Every government starts its agenda with a manifesto. After coming into power, the government implement that manifesto in the form of policy at different levels. These policies bring in the agenda for day-to-day business as well as to perform activities at different levels. Once implemented, policies do have positive implications while some good policies have costs attached, which have an impact on the common man’s life, in one form or another.
The current PTI-led government at the federal and provincial level is trying to bring in unified policies at the social, economic and environmental level, which, in the long run, may have fruits to bear. Yet, in the short run, too much burden has been shifted to end-user. These policies include tax-related measures, to be very precise as well as those prioritising the environment and cutting down the higher education budget.
First, to increase revenue at one end, the government is trying to increase prices such as oil prices, which has been seen going up. Another approach taken in this regard is revamping the tax system with more rigid approaches towards documenting the economy.
One of the steps in this regard was showing a copy of National Identity Card for transactions at a certain level. Besides this, the government puts the focus on increasing the tax rates at different utility items.
While looking at the CNIC condition, reports have shown a decrease in the cement sale. This shows the impact on the production side of the cement as demand falls: companies have downgraded their capacity of production. This fall in demand for cement is also attributed to the uncertain business environment, both in the public and private sector. This decline in demand and production will immediately have an impact on industries; reducing the existing labour force employed, and, therefore, increasing the unemployment rate.
There is a need to introduce alternates to cost-control measures
Alongside this, high cost of inputs and regulatory burden is another factor due to the uncertain business environment, which is putting more economic pressure on the industry. This would result in the additional economic cost of policies, including tax, investment and other related policies.
Secondly, policies related to the environment play a significant role in development. In this regard, the government has put in efforts for planting trees, improving sanitation and banning plastic to control pollution.
Let’s take the example of the plastic ban here, which is a good policy practice. Yet, the problem lies in the implementation. The policy has been implemented hastily in this regard, which has resulted in high costs for producers, buyers and consumers.
The impact has been observed at the economic front on different levels. These include:
1) Consumer, who assumably has to buy some items from a shop. He is charged with the cost of the bag, which ranges from 15 to 75 rupees per bag. This, thus, resulted in an increase in product price by the price of good plus the price of the bag.
2) It was observed in the weekly bazaars that small children and old men used to sell plastic bags ranging from five to 10 rupees per bag. Assuming the fact that they were able to sell some plastic bags, they were able to earn and feed their families. With the change in policy, these sellers have been observed selling bags other than plastic bags for 30 rupees. Now, people are taking cloth bags to the bazaars and the probability of selling a bag declines. This results in a reduction in the probability of earning 30 rupees to feed their family.
Besides, another economic impact can be forecasted on the existing industry and the bags it will manufacture in the long run. New bags will have higher input costs, resulting in low production and a higher probability of unemployment.
Let’s take the cut in the budget of higher education. This cut may have been done with a good intention while looking at the space that universities have occupied in terms of land with limited buildings and more open and vacant land, which can be used for various activities. This could itself give universities higher revenue and make them stable in the long run. But with this cut and implementation of the policy, the impact has shifted in terms of cost to the students. This type of deduction will be manifolds: Higher cost of education to bear by parents; Decline in incentives for research; Decline in support for faculty be it their development while studying abroad or capacity-building within the country.
For academic institutions to come out of this whole fear of cut in the budget, weak point to build upon are their capacity. Institutions have not sufficiently been capacitated over the years to utilise resources (physical in the form of land, entrepreneurship, research and business development models using entrepreneurial models) it possesses for growth and long-term sustainability.
The quality of research has a bigger role to play, which has not been seen significantly developing into the discourse of policymaking because of two main reasons: 1) Objective of research in the academic institute is mainly focusing on the degree; 2) Decline in the quality of students.
Thus, looking into these costs and making policies to work for betterment and welfare, there is a need to introduce alternates to cost-control measures and reduce the pressure on human capital, to be very precise. Similarly, on controlling the externalities in such policies, the government, at all levels, and institutions, at their levels, should capacitate the labour force to adopt new ways and have an innovative approach towards business. On the education front, the focus should be there on the research-based programmes. The need remains that research be incentivised so that universities can come up with ways to sustain in the long run. But to do this, there is a need for change in the curricula, thinking of the faculty, approach towards education and adopting an entrepreneurial approach for sustained growth. Thus, the focus of the government should be on innovation and technology transfer in the case of academic institutes are concerned. There is a need for competitive funding with ease in procedures for research in the long run.
So, summing it up, every policy, and more precisely, every good policy has an economic cost associated with it. To implement that policy, there is a need to introduce an alternative to help end-users and consumers going through a smooth transition from one practice to another. This transition phase needs to be incentivised by the government, both in terms of monetary and regulatory ways.
The writer is a visiting research associate at the Sustainable Development Policy Institute