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D) is commonly defined [by whom.
07:05 AM (GMT +5)
Tuesday, March 30, 2010
Impact of Law & Order on Pakistan's Economy at operational level
IMPACT OF LAW AND ORDER ON PAKISTANS ECONOMY AT OPERATIONAL LEVEL
LAW AND ORDER
The law and order situation arises when there is insecurity, threat of violence or violence arising due to a host of factors disturbing the ordinary conduct of life and businesses in a society.
it may be a product of one or more of the following:
selective macroeconomic indicators to determine the state and growth of economy like GDP growth rate, poverty incidence, and per capita income growth rate over a specific period of time, and level and nature of investment.
LAW AND ORDER SITUATION IN PAKISTAN
Organized crime and terrorism are usually viewed as two different forms of crime, increase of which directly deteriorates law and order. Organized crime is generally held to focus mainly on economic profit (but not always limited to it), while terrorism is said to be motivated chiefly by ideological aims and by a desire for political change.
Causes of Crimes
Side by side the economic and poverty factors, crimes may be caused by social environment motivating or encouraging crime and the dysfunctional family conditions like parental inadequacy, parental conflict, parental criminality, lack of communication (both in quality and quantity), lack of respect and responsibility, abuse and neglect of children, and family violence. Our review, however, has a limitation of considering primarily the economic and poverty causes and precedence of crimes with a law and order perspective.
Nature of Terrorism
Tribal belt especially the North and South Waziristan Agencies have traditionally been a fertile land for militant activities. The area was used for recruitment, training and as a launching pad for operations against Russian forces during Soviet Union occupation of Afghanistan in 1980s. After Taliban defeat in 2001, the militants shifted to this area and started their activities against US / NATO forces. Since 2004, Taliban terrorist attacks and LEAs counter attacks have become a routine affair in Pakistan.
The worst victims of law and order as well as poor economy are always the poor. Their vulnerability to shocks is more than others. Therefore, it is imperative that any analysis of the impact of law and order on economic situation must start with the most vulnerable in the society. In other words, no study of economic situation is complete without taking account of at least three interrelated economic indicators of poverty, unemployment, inflation, particularly food inflation.
Our study has seen positive correlations between crime and major economic variables: when there are negative trends in the economy (increase in inflation, poverty, unemployment, and decline in investment) there are negative trends in law and order (increase in crime rate). The results show that the decrease in number of all categories of crimes during the years 1999-2001 (Annex-I) have also witnessed decrease in inflation, poverty, and unemployment. The subsequent years have witnessed positive growth in these sets of variable testifying our hypothesis that law and order and economy have positive correlations: betterment in the conditions of the former coincide with an improvement in settings of the latter
However, not all economic indicators have similar direct correlations with the crimes. Law and order and economy being complex and multidimensional may interplay with each other through their externalities depicted in our theoretical framework (Figure-1). These results may have some implications for the policy makers as well as practitioners engaged in law and order and economic management.
It has been estimated by the Economic Survey that two thirds of the countrys population lives on less than $2 a day, with at least one third living below poverty line. During the last eight years or so the poverty in Pakistan has increased from 30 per cent in 1998-99 to almost one third in 2008-09, adding another 16 Million people to the absolute poor. While incidence of poverty decreased between 2000-01 and 2005-06, the last few years witnessed an increase.
Another contributory factor to poverty is the inflation in the country. The Economic Survey of Pakistan (2009) puts the inflationary rate at 22.3 percent; the food inflation in the country has risen from a low of 6.9 percent in 2006-07 to 17.6 in 2008-09, touching a record high of 34.1 per cent in August, 2008. As poorest spend more than 70 per cent of their income on food, large sectors of population have been pushed deeper into poverty.
The Human Development Index (HDI) that includes a broader definition of well being ranks the country 136th out of 177 countries showing that Pakistan is well below compared with other countries. The Global Hunger Index Pakistan ranks the country 61 out of 88 countries. In short all estimates and survey point towards rising levels of poverty in the country, an outcome of slowing economy and worsening law and order situation. Another contributory factor to poverty as well as to crime and law and order situation is the rising levels of unemployment in the country.
The successive governments over period have initiated a number of policies and programs for eradication of poverty in the country but still the poverty is on the increase. It is argued that these programs and policies did have some beneficial impact but the population growth rates as well as rural-urban disparities plus the weak implementation of policies neutralized the impact.
The initiatives designed to improve rural infrastructure, cash transfers, zakat, Bait-ul-mal, employment creation through small and medium enterprises, micro-finance programs, Khushal Pakistan Program, Rural Support Program, Social Action Program, and Poverty Reduction Strategy of Pakistan (PRSP). A recent initiative to this end has been Benazir Income Support Program (BISP).
It is agreed at different levels that any single policy is not going to work to eradicate poverty. Its a complex issue and requires multidirectional approach with a mix of policies ranging from cash payments to human resource development. It should aim at greater growth that ensures an adequate flow of benefits to the poor and vulnerable. Special social safety nets play an important role to meet the current needs of the poor while micro-finance helps them
Stand on their own feet and investments in human development and infrastructure helps enhance their productivity in terms of both quality as well as quantity. Another important initiative required is to provide employment by initiating labor intensive industry and programs. One important factor for increasing rate of poverty in the country has been slow down of the small and medium industries that are mostly labor intensive and rural.
One of the prime examples of impact of law and order on the economic situation of the country on the life of common man is first displacement, and then relocation and repatriation of over 2.5 million people of Swat. It is perhaps the worst impact that the terrorism may have on the people and economy. While the cost of loss of business, government infrastructure and private property of the people is yet to be assessed.
While the cost of loss of business, government infrastructure and private property of the people is yet to be assessed. It would be an understatement to say that the whole economy of NWFP in particular and of Pakistan in general has suffered. The cost of ongoing military operation rebuilding of the infrastructure, resettlement of the people and their businesses is estimated to be stupendous, while the cost in terms of human lives and sufferings is at best untold. It also offers the reverse linkages where poverty and poor economy provides ready recruits for crime and terrorism.
Our study of law and order has revealed that the policies often fail to achieve the stated objectives and targets for lapses at operational level. At this level either there is no identification with the policy aims and objectives or lack of understanding that often leads to poor strategizing with poor results. Even normal functions of governance receive little attention at times.
Intra-provincial and inter-provincial policy distortions like varying compensation rates and allowances admissible in public sector etc. may be corrected
The disparities between rural and urban areas create very strong urban bias in the provision of services need to removed
Gender imbalances in essential services in education and health need to be corrected
There is an urgent need for augmenting the security apparatus in NWFP and Tribal areas that includes deployment of armed forces in support of police, and para-military forces of to prevent deterioration of law and order in the most vulnerable areas
The already established community police force in the tribal areas needs to be brought into the mainstream of local administration of law and order and other areas may also be considered for having such force
Modern training may be imparted to police force to combat terrorism
The government needs to reduce its dependence on the use of military force to address internal security issues, and should enhance the capacity of paramilitary forces i.e. Rangers, the Frontier Corps and other law enforcement agencies. That has emerged as a crucial issue in view of the high number of casualties caused during operational attacks in the NWFP and FATA
Capacity building of intelligence agencies to be enhanced. A better coordination among various agencies and law enforcement departments is also recommended
The government and media need to create more space for cultural and social activities, provide healthy activities for the youth and ensure proper utilization of funds allocated for youth and cultural development
The already started reconciliation and confidence building process in Balochistan should immediately be concluded and action plans to remove the grievances be prepared in consultation of the important stakeholders
The new NFC may immediately announcement by considering the proposals of Balochistan on resource distribution and Gas Development More development funds, especially for better health and education, must be allocated as a priority
Temporary rehabilitation facilities for the resettled IDPs in their areas be provided and the process of developing permanent facilities be accelerated
Special counter-insurgency contingents of paramilitary be raised
Physical infrastructure including road, and bridges in inaccessible affected areas be constructed
Procedures and systems for regular audit of Madrassahs and NGOs be devised and implemented
To control rise of inflation, the administration should take initiatives for enabling consumers to form their effective consumer associations supplementing already in place monitoring mechanisms
Despite very high inflation, the possibility of reducing the discount rate by further 1-2 percentage point may be explored at operational so that the costs of borrowing from the banks are reduced
During the period of economic problems, the government should take the lead and start more public investments to provide a jump start to the economic activities.
Primarily, it is the domestic investors who have to be encouraged and motivated to take the lead for the investment. The administration of governmental incentives to them should be more business-friendly. Once, domestic investors start flourishing, it will encourage foreigners to invest in Pakistan as well
There is a need to improve business environment in the country, including the availability of educated and skilled manpower, ancillary industries and utility services. Continuous rise in the prices of petroleum products, electricity, gas and other utilities are also adversely affecting the business environment.
We need to improve our infrastructure facilitations to make the Business environment more conducive to foreign and local investments.
Power shortage has already resulted in closure of many units which is deplorable and needs to be rectified at the earliest.
The main stake of our economy is agriculture and facilitation and incentives to develop the cottage industry need special attention. In order to boost up investment particularly in livestock, poultry, fisheries, and associated value added production facilities like financing, development of services infrastructure, and manpower development should be part of government plans and programs
So far, most of FDI has been in the services sectors which are non-tradable and adversely affects the balance of payment. Taking into account the unfavourable balance of payments problems of the country, we need to prefer further FDI in the foreign-exchange-earning sectors in future.
Pakistan has a record of economic growth in sixties as well as in the recent past. However, the adhocism, and poor implementation of policies have been distorting the system. In order to stimulate investment and revitalize our economy, we have to ensure continuity of economic policies coupled with political stability.
In order to boost up further investment in the home grown manufacturing like textile industry the system of one-door operation need to be activated and extended
Factors instrumental to private and foreign investors:
Risks of doing business and ;
Expected returns of the investment.
Four major challenges to Pakistans socio-economic growth including:
regaining macroeconomic stability;
fiscal retrenchment and;
Weaknesses in the external account.
Decay of Pakistans image
The soft image Indeed is a pre-requisite for attracting high ratios of foreign direct investments;
Brightens the possibilities of joint ventures;
Encourages FTAs and regional economic integration.
Second largest sector of economy
GDP contribution 18.4 %
Negative growth of 3.3 % against target of 6.1 % and last years 4.8 %
because of acute energy outrages, security environment and political disruption in March 2009.
The services sector grew by 3.6 percent as against the target of 6.1 percent and last years growth of 6.6 percent. Value added in the wholesale and retail trade sector grew at 3.1 percent as to 5.3 percent in last year and target for the year of 5.4 percent. Finance and insurance sector slowed down to 12.9 percent in 2007-08 but registered negative growth of 1.2 percent in 2008-09 because of financial crisis plaguing international in financial markets.
total investment has declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP
in 2008-09. Fixed investment has decreased to 18.1percent of GDP from 20.4 percent last year
The inflation rate as measured by the changes in Consumer Price Index (CPI) showed an easing
trend beginning in November 2008, touching 17.2 percent in April 2009 after reaching a record level of 25.5 percent in August 2008 as the food group was the major source of inflation in Pakistan during the first ten months of 2008-09, the nonfood component of the CPI has also been persistently high, resulting in overall stubbornness of the inflation.
The exports (-) 6.7 % $19.1 billion to $17.8 billion in 2008-09 compared last year;
Exports were targeted at $ 19.1 billion or 6.7 percent lower than last year. The exports were $ 17.8 billion in 2008-09.
Imports (-) 12.9 % $40.4 billion to $34.9 billion in 2008-09
The merchandise trade deficit improved by 12.3 percent and declined from $10.7
billion in July-April 2008-09 to $ 12.3 billion in July-April 2008-09. The substantial decrease of 9.8 percent in imports outstripped otherwise significant decrease of 3.0 percent in export
growth, which caused the trade deficit to improve by 12.3 percent.
An overview of Pakistans economy 2008-09 by Ministry of Finance has reported that the macroeconomic environment of the country is affected by intensification of war on terror and deepening of the global financial crisis which penetrated into domestic economy through the route of substantial decline in Pakistans exports and a visible slowdown in foreign direct inflows.
Pakistans participation in the international campaign has led to an excessive increase in the countrys credit risk. Due to which recently, the World Bank has lowered our credit rating further. Pakistans economy continues to remain exposed to the vagaries of international developments as well as internal security environment.
Pakistan not only lost precious lives and infrastructure but a very conservative estimate has placed economic cost of this war for Pakistan at around US$ 35 billion since 2001-02. Rehabilitation of IDPs and their livelihood will require more than $ 5 billion in Malakand and FATA alone. All this expenditure is not going favourably for Pakistan as they are the unsustainable burden on the meagre resources of Pakistan.
Terrorism is a great hurdle in our socio-economic prosperity, political stability, geo-strategic sustainability and energy security. Development activities are halt in these areas.
The rule of ignorance, stagnation, fanaticism, and destruction is spreading like a wild fire especially in NWFP and FATA. The government should initiate three-pronged policy i.e. dialogue, development and deterrence. Let us hope that our soil will be freed from the terrorism and there will be no more bloodshed in the days to come.
Why Plan B?
FUTURE POSSIBLE SCENARIOS
Resurgence of ethnic conflict in Karachi?
Attack like Mumbai takes place?
US Iran conflict escalates?
Ethnic conflict in Karachi erupts .
Flight of capital
Exports / imports suffer
Ripple effect on economy
Law and order deterioration
Another Mumbai takes place .
India opts Surgical strikes
Pakistan goes into further Isolation
US attacks Iran .
Surge in oil prices
Use of proxies by Iran
Attack on US interests
Disruption in NATO supplies
Minorities at risk
Oil prices affect economy
Law & order aggravates
Damage to the infrastructure
Sectarian, ethnic clashes
Economic melt down
No matter how fast i run or how far i go it wont escape me, pain, misery, emptiness.
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