The noisy zealousness that we are witnessing about the need to construct the Diamir-Bhasha dam reflects very poorly of our national psyche. It’s amazing how suddenly, we have woken to this reality that water scarcity poses an existential threat to Pakistan. However, the situation did not turn dire recently. The fact is, Pakistan has been categorised as a water-stressed country since 2005. Unfortunately, the country’s leaders and policy makers collectively failed us by showing little concern about this problem at the right time.
Even now, those who are at the helm in this country lack vision and in-depth understanding of the challenge. For instance, the current euphoria on constructing new dams has its origin in Chief Justice of Pakistan’s order to the Finance Ministry to open a donation account to fund Diamir-Bhasha Dam. Since then the populist Chief Justice has held scores of meetings with heads of relevant departments and experts.
Today, many people are refusing to take Chief Justice (CJP) Saqib Nisar’s initiative seriously, as it was obviously an institutional trespassing into the jurisdiction of the executive arm of the state. Still, many people at home and abroad were surprised last week when Imran Khan — within the first month of becoming Prime Minister (PM) — vociferously appealed to Pakistanis living abroad to fund the construction of the Diamer-Bhasha dam. Not only did his desperate appeal show he was not briefed well on the issue, but also that he didn’t have any idea about how mega projects like this are financed.
For instance, lack of reservoirs isn’t the only reason for water scarcity in Pakistan. It is also related to the way this country’s citizens use and waste water. According to one report, Pakistan has the world’s fourth highest rate of water use. Pakistan’s water intensity rate, i.e., the amount of water, in cubic meters, used per unit of GDP, is the highest in the world. It is quite possible that no country’s economy is more water-intensive than Pakistan’s. So, just building new dams won’t solve the water scarcity problem automatically. We must make significant investments in water use technologies and management systems as well.
Supposing the dam fund receives Rs 5 billion every month, it will collect a mere Rs 60 billion in a year. This means it will take ten years to collect Rs 600 billion; whereas we need $14 billion or Rs 1,722 billion
Certainly, water reservoirs such as Diamir-Bhasha dam are important, keeping in view our population growth and energy needs. This dam is a mega project worth $14 billion and needs a minimum of nine years to be completed. Once complete, it will have a 6.4 million-acre foot (MAF) live storage capacity and an installed power capacity of 4,500 MW. However, it is located in Gilgit-Baltistan, which is historically an administrative part of disputed territory with India i.e. Jammu and Kashmir. Multilateral donors such as World Bank and ADB haven’t been enthusiastic fund this dam.
Ergo, financing has been an issue. The CJP’s populist initiative aside, this project has been on the tables of the last three governments. While Prime Minister (PM) Gilani had laid the foundation stone of this dam in 2011, the previous Pakistan Muslim League-Nawaz (PML-N) government had initiated its ground work. The PML-N government also decided that the government would fund it through annual PSDP and commercial loans.
Leaving the Chief Justice aside, the new PTI government was expected to come up with a better plan to finance and implement this project. Throughout its struggle, PTI under Imran Khan had rightly agitated to bring millions of tax-worthy individuals and entities in the informal sector into the tax net so that the poor could get some relief from indirect taxes. Instead of donation appeals for this dam, the PTI government could have prioritised increasing tax revenue to fund this and other projects.
There was scope for increasing revenue receipts. At the federal level alone, Pakistan has a tax revenue potential of Rs8 trillion. However, our total tax revenue receipts this year stood at a measly Rs 3.8 trillion. By increasing tax collection, through enforcement and without raising tax rates, in the range of 15 percent to 20 percent, this government could generate an additional Rs 530 billion rupees, which can just be kept for this project. This approach would have not only earned respect for the new government — but was long needed — given the low tax to GDP ratio of 11 percent.
At best —the route currently being taken to build this dam reflects our collective immaturity — if not outright hypocrisy. Supposing the dam fund receives Rs 5 billion every month, it will collect a mere Rs 60 billion in a year. This means it will take ten years to collect Rs 600 billion; whereas we need $14 billion or Rs 1,722 billion. It is also hypocritical of our society and state. While people so routinely evade due taxes, they are always keen to participate in ostentatious and meaningless charity. Similarly, while the government shies away from implementing the state’s writ to collect due revenue, it opts to invoke piety among people to receive alms.
The writer is a sociologist with an interest in history and politics. He tweets @ZulfiRao
Published in Daily Times, September 13th 2018.