Corruption: The Economy’s Termite
Faizan Ahmed
The interference and actions of National Accountability Bureau and Supreme Court of Pakistan in past months shows that Public Institutions are taking strict measures against corruption cases. This activeness in past months and decisions against famous politicians shows that now State is moving in right direction to curtail corruption. It had been many governments but the level of corruption in country had either remained unchanged and efforts to curtail it are very minimum. It has been a social issue for country since decades and whenever any government came into power they come up with manifesto that they want to end up corruption in country but the end results at the end of their tenure is very different and results remain unchanged however the effects of corruption become more obvious and dangerous for country in future as well in current scenario. Pakistan is included in those countries list which is most effected by corruption and the repercussions of this corruption have led the country on that stage where it have to take loans and aids from International Financial Institutions and countries to sustain their economy and to develop other developmental projects. Pakistan Economy is victim of corruption and the government tries to end the perception of reducing corruption but in reality they are contributing to corruption.
If corruption is ended than country could prosper in economic terms and it can grow its GDP by collecting taxes, investing in developmental projects and RDi’s. There are major effects of corruption on economy; first the country gets limited resources to invest in projects which could generate funds for other projects. Another drawback of corruption is that it makes the cost of initial projects such high that new projects could not be started and it limits the scope of that project. One major drawback of corruption is that it is leading to circular debt in an economy which is enrolling in an economy like a vicious cycle and effecting government spending and earnings. Circular debt is mainly caused by corruption in an economy, it is a shortfall of funds from one department to another and due to corruption these funds are shortened in economy. Another drawback of corruption is that it reducing quality of service in society and allowing individuals to complete their tasks not professionally and ethically as a result quality of service provided is very poor and people comprising on it and not complaining.
If things continue like this than one day a country will become on a stage where it will be bankrupt or could not able to pay bailout packages of Financial Institutions and loans of other countries. Corruption is a social issue which is eating in an economy like a termite and the government as well as public is not taking seriously that this social issue could lead country on a stage where it could not able to recover and it economic prosperity will stop and the pace of growth will fall to level from where rising is very difficult.
Corruption makes economy like a termite and leaves a country at a stage or area from where it could not compete with developed countries in growth , Technology and GDP. Corrupt countries faces high inflation and living costs and they have to survive on aid and loans from financial institutions and other countries. These countries have to take loans on high interest rate for further developmental projects which has high cost involving interest payments. Corrupt countries have a weak tax base and tax collection system which provides a base for people to do corrupt practices. Mostly people save themselves from taxation by taking advantage of weak laws and doing corrupt practices such as offering bribe to government officers so that they can report their tax amount on very less amount. Another drawback of corruption is that public faith on government and its institutions is reduced and people try to avoid invest in those projects where government is involved.
I think the rising devaluation of Pakistan currency and circular debt can be reduce if state controls the level of corruption in country and bring back money that is gone out due to corruption. The rising devaluation of currency is caused because most of the corruption money is laundered to other states which increases the supply of money in economy and increases the demand of other currencies in an economy. This causes the devaluation of Pak rupees in open market and makes Pak rupees devalue against other countries. The recent example of devaluation of Pakistan currency is best example how corruption effects other aspects of an economy, recently Pak is devalued against US dollar such drastically it fall from PKR 115 to PKR130 against 1 US dollar.
Another drawback of corruption is that people losing trust on government and politicians. Mostly people believe that giving them power and mandate allow them access to do free hand corruption in administrative and developmental works. People believe that democratic system is good for country but at the same time it is allowing corruption in country. It has been observed that in democratic rule the corruption in country have risen.
Strict measures, policies and monitoring need to be done by Federal as well as provincial governments to stop corruption at both upper and lower level otherwise results will be very drastic and harmful for country.
The contributor is a student of IoBM, Karachi.
