Conventional economic theory argues that pursuit of privatisation is to enhance service quality, attract private investment, reduce government intervention and improve accountability and transparency in the management of public assets.

In Pakistan, administration after administration has pursued privatisation to reduce the budgeted allocation for loss making entities.

The incumbent Finance Minister Muhammad Aurangzeb is no exception and leaves no opportunity to argue that the private sector must be allowed to take the lead role in Gross Domestic Product (GDP) growth.

This in spite of the fact that the programme he negotiated with the International Monetary Fund (IMF) specifically states that: “The state’s support of businesses through subsidies, favourable taxation arrangements, protection and governmental price setting has undermined the development of a dynamic and outward oriented economy.

Subsidies have taken the form of low-cost financing and other concessions, which, although varied across industries, left financing and taxes net of subsidies more favourable than in peer economies and less-favoured sectors.

The tax system has been extensively used to provide non-transparent support through exemptions for privileged sectors like real estate, agriculture, manufacturing, and energy, as well as, through the proliferation of Special Economic Zones……Despite all this support, the business sector has failed to become an engine of growth, and the incentives eventually weakened competition and trapped resources in chronically inefficient (including perpetually “infant”) industries.“

To add to this damning indictment of the performance of the private sector by the IMF, the Large Scale Manufacturing Sector’s performance over the past few years has been in the negative territory (negative 1.32 percent July-November 2024) and negative 3.81 percent in November 2024.

A study undertaken by the Central Monitoring Unit (CMU) of the Finance Division, set up in 2023 as per the IMF report,........

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