Article Type

Article

Description

Popular discourse pertaining to Pakistan`s economic problems usually takes place at a highly superficial level, looking merely at symptoms. It is essential to go beyond generalisations and diagnose the real sources of the malignancy affecting the economy.

Several disconnects and mismatches of various kinds are sapping the economy`s energy and vitality. These need to be fixed as part of a medium-term consensus agenda. First, unlike the past where the rural population lived under miserable conditions, the increase in commodity prices has transferred additional purchasing power worth about Rs450-500bn from the urban economy to the rural. Rural incomes are exempt from direct taxation and therefore the government is unable to capture a share of this additional income. The rural aristocracy spends its newly earned incomes on luxuries such as cars and travelling abroad. Farmers and other members of agricultural labour spend on either tax-exempt goods or on goods and services provided by the unorganised sector.

Publication Source

Dawn

Publication Date

2-6-2011

Pages

1-3

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