Read on Twitter
Last week, PM announced a money-whitening/no-questions-asked policy with tax cuts for the construction sector. I wrote about it here ( https://www.brecorder.com/2020/04/06/586773/construction-amnesty-caution-is-advised/) but I also started to think about the disparity this represents...(a long thread) 1/n
The rich can now put in their ill-gotten money into construction, earn good profits while enjoying tax cuts. Yes, they will be creating a lot of jobs (mostly low skilled) but I'm personally unclear why they need this incentive in the first place. Anyway, rem: no ques asked. 2/n
Now compare this to the Ehsaas Emergency Cash (EEC) program for the poor. Rs 3,000 for 4 months, 12 million families (30% of total HHs) and many many questions asked. Yes I understand we have limited resources, yes we don't have fiscal space, yes we don't earn tax revenues...3/n
But isn't the disparity here stark? The program is systematic with three categories including current BISP beneficiaries. Its tech-driven, modern, uses data analytics (all very cool)..to VERIFY who deserves the money the most. But its Rs12,000 a pop, one-time cash transfer! 4/n
Individually, its not a lot of money. Plus, let's assume, we send Rs12K to all HHs in the country (32 million) in the style of a Universal Basic Income, it comes to Rs0.38 trillion which is less than the total relief package announced by the government of Rs1.12 trillion. 5/n
Aside from above rather radical thesis, there are other things to consider. Is the EEC really effective, despite its clear lack of coverage? The verification process is tedious and time consuming. And many poor/needy people might not be able to reach the gov. 6/n
I talk about the complication of the mechanism here: https://www.brecorder.com/2020/04/08/587502/ehsaas-mechanism-will-it-work/
But I would further implore, is the verification really necessary when time is of the essence? 7/n
But I would further implore, is the verification really necessary when time is of the essence? 7/n
This is a one-time transfer. The gov has NADRA and Census data. Just send cash to 70-80% of HHs, if not all of them and be done with it. We are fighting a debilitating war, not just against poverty but against time. People need food TODAY. 8/n
And it's not just daily wagers. Its vulnerable labor force (LF), white collar people (safaid-posh), those that depend on non-contractual jobs (which constitutes 74% of the entire LF). The EEC coverage is not enough and the mechanism is weak. 9/n
And there is no time to refine it or undergo due process, so why are we?
These are just thoughts that I've had in the past few days and I have not come to a conclusion here so it's open for discussion and debate. I strongly uphold free market ideals...10/n
These are just thoughts that I've had in the past few days and I have not come to a conclusion here so it's open for discussion and debate. I strongly uphold free market ideals...10/n
But this economy is ridden with rent seekers/crony capitalists/and myriad of inefficiencies which has helped grow the rich-poor divide. In this case (construction package) the rich have the opportunity to invest/earn a profit with lax regulation/gov oversight... 11/n
...while the most vulnerable are stringently verified to receive a small sum of Rs12K to cover 4 months. BTW, the poorest 40% of HHs in Pakistan spend Rs10,500 PER MONTH, on food alone. 12/n
Can we make a clear economic case here? I'll be thinking about this question and more over the next few days. Send thoughts/numbers/analysis/opinions/arguments for a more fruitful discussion. (End thread) 13/13
