LACK OF EDUCATION CHALLENGES AND PROSPECTS 1. Intro.

. Pakistan currently ranks 125th (out of 169 countries) on the United Nations Development Programmes Human Development Index, and the government is investing little in socio economic development, which also is hindering the growth potential of the Pakistans economy and depriving people of opportunities to live a satisfying life. Poverty and illiteracy rates are among the highest in the region: almost one-quarter of the population lives on less than $1.25 per day, and more than half of all Pakistani adults are illiterate. A 2010 review conducted by the Pakistan Education Task Force, which was formed by the Pakistani government, highlighted the severe challenges in the countrys education system. According to the Task Forces report, government expenditures on education as a share of gross domestic product are estimated to be less than 1.5%. As a result, approximately 1 in 10 of the worlds children not in primary school live in Pakistan, making the country second in the global ranking of out-of-school children. Moreover, 4.2 million girls are out of primary school compared with 3.1 million boys, highlighting the gender disparity in education in Pakistan, and 30% Pakistanis have received less than two years of education. 2. Aim. To analyze the challenges faced by Pakistan in education sector with the view to highlighting the problems and recommending the viable measures. 3. Challenges to Pakistans Economy a. Low Domestic Saving. Out of every hundred rupees of our national income, we consume 85 rupees and save only 15 rupees. To grow by 6%, at least 24-25% investment rate is needed - and if the reliance is on domestic savings, saving rate should be 25%. Trade Imbalance. Till 2009-2010, 80% of Pakistans imports were financed by our export earnings. This ratio has come down to only 50%, it may go up to 60% but a gap of 40% of financing needs in order to keep with the import level still exists. As a nation we prefer to use even the basic commodities of foreign countries rather than locally manufactured goods. Fiscal Deficit. It is the difference between the revenues which are collected in a year and the total expenditure incurred by the Government.Our fiscal deficit is (5.8% of total size of economy). Pakistans government takes away 20% of national income as its own. 80% is left in the private sector and 20% in the hands of the government is spent on defence, debt servicing, development on education, health, general administration etc. The revenue generated is only 15% of the GDP at best, and in the worst days it is 12 to 13%. Pakistan fiscal deficit is

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1,194,409 million rupees, which means income or revenues are only 13% of the GDP, whereas, expenditures are 20%. This has increased the inflation rate to 15.5%. d. Tax to GDP Ratio. A large portion of Pakistans economy is undocumented, resultantly evades the tax. The culture of paying tax is nonexistent. Tax collection system of Federal Board of Revenue is fraught with inefficient and corrupt staff. Tax to GDP ratio of Pakistan , amongst the lowest in the world.(9.1) Poor Social Indicators. One of the most glaring weaknesses is that a country like Pakistan that should have had best indicators in literacy, infant mortality, fertility rates, in access to water supply, in primary enrolment ratios has social indicators which are more comparable to Africa rather than to the countries of similar per capita income. Energy Shortfall. Another challenge Pakistan face today is energy shortages. With the losses of KESC from the point it has generated to the point they realize the billing is 45%, so 55% people are paying for those who are stealing the electricity. According to the latest reoprt that our , GDP could have been higher by three percent or around Rs. 450 billion, had there been no shortage of power and water that has adversely affected the national economy. Sustained Economic Policies. A glance on yester years policy documents of various governments on education, agriculture, health, trade policy etc, does not show any significant record of implementation. We produce five years plans and all kinds of medium term frameworks, but it is the poor governance and implementation that are the weak links in getting things done.In 2005, the World Bank named Pakistan the top reformer in its region and in the top 10 reformers globally( statement to refer in terms of our in consistent policy) Political Stability, Law and Order / Security. The overall arching theme is that for a robust economy we should have political stability, law and order / security. In 2007, Pakistan was one of the most favourite countries among the international investor community.However,Since the beginning of 2008, Pakistan's economic outlook has taken stagnation. Security concerns stemming from the nation's role in the War on Terror have created great instability and led to a decline in FDI (Foriegn Direct Investment) from a height of approximately $8 bn to $3.5bn.

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Poor Governance. According to the latest report The State of Economy: Pulling Back From the Abyss, released by the Institute of Public Policy of the Beaconhouse National University, Lahore Pakistan remained abysmally at the bottom among South Asian States as it lost 8.3 per cent of its GDP or Rs. 820 billion during last year owing to bad governance. Economy Today ( First Heading) Due to inflation and economic crisis worldwide, Pakistan's economy reached a state of Balance of Payment crisis. "The International Monetary Fund bailed out Pakistan in November 2008 to avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from an initial $7.6 billion."[29]

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Analysis a. Low Domestic Savings. Pakistan saving rate is 11% as compared to China, having saving rate of 50%. So this is the contrast as to why we are in serious difficulty. Trade Imbalance. As a nation we prefer to use even the basic commodities of foreign countries rather than locally manufactured goods. There is a gap between our export earnings and expenditure on imports. Poor Financial Discipline. To cope up the deficiency of fiscal deficit, Government has to barrow from the external donors, or from private sector. Another ill afflicting Pakistans economy is no cap on barrowing from the State bank of Pakistan, hence, high inflation. Tax to GDP Ratio. Pakistan is ranked amongst the lowest countries with regard to tax to GDP ratio in the region. Agriculture incomes are exempt, professionals, retailers, wholesales, transport owners and many other service providers evade taxes by paying a small fraction of what is due. Low Literacy Rate. The mother of all social evils is poor literacy rate in Pakistan. There is a direct correlation between provincial inequities and backwardness with the level of education. Energy Crisis. Circular debt coupled with line losses is delivering a crippling blow to the industry of Pakistan. Sustained Economic Policies. The approach of successive governments towards policies is revolutionary. As a result with the change of government, there is an abrupt termination of all previous projects and programs.

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Political Stability, Law and Order / Security. Confidence of international investors has decreased manifold since 2007 due to political instability and deteriorating law and order sit.

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Recommendations a. National Saving Schemes. Saving may be enhanced by positive real rates, efficient financial intermediation and good investment opportunities. Wider dissemination of information regarding alternative instruments of savings such as insurance funds and creating awareness of life insurance policies as a viable investment option. There is an urgent need to develop long term contractual saving instruments such as provident and pension funds. Brand Pakistan. Self reliance should be our national slogan. In the past the wayward political leadership has trumpeted self-reliance for political mileage only. Government should formulate and adopt a long term, and concrete self reliance strategy in the public or private sectors. Both domestically and globally Pakistani products will gain acceptance for their quality and worthiness. Broad Base of Taxation Sys. (1) Tax on Large Inherited wealth. Large inherited wealth should also be subj to taxation. The intro of progressive estate duties ranging from 10-30% on estate in excess of Rs 5 million could help to moderate the growing income disparities. Tax on Income Derived from World Sources. Most countries tax the global income of their residents. Pakistan also did the same in 1960s but called it off imed. The present sit actually encourages residents to transfer savings and hold assets abroad and thus acts against domestic investment. Imposition of Agriculture Income Tax. This must be made effective. Dramatic inc in revenue from this source should not be expected but a working agricultural income tax is highly necessary to improve fairness and plug leakages in the tax sys.

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Improve Quality of Products/High Exports. We need improve the quality of our products, go out and do the marketing abroad. Export expansion needs to be given high priority. Regional integration as well as

removal of impediments to exports is probably the starting point for evolving a coherent export development strategy. e. Human and Social Development. Government should adopt prudent policies which remove social injustices by eliminating economic disparities and public deprivations. The best way is to increase the literacy rate of Pakistan. Unless we build up human capital, we are just going to be left behind because the world economy is going to be a knowledge based economy. Tapping all Energy Resources. Pakistan should diversify its power generation by tapping all energy resources. Building new dams, constructing new nuclear reactors, power generation from wind and bountiful sunshine is way forward. A comprehensive energy policy in this regard should be formulated and implemented at the earlist. Sustained Economic Policies. The approach towards economic policies should not be revolutionary rather should be incriminatory. The projects and programmes which were initiated by the previous governments, should be evaluated as to what the strengths and weaknesses were, fix those weaknesses and carry them forward. Security to International Investment. It is necessary to have political stability, good law and order situation in Pakistan. Investors from all over the world should be assured and provided security, so as they are willing to invest in Pakistan.

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6. Concl. Pakistan is rich in human and material resources, but poor governance of the country has impeded the process of exploitation of these resources. Among macroeconomic problems faced by the country, financial mismanagement is the mother of most economic ills in Pakistan. The most fundamental change in economic policies that is required to address economic crisis is that the past practice of large scale financing of government operations through external borrowings and internal money creation should be abandoned.