Economy – Insight on Kashmir

Pakistan can avoid going down the path of economic meltdown

Pakistan can avoid going down the path of the economic meltdown of Sri Lanka. The country will need to get out of the political instability as early as possible, the analysts have warned.

Pakistan’s currency has been plummeting against the US dollar and the delay in the release of a crucial $1.17 billion installment from the International Monetary Fund to Islamabad has also added to the existing economic crisis.

Bloomberg which is a leader in providing market data from around the world through its branded analytical tools and various platforms has recently published a list of those countries that are most at risk of default in 2022.
Unfortunately, Pakistan is also included in this list. The title of the said report itself tells the stories of the failures of economically weak countries and their poor economies.
The list is based on four indicators namely government bond yields of any country, credit default risk situation, interest payment ratio to GDP ratio, and government debt to GDP ratio.
According to the latest research, with a 15 % interest rate, Pakistan’s government bond yield has recently been calculated as performing at the lowest levels.

20 years

13.594%

+2.6 bp

+165.1 bp

7.81

-0.51 %

-25.41 %

28 Jul

Pakistan’s state bond performance

which means that this bond is in a more dangerous situation than before.

A country’s government bond yields start to cause trouble for its central bank when it has to readjust interest rates abnormally to protect its currency.

We have also seen how the Pakistani currency has nosedived in recent weeks.

According to economic analysts, former prime minister Imran Khan’s government ignored the complexities of financial issues. The previous Pakistan government gave unlimited powers to the State Bank to play havoc with interest rates.
If the PML-N government is calling the aggressive decisions of Imran Khan’s government the root cause of Pakistan’s economic problems, then there may be a lot of truth in it.
Because Pakistan’s economic problems, like many other economies around the world, were further aggravated by the pandemic and the war situation in Ukraine.
Some analysts are comparing Pakistan with Sri Lanka. Before making a comparative assessment of Sri Lanka and Pakistan, we have to examine the objective economic conditions of both countries.
One of the major reasons for Sri Lanka’s complete economic and political collapse has been attributed to its financial sovereignty being caught in China’s ‘debt trap’.
To some extent, this revelation should be an eye-opener for Pakistan, because China certainly has its share in the economic crisis that Pakistan is heading towards.
It is worth noting that Pakistan in the Imran Khan era had started thinking of aggressive economic policies in the context of its traditional friendship with China.
This strategic economic policy change was linked to the change slogan of Prime Minister Imran Khan in 2018.
The capitalist and tax-based financial systems and institutions in the Western World were skeptical that Imran Khan’s tenure as prime minister would complicate the repayment of international debt.
During his tenure, the political arrogance of the PTI government was on one side, while the economic woes of the country were rising on the other side.
As a result of Pakistan’s economic urgency, the former government was forced to establish contacts with Beijing to seek assistance.
Many major economic analysts have been analyzing the economic situation of Pakistan and comparing it with the major crisis in Sri Lanka.
Like Sri Lanka, Pakistan is facing problems of a most expensive external debt, high inflation, an increase in unemployment, and a shortage of food and medicine.
For most governments in Pakistan, economic and political deterioration is a legacy problem.
However, the present political leadership of the country is showing appalling negligence in ignoring these issues.
The recent political mess created by PML-N after the results of the Punjab by-elections was a self-destructive exercise. The country does not afford instability at this critical juncture.
Imran Khan’s PTI party has won the by-elections leading to widespread speculation in the media that this could be the political resurrection of Imran Khan and his possible return as Prime Minister of Pakistan.
Imran Khan’s big wins in Punjab have come from seats where PTI’s defected member had earlier been disqualified.
Therefore, it can be said that PTI has retained its already strong constituencies. So the PTI has nothing to show that it has expanded its political base.
PTI’s foreign policy was badly muddled by both Imran Khan’s own predictions about China and the controversial statements of his far-sighted Foreign Minister Shah Mehmood Qureshi.
While both of them put Pakistan firmly in China’s orbit and Pakistan was starting to look ahead with the fascinating concepts of the Islamic bloc comprising Pakistan, Turkey, Malaysia, etc.
In fact, Pakistan was geopolitically aligning itself with countries that were clearly hostile to the US controlling the global financial institutions.
There was a clear indication that the US did not trust Pakistan during Imran Khan’s regime.
This was realized by Pakistan when Saudi Arabia showed its changed side by putting a soft corner for PM Imran Khan aside.
When he went to Jeddah with a bail-out request, the powerful bloc of Arab monarchies led by Saudi Arabia urged him to clearly express his political and economic policy towards Saudia’s rival countries.
As soon as the features of the policy were revealed, the creditor countries led by the United States began to tighten their grip.
On the other hand, Pakistan was also struggling to get out of the sanctions of the FATF.
It is a universally acknowledged reality that if the countries providing the most expensive loans do not have access to the economic policies of the countries receiving the loans, the creditors will not offer a soft ground.
Keeping in view the internal political dynamics of Pakistan the results of the recent by-elections are alarming for many creditors.
They can see that the political mood is in the favour of the return of Imran Khan to the center.
This clearly means that the political access of the bloc of creditor countries and especially the United States to Pakistan may be in jeopardy.
Currently, international organizations are trying to estimate the minimum time it would take for Pakistan’s economy to recover under the current political conditions.
If we look at the overall political mood of the country, it may be even more difficult to predict the timespan for economic recovery after the return of Prime Minister Imran Khan.
Pakistan can avoid going down the path of economic and political disintegration of Sri Lanka. The country will need to ensure political stability in the shortest possible time.

The writer can be contacted via Twitter @MIMazhar.

Real Income Support Program

Dr. Atiq-ur-Rehman

Nowadays, it is the talk of the town that Bangladesh has gone far ahead of Pakistan, even though when Bangladesh separated from Pakistan, there was more poverty and misery in Bangladesh.

A major character transforming Bangladesh into a stable economy is Dr. Muhammad Younus.

Dr. Younus started an income support program out of his own pocket for poor women of Bangladesh in 1976.

Dr. Muhammad Yunus (PC: Nelson Mandela Foundation)

Under this scheme, Dr. Younis started giving business loans to the poorest women. These small loans began to change the uplift the social status of women.

These loans would empower the women and would provide them with a permanent source of employment and livelihood.

The loan repayment rate was surprisingly high and the recovery rate was over 99.6%. Dr. Younis used to take an undertaking from the beneficiaries of his microfinance program for adapting certain social norms including the oath to send their children to school.

In 1983, Dr. Younis’ microfinance scheme took the shape of Grameen Bank and the network spread to 98% of the villages in Bangladesh, which has now spread to many countries of the world.

In 2006, Dr. Younis and his brainchild, Grameen Bank, jointly won the Nobel Peace Prize, the world’s largest award.

After Grameen Bank, Bangladesh has witnessed the launch of several other NGOs, one of which is BRAC, which is considered to be the largest NGO in the world.

Like Grameen Bank, BRAC also focused on microfinance. Bangladesh currently has the largest network of social sector organizations.

Dr. Younis’s program and later the microfinance programs of other NGOs were actually income support programs in their literal meanings.

These programs give people the opportunity to create a permanent source of income for themselves.

The people took full advantage of this opportunity, and all the towns and villages benefited from this scheme, which led to an increase in income and a reduction in poverty. In the end, Bangladesh overtook Pakistan in the race for development.

Several programs were also initiated in Pakistan under the name of the Income Support Program to help the poor.

However, it is incorrect to label these programs as income support programs. These are actually the consumption support programs, helping the beneficiaries to support their family expenditures.

In these schemes, instead of teaching people any skills, the beneficiaries were given money for household expenses.

There is no component of income support in these programs.

It is a well-known proverb that it is much better to teach a person how to hunt a fish than to give him a fish as charity.

By donating a fish, you can benefit someone for a while, and then he/she will need the help of someone else for the next meal.

In contrast, by teaching him how to hunt a fish, you can teach someone to be permanently self-sufficient.

The program, which started during the PPP era, has not yet been able to teach people self-reliance, nor can it.

Existing consumer support programs can easily be converted into income support programs.

Federal Minister for Poverty Alleviation and Social Safety Shazia Marri Visits Benazir one window Center in Islamabad. (PC: BISP Portal)

The beneficiaries of these programs have some skills. Someone knows to farm, someone can do the work of a mechanic, and someone knows the skill of driving.

The income support program should support them in utilizing their skill to earn something. Once they have started their own business, future support should be conditional on the productivity of their business.

For example, while reviving the former Prime Minister’s chicken egg scheme, buy chickens for rural women, and make their future assistance conditional on the production of these chickens.

To save women from the tyranny of the ruthless market system, the government can make an agreement in advance to buy their products.

There is nothing wrong with this agreement if the government has to pay more than the market rate.

This aid will lead people to self-reliance.

Similarly, every person benefiting from the Income Support Program should be provided technical and financial assistance to start a business according to his / her ability and in order to protect the interests of these people, a purchase agreement should be linked with them.

This program will gradually remove people from the list of recipients and add them to the list of donors.

Otherwise, these so-called income support schemes have not changed the condition of the people in the last 15 years and there is no possibility of change in the future.

These income support programs can be useful for the production of goods that the national economy needs but at present their production is not adequate.

For example, despite the fact that the production of edible oil is possible in the country, a large amount of foreign exchange is spent on the import of edible oil. People who have small plots of land on which no crops are grown should be given technical and financial support for the production of edible oil here and they should be assured through a contract that their products shall be purchased. Future funding under income support programs should be linked to this product. It will actually be an income support program that will increase people’s income and lift them out of poverty and make them self-reliant.

About the author:

Prof. Dr. Atiq ur Rehman is the director of the Kashmir Institute of Economics at the University of Azad Jammu and Kashmir, Muzaffarabad.

An analysis of the real estate industry of Pakistan | By Prof. A. Shakoor Shah

// The real estate industry of Pakistan was initiated in Karachi. It existed even before the partition. The then property tycoons used to construct residential and commercial buildings but the selling of plots was uncommon.

The industry made good progress in the 1950s when the Defence Housing Authority (DHA) came into being. In the 1960s, the sale and purchase of plots in the DHA achieved some boom.

The industry was making headway from 1970 to 1974. Prime Minister ZA Bhutto launched an amnesty scheme and the market enjoyed a real boom till 1977.

The disastrous floods in the DHA and post-election political unrest halted the industry till 1982.

The Afghan war brought a bulk of finance to the market from 1982-1988. The sudden death of the then president Zia ul Haq halted the industry from 1988 to 1992.

The market lingered leisurely from 1992-1994 and caught its next thrust from 1994-1997. However, it suffered a recession again from 1997-2001.

The industry got its major boom after 9/11. The upturn broke the entire past peak records. The gigantic price hike brought forth the money mongers in the early 2000s.

The next recession toppled the market from 2005-2010. The market retook in 2012 until 2015.

The patterns of market trends remained the same for 43 years out of its 69 years. The boom ratio is 4 to 5 years.

The proportion of price increment in urban areas is 4 to 5% and for rural areas, it is around 9 to 10 %.

During the recession, the prices in urban areas fell from 0.5 to 1 % and in rural areas, it is almost 5%.

Globally, the real estate industry normally follows a stable escalation rate of 5 to 8% yearly.

However, in Pakistan, it observes bullish trends. The numbers jig up to 40 to 60% growth rate annually.

The year 2016 was an extremely promising one for the industry as in 2015, the outlay in residential property boosted by 5 to 7 % while commercial property saw a boost of 15 to 20% across Pakistan.

The Federal Budget 2015-16 brought much-needed tax relief to the sector until 2018.

Customs Duty on the import of construction machinery was also abridged to 10%.

The FBR data and industry surveys guesstimate industry growth is worth more than $700 billion.

The industry accounts for roughly 2% of the national GDP. It not only spawns a high level of direct employment but also excites stipulate in more than 250 subsidiary sectors.

Pakistan is the most urbanized nation in South Asia.

If the rural to metropolitan exodus persists at the existing rate, the metropolitan area is anticipated to touch 95.62 million by 2025, taking the urbanization level to an unprecedented 53.3%.

The trend of buying luxury apartments has increased nearly 7 to 9% during the last decade.

Therefore from 2010-2016 apartment prices were boosted by 120%, while houses registered were 80%.

Pakistan has a housing backlog of almost 12 million units.

Even more astonishing is that for an industry that had been registering double-digit growth since 2010, with new suburban projects proclaimed almost weekly, more than 50% of the metropolitan population lives in slums and squatter settlements that lack basic necessities.

Only 1% of the housing units developed yearly to 68% of the total population, consisting of people monthly income – Rs 30,000.

On the other hand, almost 56% of housing units target 12% of the population, comprising individuals with a monthly income of Rs 100,000 or above.

The mortgage rates are still considerably higher compared to the region.

The mortgage rates in neighboring countries are as follows: Hong Kong (2.15%), Japan (2.7%), China (7-8%), and India (8-12%).

The Property in cheaper zones of Islamabad during the early 1980s, for a house 1500 sq ft in the G sector was $10,000.

In a decade it tripled to around $30,000, then in the 2000s it tripled again to $100,000 and now it’s around $200,000 at least for the same old house in decrepit shape.

So the price in the previous 30 years has risen 20 times. This is unimaginable anywhere else in the world.

In the USA after the 2008 Housing bubble burst, the house prices came crashing down but over here it is quite the opposite.

The Covid-19 played a vital role in the economic slowdown of the whole world and affected the sector gravely.

The worst of all is that money-mongers and no professional unbridled financial tycoons have made the industry a cradle of corruption, land mafia, land grabber, and blackmailers.

The black giants have even grappled with the state via real estate. The big bangs of real estate are choking the state machinery by influencing state policies.

The mafia of the real estate sector is much more powerful than the rest of the branches.

They have set up charity institutions, trusts, and print and electronic media houses to get rid of the state and even blackmail the state.

They are also inflicting the state with severe threats like water shortage, decrease in agriculture, price hike, and land-grabbing, black money, smuggling, and other illicit means of hampering state powers.

The writer is a professor in English and a freelance columnist. He is based in Lahore and can be reached via the email prof.abdulshakoorsyed@gmail.com

AJK & GB agriculture officials agree to enhance cooperation

Muzaffarabad (IoK News): The officials of the agriculture department of Gilgit-Baltistan and Azad Jammu and Kashmir have agreed to enhance cooperation between them to benefit from each others’ expertise in the growth of agriculture sector.

This was announced after a visit of a high level delegation of the Azad Jammu and Kashmir agriculture department to Gilgit-Baltistan.

The delegation was comprised of Secretary Agriculture Dr Bashir Butt, Director Research & Technical Services Khawaja Masood Iqbal and other senior officials.

Director Agriculture Dr Fazal ur Rehman welcomed the members of the delegation and briefed them on recent developments of the agriculture department of the region.

Deputy Director Shigar GM Saqib invited the delegation to visit a medicinal plants and floriculture garden.

He informed the members of the delegation that agriculture department of the region was playing an important role in making medicinal plants available to local farmers and offer them a profitable business opportunity.

He further informed the delegation that there was a huge potential of producing herbs and flowers for income generation.

The production and growth of herbs and flowers for medicinal and decorative purposes is highly likely to make a positive impact in the economic development of rural and mountainous communities of Gilgit-Baltistan.

Senior scientific officer PCSIR laboratories (Skardu) Fazal Ullah briefed the members of the delegation on measures to keep fruit and vegetables dry and safe for commercial purposes.

He emphasised on creating awareness among people on developing agri-based businesses.

Senior Scientific Officer of Pakistan Agriculture Research Council (PARC) Skardu Ayub Balgari apprised the members of the delegation about the research and development activities of his organisation in Gilgit-Baltistan region.

He said that four dedicated research centres were fully operational in the region to boost the role of agricultural research and development in GB.

Deputy Director Muhammad Ali discussed the role of modern lab techniques in controlling the diseases in fruit and vegetables.

He particularly mentioned the successes his department has made in eradication of the diseases in various specious of potatoes in the region.

Secretary Agriculture AJ & K Dr. Bashir Butt said that the visit of the AJ & K agriculture department delegation was highly rewarding.

He considered that the visit was very successful as it offered enormous opportunities to increase the cooperation between the agriculture department of both the regions.

He further said that this was a first-ever high-level interaction between the officials to discuss technical and scientific aspects of the agricultural research and development in the region.

The visit will have far-reaching impact on the development and growth of agriculture and agricultural research in Azad Jammu and Kashmir.

Fixing the agriculture economy of Pakistan | By Prof Abdul Shakoor Shah

Agriculture is an art of nurturing harvest and hoisting livestock. Its paramount economic role in undersized or budding countries has vital significance.

In Pakistan it has been considered an economic axis for growth. In the 40s, it made up around 53% of the country’s GDP and more than 65% of our labour engaged in this sector.

During the last 7 decades, political, social, environmental and climate change have curtailed these figures to decline.

Currently, agriculture is contributing 22.04% to national GDP. The agro-employment ratio has fallen from 65% to mere 35.9%.

The national rural population is around 63.09% and overwhelming preponderance of the bucolic is unswervingly or circuitously connected with agriculture.

It also supplies unrefined material for the various industrial sectors as well as a chief purchaser of agro-products. Ironically, we are only cultivating 21.1 million of the area out of 796,096km that is why roughly 1/3rd of our population lives below the poverty line approximately, around 49% of our people are facing food insecurity.

It is anticipated that the wheat production will decline by 50% in 2050 due to climatic change. Climatic change has drastically affected our mango production.

Despite all this we are one of the largest producers of chief crops contributing to around 35% of agriculture, livestock contributes to around 61% in agriculture, fisheries contribute 2.06% and forestry contribute 2.13% in agriculture.

The crops production had negative growth in 2015, 2016 and 2019, Forestry saw a gigantic beg off in 2015 and downbeat growth of 2.33% in 2017.

Wheat is one of the most used crops in the world. During 2020, it contributed to 8.7% in agriculture and 1.7% in GDP of the country.

In 2019-2020, despite covid19 and locust attacks Pakistan managed to produce 24.9 million tons of wheat and the area for wheat cultivation also increased by 1.7%.

Rice is the second most vital crop in terms of food, cash and export. It contributes to 3.1% of agriculture and 0.6% to national GDP.

In 2020, Pakistan produced 7.4 million tons of rice and the area of cultivation also increased by 8%. Cotton is also considered the backbone of our economy.

It contributes to 4.1% of agriculture and 0.8% to the GDP of the country; in 2019-20 we produced 9.1 million bales of cotton, the 7% production of cotton decreased by almost 7% from the output of 2018-19.

The area of cultivation was increased by 6.5% but the overall output decreased in 2019-20. Sugarcane is very significant for the sugar related industries.

The Sugar Mafia and the sugar crisis had been rampant some months before. Sugarcane contributes to 2.9% of agriculture and0.6% to the GDP of the country, in 2019-20, the production of sugarcane declined by 0.4% and the area under cultivation fell by 5.6%.

The negligence in sugar production resulted in a severe sugar crisis. Maize contributes to 2.9% of total agriculture and 0.6% to national GDP.

The area of cultivation was increased by 2.9% in 2019-20 and its production increased by 7%. The increase is due to allocation of more area and better seeds.

The production of gram, Bajra and Tobacco boosted by 21.9%, 9.7% and 5.8% in the year 2019-20 respectively, while the production of Jowar declined by 19.5%.

As for the pulses the production of moong increased by 12.6%, mash decreased by 5.8% and the production of masoor remained stable.

Production of chilies increased by 34.6%, due to the good weather conditions but the production of onions and potatoes decreased by 1% and 5.3% in the year 2019-20.

The production of oil from oilseeds was only 0.5 million tons. More than 8million families are directly or indirectly linked with this livestock sector and it is the source of 35-40% of their income.

Livestock also contributes to 3.1% of our exports. 960.6% of total agriculture is based upon livestock and it contributes to 11.7% of our national GDP.

Globally, Pakistan is the fourth largest milk producer. In 2019-20 we produced 61.6 million tons of milk and 4.7 million tones of meat.

Poultry is a subsector of livestock, currently the investment in this sector has reached 700 billion rupees and the sector provides jobs to around 1.5 million people in the country.

This sector balances the overall meat production of the country as 35% of the total meat comes from poultry. This sector grew by 9.1% in 2019-20. Fisheries is the source of income for the people living in coastal areas of Pakistan. It has a 0.4% share in GDP.

In 2019-20 the total fisheries production was approximately 701762 metric tons and we exported Rs 49528 million worth of fishes and fish products.

There is an overall increase in production, in comparison to 2018-19 was 9.7%, whereas the overall increase in the exports of fish and fish related products was 2.7%.

Forestry is very important but unluckily only 5.01% area of Pakistan comprises forest.

The country has 4.51 million hectares of forest, in which 3.44 millions of forests are on government owned land, the rest are on private owned lands.

The share of forestry is only 2.1%. The results indicate that Agriculture and subsectors of Agriculture had a significant impact on economic growth of the country. However, forestry did not have a significant impact on economic growth.

There is a dire need of turning our lens to agro-economic development. AJK and GB must be kept on focal points in this respect as there are greater prospects of agro-economic growth and contribution to national GDP. In AJK and GB most of the areas are uncultivated and uninhabited.

The industry of livestock can bring a tremendous change to boost a country’s economy and the living standard of the masses.

Agro-economic sector needs immediate attention of the concerned authorities to tackle the future problems which may get worse in case of further delay.

The writer is a freelance contributor and can be reached via email id prof.abdulshakoorsyed@gmail.com

The current state of global Islamic finance industry

By M.I.Mazhar

The Islamic finance industry is shy to make a candid reference to Islam for the fear of being labeled as a manifestation of fundamentalism

After six decades of a one-step-forward and two-step-backward journey, the 1.3 trillion dollars global Islamic finance industry is still shy to make a candid reference to Islam or Sharia for the fear of being labeled as a manifestation of fundamental Islam.

In Pakistan- where the 98pc of government business is still based on interest-based transactions, the most influential Federal Sharia Court holds only one hearing in four years on the most important case about switching the country over to Islamic finance mode.

In 2020, a renowned Islamic finance expert and scholar from Pakistan, Mufti Taqi Usmani, was named the most influential personality among 500 Muslim leaders in the world.

In Indonesia, also known as the most celebrated home of Islamic Finance, despite a born-again career approach in which every 15 candidates out of 50 would refuse to take a job in a conventional interest-bearing bank, the market share of Islamic finance is still 7%.

In the UK, despite much-trumpeted government backing, the Islamic banking sector is still far from tapping the huge market. The first UK Islamic bank Al-Barakara International was opened in 1982.

Ahmad El-Najjar was the first Muslim economist who pioneered the formation of the Islamic Banking system by setting up a small Savings Bank in Egypt in 1963.

Contrary to conventional practices of the mainstream banking industry, he invested in a business model that was based on profit-sharing between the bank and the investors (savers).

The business model of Ahmad El-Najjar was unconventional. He was neither charging interest nor paying it in his transactions simply because of a basic moral point.

Despite openly declaring them as unIslamic, he considered that interest (particularly the compound interest) bearing financial solutions were against the norms of social justice.

He invested the depositors’ money mostly by engaging in trade and industry, directly or in partnership with others, and shared the profits with depositors.

The El-Najjar banking strategy, after an evolutionary process, has found ways of cooperating rather than challenging the conventional approach toward the creation of wealth by conventional and well-established lenders.

However, despite the huge potential of making a real positive global change in the financial systems, the Islamic Finance industry is still not finding a comfortable way to collaborate and partner with the capitalist economy.

A slight difference of procedures makes the things halal and Haram, Dr Humyun Dar

Difference between halal and haram is impossible to figure out with the physical standards, says Islamic finance expert

Muzaffarabad (IoK News): A renowned Kashmiri scholar and expert in Islamic finance Dr Humayun Abbas Dar, while addressing a seminar here in the University of Azad Jammu and Kashmir, said that the difference between halal and haram was impossible to figure out with the physical standards.

“For example, the difference in relationship with and without marriages is impossible to explore with the biological standards, however, the marital relationship is admired in Islam, whereas, the extramarital relationship is strictly prohibited and denied,” he further explained.

In Islam, Islamic banking is permissible and conventional banking is not

Dr Dar also mentioned that the difference between Islamic and Commercial Bank was unable to be traced by using usual economic measures. However, he emphasised that the Islamic banking was permissible and conventional banking was not.

On June 24^th, Dr Dar was invited to address the seminar. He is the Director General of Cambridge Institute of Islamic Finance. He was invited by the Kashmir Institute of Economics and Department of Islamic Economy and Banking, UAJK.

The seminar was titled “The Difference between Islamic and Commercial Banks: A Reality or Illusion”.

Dr Dar who was the guest speaker- explained with examples that the difference in relationship with and without marriages was impossible to explore with the biological standards, however, the marital relationship was admired in Islam, whereas, the extramarital relationship was strictly prohibited and denied.

The difference between Islamic and Commercial Bank is unable to be traced by using usual economic measures, however, the Islamic banking is permissible and conventional banking is not, he added.

Usually a slight difference of procedures makes the thing halal and Haram.

He went on to delineate “usually a slight difference of procedures makes the thing halal and Haram.”

“For example, if a chicken slaughtered while reciting Takbeer would be considered as halal where is the same chicken slaughtered with the same knife without reciting Takbeer would be considered as Haram. This slight difference of procedures actually makes a huge difference in the long run.”

Islamic banks deal with trade based modes of finance

The major difference between operations of Islamic and Commercial Banks comes from the fact that the Islamic Banks deal with the trade-based modes of Finance whereas the commercial Banks deal only in the debt instruments.

Islamic financing involves real-time economic activity

Therefore the Islamic financing involves real-time economic activity, whereas commercial Banks do not, and this small difference of procedures makes a real difference in the Long run.

Islamic banks shown ability to survive in global financial crisis

For example, the Islamic Banks were able to survive the Global Financial Crisis without any serious consequence.

The seminar was addressed by other leading academicians. Addressing the seminars, Dr. Syed Nisar Hussain Hamdani, the pioneer and first chairman of Department of Islamic Economy and Banking said that the Islamic banking would become the dominant banking system if the share of Islamic banking exceeds 50% in the total banking system.

So it’s we who will be deciding the fate of Islamic banking system. The Deputy Chief Manager of State Bank of Pakistan elaborated the measures taken by State Bank of Pakistan for promotion of Islamic Banking and Finance.

Mr. Abu-Bakr Sadique, lecturer, international Islamic University explained that the conventional Banks transfer all of the risk to the customer , and on the other hand Islamic Banks retain the risk with them.

In the Islamic Shariah, the share in profit is permissible only if the investor affords the risk of investment.

Therefore this difference makes one of the banking systems permissible and the other as prohibited.

The director Kashmir Institute of economics and head Department of Islamic Economy and Banking Dr. Atiq ur Rehman paid vote of thanks to all the listeners and especially to the Honorable guest who visited the campus on a short notice.

The event was arranged in the Central Auditorium of King Abdullah Campus, a state of the art hall with seating capacity of 1000 audiences. The auditorium and other buildings in the campus were donated by the Kingdom of Saudi Arabia via it’s Saudi Fund for Development (SFD).

The seminar was the first event in the newly built auditorium. It was attended by Dean Faculty of Health and Medical Sciences Dr. Bashir ur Rehman Kanth, Deputy Chief Manager of State Bank of Pakistan Muzaffarabad Branch Mr. Ghufran ud Din, renowned economist Dr. Sayyed Nisar Hussain Hamani, Lecturer International Islamic University Mr. abubakar Siddique, representatives of different Islamic Banks in Muzaffarabad the , students of various colleges in Muzaffarabad, representatives of civil society and the students and faculty of various departments of the University of Azad Jammu and Kashmir.

Dr. Humayun Dar is the Director General of Cambridge Institute of Islamic Finance. Previously he was Director General of Islamic Research and training Institute, a constituent unit of the Islamic Development Bank. Dr. Humayun is the pioneer of Global Islamic Finance report, a yearly publication on Islamic Finance. Dr. Dar is also a pioneer of the Global Islamic Finance Award. This is most prestigious award in Islamic Finance and so far many Heads of Muslim countries including Malaysian Premier H.E. Mr. Abdullah Ahmed Albadawi, the President of Kazakhstan H.E Noor Sultan Nazarbiove, President of South Africa H.E. Matamela Cyril Ramaphosa, President of Djibouti, Bosnia and Herzegovina, and President of Indonesia have been decorated with this award. The awards in the other categories were awarded to over 5,000 people related to Islamic banking industry and the awardees include prominent Islamic Scholar Mufti Taqi Usmani.

The enigma of Food wastage | By Prof. Abdul Shakoor Shah

“Throwing away food is like stealing from the table of those who are hungry.” -Pope Francis.

The history of food waste is directly linked to globalization. From farm to table, food is lost or wasted at every stage.

Fresh food, fruit, vegetables, dairy and meat are principally susceptible to waste. If we realize what hunger is, we shall think twice before wasting or throwing food.

The rich talk about tastes while the poor have nothing even to taste. Food wastage is a global problem.

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One-third of the world’s edible food, an estimated 1.3 billion tons, worth $1 trillion is annually wasted worldwide.

Photo by Alena Shekhovtcova on Pexels.com

On the other hand, globally we have nearly 1 billion hungry people. The amount of food lost or wasted costs 2.6 trillion USD annually and is more than enough to feed 815 million hungry people in the world-four times over.

What’s food survival?

We can feed more than a quarter of worldwide hungry people with the wasted food only in the US, UK and Europe.

2.3 billion souls are expected to join our planet by 2050. It means we are bound to increase global food production up to 60-70% or we can meet food shortage by stopping food wastage.

Approximately, an area more than China is cultivated that is never eaten but thrown away.

Through food wastage, we waste 25% of the world’s fresh water that is used for food growing which is never eaten.

More than 50% food wastage in most developed countries takes place in homes. Its annual worth is more than $2, 277 per family in the US and UK.

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In the US, a person wastes almost 1 pound of food daily.

According to USDA, 103 million tons of food was wasted in the US which is approximately 30-40% of food supply in 2017.

The US is the worldwide leader in food wastage.

According to FAO, about 50% of fruits and vegetables are wasted. It means one thirds of food produced for humans, 1.3 billion tons goes waste.

Pakistanis waste 40% of their food. A single hotel in Islamabad wastes nearly 870kg food daily.

Predictably, 36 million tons of food is wasted in Pakistan annually. This is equal to every citizen of Karachi, Lahore and Hyderabad ranging abroad for outdoor eating daily.

Intense weather conditions and ceremonies result in food wastage. According to country director of World Food Program, Lola Castro, 43% of the country’s population remains food insecure, with 18% facing a severe shortage.

The Global Hunger Index 2016 ranks Pakistan as a country with a “serious” hunger level. 2.5 liter water is enough for drinking each day; it takes about 3,500 liters to produce the food for one person for one day.

Food waste impacts natural resources in terms of land and soil degradation. Food wastage does not mean only waste food but it also wastes, fertilizers, pesticides, fuel, electricity and human energy. Food insecurity is a threat and multiplier for violent conflict.

Moreover, the US National Intelligence Council reveals, declining food security will lead to social disruption, economic downfall and political instability.

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According to the FAO, high-and low-income countries discard similar amounts of food-670 and 630 million tons, respectively.

In low-income countries, loss occurs more often in the earlier stages while in others, it transpires in later stages.

According to the FAO, food production for human use, per capita, is around 460 kg annually in poor areas, compared to 900 kg in rich regions.

According to specialists from the University of Birmingham, lack of a sustainable cold chain contributes to 4.4 billion GBP worth of fruit and vegetables being wasted annually in India.

About 70 % of fresh water is used for agricultural purposes. The production of just one apple requires an average of 125 liter of water, which means throwing away a bruised apple is akin to draining 125 liters of water.

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Food Wastage Footprint Report discloses that 250 km3 of water, three times the volume of Lake Geneva, is used annually to produce food that is ultimately lost or wasted.

The FAO guesstimates the carbon trail of food waste is 3.3 billion tonnes of CO2 equivalent per year. Food wastage not only increases oil, diesel and other polluting fuels but also causes greenhouse gas emission.

Redundant waste decaying in landfills gives off methane, a powerful greenhouse gas 25 times more proficient at trapping heat than carbon dioxide.

There are some recommendations to meet the enigma of food wastage: we should train farmers and food related workers to avoid food wastage.

We should improve our farming and agricultural technologies. We can use solar power refrigerators to avoid pollution caused by food wastage.

We can avoid it by using surplus strategy. We can set up a surplus market like “SirPlus”, “WeFood”, for unused and discarded foods at minimum price for feeding the poor and minimizing food wastage.

We can improve supply chains to avoid this issue. We can turn waste into worth by turning leftovers into new products by converting hotel oddments into bioplastics and home food waste into biogas essentially using food scraps to produce household energy.

We can solve the food wastage riddle by educating the people and creating awareness about food wastage.

We need to change consumer attitude and behaviour via public-private sector initiatives like Mimica.

The public-private organizations must step forward to collect extra food and provide it to the needy and the poor.

We should establish a Waste Food market like the one in Leeds, England for stocking wasted food. We can avoid it by improving our processing, infrastructure and transportation system.

The uneven and bumpy roads bruise the fruits and vegetables. We must take initiatives to change consumers’ habits which are chiefly responsible for food wastage at a later stage.

By one get one deal should be banned as they encourage food wastage. We must make date labeling understandable for laymen.

By sensible date labelling we can control food wastage. According to the European Commission, an estimated 10 % of the EU’s 88 million annual tons of food waste are related to date labelling.

About the writer:

Prof. Abdul Shakoor Shah is an academician and freelance contributor.

Small-scale hydropower projects in Azad Kashmir

IoK News ( 1st June 2021) : //

The AJK government has accelerated the pace of hydropower development and to construct a number of additional small hydropower projects through its own resources and with private investments.

A recent small scale hydro power project has been completed in Jhing Azad Kashmir. The 14.4 MW Jhing Hydro Power Project was inaugurated by Prime Minister Raja Farooq Haider Khan on 26th May 2021.

The Project was started in June 2016 under power Development Organization, AJK.

Hydropower projects use a well= established method of generating electricity that uses moving water (kinetic energy) to produce electricity.

There is huge potential of small-scale hydropower projects in Azad Kashmir.

The small-scale hydropower can be installed with little environmental impact.

on wildlife or ecosystems, mainly because the majority of small hydropower plants are run-of-river schemes or implemented in existing water infrastructure.

The company behind this small scale project is ZK & Associates (Pvt) Limited . This company was founded in 2002 as a Proprietorship concern.

Till 2012 the company was on very slow pace but after 2012 the company started its business aggressively and within a short span of eight years company was upgraded to CA (No Limit) from C3 category in Pakistan Engineering Council.
During the period company extended different types of projects including roads, Buildings, Bridges (specially cantilever box girder and multi-span continuous “I” shape girder bridges), Bridges Rehabilitation, Hydropower, Water Treatment Plants, secant pile work for Power House and interior works.

The company is also working on many other projects in Azad Kashmir. One of these projects is an extension of the existing Hospital Facilities in the city of Rawalakot AJK.

Reviving The Economy from Recession | By Dr. Atiq ur Rehman

Until March 2020, Italy was the most affected country outside China due to pandemic covid-19.

The death rate due to the pandemic during February-March 2020 was 45% and the number of deaths per day exceeded 800 by the end of March.

To reduce the spread of pandemic, Italy enforced a strict lockdown on March 9. Life seemed to be halted due to the containment measures. The roads, streets, shopping centres, hotels, tourism etc. all activities stopped at once.

The pandemic was not only a health emergency; it was a huge economic recession as well. Steep fall in business means similar fall in the earnings of individuals and in revenues of the government.

Photo Credit: How is Venice contending with the Pandemic …nationalgeographic.com

This was certainly a crisis in Italy with no example in the recent past. The GDP of Italy dropped by 18% in the first half of 2020. People needed relief without any work despite a huge fall in the government revenues.

Coming out of the crisis was certainly a great challenge. The entire world was suffering from the same problem with different levels of intensity. No one from the outer world could come to help the country, and the domestic revenues were not sufficient.

Italy was continuously running a deficit budget for the past 20 years and the average budget deficit during the two decades had been more than 2% per year.

How can the country manage resources to run the normal routine of life during such a crisis? But over and above the normal government spending, Italy provided an unimaginably generous package to its citizens. On March 15, Italy adopted a package of €55 billion (3.5%of GDP).

On March 17, the government added a package of €27 billion. On August 8, the government added €12 billion, on October 27, they added €4.5 billion including all these, the fiscal stimulus reached to about €100 billion. Many of the developing nations responded to the pandemic in the same way. Brazil has the third largest number of covid victims in the world.

The economy of Brazil shrank by about 10% in the first half of 2020. Brazil was also running with a fiscal deficit for the last two decades, and had a deficit of 6% in 2019.

Responding to the pandemic, Brazil extended a fiscal stimulus amounting to about 12% of their GDP.

The fiscal measures included heath spending, income support to vulnerable households, one month bonus pension for retirees, advance salaries and bonuses for the low income workers, partial compensation for the furloughed workers, tax deferrals and tax reductions, lower taxes and import levies on essential medical supplies, and new transfers from the federal to state governments as cushion against the expected fall in revenues.

Government has backed over 1 percent of GDP in credit lines to SMEs and micro-businesses to cover payroll costs, working capital and investment. On the other hand, the policy rate was reduced to historic low at 2%.

Ultimately, Brazil also recorded 7% growth during the second half of 2020 against -10% growth during the first half.

Like Italy, Brazil has been running a deficit budget since very long, so in a conventional sense, it was impossible to manage resources for such huge packages.

But the two countries expanded huge fiscal stimulus and succeeded to bring their economies out of the financial crunch.

How did these countries manage resources for the packages? The answer lies in monetary sovereignty.

A sovereign nation is authorized to use its central bank to create money for its needs. The two countries used their central banks to create money so that relief could be given to the people in this time of need.

The key to revive the economy was out of the way support to the businesses, maintaining the consumption in the economy by huge fiscal stimuli, providing enough liquidity to the financial system for onward transfer to businesses.

Not only had these two countries, many developing and developed countries responded to the pandemic on the same pattern.

On the contrary, the authorities in Pakistan adapted exactly the opposite way to deal with the financial crunch.

Photo by Ali Madad Sakhirani on Pexels.com

When the present government took charge, the borrowing from SBP was over 5300 billion and despite the financial crunch, the government borrowed from commercial banks to retire the SBP debt.

In Feb 2020, the borrowing of the government from SBP was about 300 billion which means the government borrowed 5 trillion from commercial banks to repay to SBP.

By such a huge borrowing, the government has actually sucked all the liquidity from the market which could otherwise be used to finance businesses. The pandemic could not stop the government from this anti-business policy and the government has retired the remaining 300 billion of SBP debt by further borrowing from commercial banks and today the government borrowing from the central bank is zero.

The entire world responded to the pandemic by reducing the policy rate but in Pakistan, the policy rate today is higher from the level inherited by the present government.

The two actions, maintaining the high policy rate and restriction on borrowing from SBP are justified in the name of inflation targeting.

It is said that reduction in interest rate and the borrowing from central banks each of the two actions brings inflation.

Therefore, the anti-business actions are actually the attempt by the SBP-government nexus to control inflation, but the two actions happened to be counterproductive and inflation today is higher than the inflation inherited by the present government.

In fact, the myths that borrowing from the central bank is necessarily inflationary and that the reduction in interest rate brings inflation are found false in the entire world including developing and developed countries.

For example, Brazil reduced policy rate from 14% to 2% during the period 2017-20. The myth says that the results should be higher inflation in Brazil, but actually the inflation today is much lower than the level of 2017.

The recessions are not the periods of austerity and contractions. The recessions must be reversed by increased government spending, reduced cost of borrowing for the businesses and enhanced liquidity for the private businesses.

This is the time for the government to rely on the central banks for financing the fall in revenues and to ask the commercial banks to find their profits by financing the public.

The government is such a huge borrower that the banks have absolutely no attraction in financing the private sector.

There is a need to take the steps that banks find the investment in government securities to be unattractive, so that they are motivated to find their clients in the private sector.

We need to adopt the policy of Italy that everyone willing to do business should be provided with required liquidity and the government needs to provide guarantee on these loans so that banks can forward loans without worrying about collateral.

Dr. Atiq-ur-Rehman is Director, Kashmir Institute of Economics, Azad Jammu and Kashmir University.