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How Can People Save If They Live Below Subsistence Level?

How can people save if they live below subsistence level?

[dropcap]M[/dropcap]ost of the discussions at experts’ level hover around poor savings rate in the country. However, they tend to completely forget that a significant percentage of Pakistan’s population live below subsistence level. If they don’t have money to buy food and other necessities of life and carry huge load of debt they just can’t save any amount. The solution is simple, government should facilitate in the creation of new job opportunities, offer soft term loans for micro and small and medium enterprises (SMEs) and follow policies that can improve competitiveness of the local producers.


Pakistan suffers from two contentious issues: 1) high unemployment rate and 2) payment of wages below the government fixed rate. High unemployment rate is because of 1) poor literacy and 2) lack of vocational training. The country continues to suffer from poor literacy because of paltry allocation of fund for the education by the federal and provincial governments. Cognizant of the poor teaching standards of government schools, private sector has started educating business in the urban areas.

Private schools charge fabulous fee and it appears that imparting education has become the most lucrative business. There have been regular and substantial increases in fees annually and management also collects money in the name of computer labs, air-conditioning, generators and extra-curricular activities. As against this, children of 65 percent population living in rural areas remained deprived. The elected senators, MNAs and MPAs from the rural areas just don’t want the children of their peasants to get education. They know well that once the youth get education, they start demanding their rights and not given move on to urban areas in search of jobs.

Every year the government fixes minimum wages for the workers but they continue to get far below remuneration. The authorities responsible for overseeing that workers get the stipulated wages are ‘bought out’ by the employers. Not only that the workers are paid paltry remuneration, they are deprived of healthcare facilities and post-retirement benefits. Even if collective bargaining agents demand their rights, they are sent behind the bars or even assassinated and the killing is given any name from personal rivalry to target killing.



The successive governments have been initiating various schemes for people, but the number of beneficiaries remains too small. First of all the annual allocations are too small, which add to the number of ‘baggers’ rather than enabling them to initiate any business. On top of all, most of the beneficiaries are ‘party activists’ and a significant percentage of the total amount is embezzled and never reach those whose names appear in the record. Such disbursement can be termed ‘giving a fish rather than enabling them to catch their own fish.

The loans extended by microfinance and SME divisions of commercial banks do extend small loans, but the amounts disbursed are too small and the borrowers also have to pay very high interest rate. Even a person of average knows that no business can be undertaken with Rs25,000 or Rs50,000. Loans extended under transport schemes often go delinquent because the borrowers enjoying the backing of political, religious and linguistic groups and never bothers to pay the loan installment. Financial institutions are also not keen in reposing the vehicles of defaulters. Even if some vehicles are repossessed, soon these become part of junk, which is often auctioned at a through away price to the favorites or pilfered ultimately. If any one disputes this statement, should visit ‘nazarat’, where impounded vehicles are kept. One of the most naked examples is a nazarat located near Aziz Bhatti Shaheed Park in Karachi. First the impounded vehicles were removed and subsequently, land grabbers sold the plots on which multi-storey buildings have been constructed.


Pakistani manufacturers have been losing competitiveness over the years. Over the years exports of textiles and clothing are on the decline because the local manufacturers just can’t compete in the global markets. Pakistan also failed in drawing any benefit from grant of GSP Plus status by the European Union. Textiles and clothing industry often hold the government responsible for high cost of doing business, which is an attempt to overcome their own inefficiencies. Over the years textile industry, particularly spinning have failed in under taking balancing, modernization and replacement (BMR). If the owners continue to use obsolete/outdated technologies certainly they would not be able to compete in the global markets. Having said that it is necessary to highlight that the government also does not make timely payments of rebates.

One completely fails to understand the logic of collecting a tax that has to be refunded. The government must follow no-tax no-rebate policy to eradicate corruption. According to an insider, “Often the amount paid as rebate exceeds the amount collected”. However, he is of the view that the big players get the rebate because the goods were supplied by a vendor who had not paid any tax or even if he had paid the tax just doesn’t wish to come in contact with tax collectors.


While one can write hundreds of pages on accelerating the GDP growth rate, addressing the above stated issues can bring significant change though snowball effect. The business community has to also learn to live without the crutches of government support, rebates and incentives. Unless they make their units efficient, they would never be able to compete in the global markets.

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