Power Sector’s Transmission , According to Pakistan Institute of Development Economics (PIDE)’s One Year Growth Strategy for Pakistan, energy is a chronic problem that eight governments have not been able to solve. Due to mismanagement and weak governance in the power sector, huge transmission & distribution losses reached Rs. 473 billion during 2021, out of which Rs. 402 billion were recovered through tariff from the electricity consumers and Rs. 71 billion was added to circular debt.
Pakistan Institute of Development Economics (PIDE) has launched the “One Year Growth Strategy for Pakistan” on the occasion of Pakistan’s 75th anniversary of independence. PIDE report suggests a decentralized billing system at the DISCO level and need to bring pre-paid meters to the market, which consumers will buy themselves. Link this pre-paid meter to DISCO billing. This will create the possibility to minimize losses in receivables by 80% (total receivables at the end of 2021 stood at Rs 1.5 trillion, and they are growing at 15 % annually).
There is also a need to empower the regulator (NEPRA) to facilitate ‘wheeling’ at the marginal cost to make it attractive for sellers (generation companies) and buyers (bulk power consumers). It will decrease the cost of energy for the industry. All DISCOs should also be allowed to purchase energy on a short-term contract and acquire generation assets falling inside their territorial jurisdictions and even from outside. Despite experiencing extreme economic and political instability, Pakistan has still been unable to break with the ramshackle of its unstable development enigma. As a result, Pakistan’s economic indicators have fluctuated widely over the last seventy-five years. Pakistan has the lowest investment rate in neighboring countries: our policy is totally focused on the tax rate and revenue collection, with no priority to investment and growth, said the report. The report said that historically the country focused on taxation, not on growth. “We have to shift the focus on growth; for that, we need to shine a light on investment, productivity, and exports. However, to increase investment and productivity, which will lead to an increase in exports, we must address the bottlenecks,”
Another grave concern is that Pakistan’s debt to GDP ratio has continuously been rising over the last decade. Research says there is a negative linear association between debt and economic growth regardless of the types of debt and the countries’ income levels. Moreover, since 1965, Pakistan has approached International Monetary Fund (IMF) twenty-two times; the recent engagement with IMF makes it the 23rd time. The PIDE’s research also suggests reforms in taxation for sustainable growth. There must be a mandatory tax filing, need to abolish the distinction between filers and non-filers.
The distinction creates a nuisance and does not contribute to improving the tax net (the number of filers was 2.28 million in 2020 and 2.29 million in 2021). Individuals file returns with 0 incomes only to avail of the filer. PIDE recommends introducing joint return filling instead of individual, and Income tax should be universal and not segmented. The division of income based on agriculture, dividends, and so on must be abolished. An integrated, fair value single VAT-based system of Sales Tax is the need of the hour. Besides these four areas, PIDE suggests that we also have to focus on our market spaces. PIDE proposes that Pakistan must grow at 7-9 percent. Other crucial issues would settle through the spillover and the ripple effect of that much growth.
