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Pakistan’s Informal Economy: The Way Forward (Strategies to Change the Status of Informal Economy)

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The informal economy refers to the undocumented economy that is not on government record. The state cannot monitor such type of economy since it is not listed on the official account. According to the statistics of the World Bank, about 36% of Pakistan’s economy is undocumented, which is an alarming situation. This percentage is equivalent to agriculture and industrial contribution to the GDP of Pakistan. Without the inclusion of the informal economy in our current GDP, the prosperity of the country is just an elusive dream.

The informal economy consists of the income earned by laborers, vendors, daily wagers, home businesses, small businesses, etc, and also it contains the profits received through illicit activities. All such wealth is mostly not registered on government records. World Bank predicted that if this informal economy becomes a part of the current economy, it will increase the GDP growth by 10.5%. The informal economy brings adverse effects on the productivity of the country. It increases corruption, bribery, money laundering, social evils, a threat to registered products, etc. The government suffers hugely in terms of tax evasion, which directly affects public spending.

In this article, our focus will remain on the strategies through which we can change the status of the informal economy. In the next few paragraphs, we will discuss the points that help transform the Informal economy into the formal economy.

Firstly, government institutions are responsible for taking action against those businesses that are not registered in official records. The government should make surveillance teams in every district on the provincial and national levels to constitute a list of those, who not listed on formal documents. Many products in the market are manufactured by companies that are not registered in official records of the Security and Exchange Commission of Pakistan (SECP). Due to the un-documentation of such businesses, the government is enduring a lot in terms of tax.  Government institutions like FBR, NAB, FIA, SECP, etc should establish special teams to counter such organizations involved in the transactions of unregistered products.

Secondly, the Security and Exchange Commission of Pakistan (SECP), with the collaboration of NADRA and FBR, create a special database in which all the record of salaries should be stored. The government should make it mandatory for every company, business, shop, vendor, etc to submit the record of its employees along with their salary documents. Also, the government should make it obligatory for every employer to pay salaries through the banking network. This will help in the identification of those who are out of the formal economy circle.

Thirdly, business-to-business transactions should be made through the banking sector. The majority of the small business transactions are carried out in the form of cash, which does not become a part of the government record, and because of that, businessmen hide this money from the eyes of the government for tax evasion purposes. The government should encourage businesses to make transactions through banking channels because it will help the government to constitute a record or financial transactions.

Fourthly, it is estimated that around Rs 10 billion worth of products are being sold to customers each month which has no record. The government should impose an ID card policy on every sector, whether big or small. This will help in the identification of those who are buying more than they earn. Most of the tax evaders prefer to buy in cash, which provides them a shield against government institutions. The state should make it mandatory that every citizen must provide its National identification card (CNIC) in case the amount exceeds the limit set by the government.

Fifthly, the government should make it compulsory for all the businesses, shops, manufacturers, service providers, etc to acquire a work license. There are millions of small businesses that are working without any license or certificate from the government. The government should apply strict actions against unlicensed shops. Any business without a license should be closed immediately, and the owner must be punished accordingly. The same thing should apply to the service sector because the service sector comprises a big amount of GDP. The licensing will help the government in maintaining a record of all the business and service activities in the country.

Sixthly, the government cannot achieve any productive outcome without changing the perception of the public. Changing the behavior and attitude of the public is inevitable to the development of the country. The government should assure the people through its attitude and work that whatever money the government receives, in the form of taxes, will be spent on the welfare of the people. The state, with the help of Media, should launch campaigns to increase awareness in the public about the benefits of their registered businesses, and taxes. The government should enhance public spending on education, health, transport, etc to prove that the public will be benefited from the taxes.

Seventhly, the unwillingness of the previous political parties increased the informal economy. In the past, democratic governments didn’t pay much attention to this matter, and the consequences of their neglection are severe. The incumbent government is taking steps to bring the informal economy in the tax net. The government should attract small businesses through different schemes, like tax exemptions, etc to lure them towards documentation. PTI government launched various projects to provide benefits to small businesses.

Eighthly, the state must impose strict security measures on the border to stop the flow of smuggled goods in the economy. Billions of rupees worth of smuggled products get in our markets, which brings huge losses to our economy.

Lastly, the government must enhance the information technology sector of the country, which will help in the documentation of the economy. By improving the IT department in government institutions, record-keeping, and documentation will become simple. The identification of the culprits will become easy, who are involved in illicit activities.

To conclude the whole argument, it is pertinent to say that the conversion of the informal economy into formal is inevitable for the prosperity of Pakistan. Pakistan is already struggling with various financial deficits, and this conversion will be beneficial in overcoming many financial losses.

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Will Pakistan Recognize and Accept Israel?

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The Muslim world is at a new turning point in history. The distance between Arabia and Israel seems to be closing. Israeli Prime Minister Netanyahu and Saudi Crown Prince have met. The US Secretary of State was also present at the meeting in Saudi Arabia. The world media is shouting at this meeting. If this news is true then it is a great development in world politics. The UAE, Bahrain, and Sudan have already joined Israel. What color will this friendship with Israel bring to the Arabs? Why are the Arab countries so anxious to embrace yesterday’s enemy? Will Pak-Israel anger last forever?

ALSO READ: Two Factors that are Blocking the Way of Resolving Palestine Issue

While the new global political development is a source of joy for the minority, it is also a source of unhappiness for the majority. Questions about recent developments also need to be answered. Experts say the meeting took place and that Israeli Prime Minister Netanyahu arrived in a private jet with the Mossad chief. He met secretly with the Saudi Crown Prince. The problem is that the results of the recent US election have upset many countries, including Saudi Arabia. After Biden’s victory, Saudi Arabia fears what the new US president will do. Saudi Arabia wants the support of the Israeli lobby in the United States. Saudi Arabia has extended a hand of friendship to both Turkey and Israel. Saudi Arabia does not want its relations with the United States to rupture. Will Saudi Arabia’s efforts work?

The first is that US foreign policy has implications. Four Muslim countries were destroyed by US foreign policy. Libya was devastated by Obama and Hillary. Had it not been for Russia and Hezbollah behind Assad in Syria, it would have been like Libya. The situation in Iraq and Afghanistan is also in front of everyone. The situation in Afghanistan and Iraq hurt the United States. Trump has not started new wars. Biden is under the influence of former US President Barack Obama. They are “dense” like them. Such people are dangerous. This threat is making the world restless.

ALSO READ: What is Pakistan’s Stance Regarding Recognizing Israel state?

Iran has also linked Biden’s victory to goodwill. Iran hopes sanctions will be eased. Trade routes to Europe will open for Iran. Pakistan will also benefit from easing sanctions on Iran. Pakistan’s goods will go to Iran and Iran’s goods will come to Pakistan. Saudi Arabia wants to curb Iran’s influence in the region. If anyone can look Israel in the eye, it is Iran and Turkey. Saudi Arabia will not be made of Iran. It is said that the enemy of the enemy is the friend, Saudi Arabia is also going to sacrifice its long-standing policy under the same policy.

The question is, when Pakistan’s friends are raising the bar of love and friendship with Israel, will Pakistan lag behind in this race? Will Pak-Israel anger last forever? Prime Minister Imran Khan’s position on Palestine is the position of the nation, in which he said that our policy on relations with Israel is the same as that of the founder of Pakistan. The founders of Pakistan have always rejected relations with Israel. He used to say, “This is a dagger inserted in the heart of the Ummah. This is an illegitimate state which Pakistan will never recognize.”

ALSO READ: CPEC & Chabahar Paving the Way for China’s Supremacy in the Region

Our position cannot be linked to the position of the Arab League or the OIC. Our position is based on the position of the founder of Pakistan, Quaid-e-Azam. If Pakistan backs away from the Palestinian policy, it will deviate from the Kashmir policy. Pakistan is a non-Arab country that has taken part in two wars against Israel. Pakistan’s policy is clear and cannot be changed. But our Prime Minister is second to none in changing his stance on every issue. As soon as the news of the Saudi Crown Prince’s meeting with the Israeli Prime Minister came, a certain group in Pakistan was deployed to form a consensus to recognize Israel.

A lobby of specialized intellectuals and journalists has begun work on the “Acceptable” mission. The government has started throwing leaves through social media. The past shows that our Prime Minister jumps to great heights, in this case too. If that happened then his followers would accept it as a blessing.

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Pakistan

Can Kashmir be Removed from the UN agenda?

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After an illegal action of scrapping the special status of Jammu and Kashmir, India is now adamant to take the Kashmir issue off the agenda of the UNSC, terminating the hopes of the sovereignty of oppressed people in the disputed territory. Pakistan jogged India’s memory that Kashmir can not be removed from the agenda of the united nations security council (UNSC), which was determined to solving this dispute between Pakistan and India according to the desires of the Kashmiri people. Munir Akram, Pakistan’s permanent representative to the United Nations, while answering to the Indian move, said “Indian spokespersons either deceiving themselves or pulling the wool in their public eyes that they will get Kashmir out of the security council’s agenda”.

He said, “it will never happen”. He further brought to the light that the security council’s agenda was set in agreement with the established rules and procedures and could only be modified by a consensus of the members of the council and can not be altered unilaterally by a single member state.

ALSO READ: Reasons and Background of Recent Indo-China Border Conflicts

As the 75th session of the UN general assembly is to begin in New York later this month, it goes without saying that Pakistan will raise its voice and bring the miseries of the Kashmiri people to the mind of the world community to call for justice in the valley. India asked the UN to detach Kashmir from its agenda to refrain Pakistan from raising it at the 75th session of the United Nations General Assembly. India backing its move, in response to the report of the security council for 2019, complaining that Pakistan “keeps shoving for debate on an obsolete agenda thing in the council”.

Pakistan has raised the issue inside the council three times with the support of china since the illegal annexation of the valley. India’s argument that why it should be removed from the agenda of the council is hollow from the facts. As the UNSC does not acknowledge the Indian claim and treats the territory as an unsolved dispute. Furthermore, it has deployed its military observers on both sides of the Loc. Diplomatic sources told that India has been seeking for a long time to bring out the “Pakistan-India Question” from the agenda of UNSC. In spite of India’s long efforts, it has fallen through in its aim incessantly.

ALSO READ: Nepal-India Territorial Conflict Explained: Facts & Background

One UN diplomate called the Indian claim as “weird” as he told the reality of removing any agenda item. He said, “it could be only possible if a dispute was solved or the consensus decision of the council”. However, the Jammu and Kashmir issue is not settled yet, rather, illegally annexed by the Indian state inspired by the Hindutva ideology of RSS, a Hindu extremist organization.

The ultimate goal of the Security Council, an important part of the UN, is to ensure international peace and stability, which calls for the list of unresolved issues of its agenda and can’t be removed even if one member state wishes to remove.

From the time, Kashmir issue was inscribed in its agenda, till today 16 resolutions are passed by the UN on Jammu and Kashmir. The illegal annexation of Jammu and Kashmir by fascist India was considered in its agenda “The Pakistan-India Question” on 16 August. The deployment of UNMOGIP was approved under the same agenda.

ALSO READ: Indo-China Conflict & the Role of America

UNMGOIP remains deployed in disputed territory between Pakistan and India, another confirmation that the dispute is still on the agenda of the security council. It checks and reports ceasefire infringements along the LOC in Kashmir, allowing the UNSC to stick to their guns. The military observers are present in disputed territory and violations are reported to the UNSC and the UNHQ. This proof unveils that this dispute is under the active consideration of the council and is not obsolete in any way.

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What can be the Possible Solution to Karachi’s Conundrum?

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As we all are apprised of the rack and ruin brought about by the inclement monsoon season in the metropolitan city of Pakistan, Karachi. The people of Karachi have been compelled to face severe losses in the wake of rain floods engulfed approximately the whole city. Despite severe losses due to the rain that has inflicted upon the people, one positive development has been witnessed as the masses are incensed with the management and administration of Karachi and the sense of raising their voices this time for the amelioration of the shambolic city is developed. Who is held responsible for the administrative fiasco in Karachi?

The city has not seen major development at the hands of ruling parties instead of the Musharraf era in which, under the watch of Mayor Karachi Mustafa Kamal, the city was leading ahead in the whole South Asian region in terms of development and progressive work. It is not wrong to say that the development Lahore has witnessed in 2013-2014, Karachi was enjoying in 2005, as ill-luck would have it, no further up-gradation in the city has seen till to date. Unfortunately, due to incompetence and politics, the financial hub of Pakistan and one of the largest cities in the world are enjoying the serendipity of trash. Due to power politics between PPP and MQM, the city is lagging in development and the masses are enduring a very difficult situation.

ALSO READ: Worst Condition of Karachi, Who is Responsible? Petition in Sindh High Court

Much to the sufferings of people, Karachi deserves a comprehensive and practicable solution to all the problems faced by the people. So, they can finally take a sigh of relief.

The concept of ‘Karachi a separate province’, as it is surfacing on social media and the minds of people, is utterly non-viable because it clashes the vested interest of the political parties and the administrative problems solely lie with the people not with the parties, and they will never allow laying their hands off of the hen who lay golden eggs as the slogan ‘Marso Marso Sindh Na Deso’ will start airing.

Although, if Karachi is made a separate administrative unit, to much extent, the management problems can be eradicated. But again the problem is the same.

The most viable and workable solution for the administrative fiasco in Karachi as well as for all the metropolitan cities is to develop ‘Local Body Structure’ as it is already established in major big cities of the world. For instance, London has its local body structure spearheading by mayor Sadiq khan who is responsible for all the issues occurring in the city, including sewage problems, transport, sanitation, policymaking, public safety, and water supply management.

We are still bound to the inherited ancient structure from the British and they moved to the new one local body structure in which the mayor is directly elected by the people and bestowed by a full-fledged authority to run the city’s affairs properly.

On the other hand in Pakistan, commissioners and deputy commissioners control all affairs of the city. At the time of crisis, people are blowing hot and cold to whom they go for their complaints, either go to chief ministries, the federal government, or powerless mayors. The masses should be directed to one person responsible for the city’s administration. Unfortunately, in Pakistan MNA’s are doing the work of pavement of streets and the concrete meant of roads which is highly contrary to their work as they are responsible for making laws in the national assembly.

The local body system set up in 2013 was hamstrung and completely failed as the powers were not devolved to the lower level of the institutions. We often saw the mayor of Karachi Waseem Akhtar crying for funds and imploring to the provincial government for funds to take the tasks to completion in the city. After the 18th amendment, the power and authority were given to provinces but the devolution of power to grass root level is not assured.

Karachi is plunged in a quagmire of different power holders like the Army handling some institutions, MNA’s of the ruling party, and the mayor of Karachi. As I aforementioned, who is held responsible for the failure, and people should know whose neck they are going to hold in time of crisis.

It is the need of the hour to make different administrative units to run this country efficiently and effectively as the administration becomes plain sailing. Our neighbor country India has nearly 36 administrative units, America has approximately 50 states and our brother country turkey has 81 provinces. So, by seeing these example its desideratum becomes quite evident.

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