By Dr Pervez Tahir

THE constitutionality, legality and the morality of Musharraf's impeachment is doubted by few. But many, and this includes some supporters of impeachment, seem to believe that he did turn the economy around. This is patently false.

An illusion of turnaround was created by imposing a wrong strategy of growth, sustained by a series of commando actions to enforce a culture of being economical with the truth. No wonder, when the inevitable meltdown occurred, it was simply unstoppable.

Take the criminal choice of growth strategy first. Any economist will tell you that growth in national income, the so-called GDP, can be achieved by promoting consumption, investment or net exports. The choice among these depends on the stage of development of a country. While net exports are good for both developed and developing countries, consumer spending dominates growth in the former and investment in the later. The reason is that developed countries have already accumulated a sizeable stock of capital while developing countries like Pakistan have not.

Growth under Musharraf has been driven by consumption. For example, GDP at market prices grew at six per cent in 2007-08. Consumption at 6.5 per cent, however, exceeded the GDP, the extra consumption coming from imports. Investment made a negligible contribution. Again, consumption-led growth has been contributed by the predominance of the services sector. In the past eight years, the average annual growth of services was 6.2 per cent, higher than the GDP growth of 5.6 per cent. The commodity-producing sector, important for livelihoods, grew far less at 4.9 per cent. The most pro-poor sector of agriculture posted the lowest growth of 2.8 per cent. The sector of the rich and the powerful "” finance and insurance "” achieved the highest growth at 14.4 per cent.

In the years of Musharraf as chief executive, the GDP growth was very low. In 2000-01, it was around two per cent which deeply upset him. All illegitimate governments focus on the economy to have a semblance of legitimacy. The Shaukat Aziz team, which was still trying to get its feet wet, assured it would correct the situation.

The correctives applied were two-fold. On the one hand, the staff of the Federal Bureau of Statistics (FBS) was put on the mat and asked to 'improve' its collection arrangements and methodology. On the other hand, the State Bank was drawn into financing a consumption-oriented growth strategy by co-opting the 'autonomous' governor into the official economic team.

The dirty work of threatening the suppliers and processors of data in the name of the 'big boss' was assigned to the economic advisor, who being a contract employee was all too eager to be 'result-oriented'. Secretaries in charge of Statistics were put on notice, the most pliable of them working effectively as director general of FBS, a lower post but one crucial to manufacture desired outcomes.

After this, GDP growth never looked back. It went up and up to reach the peak of over nine per cent in 2004-05. Early estimates had shown this growth to be around 6.6 per cent mainly because agriculture had done extremely well. But this quite respectable growth was not satisfying the 'dream' economic team. A commando action jacked it up first to 7.5, then 8.4 and eventually to above nine per cent. There was an implicit consensus from then on that growth would never be allowed to fall below seven per cent. Any deviation from this implicit consensus led to explicit interventions. The lying about the wheat output last year provides a graphic example of how the much-trumpeted growth was won by the Musharraf regime.

Sectors which do not have a very reliable database and those dependent on occasional surveys suddenly started to show high growth rates. This was done when major crops and large-scale manufacturing, with relatively more reliable data, could not justify the magic growth number. Thus minor crops, small-scale manufacturing, informal services and transport made their contributions in the hour of need. Sectors under the control of government, such as public administration and defence, electricity and gas distribution came in handy to fill any gaps that remained. The Shaukat Aziz Sector, i.e. finance and insurance, danced to his tune.

Growth and investment have to match for credibility. In the beginning, the slow-moving investment was explained away by claiming higher productivity. When the argument became unsustainable, investment was also jacked up without conducting any detailed enquiry or survey.

Fudging was perfected to an art form, and was fully 'responsive' to public concerns. Prices have always been of great concern to the public. This used to be the permanent item, number one on the agenda of the Economic Coordination Committee of the cabinet meeting nearly every fortnight. Spurious regional comparisons coming out of this meeting are well-known.

What is not known is that if the price of a commodity showed an unpalatable rise in some area, the problem was always 'fixed' by the next meeting, with the chair claiming the success of the 'measures' taken and telling the PR staff, no, dictating the text to be sure, what to highlight in the media. Inflation thus remained low in the five to six per cent range. Part of the reason why inflation recently has been extremely high is that prices are being reported as received.

With growth high and inflation low, policy consistency required that poverty must fall. In 2001, the correct survey-based estimate was 35 per cent, implying a rising trend but it was announced as 32 per cent. Even this was not published for a long time and was officially questioned in a smaller subsequent survey supervised by the economic advisor. The survey for 2005 was a well-planned operation. The data was not released and results announced until commando action in the computer centre of the FBS did not, by an iterative process, yield the desired result of 24 per cent. By re-fixing the poverty ratio for 2001 at 34 per cent, it was claimed that poverty had come down by 10 percentage points between the two years.

The success on the poverty front could not have been allowed to be contradicted on the employment front. Commando action in the Labour Force Survey added two to three million new jobs.

To recap: the chargesheet against Musharraf must include (a) the active promotion of conspicuous consumption of the rich by ignoring the sectors on which the large majority of the people depend and creating a bubble rather than sustainable growth; (b) the destruction of the integrity of the statistical system. While Shaukat Aziz is absconding, all other members of the team continue in important positions hoping for the return of the big boss. The responsibility rests in his person as much as his chosen economic team because efforts to tell him the truth met with his displeasure.