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“Underdevelopment occurs not because of lack of capital: capital can easily be raised; it occurs not because of lack of skilled people: people can be trained; it occurs because of the failure of a society to organise itself for development…” Albert O. Hirschman (The Strategy of Economic Development, 1958).

ON Pakistan’s 78th independence anniversary, we have to ask ourselves a sobering question — why is the country that was born on the wings of hope, between promise and peril, and seemingly prospered for decades, in its current dismal state? Why are its human, social and economic development indicators competing with Afghanistan and sub-Saharan Africa? Why have numerous promised ‘game changers’ over the decades, from CENTO and SEATO membership to CPEC and SIFC, failed to deliver for the people?

The answer is simple as much as it is uncomfortable. Pakistan is not organised as a polity for development, let alone inclusive development. It is organised for elite extraction, appropriation, expropriation and enrichment. And the two models are not just incompatible, they are mutually exclusive.

A society is organised for development when its laws, institutions, cultural norms and incentives are deliberately structured to expand opportunity, raise productivity and channel resources towards the most optimal use for the widest common good. Economies that have successfully climbed the ladder of development, at least over the past five decades, display common characteristics. These include an emphasis on human capital development, high savings and investment rates, an equitable and non-discriminatory tax regime, responsible governance, high levels of transparency and accountability, institutional checks and balances against executive overreach as well as policy and regulatory capture.

Pakistan’s current organising principle as a polity is incompatible with development.

This is in sharp contrast to how Pakistan has been configured as a polity. To adapt Lant Pritchett et al’s quote, countries such as Pakistan “look like a state” but do not exhibit the foundational characteristics.

Pakistan has a Constitution but one that fails to restrain, to provide checks and balances; it has ‘law of the land’ without rule of law; governments without governance; buildings without institutions; projects without purpose; spending without impact; civil service without service; security agencies without security. Like many other Third World countries, Pakistan has been organised as a neocolonial project with local elites installed on behalf of former colonial powers. Two natural corollaries of elite capture are weakened institutional checks and balances, and extraction.

The wages of extraction are evident in how the two broad groups of society — the elites versus the non-elites — have done over the course of Pakistan’s existence. The current state of these two broad segments are in stark contrast. The lived experience of ordinary Pakistanis is one of grinding poverty, unemployment, unpayable bills and taxes, state repression and waiting in endless queues to leave the country.

On the other hand, the general elite as a broad cohort has never had it better. With over $17 billion of privileges accumulating to the elites each year via tax exemptions, concessions, land grants, budgetary allocations, etc, and an estimated siphoning off of around 30-40 per cent from public procurement and development budgets, an estimated annual capital flight of well over $10bn takes place. This has allowed ruling elites to accumulate vast offshore assets, as revealed in the various investigative leaks such as the Panama and Pandora Papers.

Neither of the two realities and daily lived experiences is an ‘accident’. It is by design and a result of deliberate policy choices. The process of marginalisation, income and wealth redistribution and extraction via public policy has accelerated from 2008 onwards. Powerful social, economic and political groups such as political families, the military, landed and business elites and bureaucrats have begun to monopolise public resources, and shape policy to favour themselves, away from ordinary citizens at large.

This widening divergence between ordinary, disconnected Pakistanis and the wealth accumulation of the connected elite coincides with the use of public policy as a tool for extraction and redistribution from the bottom to the top. Two areas where public policy has made possible the largest transfer of resources in Pakistan’s history, and mortally damaged the economy, are IPPs and sugar. (Land allocation is a third area).

The scale of the wealth transfer is staggering. As a crude indication, around 33 IPPs received contractual capacity payments of Rs8.3 trillion between 2014 and 2024, according to disclosure by the Power Division. According to the 2020 GoP inquiry report, the return on equity of a majority of the IPPs set up under the various power policies ranged from 40pc to 87pc in rupee terms. Against an initial investment of Rs110bn, IPPs set up under the 1994 and 2002 power policies alone earned net profits of Rs618bn. Investment payback periods of projects reviewed by the committee ranged from one to six years.

In the case of sugar, manipulation of data as well as government policy has regularly handed 90 millers, across the political spectrum, hundreds of billions of rupees in unearned rents. The rentier economy around sugar has destroyed Pakistan’s cotton economy, the mainstay of the country’s exports. And yet it continues unchecked.

Vested interests have begun employing the same template in wheat to earn enormous rents at the expense of the country’s 11.7 million farmers. More is in the pipeline, from rare earths and minerals extraction in KP, canals in Cholistan, and a crypto misadventure. Fire sales of state assets such as ports, airports and other vital infrastructure are also on the cards. This is institutionalised extraction. Institutions, budgets, laws, policies, markets and regulations have been increasingly structured around securing perpetual rents and privileges for the elites.

In short, Pakistan is not organised for development. A self-interested ruling elite lacking ‘skin in the game’ with little or no incentives to develop the country has rigged the system for extraction. In its current configuration, Pakistan is set up as a system of spoils for this elite. Without a fundamental rethink and reformation of the state, no amount of copper and gold or rare earth mineral finds will secure Pakistan’s future.

The writer has been a member of several past economic advisory councils under different prime ministers.

Published in Dawn, August 16th, 2025

LAHORE: The Provincial Disaster Management Authority (PDMA) on Friday issued a flood alert at Kalabagh and Chashma in the Indus River.

According to the authority, there is a possibility of water rising in both the dams due to the monsoon rains on Aug 16 and 17. There might be medium to high levels of flooding at Kalabagh and Chashma.

The PDMA issued an alert to the commissioners of Rawalpindi, Sargodha, Dera Ghazi Khan and Bahawalpur divisions. An alert has also been issued to the deputy commissioners of Attock, Mianwali, Bhakkar, Layyah, Kot Addu, Dera Ghazi Khan, Muzaffargarh, Rajanpur and Rahim Yar Khan.

Punjab Relief Commissioner Nabeel Javed has issued instructions to the commissioners, deputy commissioners (DCs) and Wasa officials to remain alert about the possible situation. Alerts have been issued to the local government, agriculture, irrigation, health, forest, livestock and transport departments.

Rs20m provided to Kasur admin for relief, rescue activities

PDMA Director General Irfan Ali Kathia said all arrangements should be completed in advance and the staff in emergency control rooms should be kept on alert. He added that disaster response teams of Rescue 1122 should also be kept on high alert and provision of food, clean drinking water and other facilities should be ensured in flood relief camps.

“In view of the flood situation in Kasur, the activities of PDMA Punjab are going on in the district.”

According to the PDMA DG, more relief supplies have been provided to deal with the flood situation in Kasur. The relief supplies included 50 tents, 100 life jackets, 50 life rings, 100 mosquito nets and 50 plastic mats. An additional amount of Rs20m has been provided to the district administration for relief and rescue activities. The supplies have been delivered to the district administration by the PDMA Punjab. All rescue and relief equipment and teams are present in the field. Rescue 1122 and other workers are engaged in rescue activities.

“The citizens should strictly follow precautionary measures in flood situation though protection of life and property of citizens is the top priority of the Punjab government,” he added.

The PDMA Punjab also issued a fact sheet on the monsoon flood situation. In the last 24 hours, 28mm of rain was recorded in Murree, 22mm in Rawalpindi, 13mm in Narowal, and 11mm in Lahore and Sialkot. Due to monsoon rains until Aug 17, there is a risk of water rising in major rivers of Punjab.

According to the fact sheet, there is a low-level flood situation in the Indus River at Kalabagh, Tarbela and Taunsa. A medium-level flood situation has been recorded in the Indus River at Chashma. There is a low-level flood situation in the Chenab River at Khanki and Marala and a low-level flood in the Sutlej River at Ganda Singhwala. The water flow in the Jhelum and Ravi rivers is normal as well as water flow in the rivers and canals adjacent to the major rivers. Tarbela Dam is 96pc full while Mangla Dam is 67pc. The water level in the Indian dams is up to 70pc.

Mr Kathia said the citizens should take care of children and not let them bathe in the rainwater drains, low-lying areas, rivers and canals. “This year, 164 citizens died in various accidents due to monsoon rains. In view of the instructions of the Chief Minister of Punjab, financial assistance is being provided to the affected families. 582 citizens were injured, 216 houses were affected and 121 livestock were killed.”

Meanwhile, Provincial Minister for Health and Chairman Cabinet Committee on Disaster Management Khawaja Salman Rafique visited the PDMA Head Office to review the latest water flow situation in the Indus, Jhelum and Sutlej rivers.

DG Kathia briefed the minister.

According to Mr Rafique, there is coordination among all the relevant institutions across the province. Rescue personnel and other departments are performing their duties for the convenience of the public in the affected areas. Real-time gauges are also inspected in the PDMA and instructions are issued. All other relevant institutions, including the district administration, have been directed to remain alert.

According to weather reports, heavy rains are predicted in most districts of Punjab in the next 24 hours. There are concerns of heavy rains and cloudbursts in the Upper Punjab.

The PDMA Punjab issued orders for deputy commissioners across the province to keep lifeboats, life rings and rescue equipment on standby.

DG Kathia said provision of staff should be ensured in hospitals to deal with emergency situations. “Rescue teams should be deployed in advance at sensitive places to deal with emergency situations. Inform citizens in advance in case of heavy rain. There should be sufficient stock of petrol and diesel for rescue operations,” he said.

He added that drainage should be ensured in all sensitive places, especially around hospitals. Announcements should be made in mosques and instructions should be issued at the local level to citizens to stay in safe places.

Published in Dawn, August 16th, 2025