Re: So where is the 8% growth going?
First, I would like to thanks Zakk, Parissenoor, mYsTeRiOuS_gUy, yildiz_79, gravity_killz, mAd_ScIeNtIsT and all who appreciated my previous post. You are welcome.
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Minime:** What I can understand, what you are trying to question is that, even if economy is growing, piece of cake for the poor seem still same (and administration is making sure that it stays same).
I believe differently. I believe that cake size has increased and that poverty has decreased substantially. Why? Because figures say so that poverty in Pakistanhas reduced substantially during last 6 years and that overall, situation of poor have got better. Would you like to believe it? I feel that you would not like to believe that. So let look at it in different way. I hope that you will look at what I will write logically, not according to what you would like to believe regardless of evidence.
Actually, all figures, be it of growth rate, inflation or reduction in poverty, it comes from government. We have to trust that. It is difficult if not impossible to fudge these figures a little. Regardless, World Bank, IMF, Asian development Banks and other lenders scrutinize the figures, as when lending, they are also staking their capital, and have ability to work out the truth.
If figures are fudge and government is involved in that, country can easily become bankrupt (also lose world respect) as no lenders would trust figures of such governments (even true), and thus the country would not be able to take loan or could have credit from anywhere. Figures sometime are wrong, but most of the time it is unintentional or because of mismanagement, incompetence or defective accounting practices.
Anyhow, one will always find people from opposition, especially those who are corrupts and survive on ignorance, misguide unaware people that figures are not true (especially when figures are good). They would have no answer if anyone asks that why the figures was bad when they were in power, were they truthful and others are lair? Fair enough, people are ignorant and these people are crooks, so being crooks they are just following their nature to take advantage of people’s ignorance.
Anyhow, it is no good asking people to accept figures unquestioned (people have seen so many corrupts in Pakistan they stopped trusting anything and anyone, especially what they do not understand). So let forget the figures and come to observation and analysis that even an ignorant can see (actually, I did mentioned about that earlier too).
Are Pakistani better off now then before?
Fortunately, a very unfortunate thing happened recently in Pakistan, however unfortunate, tells a lot about the state of Pakistani poor economical conditions. That was shortage of Sugar and Cement and their rocketing price.
Let be realistic, ask question and analyse:
Sugar consumption per head in Pakistan is increasing every year, specially recently it has increased a lot. Who is increasing the consumption per head? Obviously, it must be poor.
Non-poor (rich, moderately rich and middle class) would be consuming sugar what they want, regardless of affordability, as they would be affording anyhow. Thus, consumption of this group would stay constant.
High sugar consumption is not necessary. Poor that once had difficulty to consume too much sugar because they need that money for other needs, once get richer, starts consuming more sugar. That is what logic says, right?
Thus, increase in sugar consumption shows that poor are economically getting better (have more money in the pocket).
Now come to sugar shortage in Pakistan:
World Health Organization (WHO) recommends that a person should not consume more then 50 gram of sugar a day maximum; that comes to around 18.25 Kg of refined sugar per person per year (better to consume even less).
Pakistan refined sugar production is around 3.9 to 4 million tons (capacity to produce is much more). Pakistan population is around 160 million. That means Pakistan maximum sugar consumption should be 2.9 million tons a year or less. Pakistan actually consumption is around 3.8 to 3.9 million tons a year (around a million ton more then WHO recommendation).
Now ask yourself, what would happen if due to sugar shortage, price rockets.
Normal logic says that poor would reduce sugar consumption if price goes beyond their affordability, especially if they are consuming much more then they need. This would reduce demand and would bring the price down, right?
Sugar production this year was 2.8 million tons. Carried forward stock from last year was around 0.9 million tons. Thus, available sugar was 3.7 million tons. True that mill owners did not brought all their sugar output into market, still there was no need for people to get frenzy, right? [Actually, mill owners realized that buying power has increased so it does not matter to hold sugar]. Now, was it necessary to import huge quantity of sugar to increase supply and thus fulfill demands of people sweet tooth (mostly poor)?
What happened? Even though sugar price gone too high in Pakistan, most poor kept consuming their need as pressure on sugar demand by poor kept the price high and country had to import lot of sugar. Am I Right?
Thus, logic says that even when there was shortage of sugar (though no shortage according to WHO) and price rocketed, there was little reduction in consumption shows that poor can afford that price, means that poor are getting better economically.
Cement tells the same story. Even when cement consumption increased from 9 million tons to 14 million tons in last 6 years, cement shortage happened and price rocketed. Still, demand did not decreased and government had to import huge quantity of cement. It shows that, people are getting richer.
Let look at new vehicles sales.
About 6 years ago, Pakistan use to produce 33,000 cars a year and sale was similar number. Production of motorcycle was 90,000 units and sale was similar number too. Today, Pakistan produces around 200,000 cars and over half a millions (500,000) motorcycles a year, still there is shortage.
What is happening? Where are these buyers coming from? Logic says that many who were not even able to afford new car are now buying new car. Seems most motorcycle buyers have upgraded themselves to car.
Many who were poor enough and not even able to buy motorcycle are now buying them in large number. What logic says? It only says that many from poor have upgraded themselves from not even able to buy motorcycle are buying motorcycle and car.
Let see some production figures of durable items and think logically.
TV sets production was around 120000 units and now around a million.
Air conditioner was around 5000 units and now 150000 units.
Refrigerator was around 200000 units and now around 650000 units.
Mobile phone users have increased from negligible number 6 years ago to now over 40 million subscribers and could reach 70 million subscribers by end of next year.
Just imagine that livestock growth last year was 8 percent, shows that meat, milk and yogurt consumption has increased substantially.
What does it shows? Logic says that people are upgrading themselves, buying increasing number of car, motorcycle and other durable goods, buying cements in increasing quantity to make their houses, consuming more high price food (especially poor, as rich must be consuming same as past as it is difficult to increase food consumption even when one have more money) etc. Am I Right?
Well, consumption in Pakistan is increasing so fast that Pakistan increased their gas requirement from Iran-Pakistan pipeline. Initially, Pakistan was asking for 2.1 billion cubic feet per day. Now they have increased their want to 2.8 billion cubic feet per day (33 percent increase). Program is to start looking for more supplies as growth expectation is high. Faster increase in growth would mean faster increase in demand. Government has reduced the expected life of Pakistan gas fields, as increase in demand would consume these reserves quicker.
Obviously, rich cannot increase demand as what they wants, money does not stop them to have that. Logic says that it must be poor who are getting financially better and thus increasing demand. What do you think?
Same increase in demand is true regarding electricity, water, road or anything people need in life. Demand is increasing, not slowly but very fast. It shows that people are getting financially better off and thus demanding more, while government is trying to get them more.