MACROECONOMIC stabilisation was on the top of the economic agenda till early 2010 when it was `reinforced` with a `growth` strategy transplant. However, it did not help. The economy neither stabilised nor grew at a fast pace.

The GDP growth rate is slow, and the fiscal strains have forced the government to remain tuned to the idea of returning to the IMF programme as and when economic exigencies left it with no other option.

A close to four per cent growth rate is much less than the economy`s potential and definitely not enough to produce jobs for a growing army of unemployed.

Two years ago, Dr Nadeem ul Haq, Deputy Chairman, Planning Commission, launched the `growth strategy` `designed` to put the economy on the expansion trajectory.

The strategy floated some innovative ideas for sustainable growth. It placed a greater focus on raising productivity and encouraging innovation while advocating deregulation to allow free play of markets to spur investment and creation of spaces in cities for rapid commercial growth.

The policy document blamed insufficient connectivity of social and physical infrastructure and inefficient use of software development for erratic growth cycles and the economy`s underperformance.

`Software of economic growth includes better organisation of institutions, effective governance mechanisms, optimal allocation and efficient management of physical infrastructure, and development of human capital that is in line with globally successful experience`, a document on the website of the Planning Commission states.

Despite all the sheen and gloss, the growth strategy has yet to produce results. Higher-ups in the Planning Commission, contacted in Islamabad, felt disappointed themselves. `The vested interest, thriving on the current decadent, skewed order, is deeply entrenched. Any move towards implementing the said strategy is resisted tooth and nail at every step. How can a plan that has never been implemented be judged against performance?`, a senior official requesting anonymity said over telephone.

Dr Hafiz Pasha, leader of the government`s advisory committee of economists e-mailed a paper to Dawn in which he identified 10 steps for tax reforms to achieve stabilisation.

These include: effective taxation of agriculture incomes by provinces, reintroduction of wealth tax or introduction of a minimum assets tax on global holdings and withdrawal of `tax expenditures`, and transparency in reporting.

It further includes: a move from scheduler income to a comprehensive income concept, transition from fixed/presumptive final taxes to a withholding tax regime with an option for either regime, introduction of an integrated national value added tax on goods and services, bringing the informal economy into the tax net, tackling under-invoicing and under valuation of imports and publishing a tax directory.

The objectives of the these measures are stated in the paper as follows: `Signalling greater equity in the tax system; widening the tax system and rationalising tax rates; improving taxpayers compliance and tackling tax evasion; and strengthening the tax administration` The paper was comprehensive, and the author was inducted in an advisory capacity soon after the PPP government assumed power. However, the fact remains that the financial balance sheet of the government remains far from satisfactory.

The taxto-GDP ratio in Pakistan at about 10 per cent against the regional average of 14 per cent, and excessive government borrowings from banks, is building pressure on the currency and pulling down some key indicators.

Explaining the wisdom of the policy options, a member of the government`s economic team explained: `The growth objective was necessary to absorb unemployed voters in the economic mainstream. The stabilisation targets were necessary to avoid the ire of multilateral donors and economic watchdogs` a senior member of the economic team defended expressed policy choices.

`I fail to see the fun if all the good work by local and international experts leads us to the corner where the country finds itself. Our team of wise men needs to keep the limitations of governance and the power structure of the country in mind while drawing future plans. Even the best of the plan is useless if it cannot be implemented`, an analyst working for a private bank commented.

He said: `The Pakistan People`s Party government enjoys support of some of the best economic minds in the country.

The mild mannered finance minister Dr Hafiz Sheikh heads the economic team that enjoys the support of fiscal expert Dr Hafiz Pasha and growth specialist Dr Nadeem ul Haq.

`I understand why growth did not pick up and the financial balance sheet was not out the red patch. The beneficiaries of the current order, the rural/urban elite and the civil and military bureaucracy are powerful and used all tricks up their sleeves to block the reforms when asked to contribute judiciously to national exchequer, invest and compete in an open market environment.

`It is actually the comfort in the government circles despite weak economic data that I find disturbing. My guess is that they have some commitment of bailout from some powerful foreign quarters. It is good because expecting economic wonders in an election year by any government is foolish`, commented the frustrated senior banker.

Another economist commented: `The current system perpetuates the culture of nepotism. The private sector seeks connections in power corridors to access favours and transfer risks. The corporate sector has learned to capitalise on government`s political vulnerabilities, gaming with finesse to push ahead their petty interest in the name of the country and its people`.

`The real transformation will happen under public pressure. As long as people do not understand what needs to be done at the public policy level, the ruling elite will keep on dodging reforms. It is naïve to expect gainers of the system to forego their claims to riches voluntarily.

`It is a fact that self-propelled informal economy is enormous whereas the government leverage is limited. People struggle hard to fend for themselves and probably they are managing well for themselves in the current difficult economic environment. This, to some extent explains, the lack of enough public pressure for crucial economic reforms `, concluded an analyst.