There is a drastic decline in Per Capita Income as for FY23 it is estimated at $1568, which was $1760 last year
By Salwa Khokhar
Pakistan and India gained independence at the same time, while China gained independence one year later than both the countries. However, it needs no comments what the situation prevails in Pakistan as compared to India and China.
There had been reports that Pakistan is on the verge of default. The question arises that after independence what steps we have taken to get rid of the factors or rectify the faults that have pushed the country to such a point?
Our biggest achievement so far is only nuclear power, and except that we are all losers as a nation.
Pakistan’s economic crisis worsened in recent months due to its close brush with shortages of forex and inflation. With inflation of about 40pc, people were seen queuing up for subsidized wheat flour, often turned riotous.
In this alarming situation, Federal Finance Minister Ishaq Dar presented Pakistan’s budget for the fiscal year 2023-24. While keeping the upcoming elections in mind, the government had claimed that the GDP growth rate would remain 5% this year, but the actual number turned out to be 0.29%. After GDP, the most important factor is Per Capita Income, which represents how much money a citizen of a country earns in a year. In Pakistan’s case, the GDP per capita for FY23 is $1568, which was $1760 last year. This drastic change shows us that the average per capita income of Pakistan has significantly reduced. The primary reason for this is rupee depreciation.
Rupee depreciation is also one of the considerable cause of inflation. The inflation rate for FY23 is 29.2%. This means that inflation is highest in Pakistan as compared to rest of Asia. Inflation rate for the past 5 years was:
2019: 6.8%
2020: 10.7%
2021: 8.9%
2022: 11.3%
2023: 29.2%
In this inflationary era, an average Pakistani will have very little left from his income, so he will borrow money. In addition to this loan, he also has a public debt on him, which means that every Pakistani either male or female has to pay off a debt of 247862 at this time, Pakistan’s total income is 1263 billion while it’s total expenditure is 14461 billion.
Our primary financial burden is debt servicing, which entails repaying loans. Presently, our total debt servicing amount is to 7303 billion, signifying that 60% of our income is allocated towards repayment. After debt servicing, our largest expenditure is allocated towards defense spending. Pakistan is set to expand 1804 billion on national defense, which accounts for 14.8% of our total income, 60% of our income is spent on loan repayment and 15% is spent on defense. This means that 75% of our income is utilized for these purposes, leaving a mere 25% for other expenses.
The remaining 25% is allocated towards other expenses, including 4213 billion for salaries and government departmental allocation. The Pakistani government should spent the most on the Public Sector Development Program (PSDP), with only 950 billion being allocated by the government, which for 7.8% of our total income. In addition to this, budget deficit occurs due to excessive spending, beyond a shadow of a doubt, we will take loans to accumulate external debt in order to balance the budget deficit. We are going to borrow external loan of $24 billion this year, which is 114% more than last year.
Now let’s have a look at the sector that costs least. Government of Pakistan is going to only spend 1.7% of total GDP on the education sector. This tells us what our priorities are, where the world is competing with technology in modern knowledge and economy, and where they are advancing themselves in the field of education, and here we are reducing our education budget.
According to data, in Pakistan, there are 35000 shrines and only 300 universities but rather than investing a substantial portion in education, Pakistan is investing hefty amount on defense and buying expensive weapons.
We need to make radical changes in our country at institutional and national level, we need to revolutionize things, not just reform them. We also need to make our economy export-oriented to improve the conditions of our country as a whole.
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The writer is BBA student at Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology, Larkana Campus having interest in politics and business.
