Pakistan is experiencing the worst economic crisis and the continuing downturn has worsened in recent years. A sound economy is the backbone of the country for its grown and stability. Pakistan is one of the poorest countries in the world and a substantial number of its citizens live in poverty.
The economic crisis is due to the instability of its governing institution. Policies an priorities do not change on the basis of economic laws, but on the basis of the preferences and interests of its ruling class. Even in matters such as defense, education, health, war on terror, and foreign relations, the ruling class changes the policies according to its self-assumed priorities even betraying its own declared electoral mandate.
Pakistan after its independence faced a number of problems related with the lack of infrastructure in almost every sector of the society. Rather than addressing these issues, the ruling class often used the conditions to enrich itself from the opportunities that were open to it. This caused the country crisis after crisis in economic field. History is full with examples with economic instability and collapse has often to the disintegration of a country. The collapse of the former Soviet Union is a recent example when the once recognized super power disintegrated consequent to its economic chaos and crisis.
Pakistan has an internal loan of about 14000 billion rupees and an external loan of about $60 billion.
Fiscally irresponsible policies of the ruling are responsible for this growing debt. Every time a new ruling class takes over power, it indulges in a fiscal indiscipline to the extent that the crisis gets deeper and deeper.
Pakistan is rich in natural resources such as coal, oil, and gas. It has vast agricultural land capable of producing enough food for its people. It has vast human resources, skilled and unskilled that can turn its great resources to the advantage of the country as a whole. Yet, Pakistan lacks efficient management skills in addition to the lack of a visionary leadership that can give a comprehensive plan for its growth.
Pakistan can end the culture of economic dependence on others, if its resources are utilized peroperly and efficiently and if the ruling class abandons the culture of corruption. The first step towards that direction is to develop infrastructure in all sectors of economy that would become catalyst for the future growth. But the prevalence of corruption at levels of the society, deteriorating law and order situation and the persistent lack of infrastructure discourage foreigners as well as Pakistanis living abroad to invest in the country. Even Pakistani nationals find it difficult to continue with their investment in the country. Many have been forced to move out of the country as they have started relocating their capital and trade skills in countries, such as China, Sri Lanka and Bangladesh, that have been politically stable and that offer opportunities for growth.
Pakistani abroad send a substantial amount back to their families. These remittances are an important source for increasing the capital for investment. However, Pakistan does not offer any incentives to its own migrant labor to bring back its earnings in the country.
Tax evasion is another source for weakness in Pakistanâ€™s economy. Only .9 percent of the countryâ€™s earning population pays taxes. Even there are serious under reporting by this tax paying group in filing taxes. It is estimated that about taxes worth 12 billion rupees a day go unpaid. Corruption on the part of tax payers and tax collector is mainly responsible for this situation. In a population of 180 million only 2.7 percent pay taxes mostly from government sector.
Pakistanâ€™s ruling class is soft its agriculture sector in terms of tax collection and often the minimum taxation policies are relaxed due to corrupt practices of its tax collectors.
Additionally, Pakistan has a trade deficit crossing 172754 million rupees in July 2013 alone.
Pakistan is facing heavy trade loss of 20 Arab dollars and have faced a trade deficit of 172754 PKR Million in July 2013.
It is estimated that corrupt ruling class of Pakistan has hidden its wealth in foreign countries to the size of 125 million dollars. People from this group are also the biggest loan defaulters. Seemingly, those claiming to be leaders are the ones who are robbing the country of its resources. Corruption is rampant, nepotism and injustice in every sector of Pakistani society is common and the country is in the continuous grip of one crisis after another. This is not a healthy situation. It has disastrous consequences for the country in its domestic and international affairs. The continued crisis will further deteriorate the economic conditions leading to political and civil unrest. The ruling class has already invested in foreign countries to leave Pakistan to enjoy its life style, but Pakistan and its ordinary citizens would continue to suffer in the country if that stays a united country.