the WHO, based on beggary, India features nowhere in the top ten, while, ironically, we find countries such as the USA and France there, and Pakistan, sadly, at the top.
If its big burst of economic reforms, which opened up its markets back in 1991 under the astute leadership of Narasimha Rao, Manmohan Singh and Monty Singh, was about harnessing the potential of the private sector and restraining the state’s footprint in India’s corporate arena, the current phase of liberalisation is about building domestic competitiveness and providing opportunities and markets for Indian industry to start performing on a much wider, international canvas—a profound shift from waiting for largesse on market access to, in fact, demanding it.
However, in all this, the important question for us is: why is India able to do it while we are not? The answer is fairly obvious. While India has supported its industry over the last three decades and implemented every sort of possible economic reform, including reduced taxation and a supportive bureaucracy, to shore up domestic competitiveness and the ease of doing business, we have moved in the opposite direction by systematically destroying our industrial base and needlessly empowering our bureaucracy, leading to corruption and draconian coerciveness.
Things have rapidly worsened over the last three to four years, in turn fast-tracking the industrial dismantling phenomenon. Today, Indian industry stands at a level where it not only has the strength to compete internationally but can also reciprocally give its government the strength to negotiate its preferred trade terms, based on the support of a manufacturing backyard that has the potential to become a main supply-chain source for the world.
Pakistan, in contrast, despite having a large, 250-million-strong population with a strong mix of youth, seems headed towards increased unemployment and poverty. Its lack of belief in itself is exposed by the sheer nervousness being felt across the markets simply because of the upcoming renewal of the EU’s GSP+ status.
If Pakistan is also to improve its economic prospects and sovereignty, the only route is through supporting local industry and manufacturing by enhancing competitiveness and the ease of doing business. This will not only shore up national exports but also lure foreign investment that perceives Pakistan as a lucrative hub and an attractive market in which to set up shop, bringing investment based on cutting-edge technology and precious capital.
To mend this fractured relationship between the private sector and the government, a reset will be required based on a single element: trust.
The writer is an entrepreneur and economic analyst. Email: kamal.monnoo@gmail.com
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