The economic impact of devastating floods |
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The
full economic costs of the devastation caused by the floods-
the worst in many years- in Khyber Pakhtoonkhwa, South
Punjab, parts of Baluchistan and Sindh, will not be known
for some time. But they are likely to be substantial, both
for the people affected by the deluge and for Pakistan’s
cash-starved government.
Former federal Finance Minister, Dr Salman Shah, estimates
that costs of rehabilitation of the flood-affected
population and reconstruction of damaged infrastructure in
different parts of the country could be in the range of $ 4
- 5 billion. Another economist put the figure between $ 3.5
and 4 billion. These losses are enormous when seen in the
context of cumulative damages of about $ 6.5 billion in 14
floods since 1956.
According to another former Finance Minister and ex senior
Vice President of the World Bank, Shahid Javid Burki, “we
should get ready for another poor year for the economy, in
the terms of the rate of the growth in the national product,
pace of job creation and inter-personal and inter-regional
income distribution. The government’s prediction that GDP in
2010-11 would increase by 4.1% now seems extremely
optimistic. Given some of the shocks the economy has
received in last few days, it appears that the national
product will not increase by more than 2.5 to 2.8% this
year. This will be about the same as the revised rate of
growth in 2009-10. If that came about, Pakistan’s current
economic expansion will be less than one half that of
Bangladesh and one third that of India. Pakistan today is
South Asia’s “sickest” economy and will remain that way
unless the policy makers move decisively”.
The information minister of Khyber Pakhtoonkhwa Mian,
Iftikhar Hussain, told reporters that “the infrastructure of
this province was already destroyed by terrorism. Whatever
was left was finished off by these floods”. This is also the
case with South Punjab. It will take years for economy to
come out this pathetic state. According to the UN, “the
emergency phase will require hundreds of millions of dollars
and the recovery and reconstruction part will require
billions of dollars”. The government is looking for foreign
aid and external help to overcome the present crisis, but
the experience of Friends of Pakistan shows that an inflow
of money from richer nations will not come so easily. If the
government continues to depend mainly on foreign aid and
assistance for the relief work, then the situation will
become worst. Already affected people will be left to their
own devices, to survive in the impossibly difficult
situation. After this natural calamity, a man made crisis
will unfold.
Agriculture hit the hardest
According to the spokesman of the World Food Programme,
Amjad Jamal, “At least 1.4 million acres of crops were
destroyed in Punjab. Many more crops were destroyed in North
West and Sindh. The flooding has caused massive damage to
crops and also to the reserves that people had in their
houses. Khyber Pakhtoonkhwa was a ‘food insecure’ province
even before the floods, and now in a lot of areas, people
can’t afford even one meal a day”.
If we include the figures of Sindh and Khyber province, the
total goes up to more than 2 million acres. This is massive
damage. Sugar cane, rice and cotton crops have been badly
damaged. Agriculture experts are saying that farm production
in Pakistan, Asia’s third-largest grower of wheat and the
fourth biggest producer of cotton, may decline by 20 to 30%
because of this damage. The losses to agriculture and
livestock would have a spill over effect on industry and
commercial activities to a great extent. This is because
agriculture continues to play a central role in the national
economy. Accounting for over 21% of GDP, agriculture remains
by far the largest employer, engaging 45% of the country’s
labour force.
Damages, on the one hand, are likely to affect raw material
supplies to the downstream industry that contributes to the
export sector and, on the other hand, reduce the demand for
industrial products like fertilizers, tractors, pesticides
and other agriculture implements. And all this comes at a
time when agricultural productivity has been falling over
the years.
Since the flooding has been widespread, the damages to
cotton crops may not be verifiable at this stage. Cotton,
being a non-food cash crop, contributes significantly to
foreign exchange earnings. It accounts for 8.6% of the value
of agriculture and about 1.8% of GDP.
Likewise, sugar cane is a major crop, which is an essential
item for industries like sugar mills, chipboard and paper.
Its share in the value of agriculture and GDP is 3.6% and
0.8% respectively. Another cash crop, rice, is one of the
main export items. It accounts for 6.4% of agriculture and
1.4% of GDP. High quality rice serves domestic demand and
earns $2billion in exports every year.
Mostly small cities and towns surrounded by the villages
have been affected. The big chunk of the economies of these
cities and towns depend on the rural population. The rural
population depends on agriculture for its economic survival.
There are hardly any big industries in the affected areas.
There are small industries which are also agricultural based
and depend on agriculture for raw material. The economy of
South Punjab largely depends on Cotton and wheat crops and
mango orchards. The rural economy of Khyber Pakhtoonkhwa
depends mostly on wheat and maize crops and also produces a
large quantity of high quality fruits and vegetables. The
vegetables have completely been wiped out and big damage
done to the fruit orchards. The standing waters in the
orchards are causing further damage to them.
The canal irrigation system has also been affected and water
for irrigation might not be available to the farmers in many
areas for the next crop.
Small farmers and peasants to
suffer the most
The affected areas of South Punjab and Sindh are dominated
by the feudal lords, who own more than 80% of the irrigated
land. Small farmers and peasants make up the majority in the
population. Some work as daily wage labourers in the nearby
cities and towns. A majority of the workers either work as
public sector workers or are employed in the
agriculture-related small industries.
The small farmers and peasants will suffer the most from
this disaster as feudal lords and big farmers will transfer
the burden of disaster onto the shoulders of peasants and
poor farmers. Feudal lords and big farmers have shifted
their families to safe places in the cities but peasants and
small farmers are suffering and facing the miseries of life
because they have no means to move out of the affected
areas. They have no place to go and are forced to live under
the open skies. Poor people have been left with nothing and
at the mercy of the state machinery for rescue and relief.
They have lost their livelihoods and shelter. Now, the real
problem will start for them when authorities start to the
pay compensation and reconstruction money. They will be
asked to provide ownership documents to get compensation for
their destroyed homes and livelihoods which they can not
provide because these lands belong to the feudal lords.
These peasants have been working and living on those lands
for generations but they do not own the lands. The
destruction of crops means that they will be left without
any food reserves or money for months to come. The
government will offer cheap loans and other facilities to
the feudal lords and big farmers, but nothing will be
offered to poor peasants and small farmers. They will be
left at the mercy of private money lenders and feudal lords
to be fully exploited. These private money lenders and
feudal lords will offer loans to these peasants and small
farmers at very high interest rates. These peasants will be
forced to work like slaves for feudal lords just for few
thousand rupees. This disaster will further impoverish the
hundreds of thousands of already extremely poor peasants and
farmers.
Millions of peasants, agricultural workers and small farmers
are suffering because capitalist class in Pakistan failed to
eradicate feudalism and big land holdings in the country. No
serious effort has been made to abolish landlordism and
carry through progressive land reforms. Instead respective
military and civilian governments have tried to strengthen
the decaying feudal and tribal system. The eradication of
feudalism and capitalism would bring millions of people out
of the trap of this poverty, hunger and slavery-like
situation.
Courtesy: Committee for a Workers' International
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