Jinnah's vision and reality: Revisiting 60 years of freedom
The News on Sunday, Rawalpindi/Islamabad
August 19, 2007
By Dr. Abid Qaiyum Suleri

Year 2007 is quite significant in the subcontinent's history. It is 150th anniversary of 'War of Independence 1857', centenary of prominent freedom fighter Bhagat Singh, and sixtieth anniversary of the colonisers' departing subcontinent. One assumed that partition of India and departure of British Raj in 1947 would have been a happy ending for War of Independence. However 60 years down the road it seems things have not changed much.

Revisiting 60 years of freedom raises the question: whether colonisers really left us free? The connotation of 'freedom' needs to be discussed. Very often freedom implies geographical freedom with no attention to its other manifestations such as freedom from hunger, want, disease, poverty, undemocratic rule, neo-colonialism and conflict etc. Freedom of expression, belief, media, judiciary, and fundamental human rights are also considered a wish list that has nothing to do with creation of a sovereign state.

All of us would have our own version of freedom. However, it would be appropriate to revisit the type of freedom that Founder of Pakistan, Mohammed Ali Jinnah had envisaged. Addressing the first Constituent Assembly of Pakistan, on 11th August 1947, Jinnah forwarded the idea of a state where government would maintain law and order and where life, property and religious beliefs of its subjects would be fully protected, i.e., freedom from fear, threats, and right to life, own property and practice religion.

The second assurance that Jinnah provided was freedom from exploitation through bribery; envisaged a country free from nepotism and jobbery; and floated the idea of freedom from poverty.

He was also of the view that majority and minority communities would have equal rights and people would be free to go to their temples, their mosques or to any other place of worship in this State of Pakistan. His vision was that religion, caste or creed of an individual would have nothing to do with the business of the State and there would be no discrimination, no distinction between one community and another, no discrimination between one caste or creed and another.

Assuring the religious and political freedom, Jinnah presented the idea of a Pakistan where Hindus would cease to be Hindus and Muslims would cease to be Muslims, not in the religious sense, because that is the personal faith of each individual, but in the political sense as citizens of the State.

Now let us assess the last sixty years of our freedom in the light of what M.A. Jinnah has envisioned.

• He had assured writ of law, and right to life, property and religious belief. One finds states within state in Pakistan, where ruling class hides from its citizens due to security reasons, where violence and lawlessness prevails, where people go missing in the name of national security interest, where chief justice had to seek justice, where human life is much cheaper than a glass of water, where establishment facilitate the militant elements to occupy places of worship and hold their parallel courts, where the fear of suicide bombers force the rulers to celebrate independence by hoisting the flag indoor in a closed hall.
• Jinnah had dreamed of a state free of bribery and corruption, we witnessed that people with history of corruption were appointed as ministers when they supported the rulers of the time.
• He declared the blackmarketeers as monsters; we found all such monsters in our Cabinets (existing and previous cabinets), hoarding sugar and other essential commodities for life.
• To him freedom meant freedom from nepotism. We observed inherited life time leaders. Rule of handful of families and parliament being held hostage of Chaudhries, Khars, Legharis, Jamalis, Maliks, Khans, Rinds, and Qazis. We also observed that merit policies were succumbed to caste system; so much so that in research institutes and universities the appointments and promotions are based on castes.
• Jinnah's idea of freedom was freedom from poverty. We found 80 per cent of our rural population food insecure and poor; almost 3/4th of our population living below US$ 2 a day poverty line and poverty related suicides to be all time high.
• He had assured that no power would be able to enslave this nation. We witnessed complaints of various provinces against injustice distribution of resources and politico-economic slavery. We also saw the state handing over its citizens to foreign countries without any trail or opportunity of defense.
• He thought of a state that may guarantee political freedom. We saw colonialism turning into 'colonelism' in this country, where military has been ruling for 32 years during past 60 years.
• He thought state would have nothing to do with individual religious belief. We observed religious minorities being portrayed as enemies in our text books. So much so that a minister for state for religious affairs was inviting scholars of different sects and promoting sectarianism through his TV talk show. Jinnah founded Pakistan. We turned it to Islamic Republic of Pakistan, where 'Islamic militants' are now perceived to be the biggest threat for global peace.

Living in 2007, one needs to reassess how free and sovereign we are? Our economic policies are being dictated by international financial institutes, our foreign policy is being dictated by 'White House'. A simple phone call can force our President to attend the Pak-Afghan Peace Jirga, and half a phone call from Condoleezza Rice can determine whether emergency should be imposed.

This may sound very pessimistic. However, I have seen the ray of hope in 2007. Pakistanis got inspired by people's movement against monarchs in Nepal and got united to save the supremacy of judiciary in this country. This was the first mass movement in Pakistan that was not based on religious grounds. To me this movement filled in the gap from 1947 to 2006. Having said that, it must be emphasised that this movement is just a humble beginning and much needs to be done to realise the real freedom from legacy of colonisers, exploiters, black-marketers, and social injustice. Many sacrificed for a century and half to realise this freedom in subcontinent and now is our turn to prove that we are freedom lovers.

For decades, low input costs have served as a guarantee of the competitiveness of the country's textile and clothing industry

Pakistan's cotton league is composed of a diverse number of players from cotton growers via spinners to manufacturers of cloth and garments. They are dissimilar in their market power and political clout. Spinners are a small, but influential group that is successfully resisting quality-based pricing of the 'white gold' -- with detrimental effects for other links in the textile chain.

Pakistan is a master example of an economy whose take-off was fuelled by cotton. When Pakistan came into being, no more than two textile mills were established in the country as a colonial heritage. Since independence, however, the Pakistani textile industry has played

a crucial role in the country's industrial development. Not all players in the 'cotton league' have benefited equally, though. For decades, low input costs have served as a guarantee of the competitiveness of Pakistan's textile and clothing (T&C) industry. As described in the first article in this series, resultantly, the majority of Pakistan's millions of farmers, sharecroppers and pickers, in particular, in cotton cultivation have remained poor.

Ginning is the second stage in cotton processing. Through the ginning process, cotton seeds are removed from the seed cotton. The result is raw cotton that is sold to spinning mills. About 631 ginning factories were operating during the 2005/06 season in Pakistan. In terms of equipment, the fact that machinery from the 1950s is not an uncommon sight in ginning factories, is indicative of their lack of capital for investment.

Pakistan's spinning mills supplied 27 percent of world yarn demand in 2004. The approximately 500 spinners (Table 1) are well-organised in the All Pakistan Textile Mills Association (APTMA). It represents 360 textile mills out of which the majority are spinning or composite units. Their group is small in number but characterised by large financial strength and good political connections. Other than growers and ginners, they have alternative options regarding procurement of the raw material and the sale of their products, strengthening their bargaining power in the market. Spinners' dependence on domestic cotton has decreased during the past two decades. Whereas at the beginning of the 1990s, less than 1 percent of domestic consumption was catered for by imports, in 2003/04, this share had risen to almost 20 percent.

Cotton yarn is subsequently woven into cloth or knitted into garments. The weaving sector is divided into a formal segment of large organised mills using latest technology and a large informal division that produces cloth in cottage industries. This cottage or non-mill sector represents about 90 per cent of Pakistan's effective weaving capacity. Whereas Pakistan's T&C industry has historically focused on early stages of the value added chain, such as yarn and cloth production, in recent years, a movement towards higher value addition in the form of moves towards made-ups and garment production has taken place. The manufacturers of woven garments are a large group. It is estimated that about 5,000 units produce predominantly in the cottage industry.

Of Pakistan's textile chain, the links most directly exposed to pressures and incentives stemming from the world market are the manufacturers of woven and knit apparel as well as of home-textiles due to the significant share of exports in their sales. However, they were not necessarily the most prepared segment of the textile chain for the challenges posed by the liberalisation of T&C trade through the expiry of quota restrictions for exports that took place in January 2005.

Spinners' market power has translated into better adaptation to the challenges the T&C sector has faced. During the past years, Pakistani yarn producers, in particular, had responded to the global challenge of upcoming liberalisation in T&C trade. They had invested about USD 2.5 billion in upgrading their mills between 1999 and 2004. The commonly smaller, less well-organised and politically less well-connected garment exporters, though, hardly invested 5 percent of the total amount utilised for raising the competitiveness of Pakistan's T&C sector.

The price of the 'white gold' that passes hands from growers to T&C exporters is influenced by domestic as well as by global factors. Overall, features of the raw material have a bearing on the value of cotton. Uniform staple length and purity of the fibre are such aspects of the fibre. Standardised cotton length is uncommon in Pakistan, though, as cotton varieties are often mixed by brokers and ginners. The resistance of APTMA to pay premia and discounts based on quality grades of cotton lint is an important factor in this regard.

Also, cotton contamination lowers cotton prices. 'Contamination' means that other materials, including threads of polypropylene bags, shreds of cloth, pieces of rope twine, paper, human or animal hair and any other matter are part of the lint. Pakistan ranked second as the most cotton-contaminated country in 1999. This position has been lowered to number 25 in recent years. Still, the national economy is estimated to lose up to USD two billion annually due to cotton contamination.

Stakeholders differ in their perception of the reasons for cotton contamination, variably assuming pickers, growers, ginners or brokers to inflate the weight of the raw material or brokers not to store the lint properly. Spinners' demand for low-contaminated cotton has increased during the past years as yarn and cloth export prices rise with the material's purity. However, so far, this does not motivate them to provide premia for purer raw material to ginners and growers. In some cases, spinners would provide bonuses to brokers if they manage to procure comparatively clean cotton, leaving the price of the raw material unaffected. If they do offer incentives to ginners, they do not combine them with procurement guarantees, shifting the risk of unremunerated higher costs to ginners and growers.

Presently, cotton price determination in Pakistan is related to the location, the 'station price announcement'. It implies price variation according to location, rather than according to quality. Although measures have been announced to move towards more quality-based pricing of cotton, such as premia for the production of contamination-free cotton in the context of the 'Clean Cotton Programme 2006-07' and the introduction of standardisation and grading to improve quality, most of these measures are still awaiting implementation. Observers relate this to the spinners' market power who oppose quality-based pricing of the raw material. In a cartel-like manner, APTMA appears to agree on maximum prices per bale with obvious adverse effects on other players in the textile chain. Price increases for yarn, on the other hand, seem not to be passed on to earlier links of the textile chain.

Domestic cotton prices in Pakistan track export prices from world markets quite closely. Since the mid-1990s, the world market price of Pakistani cotton decreased from its peak in 1994/95 to a trough in 2001/02 by 58 percent and 65 percent in nominal and real terms, respectively. Domestic market prices are on average only 74 percent of import parity prices.

The global cotton market is not simply left to the forces of demand and supply, however. Especially US-American farmers obtain a considerable amount of subsidies to stimulate production and enhance competitiveness. Different studies on the effects of cotton subsidies on world cotton prices unanimously suggest that in the absence of subsidies, the average cotton price could have increased significantly, respectively, compared to the historically observed values.

In a less substantial manner, the government of Pakistan intervenes in the determination of cotton prices as well. To reduce the significant annual price variability in the case of cotton, which represents a severe risk for growers, the Government of Pakistan annually reviews and announces a support price of seed cotton. The Trading Corporation of Pakistan (TCP) would procure cotton from ginners at the announced minimum procurement price if market prices fall below the support price level to maintain prices, such as in the years 2001/02 and 2004/05.

Correspondingly, the real value of support prices has trended upward since 1990/91. However, these interventions failed to enforce the support price and the price received by growers fell below this level. Some observers question whether the TCP's interventions effectively reach growers except in the case of influential landowners. Smallholders are the target group, though, for which price stabilisation is most important. TCP has been accused to buy sub-standard cotton for kickbacks to its officials.

It appears that the downward pressure on prices of T&C manufactures due to the abovementioned removal of the quota restrictions was not passed on through the textile chain and translated into lower picking rates. Nominally, they have rather increased slightly. But also market demand that might result an improvement of labourers' earnings has not reached those who harvest the raw material for cotton-based manufactures. The case of cotton contamination provides an illustrative example. Incentives provided for less contaminated cotton have the potential to raise earnings. So far, they neither reach growers nor pickers. Although difficult to name the main culprit for cotton contamination, it is simple to identify a cycle of disincentives for clean cotton in Pakistan. Piece rates in cotton picking discourage a process of harvesting that would avoid contamination in seed cotton. A weight- and station-based rather than quality grade-related price for the raw material provides a disincentive for clean seed cotton delivered to ginners. Premia for brokers rather than for ginners makes it attractive for the latter to inflate the weight of the lint rather than to ensure purity of the raw material.

The result are low prices for producers of Pakistani cotton in the world market but low input costs for spinners. Despite an expressed demand for clean cotton, yarn producers appear to be the main obstacle for a reduction in cotton contamination as they resist quality grade based pricing of the raw material. The fact that various policies intended to change this situation have not been implemented so far demonstrate not only the market power but also the political influence of Pakistan's spinning industry.

The discussion above has indicated some market-based steps that might benefit the weakest link in the textile chain, the large group of cotton pickers, in terms of increased picking rates. A first step towards less dependence and thus greater resilience of cotton growers would be the improved access to loans. Premia for low contaminated cotton would also need to reach the field level of the harvesting workforce in order to be effective. Already now, a large number of stakeholders, from growers to ginners and various government bodies support such a move. The challenge remains the resistance of spinners who so far prefer low input prices over higher revenues for improved quality of their produce.

(Karin Astrid Siegmann works as a Research Fellow at the Sustainable Development Policy Institute (SDPI), Islamabad. This article is the second in the series on Pakistan's cotton sector.)

(View part I of this articles)