Pakistan is an elitist society, and its economy in all its dimensions has been captured by the privileged classes. The result is there for all to see: an increasing income gap and rising poverty. One the one hand, the rich and superrich live in their luxurious villas and farmhouses, while on the other vast multitudes are deprived of the basic needs of life.
Elite capture is defined as a situation where a small group of powerful individuals in or out of government use their position and influence to benefit themselves at the expense of the general masses. In Pakistan, the government and the private sector are dominated by powerful groups who have little interest in promoting the interests of the people. As a result, the majority of the population has limited economic opportunities and lives in utter misery.
According to a recent Oxfam report, the top one percent of the population in Pakistan owns 10 times more wealth than the bottom 50%. Another study says that the richest 10% of the population accounts for around 40% of the national income, while the poorest 10% only receive about two percent of the national income. According to the World Inequality Database, the top 10% of Pakistan’s population holds 64% of the country’s wealth, while the bottom 50% only has access to four percent of the wealth. This severe wealth inequality is largely due to elite capture.
The latest data from the Pakistan Bureau of Statistics, the country’s Gini coefficient, a measure of income inequality, is 0.37, which is higher than the regional average for South Asia and the global average. This indicates that the distribution of income is heavily skewed in favour of the rich and discriminates against the poor. A small group of political, economic, and bureaucratic elites control a disproportionate amount of wealth and resources, perpetuating income inequality for their own benefit.
There are elites in all societies but the difference is that the rich in Pakistan feel no shame in flaunting their wealth accumulated through gross misuse of power. The Pakistani elite’s show of money power includes building palatial houses, holding extravagant parties, membership of golf and exclusive country clubs, display of high-end designer clothing, expensive jewellery, and luxurious cars. For the use of the privileged classes, there are more than 200 golf courses built on government lands worth billions of rupees but leased at nominal rates. Such display of wealth in a vast sea of poverty creates class jealousy and social tension.
The elite’s capture of the economy stems from their hold on power and all levers of policy making. Government policies are formulated in such a way that they favour the rich and ensure that their children have access to better education, health, and employment opportunities. These ill-advised policies have over the years perpetuated intergenerational income and wealth inequality, restricting economic opportunities for the vast majority, and confining wealth within the clutches of a privileged group. The notorious 22 wealthy families of Pakistan sit atop the elite pyramid composed of well connected politicians, civil and military bureaucracy, business tycoons and media moguls.
Pakistan is a democracy but in actual fact it is an oligarchy which hides behind a parliamentary cover. The national and provincial assemblies are dominated by feudal lords and other vested interest groups who make policies and laws which ensure the continuity of the present iniquitous system. Most of the budgetary allocations go to further enrich the rich. The agriculture sector, which is dominated by political elites, receives massive subsidies from the government, while the needs of small farmers are ignored. The same goes for the industrial sector which gets easy bank loans and massive tax concessions which benefit only the rich.
According to the Pakistan Economic Survey 2020-21, the government allocated Rs682 billion in subsidies for the agriculture sector, while allocating only Rs70 billions for other sectors. An example of elite capture in Pakistan is the sugar industry which is dominated by a small group of politically influential families who with official support manipulate prices and monopolise the market. According to a report, the sugar industry receives billions of rupees in subsidies and tax exemptions. With government support, artificial shortages are created to jack up prices and maximise profits. In this way, sugar mill owners have enriched themselves at the expense of farmers and consumers.
The elite capture of the economy has resulted in low investments in essential sectors like education, healthcare, and employment. Pakistan has one of the lowest education budgets in the world (only 2.2% of its GDP) as compared to 5-7% in other countries. Pakistan’s healthcare system is similarly ignored, getting only 0.9% of the GDP. The lack of basic health, education and housing facilities for the masses limits their ability to escape poverty and build a better life for themselves. Needless to say, without dismantling the prevailing elitist system Pakistan cannot get out of the political and economic crisis it is enmeshed in at present.