A Shift Toward Thrift Required
By Saleem Khan • Nov 5th, 2008 • Category: Politics • (3,938 views) • 3 CommentsOne wealthy man wrote this advice, “True economy consists in always making the income exceed the outgo. Wear the old clothes a little longer if necessary; dispense with the new pair of gloves; mend the old dress; live on plainer food, if need be; so that, under all circumstances, unless some unforeseen accident occurs, there will be a margin in favour of the income. A penny here, and a dollar there, placed on interest, goes on accumulating, and in this way the desired result is obtained. It requires some training, perhaps, to accomplish this economy; but when once used to it, you will find there is more satisfaction in rational saving than in irrational spending.”
In the household and in business, little savings amount to more than one would suppose. Savings provides the most important economic link between past, present and future of any country. The aggregate savings of a country have three components namely private, corporate and public sector savings. These components are dependent on spending behaviors of the people and government. The more they spend, the less is left to save and that results in less investment, because Savings are equal to Investments in economics. It is possible to make money off your savings is because these savings are used by other agents in the economy who have the ability to pay you back later on; fundamentally these savings are used to invest.
A low rate of savings if maintained over a long period of time, an economy entraps in a vicious cycle of low investment, low per capita income, low growth, and low productivity and so on. A higher savings is the only solution for getting out of low saving – low growth equilibrium. Sadly, far too many Pakistanis spend more than they earn and rely too heavily on plastic money and borrowed funds, and most are not saving enough (if anything) for their futures.
The national savings rates of Pakistan is estimated at 13 percent of GDP, where as our neighbouring country India’s current national savings rate is about 24% of GDP. The difference in the saving and consumption within both countries can be clearly seen in the manner Pakistanis spends on marriages, social functions and religious ceremonies. The Indian culture is pro-saving, while Pakistani culture is pro-consumption. This pro-consumption culture is actually compelling our government and financial institutions for tight monetary policy to tackle problems like high inflation and low savings.
It’s clear that we drifted badly from two bedrock virtues: thrift and personal financial responsibility. And now that the economy is struggling, we’re all … well, paying the price. A shift toward thrift is required for economic stability and growth in Pakistan.
One should be a civilized man, saving something, and not a savage, consuming every day all that which he has earned. Some of the most famous sayings stress thrift — and the foolishness of wasteful spending like “A penny saved is a penny earned”, “He that goes a borrowing goes a sorrowing” and “The wise man saves for the future, but the foolish man spends whatever he gets.”
“Be it ever so humble, is a sentiment that does not appeal to the modern home. Individuals and nations would be better if they would love the home more and its furnishings less. There would be more happy homes if there were more thrift and economy,” a writer writes in his book The Real Home.
Let’s strive and pray to conduct our future financial affairs with wisdom. Let’s add our share in the growth of Pakistan’s economy by strictly following thrift as a ruling habit. Let’s practice it from today because “Thrift is of great revenue” (Marcus T. Cicero).
References: The Empire of Business, by Andrew Carnegie. Economist.com Business Plus, Pakistan. Dawn News.
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August 28th, 2008
I think this time readers took it serious that why I wished for thrift
Just kidding and no offenses!
August 28th, 2008
Saleem Khan (that’s who you are, right?), I guess your readers have decided to be ‘thrifty’ with words.
No, there can’t be two opinions on this; we will have to change our habits; we have to discipline our urges to spend and overspending. Personal financial management does not have any meaning among us as a nation. This has to be inculcated right from the beggining. Sometimes, I get this feeling that we grow up without ever, really, learning how and what it takes to earn money and wisely spend it. May be it has something to do with that false sense of security that parents wish to give to the young ones or perhaps their ‘pride’ plays a role in it.
My parents always talked about this simple truth: If income is Rs100 and expenses Rs95 it means prosperity, but if the income is Rs100 and expenses Rs105 it means big financial problems. Set your priorities and learn to curb / sacrifice your utges. It works!
August 29th, 2008
THE BELOW SHOWS THAT PEOPLE IN OUR COUNTRY KNOW ONE
THING I.E. CRITICISM WITHOUT A GENUINE KNOWLEDGE OF
THE FACTS AND FIGURES - IN DOING SO THEY ALSO WELCOME
BACK TAINTED POLITICIANS WITH HISTORY OF FINANCIAL AND
OTHER FORMS OF CORRUPTION KEEPING HIGH HOPES OF THEM
RE-SHAPING THEIR DESTINY!! THERE IS NO RECOGNITION OF
ONE WHO HAS DEVOTED TIME AND EFFORT WHICH HAS SADLY
GONE DOWN IN VAIN!!
SOURCE: VARIOUS ASIAN, EUROPEAN & AMERICAN RESEARCH
ORGANIZATIONS OF INTERNATIONAL STATURE!!!
INTERESTING. Basic comparison of 1999 and 2007
Pak Economy in 1999 was: $ 75 billion
Pak Economy in 2007 is: $ 160 billion
GDP Purchasing Power Parity (PPP) in 1999: $ 270
billion
GDP Purchasing Power Parity (PPP) in 2007: $ 475.5
billion
GDP per Capita in 1999: $ 2,000
GDP per Capita in 2007: $ 3,004
Pak revenue collection 1999: Rs. 305 billion
Pak revenue collection 2007: Rs. 708 billion
Pak Foreign reserves in 1999: $ 700 million
Pak Foreign reserves in 2007: $ 17 billion
Pak Exports in 1999: $ 7.5 billion
Pak Exports in 2007: $ 18.5 billion
Textile Exports in 1999: $ 5.5 billion
Textile Exports in 2007: $ 11.2 billion
KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 70 billion at 14,000 points
Foreign Direct Investment in 1999: $ 1 billion
Foreign Direct Investment in 2007: $ 8 billion
Debt servicing 1999: 65% of GDP
Debt servicing 2007: 26% of GDP
Poverty level in 1999: 34%
Poverty level in 2007: 24%
Literacy rate in 1999: 45%
Literacy rate in 2007: 53%
Pak Development programs 1999: Rs. 80 billion
Pak Development programs 2007: Rs. 520 billion
Under Musharraf’s vision
• 9 world class Engineering universities being
developed and 18 Public universities already
developed.
• Public sector institutions have increased from
110,267 (in 1999) to become
• Private sector institutions have increased from
36,096 (in 1999) to become 81,103 (in 2006).
• PAK is 3rd best in world Banking profitability.
• PAK IT industry now values around $2 billion,
including $1 billion exports and employs around 90,000
professionals.
• CNG sector has attracted over $70 billion investment
in last 5 years; and created 45,000 jobs.
• Telecom sector attracted around $10 billion in
investment and created above 1.3 million jobs.
• Industrial Parks are being setup throughout the
country for the first time! M3 estate, Sunder
industrial estate, Chakri, etc.
• Major Mega projects like the Saindak, Rekodiq,
Marble production, Coal production and Mining &
Quarrying are being pursued.
• In 2006, GDP growth is 6%. Earlier in 1999 was 3.5%.
• Foreign Reserves from $1 bn to $17 bn.
• KHI stock market: from 700 points to 13,000 points.
• Literacy rate improved by 11%.
• Poverty decreased by 10%.
• He made 4 dams: Mirani, Subakzai, Gomalzam, Khurram
Tangi dams.
• 6 Motorways completed or under construction: M1, M3,
M8, M9, M10, M11.
• Six major highways under construction.
• GWADAR advance mega Sea port developed under his
vision!
• Historic 100% increase in Tax collection of $11
billion.
• Large scale manufacturing is 30 year high, and
Construction activity is 17 year high.
• Newly found World class copper- gold deposits in
Chagai will fetch $600 million per year.
• A new Oil refinery with UAE will fetch $5 billion &
will process 300,000 oil barrels a day.
• Industrial sector registered 26% growth.
• PAK in 1999 was a $75 billion economy; and now 2006
it’s $160 billion economy!
• PAK economy is now the 3rd fastest growing economy
after China & India .
Education under Musharraf Era
In 1999-2000 there were 31 Public Universities. Now
2005-2006 there are 49 Public Universities. Under
Musharraf 20 NEW UNIVERSITIES SET UP!
• Air University (established 2002)
• Institute of Space technology, ISB (established
2002)
• Sardar Bahadur Khan Women University , Quetta
(established 2004)
• University of Science & Technology, Bannu
(established 2005)
• University of Hazara (founded 2002)
• Malakand university, Chakdara (established 2002)
• Karakurum International university, Gilgit
(established 2002)
• University of Gujrat (established 2004)
• Virtual University of Pak, Lahore (established 2002)
• Sarhad University of IT, Peshawar (established 2001)
• National Law University, ISB (2007)
• Media University, ISB (2007) etc.
• University of Education , Lahore (2002)
• Lasbella University of Marine Sciences, Baluchistan
(2005)
• Baluchistan University of IT & Management, Quetta
(2002), etc.
Pakistan now has a total of 245,682 Educational
institutions in all categories, including 164,579
(i.e. 67 percent) in the Public sector and 81,103
(i.e. 100 percent) in the private sector, reports the
National Education Census (NEC-2005). The census –
jointly conducted by the Ministry of Education, the
Academy of Educational Planning and Management (AEPAM)
and the Federal Bureau of Statistics (FBS) — reveals
that the number of private-sector institutions has
increased from 36,096 in 1999-2000 to 81,103 in 2005,
i.e. by 100 per cent.
Total 99,319 Educational Institutions (Public &
Private) have increased in Musharraf Era!