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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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Pakistan

The Federal Cabinet Approved the First Political Map of Pakistan Showing IOK as Part of Pakistan

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The Prime Minister of Pakistan Imran Khan has released a political map of the country in which occupied Kashmir has been shown as part of Pakistan.

Addressing the nation on state TV, the Prime Minister said that for the first time, a political map of the country is being released which reflects the aspirations of the Pakistani and Kashmiri people and the Kashmiri leadership.

He said that the launch of the political map of the country is the first step towards making Kashmir Pakistan. We will continue to persuade the United Nations that either they recognize this conflict or not, we will continue to work for its resolution.

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The Prime Minister announced that from today onwards, the newly issued maps would be used everywhere, including in the curricula of educational institutions across the country.

“Today is a historic day,” he said. The issuance of this map negates the August 5 move of India in Occupied Kashmir. The map has the support of Pakistani political parties and the Kashmiri leadership and has been approved by the federal cabinet.

Earlier, the federal cabinet approved the release of the political map of the country. For the first time in the history of the country, a political map of the country has been released.

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A meeting of the Federal Cabinet was held under the chairmanship of the Prime Minister in which the Board of Korangi Fisheries Harbor Authority was reconstituted and the Deputy Governor State Bank of Pakistan was approved.

The Cabinet was briefed on the performance of the National Information Technology Board, payment of dues to media houses, and gas distribution projects, while a progress report on institutional reforms was presented.

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Global

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

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The Cold War between the United States and China is still going on and it will go on for a long time until one wins. This war is to gain a hegemonic role in the region as well as in economic superiority. China is rapidly becoming an economic challenge to the United States, and its extraordinary growth has forced the United States to impose economic sanctions on China.

This annoyance of the United States is also an announcement of its undeclared defeat. In such a situation, it was inevitable for China to retaliate, which it did. The US president then made derogatory remarks against China itself. In response, the Chinese Foreign Ministry issued a “shut-up call” to the United States. The United States has banned Chinese technology company Huawei. It made it almost impossible for China to access 5G technology, but the frustration of the US increased when China made it clear to them that it had completed work on 5G technology with its own resources, and the shock of the ban on Huawei could easily be endured. Huawei has also begun to gain a foothold in Asian markets outside of US markets by improving its technology, while a report suggests that Huawei could also benefit from European markets.

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According to US experts, Trump’s poor policies have widened the gap between China and the United States, which does not appear to be closing in the near future. According to them, the United States should have given China a tough time, to improve its trade, to go to more markets, to improve the situation in Africa, and convert it into a market as well. But imposing sanctions in this way will send a message to the world about the weakness of the United States system.

A large segment of the world still believes that the Coronavirus is a product of the US-China war, which is taking its toll on the world. It can be true but what is reality? Its secret will be revealed only after many years. At the moment, the situation is such that China has become a challenge for the United States in the region. The US thought that if it supports India both economically and militarily, it would give China a tough time. But here American research and calculations proved wrong. India could not give China a tough time in any field despite the support of the United States, on the contrary, it began to be alone in the region. A recent example of this is the major developments in Iran, where Iran has sidelined India and started making trade agreements with China.

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According to a recent agreement, China will invest $400 billion in Iran over the next 25 years. Estimate how big this amount is when in 2018, our government needed only $6 billion to avoid default and run the country. The volume of CPEC of Pakistan and China is currently about $65 billion. Chabahar is almost 80 km from Gwadar. It is also a deep water port. Shortly after Pakistan and China launched CPEC, India announced work with Iran on the Chabahar port. India’s real intention was to sit here and promote proxy war in Pakistan and destabilize Pakistan. An example of this is the arrest of Kulbhushan Yadav and his revelations.

Iran was also in the anti-Pakistan camp because of India and its territory was also used against Pakistan. India’s sole purpose in this whole scenario was to use Chabahar to harm Pakistan and CPEC. While this situation was unacceptable for Pakistan, it was also unacceptable for China and that is why after a few years of hard work and backdoor diplomacy, Iran has now shaken hands with China and on the other hand, it has sidelined India from Chabahar projects.

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According to Iran, India’s plan was to increase tensions for Pakistan from Chabahar. India was only talking verbally while Iran was spending money. Investment is a difficult task for Iran, which is mired in global sanctions. Therefore, keeping in view the situation, Iran has sidelined India and preferred friendship with China. Due to this situation, the Modi government in India is also being severely criticized that India has spoiled relations with its neighbors at the behest of America, while America has a history of not being anyone’s friend and it uses countries for its own purposes regardless of color, race, religion.

Recently, Iran’s ambassador to Pakistan has sharply criticized India without naming it. He said that when a country is reluctant to maintain relations with Iran and needs the permission of other countries for its normal relations, it is clear that it is not capable of long-term planning and implementation. He made the statement in view of the lack of seriousness of India’s Chahbahar to Zahedan rail project, in which India has been making statements, but in practice, it has done nothing.

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It is also clear that a new alliance is being formed in the region comprising China, Turkey, and Russia, which will include key countries in the region, including Malaysia. Pakistan is naturally present in this alliance because of Turkey and China and now Iran’s participation will further strengthen this alliance. However, due to US conspiracies, relations between Pakistan and Iran have not been good for a long time. Pakistan and Iran have been in separate camps since the Soviet war. Pakistan’s relations with Arab countries have also played a role in spoiling relations with its neighbors and on the other hand, the proxy war has left no stone unturned. The two countries have a long history of suffering, but now that China is investing heavily in Pakistan and Iran, so it is time for the two countries to mend their diplomatic and trade ties.

On the one hand, Pakistan can benefit from Chabahar, while Iran can also benefit from Gwadar and CPEC. India’s influence is also disappearing from Iran, so now Pakistan will also deal with Iran in different ways. As far as Saudi-Iranian relations are concerned, this ideological Cold War began after the Rightly Guided Caliphs, and will probably continue in the future. Therefore, the two countries must accept each other, respect each other’s religious views and, most importantly, get out of the abyss.

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China is a strategic partner for Pakistan but on the other hand, it needs to be made with the United States as well. Iran is Pakistan’s neighbor and on the other hand, Pakistan has to maintain relations with Saudi Arabia. It is a double-edged sword in diplomacy that is extremely difficult to wield. But if Pakistan learns to wield this sword successfully and if we learn to balance relations, it will be a great achievement not only for Pakistan but for the region.

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Celebrities & Glamour

Police Brutally Tortured Iqrar ul Hassan & other Team Members of Sar-e-aam [Watch Video]

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According to the reports, Iqrar-ul-Hassan, the anchorperson of private TV program Sar-e-aam, was attacked and tortured by the Hyderabad Police. It was reported that the SHO of the Police Station slapped and tortured Iqrar-ul-Hassan.

According to details, Team Sar-e-aam had conducted a sting operation against criminals within the limits of Hyderabad’s Hatri police station, after which SHO Farooq Rao, along with other police personnel, tortured Iqrar ul Hassan and other members of Sar-e-aam team, and tried to lock them in a room.

According to the report of ARY News, the team had carried out a sting operation against the patronage of criminal elements of the concerned police station, on which the SHO of the police station beat Iqrar ul Hassan. According to the report, the police personnel used to take bribes from the vehicles of Gatka and Mainpuri.

ARY also aired footage of the incident, which clearly showed plainclothes policemen slapping Iqrar ul Hassan and trying to lock him in a room.

It may be recalled that in the last few days, Iqrar-ul-Hassan had said in his video message that he was receiving death threats.

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