Shackled potential

IMRAN ALI

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WHILE the Indian Punjab after partition in 1947 further subdivided into three states, the Pakistani Punjab has remained as one province for the past six decades. Around the tenure of the military regime of Ayub Khan, the Punjab was merged into a single unit of the administrative entity termed West Pakistan, along with the three other provinces of Sindh, Baluchistan and Frontier. In 1972, consequent to the secession of East Pakistan, the four western provinces were restored as distinct administrative units.

The Pakistani Punjab now has a population of over 80 million, which would make it a populous nation in its own right. The province has around 35 districts, also known as zillas: many of the tahsils of British times have been upgraded into districts, reflecting population growth and increasing administrative complexities. One major change, introduced during the military regime of Pervez Musharraf, has been the abolition of divisions, both in the Punjab and the rest of Pakistan, so that this intermediary layer between district and province has now been removed. This move has placed greater coordination and allocation responsibilities at the provincial level, which in the future will need to augment its administrative capabilities to fulfil this role effectively.

 

In fact, several functions previously performed at the apex provincial level have now been devolved to local governments, a major reform introduced by the Musharraf regime through the Local Government Ordinance. This measure aims at devolution of administrative responsibilities to elected local bodies at the district and subdistrict levels. These functions have not yet been extended to a revenue generating role, so that local government still relies for funding on awards and allocations made in turn at the federal and provincial levels. Thus the provincial government, which represents the bureaucratic interests that have been fairly influential in Pakistanís history, can still exercise various controls on local bodies.

The Deputy Commissioner, who provided the local anchorage to the upper bureaucratic apparatus, has now been renamed as the District Coordination Officer or DCO, and nominally reports to the district mayor, or nazim. In reality, the DCOs are still drawn from the District Management Group, a reconstituted version of the old civil service that had continued from the colonial period. Presumably, the loyalties of these district officials still lie with the bureaucratic chain of command and interest group. It remains to be seen whether the future sees a dilution of the centralization model and the bureaucracy becomes more committed to a genuine devolution of local government.

Such an outcome will also depend on the capabilities and capacities of the district, tahsil and municipal nazims and local councillors that compose the human resource of the local bodies. Moving power and administrative decision-making closer to the people is in itself a good thing, but it is doubtful whether the military regime enacted this measure for altruistic reasons, or to dilute the authority of political parties and elected legislatures. The elections to local bodies have to be on a non-party basis. This is not totally anomalous, as both systems exist internationally. Australia adheres to the non-party mode, whereas in Britain candidates to local council elections stand on overtly party lines.

Even so, in the couple of local elections that have taken place in Punjab, it has been impossible to avoid the political alignment of candidates with either the ruling regime or with opposition political organizations. Especially by the time of the second election, the political faction allied with the Musharraf regime was clearly favoured, giving rise to grave concerns of electoral manipulation to suit regime-supported candidates. If the very essence of effective and equitable local government is sensitivity, transparency and accountability to the peoplesí needs, then personal positioning with an undemocratic ruling regime might not be conducive for a real devolution of governance, or for the effective provision of administrative and social sector services. In a reimagined Punjab, the institutionalization rather than manipulation of local government, and with it more equity and prioritization in servicing the needs of a neglected population, must be accorded a significant place.

 

One of the great differentiating features between West and East Punjab, even during the British period, was the greater reliance of the former on canal irrigation. Owing to its more arid climate, western Punjab traditionally had a much lower incidence of settled agriculture, essentially confined to riverine tracts. The rise and expansion of the West Punjab economy commenced with the construction of a network of perennial canals, which along with Sindh now comprise the largest contiguous irrigation system in the world. The sparse population necessitated the introduction of a sizeable number of land grantees and settlers, of whom the non-Muslim component had to return to India in 1947, and was replaced in large part by incoming Muslim refugees from Indian territory. The irrigation system provides the backbone of Punjabís agrarian economy, and its continued efficiency and sustainability are integral to the regionís future viability.

 

After 1960, under the Indus Basin treaty, the waters of the eastern tributaries, namely the Beas-Sutlej and the Ravi, were diverted by India. With World Bank assistance, the hydraulic system had to be restructured to make up for the deficit through link and feeder canals from the western rivers, and the construction of large dams, namely at Mangla and Tarbela. These are dual purpose dams, providing both irrigation water and hydroelectric power. Further deepening of these hydraulic resources has been delayed due to the failure to go ahead with the proposed Kalabagh dam on the Indus.

While the technical feasibility reports for this project were completed by 1990, political vacillation and lack of inter-provincial consensus have effectively prevented its construction. The Frontier province fears the loss of fertile land to the reservoir, while there is concern in Sindh that the Punjab would benefit differentially. There is also disagreement over the economic and environmental impact of large dams. The World Bank, however, has recently reverted to supporting their construction, and has expressed willingness to assist with funding for Kalabagh. Yet the state is unable to make a decisive decision on the dam. The vision of a balanced irrigation infrastructure, along with the potential for hydroelectric power generation, has thus only been partially realized.

 

As in India, accessing groundwater through tubewells accounts for a major increment in irrigation resources. An earlier phase from the 1960s was the development of a network of large state-run tubewells for controlling salinity and waterlogging by lowering the water table. Mixed results and high maintenance costs have led to this network being phased out, an illustration of inappropriate technologies induced through donor-driven solutions. Private tubewells have proliferated so extensively that aquifer levels have now begun to recede, and in some cases even reached critical levels of almost 100 feet. Hydrological seepage from brackish to sweet water reserves could permanently pollute the aquifer: the former tend to exist in mid-doab areas, and the latter closer to rivers.

Shortages of surface irrigation water, and greater flexibility of application, have encouraged over-use of groundwater. The government has considered adopting a regulatory framework for groundwater utilization, but in practice such a measure would be difficult to enforce. Shifting away from moisture intensive crops like rice and sugarcane can be one remedy. The move from a flat rate to metered electrical consumption, made around five years back, can also deter profligate extraction of groundwater, though many tubewells have already converted to diesel-driven pumps. There would be little to reimagine about the Punjab were its groundwater resources not managed in a scientific and judicious manner. The state would need to be vigilant in maintaining proper hydrological data; and cross-border sharing of such information and expertise would be advantageous.

 

Efficient irrigation management is, therefore, integral to the Pakistani Punjabís future economic success. Over the years the quality of irrigation management is said to have deteriorated. For five decades little attempt was made to reform the centralized irrigation management system inherited from British times, and controlled by provincial irrigation departments. Widespread corruption became rampant, with inequities of supply favouring larger irrigators. From the early 1990s expenditures outstripped income, and the capital budget suffered under-funding.

Largely under pressure from donor agencies, like the World Bank, to introduce a more decentralized and participatory irrigation regime, the government established the Punjab (and Sindh) Irrigation Development Authority, through legislation in 1997. A system of area water boards and farmers organizations was expected to replace the irrigation bureaucracy. In the ensuing decade, however, the implementation of these reforms did not progress beyond the pilot stage, reflecting yet again the resilience of incumbent interests. Part of the Pakistan Punjabís future vision must remain more efficient, equitable and participatory irrigation management. This will require tackling entrenched functionaries and curbing their appetite for rent extraction. The activities of rogue magnate elements, who use local influence for the diversion of irrigation supplies, will also need to be curbed.

In the economic sphere, future desired scenarios present a formidable agenda. Agriculture has remained the mainstay of the economy of Pakistani Punjab, though significant development has also occurred in manufacturing and services. The four major crops in the agrarian economy are cotton, rice, sugarcane and wheat. Cotton, the main cash crop, has now concentrated in southern Punjab, and the cultivated area extends into Sindh. Raw cotton is not only a major export commodity, it also supports Pakistanís largest industry, cotton textiles. Raw cotton, yarn and textile products account for over two-thirds of total exports. This excessive reliance on a staple reflects the failure to diversify the manufacturing base, and develop new export industries. This dependence implies that downturns in cotton production, and generally in agricultural output, can adversely affect growth rates. This happened in the early 1990s with the recessionary impacts of the cotton leaf virus, which followed a record cotton crop of around 12 million bales. The second largest export item is leather goods, which are again agro-based.

 

A further detrimental feature of the cotton economy is the concentration on the low value added spinning sector, producing cotton yarn. Even weaving, which merely produces grey cloth, remains relatively unimportant. The knitwear industry, which was heavily export oriented, had emerged strongly in the 1990s. It has now gone into virtual crisis, through competition from low cost producers like China and Bangladesh. The future challenge for business lies in achieving greater diversification in manufacturing, improved competitiveness, and higher levels of productivity. The current reality is that the textile export earnings of Bangladesh, at around US$ 14-15 billion, are around the level of Pakistanís total exports.

Sugarcane has also emerged as a major cash crop in Punjab. Sugar production has expanded considerably, from one sugar mill in 1947 to over 80 in Pakistan at present. Arguably, the arid ecology of the Indus basin is unsuited for a water intensive crop like sugarcane, and peasant-based production is uncompetitive with plantation systems. With international sugar prices below domestic prices in most years, local consumers have had to subsidize these inefficiencies. Value addition is also stunted by religious restrictions on alcohol consumption. The sugar industry now has the second largest capitalization on the national share market, after textiles. It remains questionable whether this represents an optimal allocation of resources. Also, licenses for sugar mills have been seen as rewards for political support, given to elements with few entrepreneurial skills, and representing a sub-optimal use of scarce resources in 19th century agro-processing. By contrast, little effort has been made in developing higher technology and internationally emerging industries, for which there appears to be a serious dearth of entrepreneurial capacity.

 

Let alone industrial opportunities, even Punjabís agricultural potential remains largely unrealized. While double cropping is widely practiced, and in places even three crops are obtained, yields tend to be low. The productivity of wheat, the foodgrain staple, has not seen any dramatic increments since the green revolution of the 1960s. With rising population and income levels, demand has outstripped local supply, and in certain years wheat had to be imported. To maintain food security and maintain affordable prices, the state intervened since the 1970s in the procurement, storage and distribution of wheat through public sector agencies like the provincial Food Departments and the Pakistan Agricultural Supplies and Storage Corporation (PASSCO). After 2003, the wheat market was significantly deregulated, with a cutback in government operations and a greater role for the private sector. The price and supply instabilities that this transition can create remain a challenge for the system. The future as one where market forces will prevail, or one where food security will be underwritten by state interventions, clearly represents conflicting visions.

 

Meanwhile, in the past two decades the role of the state has been progressively cut back. Earlier government monopolies, such as the cotton and rice export corporations, have given way to private enterprise. Imports of food items have been allowed to alleviate short term shortages and check price spirals, while processors can now also source raw cotton from abroad. Along with the steady rise in energy rates, and removal of subsidies on inputs like fertilizers, the farmer in Pakistani Punjab is more exposed to the forces of globalization than his counterpart in Indian Punjab. To what extent the free play of market forces, and the enhanced role of entrepreneurship, will continue to determine future trends, as opposed to a counter-revolution against such developments, remains to be seen. Levels of deprivation and inequality, and the incidence of poverty, could determine electoral responses to these processes.

The Punjab, like the rest of Pakistan, had virtually no large-scale industry at Partition in 1947. The growth of the industrial base has, at one level, been impressive. Apart from textile and sugar production, there has been growth in cement, light engineering, fertilizers, pharmaceuticals, and a range of consumer goods. Significantly, exports have been generated either in agriculture or in agro-based industry, and mainly from the medium enterprise sector. The exports from Sialkot of sports and surgical goods, and the export performance of the leather industry, have not been replicated in large-scale industry, with the exception of the low value addition commodity of yarn from spinning mills.

While the large-scale sector has enjoyed various subsidies, incentives and market protection from the state, smaller business has received minimal support. While rent capitalism is clearly a feature of big business, the informal sector evades taxation, utility charges and quality controls. The one tends to accommodate more secular values, along with the professional elite espouses western lifestyles, and can exercise influence on the major political organizations. The other is more steeped in cultural traditionalism, and could seek mobilization in religious politics, though this nexus has yet to emerge strongly. Both segments would reimagine Punjab in quite different ways.

 

One of the factors that hobbled large-scale private enterprise was the punitive nationalization policies in the 1970s implemented by the Peoples Party government of Zulfiqar Ali Bhutto. This setback adversely affected investment behaviour, which continued to remain depressed owing to political uncertainties. There followed an economic downturn in the 1990s, when Pakistanis faced the unaccustomed situation of seeing their economic growth rates dip below those of India. Despite its pivotal role in the destruction of the Soviet empire, the country faced international vilification and even sanctions.

There was a return to stronger growth from 2002, but this relied heavily on post 9/11 expatriate money flows. The new liquidity did lead to historically low interest rates, but was used up mostly in consumption and property and share market speculation. The major challenge to entrepreneurship and business development lies in moving beyond the family capitalism that is currently entrenched. The transition to a more corporate economy, with more managerially oriented firms, will test the ability of the business community to remain abreast of international transitions and opportunities. This will entail the challenge of moving out of the traditional seth mentality, and reformulating the business culture in a more modern mode, with the capacity to enter and succeed in more technologically sophisticated industries and more complex value chains. If the private sector is to be a vehicle for achieving economic transformation, then the ability to imaginatively reconfigure itself will be paramount for a successful outcome.

 

The Pakistani Punjab is strategically situated for regional cooperation and integration. It lies at the crossroads of routes into south and central Asia and western China: a function that it has served for centuries if not millennia. Should regional trade networks expand, the Punjab can become the natural staging post for a host of activities and operations. The Punjab is optimally placed, not only for regional land and air transport linkages, but also for warehousing and distribution networks, as well as a highly convenient location for manufacturing industries for regional markets.

In the colonial period, Lahore was the junction for road and rail routes to Peshawar in the North, Karachi in the South, and the Gangetic plain and Calcutta to the East. After 1947, the vitality and trade volumes of the eastern linkage were reduced; with regional cooperation and trade expansion this can again become an arterial thoroughfare. In this scenario the future of this area appears extremely buoyant. The recent construction of a motorway system linking Lahore to the manufacturing and trading hub of Faisalabad in the West, and right up to Peshawar, as well as planned extensions to the South, has created the basis for a modern and efficient road transport network.

 

An important element of this outcome will need to be institutional change. The high level of corruption creates a constituency for maintaining the status quo, with an endemic rent nexus pervading public sector management. The ineffectuality of law and the incapacity of the judiciary, the coercive nature of police authority and the oppressive role of public functionaries, create disillusionment and eventually desperation among citizens. When the elite tends to spurn the law, and the mass of people are denied justice, then civil order begins to crumble.

The recourse to religious extremism can be one option, but that further complicates the route to modernity. The inability of the Ďdemocraticí segment to institutionalize political organizations is partly due to the repeated power interventions of the military, but also rests with the inability of civilian politicians to rise above an accentuated level of opportunism. The state structure currently functions in an unwieldy and even medieval mode. It will perhaps need to make the maximum effort to reimagine itself in a more viable role, if it is to regain legitimacy with the civil society over which it presently officiates with both authoritarian fiat and custodial ineptitude.

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