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There is no simple clear cut answer to this is going to be a long one. Our problems long began before CPEC and CPEC has little to do with what’s fundamentally wrong with the Pakistani economy.First, the state of the economy:When asked about worsening fiscal position where the deficit escalated to 8.9 percent of GDP for last fiscal year, the government said that out of total collected tax revenue of Rs3.8 trillion, debt servicing consumed Rs2.1 trillion and then after providing share to provinces, the government had to borrow to meet defence, development and running of the government expenditure.A comparison of macro-indicators at end fiscal year 2018 with FY 2019 suggests that there has been a fast track deterioration of the economic situation during the last one year of the PTI rule.The following are the key indicators showing how things have gone wrong with the Pakistan’s economy.- GDP growth was recorded at 5.8 percent in 2018. As a result of slowdown in economy, growth rate for 2019 is expected to be 3 percent or even less.- Fiscal deficit has increased to Rs3.4 trillion at the end of June 2019 compared to Rs2.2 trillion when PML-N government left in June 2018. Amount wise this is the largest ever deficit in our history. In terms of percentage, fiscal deficit has been recorded at 8.9 percent compared to 6.6 percent on June end 2018. As percentage of GDP, 8.9 percent is the highest in last 30 years and 8.9 percent also has to be seen against PTI’s own set target of 5.1 percent in September last year. Missing the target by miles reflect complete lack of understanding on the part of PTI’s economic team. The high fiscal deficit has a direct consequence on the amount of borrowing as the following debt numbers will reflect.- Total debt and liabilities on the end of June 2018 was Rs30 trillion, which has now gone up to Rs40 trillion. This is the largest ever increase in debt and liabilities in one year. Pakistan’s total debt and liabilities in first 71 years was Rs30 trillion but under PTI government, one third more has been accumulated. This is unprecedented and reflects poor management of expenditure and revenue. If the trend continues like this, it is feared, the whole economic structure would collapse as our economy will not be able to sustain this.- Tax revenue was at a record level at more than Rs3,800 billion in 2018. First time in Pakistan history, tax revenue didn’t register any increase during 2019. During PML-N Government’s five years, the tax revenue increased 20 percent per annum in 4 out of 5 years. This was in spite of extremely low inflation and without significant devaluation - the two factors that automatically help increase tax revenues. It is said that the current revenue target of Rs5,550 billion seems very difficult to be achieved. It’s about 44 percent higher than the last year’s actual collection.- Inflation was at a record low at 3.9 percent in 2018. Last inflation figure reported by the present government is 10.3 percent.- SBP policy (interest) rate was 6.50 percent in mid-2018. It has been to 13.25 percent by the PTI government.- Stock Market was 42,847 at end PML-N government. It’s now hovering around 30,000 after touching 28,000.- Foreign exchange reserves were $15,913 million (SBP reserves $9,510 million) at end of PML-N government. Now it’s $15,630 (SBP reserves $8,271 million). This is in spite of around $12 billion obtained from friendly countries and IMF in last one year.- The only positive thing happened during the last one year is that the current account deficit which improved during PTI government. It was $19,897 million (6.3 percent of GDP) during 2018 fiscal year. It’s now $13,508 million (4.8 percent of GDP) in 2019. It’s ideal to reduce current account deficit by increasing exports. That has the best impact on the economy. The government, however, did it without increasing exports but due to reduction in imports. It is said that the policy to impact imports has considerably slowed down the economy.- Compared to GDP of $313 billion in 2018, our GDP has come down to $280 billion - a reduction of $33 billion only to achieve reduction of $4 billion in imports.- As a result of GDP decline, per capita GDP has gone down by more than 8 percent.- Large scale manufacturing has had negative growth during last one year.- Agriculture growth was less than 1 percent.- Massive currency devaluation took place with rupee going from 116 by end of PML-N government to around 160. This is the largest devaluation in last several decades with significant downside impact on our economy.- FDI (Foreign Direct Investment) has plummeted and is down by more than 50 percent.- As a result of significant reduction in growth and high inflation, the common Pakistani has been the worst affected. In last one year, more than 45 lac people have gone below the poverty line. In addition more than 15 lac people have lost their jobs.According to official projections, the GDP growth is expected to be around 2.4 percent while inflation will be in the range of 13 percent to 15 percent. The discount rate is expected to go further up in the range of 15 percent-16 percent.As a result, during the present fiscal year about five million people will go below the poverty line. This is on top of 4.5 million people who suffered this misery past one year. With declining growth rate, another 1.5 million or more Pakistanis will become unemployed.In the first two years of PTI rule, it is feared that about three million Pakistanis will become unemployed as against the party’s commitment of providing 10 million jobs over five years.Economic situation going from bad to worseThe Executive Summary is as follows:The debt crises of Pakistan began long before CPEC was even conceptualized. Pakistan currently is in the intial stages of a debt trap but to say it’s because of CPEC is a bad application of the correlation equaling causation fallacy.Pakistan’’s debt trap is due to its incredible inefficient and badly thought out government spending which is directed more towards plugging in leakages in it’s projects and public sector enterprises rather than meaningful investments for growth that lead to a high ROI in the future. Along with a non existent tax base that is actually shrinking even further.Lets go over the timeline first:Source: Pakistan’s Public debtSource: Pakistan’s Public debtThe following are the key insights to take away from this:CPEC was formally announced in April 2015. But Pakistan’s debt problem began in the 2007–2009 period, long before CPEC was announced.The primary cause of Pakistan’s debt is domestic debt rather than external debt. This is telling for a few reasons: External debt is normally tied to development projects. So a high external debt means that the country is borrowing loans from abroad to fund domestic development projects that spur growth and have good ROIs in the future that our coming generations can take advantage of.However, our external debt profile has not changed much. It’s our domestic debt that has sky rocketed. Domestic debt is tied closely to the government meeting it’s fiscal deficits or current expenditures. That is, the government is borrowing money from local banks or printing its own money just to meet it’s day to day expenditure.It’s ok for governments to take loans from abroad to fund major development projects and then pass on the debt for those projects to future generations as they will reap the harvest and return for those projects and it will lead to a betterment in their lives.If I borrow money today to buy a car for my son, I can make the payments for it as long as i live and then pass on the remaining to my son since he can take advantage of the car as well.But if i borrow money to pay for my booze and cigarettes and then pass on the debt i incurred for those to my son, I have curtailed his spending power in the future without passing on any meaningful betterment in his life in the future.That’s unfortunately what the Pakistan government has been doing: Borrowing from local banks to finance its day to day expenditures.Actually, we are currently borrowing to fund our entire defense, development and government administrative expenditures after paying back our debt obligations and our shares to the provinces.This has crowded out the private sector from bank capital for loans in order to grow their business as the banks would prefer to lend to the government as a safer bet. So the private sector growth has slowed leading to a lower tax revenue from businesses.Imran Khan has always been quite vocal about how Pakistan’s main problem is corruption, people not paying taxes and wealth stashed abroad. $200 billion stashed abroad in Swiss banks, which when bought back could be used to pay off our debt. Apparently the figure has been revised down to $12.5 billion and even that has not been bough back.As far as taxes go, the government keeps coming up with stats like “If every Pakistani paid 1000 rupees we could do blah blah blah”. Has Mr. Khan ever toured the rural countries from his Bani Gala residence? Nearly half of our population is below the age of 18 and earning below $2 a day. Where exactly are they supposed to scrounge up the money.Corruption then gets dragged in. I can honestly say anti-corruption drives in Pakistan and “Accountability” is used more as a political tool to keep civilian elected politicians in line more than anything. The Judiciary and Military and Civil service seem surprisingly immune from them.Also, Pakistan ranks on the same level of corruption as Vietnam which is growing at a rate of 6.8% and destined for a new Asian tiger ranking.The problem in Pakistan is legalized corruption: Where the law permits expenditures that the state has no business indulging in.An officers mess hall spending lakhs of rupees to upgrade the air conditioning of their living room and another few lakhs to maintain a pretty lawn outisde, it’s not considered corruption in Pakistan. But it is a waste.When the Director of some third rate government insitution gets a free fuel, a driver, a car, a house and perks and privileges in his formalized salary and work benefits, it’s not corruption. But it is a waste.We’ve restricted our scope to corruption because the idea of Zardari getting a 10% cut on a submarine deal or Sheikh Rashid accepting money bribes under the table inflames our passions. But most of the corruption in Pakistan doesn’t happen like that. Most of the corruption in Pakistan wouldn’t even be considered corruption.Its in the forms of perks, benefits, cars, drivers, petrol subsidies, free housing and countless other benefits distributed among elites and their networks of patronage which encompass millions of supporters for different political factions and entities.When the government distributes massive amounts of funds for discretionary spending by parliamentarians in their districts and said funds are spent on schools with no teachers, roads with no bidding and other pointless activities designed more to distribute resources among followers than actual growth, i have to ask if a poor country like ours can afford this.Pakistan’s problem isn’t a low tax base or corruption. It’s systemic waste. Legalized waste. Of precious tax payer money.On SOEs that run into billions of rupees in losses. On development projects that are offer no clear return on investments. Ghost schools. Inflated and bloated state organizations and their salaries. And countless other forms of legalized waste.Pakistan’s government institutions are often classified as “rent seeking” for a reason: they are still mired in the colonial era structures left behind by the British. The state was designed by the British colonialists to extract resources for the industrialization of England, to purchase the loyalty of local clan chiefs and tribal leaders who were loyal to the crown and to enable the aristocratic lifestyles of the ruling elite.We have barely gone beyond that way of thinking and the state currently continues to perpetuate it’s rent seeking strategy with long term economic plans being developed but continuously disrupted by political turmoil.And the political turmoil itself also bears discussion: The establishment would always prefer a weak parliament where no party has a strong majority so that civilian officials are unable to surmount a challenge to the unelected establishment.Unfortunately, weak civilian governments make weak economic policies since they are unable to gather the political will needed for tough economic measures. Especially when establishment agents are lurking around the corner to sponsor protests that cut civil leaders down to size.The military dictatorships often don’t fare much better either. While benefiting from massive amounts of US military and civil aid, their economic policies are not superior to the civilians despite protestations to the contrary.Actually, if you look at it from the data centric viewpoint, the PPP was actually the government from the 2000 to present day period that performed best in terms of boosting exports, and that too in a tough global environment during the 2008–2009 recession era.Which political party has been the best for Pakistan's economy? Trade stats reveal allOne of the core problems causing the debt crises in Pakistan is the current account deficit where imports have outstripped exports resulting in pressure on Pakistan’s dollar reserves when servicing foreign payments and debt obligations. Growing exports are a vital way to resolve this issue and to manage debt levels. Note that Pakistan’s current account deficit began during the Musharraf era and got carried on from there.Even if the trade deficit is growing, this is not necessarily a bad thing if the deficit is because of development related activities where machinery and infrastructure is being imported instead of luxury items like bulletproof BMWs (which the government imported massive quantities of). Countries like Turkey also have significant trade deficits but their trade deficits are due to productive imports that boost local economic growth.Also, the way that Pakistan has tried to reduce the current account defecit in terms of trade has been through constant currency devaluations in order to make exports more competitive. This policy has been consistently failing for a decade. Pakistan’s exports are noncompetitive because we have some of the highest electricity rates for our textile factories and other businesses. And we have failed to invest enough in small technology firms that could have made a niche out for themselves as businesses that dont require much upfront capital investment but offer immense revenues in dollar denominated currencies.Pakistan’s largest resource pool right now is its young population and if we properly trained and educated even a fraction of them and helped them set up local companies or exported them as talented man power, we could boost our exports enormously. Right now our primary foreign exchange is coming in the form of remittances.But instead we keep devaluing the currency and manage to increase maybe $500 million to $1 billion increase in exports and 3–4 billion USD decrease in imports?While inflating our debt obligations by almost 40–50%, shaving $30–35 billion USD off of our economy, choking imports and reducing economic activity to a low 2–3%?For $4 billion in account deficit reduction?In any case, growing exports won’t do much when they are matched with increasing borrowing from local banks due to high government expenditures that are mostly to cover for massive losses from 5 key elements:The five real fault-lines in the rupee-based economy are:the Rs1.7 trillion circular debtRs1.6 trillion leakages in Public Sector Enterprises (PSEs)trillion-rupee leakages in public procurement projects$2 billion leakage in the gas sectorThe Rs734 billion debt in the government’s commodity operations.These are the five sectors that need wholesale reforms. And, these are the five serious fault-lines where our reform basket is absolutely empty (resulting in the skyrocketing of our debt to Rs40 trillion).Source: ContinuityThere is no point in talking about increasing the tax base when these massive leakages in government revenue exist. It’s akin to pouring water in a jug with a hole at the bottom.Imran Khan has looked at the yawning deficits and declared austerity on the solution to our problems.Government expenditures are being slashed, the monetary policy tightened and more taxes being imposed.Thing about the tax revenue increase programs this past decade is is that they always have the same story: Government announces new tax, agriculture and retail push back, the government withdraws the tax plan and tries to squeeze out more taxes from the current, already squeezed small tax base. This leads to current tax payers start to find ways to avoid taxes and leads to tax base actually shrinking.Which is whats happening right now.Also, the imposition of taxes on retail sector has been done in the worst way possible: Indirect taxation, which is always just passed on to the end user and leads to sky rocketing inflation while eating into the already tiny margins of retailers like street vendors.Tell me: What exactly is the point of maintaining humongous tax drains like the Federal Bureau of revenue when they are incapable of collecting taxes directly from tax payers?And in some places, we area actually spending Rs 1000 to collect Rs. 100 in tax…The failure to develop an adequate tax base combined with incredibly wasteful government expenditures is at the heart of our current economic crises, not CPEC.The tendency to blame China for Pakistan’s debt problems is an angle pushed far more from Washington, New Delhi and Tokyo than anywhere else simply because that narrative suits their strategic interests.And while the irony of the Indian government excusing Pakistan’s poor economic management causing debt to blame China instead is not lost on me, it’s simply not true.As the Pakistani public is well aware of by now, crisis interventions by outside donors are no more than a stopgap solution to what has become a chronic problem: Pakistan, for all intents and purposes, does not have a tax base. Only about 1 percent of the population pays income tax. According to an IMF working paper authored by Serhan Cevik in 2016, Pakistan had a “tax revenue gap” equivalent to 10 percent of national GDP (or roughly $28 billion in 2016) and could potentially double its tax revenue-to-GDP ratio.While not even high-income countries manage to collect the full total of their potential tax revenues, the paper pointed out that Pakistan’s collection rate falls “significantly below” even countries of comparable circumstances. Not much has changed in the last two years. Pakistan’s Federal Board of Revenue confessed this past June that it would miss its original revenue collection target for the 2017-2018 fiscal year by 162 billion rupees ($1.32 billion).Until it builds an adequate tax base, Pakistan’s fiscal stability will continue to rely on outside donors. In other words: there won’t be any fiscal stability.Wanted: A Solid Tax Base in PakistanIn any case, the only thing Imran Khan has done is to impost MORE taxes on the already burdened tax base which is small enough as it is. And the reaction to that has been current tax payers taking their money abroad or finding ways to hide it because even they have reached their breaking point.Meanwhile vast swathes of the underground economy remain untaxed. Indirect taxation continues to be favored over direct taxation. Small businesses are seeing their already small margins shrink.And the end result of this sad story is that the FBR has recorded its lowest recent revenue collection in the near past. And our tax base, small as it is, is actually declining now.The Catastrophe of the IMFI could not have said anything better than what has been said by Mr. Abdul Sattar in his incredible take down of the disaster that has been the IMF and it’s economic policies. The IMF is a rapacious institution run to serve imperialist resource extraction projects across the globe and to think the IMF and it’s packages are solution to our problems is a folly beyond imagining. And the dark past of the IMF’s “austerity” mantra has a long track record of wrecking developing world economies.Long but worthy read:The US's voting share in in the IMF is 17.16 percent and in the World Bank 16.41 percent. Japan holds the next highest voting shares with 6.27 percent and 7.87 percent respectively. Washington also has the unique privilege of appointing the president of the World Bank and is the only country entitled to a permanent place among the Bank’s executive directors.So, it is no surprise that these institutions were employed as a tool to serve the interests of the global hegemon, punishing states that dared to challenge the rapaciousness of Western capitalism. For instance Salvador Allende, the first elected socialist leader of Chile, infuriated the US and its Western allies by asserting that his country should take care of its own natural resources and run the economy. This did not go down well with the arrogant modern imperial powers that are then said to have forced the World Bank to stop giving loans to the elected government in 1972, triggering an economic chaos that culminated in a military coup. Soon after the coup, the doors were opened for military dictator General Pinochet, whose brutal regime not only assassinated Allende but also decimated up to 130,000 Chileans in a 17-year despotic rule. The World Bank showered $350.5 million between on Chile 1973 and 1976, almost 13 times the $27.7 million it gave during the three-year Allende presidency.Integration of the developing countries' economies was also one of the main purposes of these institutions. To achieve this, they came up with the idea of the Structural Adjustment Programme that sought to pressure the Third World countries into privatizing industries and the service sector, cutting in government spending, liberalizing capital markets (which leads to unstable trading in currencies), promoting market-based pricing (which tends to raise the cost of basic goods) and raising interest rates.The World Bank instituted its SAPs in 1980 and the IMF imposed them in 1986. According to a research paper by Asad Sami, during 1980-93, 70 developing countries were subjected to 566 stabilization and structural adjustment programmes – with disastrous consequences. The author claims that between 1984 and 1990, Third World countries under SAPs transferred $178 billion to Western commercial banks. The enormous capital drain prompted Morris Miller, a Canadian former World Bank director, to remark, “Not since the Conquistadors plundered Latin America has the world experienced such a flow in the direction we see today." Such policies led to the stagnation of growth in developing countries besides doubling their debt burden to over $1.5 trillion by the end of the 1980s, doubling again to $3 trillion by the end of the 1990s.The ruling elite of the Western capitalist world ruthlessly exploited the developing countries, especially those of Latin America and Africa. To understand how such policies ruined the lives of millions across the world, one needs to see what happened in Peru, Mexico and other parts of the globe. In 1990, an IMF-sponsored stabilization package produced catastrophic consequences in Peru. Within no time fuel prices increased 31 times – by 2,968 percent – and that of bread 12 times – by 1,150 percent. The prices of most basic food staples increased by six or seven times – 446 percent in a single month – yet wages had already been compressed by 80 percent in the period prior to the adoption of these measures in August 1990. IMF SAPs were first imposed on Mexico in 1982 and by 1992 infant deaths due to malnutrition tripled, the minimum wage fell by 60 percent and the percentage of the population living in poverty rose from less than half to more than two-thirds.Such policies also hit Africa. The situation of the continent was not rosy prior to the arrival of the international monetary institutions in 1980 but even then during 1960-1980, Sub Saharan Africa’s GDP per capita grew by 36 percent. Between the 1980s and 2000s, it actually fell by 15 percent. Dictation by the international monetary institutions led to the rise of rampant poverty and by 2015, 413 million people were living on less than $1.90 a day. Despite following these anti-people policies, the average life expectancy for Sub Saharan Africa is only 47 years (the lowest in the world), a drop of 15 years since 1980. Forty percent of the population suffers from malnutrition that causes low birth weight among infants and stunts growth in children.Advocates of a free market economy could brag about the increasing trade that the mineral rich continent witnessed from 1989 to 1999. It is estimated that Sub Saharan Africa’s trade as a percentage of GDP (a key indicator of globalization) increased from 78.1 percent to 95.6 percent; in dollar terms, trade grew from $175 billion in 1990 to $187 billion in 1999; for the same period, foreign direct investment jumped from $923 million to $7.9 billion in 1999.But contrary to the tall claims of international monetary institutions, export expansion and rising foreign investment in Africa neither increased growth nor reduced poverty or debt. In reality, most African exports are raw materials, and non-oil commodity prices dropped by 35 percent on average from 1997 and 2004. Tax holidays and profit repatriation might have helped foreign companies to accumulate immense wealth but made very little difference to the lives of millions of Africans.Per capita income, one of the tools to measures the development of a country, also fell between 1980 – when SAPs were imposed on 36 of Sub-Saharan Africa’s 47 countries – and 2004. It fell for most Sub Saharan countries by 25 percent during the 1980s and for 18 countries these incomes were lower in 1999 than in 1975. In 1960, Sub-Saharan Africa’s per capita income was about one-ninth of that in high-income OECD countries; by 1998, it had deteriorated dramatically to about 1/18.Africa’s external debt has increased by more than 500 percent since 1980, to $417 billion in 2017. SAPs have transferred more than $229 billion in debt payments from Sub-Saharan Africa to the West since 1980. Africa spends four times more on debt interest payments than on healthcare. This combined with cutbacks in social expenditure caused healthcare spending in the 42 poorest African countries to fall by 50 percent during the 1980s. More than 200 million Africans have no access to health services as hundreds of clinics, hospitals and medical facilities have been closed.The catastrophic impacts of the policies imposed by international monetary institutions were not confined to Africa and Latin America, as discussed in the first part of this article; they also played havoc with the lives of millions in Asia and other parts of the world as well. In Asia, the IMF and the World Bank first encouraged financial liberalization that partly led to the financial crisis in South East Asia during the decade of the 1990s, and they then prescribed a disastrous recipe to address this crisis.Several experts believe that the crisis was caused in large part by South Korea, Thailand, the Philippines, Malaysia and Indonesia's heavy reliance on short-term foreign loans and openness to hot money. When it became apparent in 1997 that private enterprises would not be able to meet their payment obligations, international currency markets panicked and Asian currencies plummeted. What they forget to mention is the ideology of international monetary institutions that encourage the reliance of countries on short-term foreign loans and openness to hot money which help speculators fulfill their gargantuan appetite for profit and money.After pushing these countries towards a crisis, the IMF treated the Asian meltdown like other emergency situations, giving assistance only in exchange for structural adjustment policies, which was totally unnecessary because these states were not facing a budgetary deficit issue. Nonetheless, the fund instructed governments to cut spending, which deepened the economic slowdown. In South Korea, for example, a country whose income approached European levels, unemployment skyrocketed from approximately 3 percent to 10 percent. 'IMF suicides' became common among workers who had lost their jobs and dignity.In Indonesia, the worst-hit country, poverty rates rose from an official level of 11 percent before the crisis to 40-60 percent, and GDP declined by 15 percent in one year. Malaysia stood out as a country that refused IMF assistance and advice. Instead of further opening its economy, Malaysia imposed capital controls, in an effort to eliminate speculative trading in its currency. While the IMF mocked this approach when adopted, the Fund later admitted that it succeeded.The IMF recipe proved to be very disastrous for the common Indonesian who greatly suffered because of the policies imposed by the global financial body. Prior to the 1997-98 financial crisis, Indonesia had a relatively comfortable debt situation. The government borrowed primarily from the World Bank, Asian Development Bank, and a group of bilateral donors grouped in the Consultative Group on Indonesia (CGI), for funding its development budget. Jakarta approached IMF in 1997 for a $43 billion bailout and within a few years, the bailout turned out to be a great curse for the masses, adding to their miseries and making their lives difficult. In January 2003, the government of the then president Megawati Soekarnoputri raised the prices on fuel (22 percent), telephone (15 percent) and electricity (6 percent). This was happening in a country where inflation was 10 percent in 2002 and more than half of the country's 220 million population lived on less than $2 a day and burdened with more than 40 million unemployed souls.To tide over the crisis, it was suggested that Indonesia should take specific steps to liberalise trade and investment which included: reducing tariffs on all imported food products to five percent and cutting non-agricultural tariffs to 10 percent by 2003; opening banks to foreign ownership by June 1998; and lifting restrictions on foreign banks by February 1998. Despite taking these drastic measures, the country's financial woes did not decrease. The official debt burden increased from 27 percent of GDP prior to the crisis to more than 100 percent by the end of 1999, before declining gradually. In fact Indonesia, which was ranked as middle-income and middle-indebted before the crisis (at the same level as its neighbours, Thailand and the Philippines), came to be ranked as belonging to the SILIC (severely indebted low income countries) category.Such reckless policies also contributed to the immiserating of the people in the Philippines where the government kept domestic wages low at the behest of the international financial bodies. This badly affected the marginalized sectors of society, forcing 54 percent of the population to live in absolute poverty while the government debt service was eating up 50 percent of the national budget.This was the brief history of the disastrous impacts caused by the policies of the global financial institutions. It is difficult to imagine why we still insist on going to such institutions. The policies of international monetary institutions clearly indicate that they seek to benefit the Global North. Their agenda is to facilitate the plundering of third-world countries by the advanced capitalist states. Their mission is not opaque. Their purpose is not mysterious. They are very vocal in making it clear that the Structural Adjustment Programmes are meant to promote the free market. They want developing countries, including Pakistan, to reduce import restrictions, work for the advancement of exports, carry out the privatization of public industries, control wages and leave the social sector at the mercy of market forces.Which of these points could help the economy? Let us begin with privatization. The mantra of selling state concerns was used to convince people that it would help the country repay loans. We started the process of privatization in the 1980s, which gathered pace after the restoration of democracy in 1988. According to the finance ministry our total debt and external liabilities was $20.90 billion in 1990, rising to $38.86 billion in 2007 and $99.1 billion now. We have sold out more than 160 state-run entities since the 1980s, rendering hundreds and thousands of people jobless. Instead of seeing the country free from debt, what we see today is nothing but a phenomenal surge in our external debt and liabilities which is likely to haunt our coming generations for decades or maybe centuries.Did these much-vaunted reforms at the behest of international monetary institutions bring any positive change in the lives of millions of Pakistanis? The answer is not difficult to imagine. While the World Bank claims poverty has been reduced, asserting it fell to 29.5 percent in 2014 from 64.3 percent in 2002, Pakistan’s first ever official report on multidimensional poverty, launched by the PML-N government in 2016, says nearly 39 percent of Pakistanis live in multidimensional poverty. The other social development indicators that were meant to be visible after the economic reforms seem to be nowhere either. The country houses more than 25 million out-of-school children. More than 40 percent of children are stunted. Infant mortality rate was 63.3 deaths per thousand live births in 2018. Eighty percent of diseases are caused by contaminated water which is a rare commodity for the majority of the poor, and Hepatitis has become an epidemic in several parts of the country.Since the arrival of the Tabdeeli Sarkar, inflation has skyrocketed. The prices of petrol and gas have witnessed a phenomenal surge. The champions of employment creation are planning to render tens of thousands workers jobless by privatizing state-run concerns. Given all this, it is more likely that the prescription of the IMF will further add to the miseries. Therefore, it is important that we think of the alternatives. Following the IMF's dictation will do no good. If the advisers of Zardari, Nawaz and Imran are unanimous in seeking help from global financial bodies then the people must realise that they just want to draw to hefty salaries from the public exchequer but want workers' wages to be stagnated. They want to see austerity in the lives of millions of people but would love to stay in five-star hotels and make expensive foreign trips from the taxes of common people. It is time we came up with our own alternative.Source #1 :Is the IMF the cure?Source #2: Is the IMF the cure?We have been under IMF led programs for decades. They said privatize industries, we privatized nearly 160 industries since the 1980s and yet our debt levels have gone up rather than down. We have devalued a currency to the point that it’s 160 rupees to a dollar now, yet our exports are meager while our debt obligations and economic size has shrunk.We shouldn’t blame the IMF: We should blame ourselves. The IMF was never set up to help us. Their macro stabilization programs have had mixed successes and are a generalized template solution that doesn’t take into account region or country specific condition. They apply one size fits all solutions to countries as diverse as Laos, El Salvador. Egypt and Pakistan.The IMF is designed to serve the interests of the people who hold voting shares in it’s board. The IMF conditions and strings that are applied to it’s loan programs are designed to kick down the doors of protections for local, developing economies so they can be rapaciously exploited by American companies and firms. Wages are slashed, social safety nets discarded, taxes on businesses and industries withdrawn, mineral rights given away at throw away prices. The IMF is designed to enable the neo-colonial exploitation of the Global south and has played it’s part in the wealth transfer from the south to the Developed North long after those countries stopped being colonies on paper.It’s time we parted ways with this parasitic institution and looked for home grown solutions and alternative financing institutions like the AIIB.GrowthThe Austerity driven model of economic stabilization proposed by the IMF and other economic institutions had disastrous results, not just in the above mentioned states but also Greece during the recent economic crises.The incredible disaster of the Greek austerity debacle is something that will go down in history books. There are many fingers to point in this drama: The IMF (to a lesser extent this time) and the Greek government with their own bad spending and number fudging. The EU banks and the political chiefs who steered it’s fate perhaps gave the single greatest blow to the EU project when they pushed for austerity to “punish” Greece for some perceived sin.When the recession hit, and a new Socialist government exposed New Democracy’s cooked books, investors fled. The Greek government could not rollover its debt and risked default. Greek banks, which held large amounts of government debt, became precarious. German and French banks also had invested so heavily in Greece that their stability was in jeopardy. The Greek government and banks were so closely intertwinedthat a default by one could bring down the other.The sensible solution at this point would have been to compel foreign banks to write off large parts of their Greek investments. The banks knew the risks when they made their loans and presumably priced that into the interest they charged. The European Central Bank stoutly resisted this, fearing for the stability of these imprudent banks.Instead, the EU and other international financial institutions offered what has widely been described as a “bail-out.” This was not, for the most part, money to support human services or other forms of consumption. Instead, this was money for Greece to send right back to its external creditors. In essence, the international institutions were bailing out their own irresponsible banks but laundering the money through the Greek government.As a price for this “bail-out,” the EU and its partners demanded crippling austerity: tax increases, widespread lay-offs of public employees, and massive cuts in pensions and other social supports. Laying off so many workers and pauperizing pensioners sharply reduced demand, which triggered further lay-offs and wage cuts in the private sector. As the depression deepened, unemployment topped 25 percent. When austerity devastated the Socialists’ working-class constituency, the party was effectively destroyed.As powerful as the EU is, however, it was unable to rewrite the basic rules of economics. Each round of austerity further depressed the economy, reducing revenues and increasing Greece’s deficit. Even from the creditors’ perspective, austerity was self-defeating.Rather than recognizing the error of their ways, the international organizations doubled down on austerity, demanding still deeper cuts to government employment and basic public services. The hypocrisy was rich: Greece’s deficit was growing precisely because it was complying with the EU's austerity plan, whose implementation predictably misfired.With their economy in free-fall and the EU showing no inclination to reduce the pressure, Greek voters turned to anti-austerity parties. On the right, this elevated the neo-fascist, swastika-flashing Golden Dawn, whose leaders faced charges for killing political opponents. The majority, however, went to Syriza, a leftist group that pledged to stare down the EUand end austerity.The EU, however, stonewalled, forcing Syriza to choose between taking Greece out of the EU and implementing further rounds of crushing austerity. Syriza blinked in this stare-down, fracturing its membership and earning the ire of its voters. Since then, it has been governing in fragilecoalitions with small conservative parties, largely abandoning the aspirational program it ran on.Eventually, the International Monetary Fund pressured the EU to relent on austerity. But by then, the Greek economy had shrunk by more than a quarter, numerous Greek families had horror stories of losing their homes, being unable to support themselves, or lacking medical care for treatable conditions, and Syriza had been thoroughly discredited with Greek voters.Will we learn from the Greece austerity debacle?Contrast the EU’s austerity push with the Keynesian Stimulus driven economic recovery championed by President Obama in the US during the 2008 recession which urged that in the face of slowing Economic Growth the government must inject a stimulus into the economy to stir up consumption and spending and avoid a short recession turning into a long one.Another group, the Keynesians, subscribed to the policies advocated by their namesake in the aftermath of the Great Depression, when John Maynard Keynes argued that, by taking care of unemployment, the economy would look after itself: the need was to stimulate consumption and demand to prevent a negative spiral of declining confidence, lower spending, and more job losses and firm bankruptcies. This is, in effect, the policy pursued by President Obama, with large-scale stimulus packages (although the magnitude has been debated), including substantial investment in the automobile industry. A third group of supply-side economists argued that the problem was over-regulation, or ‘red tape’, and advocated massive deregulation. They believed that abolition of employment rights would enable wages to fall and unwanted labour to be shed, allowing firms to compete better in a global market. However, a new school of thought emerged, labelled ‘austerions’ by the economics Nobel Laureate Paul Krugman.Five years on, the results of the ‘great austerity experiment’ are at last becoming clear (Fig 1). In the USA, where a Keynesian approach was adopted, the economy has recovered and is now on a sustained upward trajectory. The Eurozone is experiencing mixed fortunes. Some countries, such as Germany, are also experiencing sustained growth, but those that adopted stringent austerity policies, such as Ireland, Greece, Spain and Portugal, have yet to recover. Iceland, one of the worst affected countries, held a referendum on austerity; 93% of the population rejected it and, so far, austerity has been delayed and limited. As a result, Iceland has had much better economic performance than the latter group of austerity cases (in part, enabled by its ability to devalue its currency and, in so doing, boost fishing exports). Paradoxically, the credit-rating agencies, which were once in the vanguard of calls for austerity, are now downgrading Italian banks explicitly because of concerns that austerity is choking off growth.The UK did make an initial recovery but there too the imposition of stringent austerity measures by the newly elected coalition government in 2010 arrested it. This evidence has not gone unnoticed and, in a series of elections across Europe in 2012, voters have rejected austerity and elected politicians offering an alternative, most notably in France but also in German regional elections. Yet their reasons for doing so are not simply because these policies have failed to fix the economy. They are also rejecting them because they are seeing the signs of the human cost that they incur, something that many politicians have sought to ignore.Austerity: a failed experiment on the people of EuropeWhen Austerity has been such a debacle across the Globe as a policy measure to stabilize economies, why exactly should the government engage in it yet again at a time when the economy is slowing down and austerity measures will heap unnecessary pain on already hapless masses?The Keynesian stimulus approach has already show tried and true effectiveness in the US and other western hemisphere economic recoveries. CPEC as an investment tool is an excellent way to achieve such a stimulus by spurring economic activity and growth and allowing the government to stabilize it’s finances while it works to cut away the wasteful and nonproductive expenditures and grow its tax base at the same time.CPEC transitions economy away for global warming eraRecently I shared this news clipping about Pakistani and Chinese scientists on the verge of a scientific breakthrough where they could develop a strain of hybrid rice that can withstand drought and high heat conditions:Pakistan, Chinese researchers on the brink of hybrid rice breakthroughI recall that 2 or 3 years ago when the CPEC master plan was revealed and there was a huge concern over a previously unrevealed agricultural aspect of CPEC. Everyone up until then had assumed it was an infrastructure, energy and logistics related project.In all honesty, I consider the agricultural aspect of CPEC to be the most important one because it’s based around three core objectives:Transition Pakistan’s agriculture away from water intensive crops to crops that utilize less water but contribute more to the GDPTransition from current breed of crops to a new strain that are more resistant to the drought and arid conditions we will face in the 21st century of Global WarmingTransition from the British canal based system of watering crops via flood irrigation which is incredibly wasteful to new systems like Drip Water irrigation and crop zoning etc that are more efficient at water usage.Pakistan is lunging into a serious water crisis. The country is rapidly moving from being a water abundant country to a water-scarce country.With its annual water availability falling below 1,000 cubic metres per person, it may in fact have already crossed this threshold. This is partly due to depletion of its fresh water resources because of increasing population, adverse climate variations like drought and inconsistent monsoon patterns, and lack of storage facilities. And it is partially due to the unchecked demand for these many limited available resources.The scope of the crisis can be demonstrated by a few key facts: About 92 percent of Pakistan is classified as semi-arid to arid and the vast majority of Pakistanis are dependent on surface and groundwater sources from a single source – the Indus River basin.More than 90 percent of the country’s water is being used by the agriculture sector where conventional irrigation methods are undertaken.About 90 percent of the country’s agricultural production comes from land irrigated by the Indus Basin Irrigation System, firmly linking national food security to water levels in the Indus River basin. And, Pakistan’s water storage capacity is limited to a maximum 30-day supply, far below the 1,000-day storage capacity recommended for a country with its climatic characteristics.With water availability per person declining year by year, and demand for food production continuously increasing, Pakistan faces not only a water crisis but also serious concerns regarding its future food security. This situation also has clear implications for the government’s efforts to become an upper middle income country by 2025.The relevant authorities should carry out a study to assess the national water demand which should focus on different water users, water balance, traditional and emerging demands, and the impacts of climate change on demand by 2025 and 2050. In order for the government to take informed decisions, sectoral demands have to be estimated for all sectors. This will give an idea to the policymakers about which sectors consume most water.Studies like these will also help realize the contribution each sector makes towards the national economy as per their water usage. For instance, according to a report, four major crops that consume about 80 percent of the country’s water resources (wheat, rice, cotton and sugarcane) generate less than five percent of the national GDP.Furthermore, experts suggest that rain water harvesting must be introduced in local households, in both urban and rural areas. Flood irrigation should be a criminal act that is still being practiced in Pakistan; this has to stop. Improved irrigation methods and crop zoning are the country’s need at the moment. There is a need to reuse water in houses; for example, the water used in our kitchens can be reused in our toilets.Disappearing waterI understand that agriculture is not the most interesting subject and in this day and age we have just assumed the constant availability of food.But climate change is going to complete alter the environmental, economic and social landscape of the Pakistani territories. And it is imperative that we pursue the agricultural related initiatives of CPEC at all costs and as fast as possible.Let me stress that a little more strongly: Even if we take on $100 billion of debt under CPEC, it will be worth it if for no other reason, we can get our agriculture to survive in the Global Warming era.It is disingenuous to talk about finances when we are talking about the very survival of the country. If you think I’m being over dramatic, I would urge you to read up on the catastrophic consequences of what will happen if we continue to keep our water usage and agriculture as is and refuse to adapt. We are seeing a mini version of this dark future in Karachi where water mafia must be paid to get your water tanks filled and access to clean water is shrinking every day.Imagine that on a nationwide level with violent mobs and riots over water shortages, food prices sky rocketing due to crop failures and militarization of water access to secure scarce water resources for the state and it’s elite.The Maldives are currently on the chopping block of Climate Change and people believe that they as a state will be wiped out by rising sea levels. Should we tell the Maldives that it’s not financially feasible to construct infrastructure that will adapt them to the Climate change era?Quorans who are often suspicious of CPEC as a colonization project: India is one of the key partner with Israel on how to adapt biotechnology in the agricultural sector so that water usage is optimized and crops adapt to the hot, arid and water stressed future. And even increase their yields in some cases. So if it’s ok for India to undertake such projects, then why not Pakistan?One more thing: While ~50+% of our economy stems from the services sector, the other half is predominately still agricultural at 23% and Industrial at 18%.Besides ensuring that our agricultural sector survives into the 21st century with the adaption of cutting edge agricultural tech from China, CPEC also allows us to begin to transition our economy away from sectors that are in danger from climate change towards new sectors that will surive the global warming era.An example of that is trade logistics: CPEC’s massive road, rail, port and highway network is planned to be integrated into China’s OBOR project so that we can develop new sources of revenue in the form of logistics related fees from Chinese companies and traders utilizing CPEC infrastructure.This is a good example of an economic sector Pakistan currently doesn’t have but it will definitely need in the future to diversify away from purely Agricultural related exports.Take a look at some of our exports by category data in 2018:source: Pakistan Exports By CategoryOne of the more sensible and realistic calculations for our earnings from CPEC toll fees was given at $2-$2.5 billion USD a year.CPEC toll income — myth and reality | The Express TribuneOur agricultural exports in 2018 are at $15 b USD a year.With 2.5 billion USD in toll fees, we have managed to diversify our export or dollar related earnings by around 16% away from our top earning crops.This is a good start. And we need to continue building on it. Our economy must transition away from purely agriculture related earnings in the Global Heat Wave of the future and move towards sectors that are immune or semi immune to Global Warming.This is how CPEC plans to accomplish this using a mix of financing for the agricultural sector, new plans for fertilizer usage, new watering techniques and sustainable agriculture through more revenue per crop capita:For agriculture, the plan outlines an engagement that runs from one end of the supply chain all the way to the other. From provision of seeds and other inputs, like fertiliser, credit and pesticides, Chinese enterprises will also operate their own farms, processing facilities for fruits and vegetables and grain. Logistics companies will operate a large storage and transportation system for agrarian produce.It identifies opportunities for entry by Chinese enterprises in the myriad dysfunctions that afflict Pakistan’s agriculture sector. For instance, “due to lack of cold-chain logistics and processing facilities, 50% of agricultural products go bad during harvesting and transport”, it notes.Enterprises entering agriculture will be offered extraordinary levels of assistance from the Chinese government. They are encouraged to “[m]ake the most of the free capital and loans” from various ministries of the Chinese government as well as the China Development Bank. The plan also offers to maintain a mechanism that will “help Chinese agricultural enterprises to contact the senior representatives of the Government of Pakistan and China”.The government of China will “actively strive to utilize the national special funds as the discount interest for the loans of agricultural foreign investment”. In the longer term the financial risk will be spread out, through “new types of financing such as consortium loans, joint private equity and joint debt issuance, raise funds via multiple channels and decentralise financing risks”.The plan proposes to harness the work of the Xinjiang Production and Construction Corps to bring mechanization as well as scientific technique in livestock breeding, development of hybrid varieties and precision irrigation to Pakistan. It sees its main opportunity as helping the Kashgar Prefecture, a territory within the larger Xinjiang Autonomous Zone, which suffers from a poverty incidence of 50 per cent, and large distances that make it difficult to connect to larger markets in order to promote development. The prefecture’s total output in agriculture, forestry, animal husbandry and fishery amounted to just over $5 billion in 2012, and its population was less than 4 million in 2010, hardly a market with windfall gains for Pakistan.However, for the Chinese, this is the main driving force behind investing in Pakistan’s agriculture, in addition to the many profitable opportunities that can open up for their enterprises from operating in the local market. The plan makes some reference to export of agriculture goods from the ports, but the bulk of its emphasis is focused on the opportunities for the Kashgar Prefecture and Xinjiang Production Corps, coupled with the opportunities for profitable engagement in the domestic market.The plan discusses those engagements in considerable detail. Ten key areas for engagement are identified along with seventeen specific projects. They include the construction of one NPK fertilizer plant as a starting point “with an annual output of 800,000 tons”. Enterprises will be inducted to lease farm implements, like tractors, “efficient plant protection machinery, efficient energy saving pump equipment, precision fertilization drip irrigation equipment” and planting and harvesting machinery.The plan shows great interest in the textiles industry in particular, but the interest is focused largely on yarn and coarse cloth.Meat processing plants in Sukkur are planned with annual output of 200,000 tons per year, and two demonstration plants processing 200,000 tons of milk per year. In crops, demonstration projects of more than 6,500 acres will be set up for high yield seeds and irrigation, mostly in Punjab. In transport and storage, the plan aims to build “a nationwide logistics network, and enlarge the warehousing and distribution network between major cities of Pakistan” with a focus on grains, vegetables and fruits. Storage bases will be built first in Islamabad and Gwadar in the first phase, then Karachi, Lahore and another in Gwadar in the second phase, and between 2026-2030, Karachi, Lahore and Peshawar will each see another storage base.Asadabad, Islamabad, Lahore and Gwadar will see a vegetable processing plant, with annual output of 20,000 tons, fruit juice and jam plant of 10,000 tons and grain processing of 1 million tons. A cotton processing plant is also planned initially, with output of 100,000 tons per year.“We will impart advanced planting and breeding techniques to peasant households or farmers by means of land acquisition by the government, renting to China-invested enterprises and building planting and breeding bases” it says about the plan to source superior seeds.In each field, Chinese enterprises will play the lead role. “China-invested enterprises will establish factories to produce fertilizers, pesticides, vaccines and feedstuffs” it says about the production of agricultural materials.“China-invested enterprises will, in the form of joint ventures, shareholding or acquisition, cooperate with local enterprises of Pakistan to build a three-level warehousing system (purchase & storage warehouse, transit warehouse and port warehouse)” it says about warehousing.Then it talks about trade. “We will actively embark on cultivating surrounding countries in order to improve import and export potential of Pakistani agricultural products and accelerate the trade of agricultural products. In the early stages, we will gradually create a favorable industry image and reputation for Pakistan by relying on domestic demand.”Exclusive: CPEC master plan revealedAnd Logistics is only part of the equation: Chinese investments are a diverse portfolio of energy, tourism, mining, public transportation and real estate to give a few examples. Most if not all of these are good diversification away from climate change impacted economic sectors that we expect major disruptions in once water shortages and droughts start to hit more frequently in the next decade.I really want to under line this point again because recall that in the beginning of the answer I talked about how it’s ok to take on debt that ensures the survival and prosperity of our future generations, we should only avoid debt that is for day to day running of current government expenses.CPEC debt is a debt that we are undertaking today to ensure that our children have a future in an era where the Indus Basin will begin turning into a desert and our children will grow up eating crops and meats that are far different from the ones we grew up eating because in their era, those crops and sources of food might not exist in our region anymore.The TLDR Conclusion:Pakistan’s Debt is because of two major reasons:Lack of tax baseEnormous wastage and leakages in government spendingPakistan has been under IMF programs for decades and they have never fixed the government’s problems because the IMF exists to push for a neo-liberal free market order that favors the US rather than fix Pakistan’s problemsAt a time of slow economic growth, embracing an IMF led austerity drive is a suicidal quest. The 2008 economic crises and government responses to it showed that Keynesian style stimulus packages to stir up the economy is what leads to recovery.CPEC is a Keynesian style stimulus for the Pak economy at a time when it’s slowing down. The OBOR, AIIB and CPEC style of infrastructure and trade led growth is critical for low growth developing countries to stir economic growth and avoid the misery of Greek austerity.Beyond just stirring economic growth, CPEC is part of Pakistan’s transition away from an agricultural/semi industrialized country to a more balanced mix of logistics/industry/trade/agriculture/consumption. It also allows the country to adapt to the water stressed, heat wave era of the Climate Change epoch of history.Not everything about CPEC is rosy. This would be a dishonest answer if I said that. We do need to investigate how much our local industries would be impacted by Chinese imports. We do need to investigate that the projects in CPEC have the right ROIs given their expenditure. That these projects are aligned with our long term aims. And that the debt repayments can be met with the ROI from these projects. These are basic precautions.But in general, CPEC is a lifeline for a country like ours thats trapped in debt and low growth in the face of annihilation from climate change. We’re supposed to face the potential heat death of the planet with our economy chained to a wall.The old Pakistan is gone. This will be our second major transformation after 71. And in some ways, it will be more dangerous to navigate and more critical to our survival. The Indus Basin has always been there in the living memory of mankind. It might not be in the near future.We will be walking our children to schools in the deserts of southern Punjab. And driving past the dried out caverns of the now dead Ravi. The very rice we eat will taste different. I’ll tell my children stories of how fruit used to be so cheap and abundant in my life time. How we’d let water run into the street while washing our cars. How Monsoon used to be a fun time to play in the canal rather than a tropical flood that washed away entire communities.A memory can only survive in the minds of the living. When the earth changes, we must change with it. The age of arrogant men telling women to stay in the home is over. The age of you turning your nose up at your neighbor because his faith is different from you is over. It’s a fight to survive the heat death of the earth, we will need all the help we can get. We need to rethink our ideas about “honor” and “Izzat” and right and wrong. The uncaring laws of the universe dont care for our mortal hang ups.CPEC will turn farmers into truck drivers, gun smiths into bio tech technicians and cloth weavers into aqua farmers.I suppose in a way, it’s like changing shape and form, changing bodies and the chemicals that animate them. CPEC will change us all. And there might be no future without it.The translucence of flames beat against the airagainst our skins. This can be done withor without clothes on. This can be done withor without wine or whiskey but never without water:evaporation is also ongoing. Most visibly in this casein the form of wisps of steam rising from the just washed hairof a form at the fire whose beauty was in the earth’sturning, that night and many nights, transcendent.I felt heat changing me. The word for this istransdesire, but in extreme cases we call it transdireor when this heat becomes your maker we saytransire, or when it happens in front of a hearth:transfire.On Trans by Miller ObermanA man drives an improvised motorcycle truck, balancing a precarious load behind him. Perhaps the best image to portray our economy, straddled by debt, innovating it’s way to survival in the 21st century.Image source: China’s $62 Billion Bet on Pakistan

Source:-Reliance Industries - WikipediaReliance Industries Limited (RIL) is an Indian multinational conglomerate company headquartered in Mumbai, Maharashtra, India. Reliance owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail, and telecommunications. Reliance is one of the most profitable companies in India,[3]the largest publicly traded company in India by market capitalization,[4]and the largest company in India as measured by revenue after recently surpassing the government-controlled Indian Oil Corporation.[5]On 22 June 2020, Reliance Industries became the first Indian company to exceed US$150 billion in market capitalization after its market capitalization hit ₹11,43,667 crore on the BSE.[6][7]The company is ranked 96th on the Fortune Global 500 list of the world's biggest corporations as of 2020.[8]It is ranked 8th among the Top 250 Global Energy Companies by Platts as of 2016. Reliance continues to be India's largest exporter, accounting for 8% of India's total merchandise exports with a value of ₹1,47,755 crore and access to markets in 108 countries.[9]Reliance is responsible for almost 5% of the government of India's total revenues from customs and excise duty. It is also the highest income tax payer in the private sector in India.[9][10]Contents1History1.11960–19801.21981–20001.32001 onwards2Shareholding2.1Listing3Operations3.1Subsidiaries3.2Associates4Employees5Awards and recognition6Controversies6.1De-merger of RIL in 2005–20066.2Relationship with ONGC7Scams7.1Insider trading7.2NICL7.3RIL plane grounded7.4Krishna Godavari (KG) Basin gas7.5Petition against Reliance Jio8See also9References10External linksHistory[edit]1960–1980[edit]The company was co-founded by Dhirubhai Ambani and Champaklal Damani in 1960's as Reliance Commercial Corporation. In 1965, the partnership ended and Dhirubhai continued the polyester business of the firm.[11]In 1966, Reliance Textiles Engineers Pvt. Ltd. was incorporated in Maharashtra. It established a synthetic fabrics mill in the same year at Naroda in Gujarat.[12]On 8 May 1973, it became Reliance Industries Limited. In 1975, the company expanded its business into textiles, with "Vimal" becoming its major brand in later years. The company held its Initial public offering (IPO) in 1977.[13]The issue was over-subscribed by seven times.[14]In 1979, a textiles company Sidhpur Mills was amalgamated with the company.[15]In 1980, the company expanded its polyester yarn business by setting up a Polyester Filament Yarn Plant in Patalganga, Raigad, Maharashtra with financial and technical collaboration with E. I. du Pont de Nemours & Co., U.S.[12]1981–2000[edit]In 1985, the name of the company was changed from Reliance Textiles Industries Ltd. to Reliance Industries Ltd.[12]During the years 1985 to 1992, the company expanded its installed capacity for producing polyester yarn by over 1,45,000 tonnes per annum.[12]The Hazira petrochemical plant was commissioned in 1991–92.[16]In 1993, Reliance turned to the overseas capital markets for funds through a global depository issue of Reliance Petroleum. In 1996, it became the first private sector company in India to be rated by international credit rating agencies. S&P rated Reliance "BB+, stable outlook, constrained by the sovereign ceiling". Moody's rated "Baa3, Investment grade, constrained by the sovereign ceiling".[17]In 1995/96, the company entered the telecom industry through a joint venture with NYNEX, USA and promoted Reliance Telecom Private Limited in India.[16]In 1998/99, RIL introduced packaged LPG in 15 kg cylinders under the brand name Reliance Gas.[16]The years 1998–2000 saw the construction of the integrated petrochemical complex at Jamnagar in Gujarat,[16]the largest refinery in the world.2001 onwards[edit]In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's two largest companies in terms of all major financial parameters.[18]In 2001–02, Reliance Petroleum was merged with Reliance Industries.[13]In 2002, Reliance announced India's biggest gas discovery (at the Krishna Godavari basin) in nearly three decades and one of the largest gas discoveries in the world during 2002. The in-place volume of natural gas was in excess of 7 trillion cubic feet, equivalent to about 120 crore (1.2 billion) barrels of crude oil. This was the first ever discovery by an Indian private sector company.[13][19]In 2002–03, RIL purchased a majority stake in Indian Petrochemicals Corporation Ltd. (IPCL), India's second largest petrochemicals company, from the government of India,[20]RIL took over IPCL's Vadodara Plants and renamed it as Vadodara Manufacturing Division (VMD).[21][22]IPCL's Nagothane and Dahej manufacturing complexes came under RIL when IPCL was merged with RIL in 2008.[23][24]In 2005 and 2006, the company reorganized its business by demerging its investments in power generation and distribution, financial services and telecommunication services into four separate entities.[25]In 2006, Reliance entered the organised retail market in India[26]with the launch of its retail store format under the brand name of 'Reliance Fresh'.[27][28]By the end of 2008, Reliance retail had close to 600 stores across 57 cities in India.[13]In November 2009, Reliance Industries issued 1:1 bonus shares to its shareholders.In 2010, Reliance entered the broadband services market with acquisition of Infotel Broadband Services Limited, which was the only successful bidder for pan-India fourth-generation (4G) spectrum auction held by the government of India.[29][30]In the same year, Reliance and BP announced a partnership in the oil and gas business. BP took a 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the KG-D6 block for $7.2 billion.[31]Reliance also formed a 50:50 joint venture with BP for sourcing and marketing of gas in India.[32]In 2017, RIL set up a joint venture with Russian Company Sibur for setting up a Butyl rubber plant in Jamnagar, Gujarat, to be operational by 2018.[33]In August 2019, Reliance added Fynd primarily for its consumer businesses and mobile phone services in the e-commerce space.[34][35]Shareholding[edit]Chairman and MD: Mukesh AmbaniThe number of shares of RIL are approx. 310 crore (3.1 billion).[36]The promoter group, the Ambani family, holds approx. 46.32% of the total shares whereas the remaining 53.68% shares are held by public shareholders, including FII and corporate bodies.[36]Life Insurance Corporation of India is the largest non-promoter investor in the company, with 7.98% shareholding.[37]In January 2012, the company announced a buyback programme to buy a maximum of 12 crore (120 million) shares for ₹10,400 crore (US$1.5 billion). By the end of January 2013, the company had bought back 4.62 crore (46.2 million) shares for ₹3,366 crore (US$470 million).[38]Listing[edit]The company's equity shares are listed on the National Stock Exchange of India Limited (NSE) and the BSE Limited. The Global Depository Receipts (GDRs) issued by the Company are listed on Luxembourg Stock Exchange.[39][40]It has issued approx. 5.6 crore (56 million) GDRs wherein each GDR is equivalent to two equity shares of the company. Approximately 3.46% of its total shares are listed on Luxembourg Stock Exchange.[36]Its debt securities are listed at the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Limited (NSE).[41]It has received domestic credit ratings of AAA from CRISIL (S&P subsidiary) and Fitch. Moody's and S&P have provided investment grade ratings for international debt of the company, as Baa2 positive outlook (local currency issuer rating) and BBB+ outlook respectively.[42][43][44]On the 28th of December, 2017, RIL announced that it will be acquiring the wireless assets of Anil Ambani-led Reliance Communications for about ₹23,000 crores.[45]Operations[edit]The company's petrochemical, refining, oil and gas-related operations form the core of its business; other divisions of the company include cloth, retail business, telecommunications and special economic zone (SEZ) development. In 2012–13, it earned 76% of its revenue from refining, 19% from petrochemicals, 2% from oil & gas and 3% from other segments.[37]In July 2012, RIL informed that it was going to invest US$1 billion over the next few years in its new aerospace division which will design, develop, manufacture, equipment and components, including aircraft, engine, radars, avionics and accessories for military and civilian aircraft, helicopters, unmanned airborne vehicles and aerostats.[46]On 31 March 2013, the company had 158 subsidiary companies and 7 associate companies.[47]Subsidiaries[edit]Jio Platforms Limited, essentially a technology company, is a majority-owned subsidiary of RIL. It is the result of a corporate restructuring announced in October 2019, resulting in all the digital initiatives and the telecommunication assets being housed under this new subsidiary.[48] This new subsidiary holds all the digital business assets including Reliance Jio Infocomm Ltd, which in turn holds the Jio connectivity business - Mobile, broadband and enterprise and also the other digital assets (JIO Apps, Tech backbone and Investments in other tech entities like Haptic, Hathaway and Den Networks among others.[49] In April 2020, RIL announced a strategic investment of ₹43,574 crore (US$6.1 billion) by Facebook into Jio Platforms. This investment translated into a 9.99% equity stake, on a fully diluted basis.[50] Further in May 2020, RIL sold roughly 1.15% stake in Jio Platforms for ₹5,656 crore (US$790 million) to the American private equity investor, Silver Lake Partners.[51] . Intel became the 12th company to invest in Reliance Jio platforms after it invested ₹1,894.50 crore ($250 million),the total investments in Jio platforms is ₹117,588.45 crore so far.[52] . On 16th July 2020, Google announced that it will acquire a 7.7% stake in Jio Platforms for ₹33,737 crore.[53]Reliance Retail is the retail business wing of the Reliance Industries. In March 2013, it had 1466 stores in India.[54] It is the largest retailer in India.[55] Many brands like Reliance Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness, Reliance Trends, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home Kitchens, Reliance Market (Cash n Carry) and Reliance Jewel come under the Reliance Retail brand. Its annual revenue for the financial year 2012–13 was ₹108 billion (US$1.5 billion) with an EBITDA of ₹780 million (US$11 million).[37][56]Reliance Life Sciences works around medical, plant and industrial biotechnology opportunities. It specializes in manufacturing, branding, and marketing Reliance Industries' products in bio-pharmaceuticals, pharmaceuticals, clinical research services, regenerative medicine, molecular medicine, novel therapeutics, biofuels, plant biotechnology, and industrial biotechnology sectors of the medical business industry.[57][58]Reliance Logistics is a single-window[clarification needed] company selling transportation, distribution, warehousing, logistics, and supply chain-related products.[59][60][61] Reliance Logistics is an asset based company with its own fleet and infrastructure.[62] It provides logistics services to Reliance group companies and outsiders.[63] Merged content from Reliance Logistics to here. See Talk:Reliance Industries/Archives/2013#Merge proposals.Reliance Solar, the solar energy subsidiary of Reliance, was established to produce and retail solar energy systems primarily to remote and rural areas. It offers a range of products based on solar energy: solar lanterns, home lighting systems, street lighting systems, water purification systems, refrigeration systems and solar air conditioners.[64] Merged content from Reliance Solar to here. See Talk:Reliance Industries/Archives/2013#Merge proposals.Reliance Industrial Infrastructure Limited (RIIL) is an associate company of RIL. RIL holds 45.43% of total shares of RIIL.[37] It was incorporated in September 1988 as Chembur Patalganga Pipelines Limited, with the main objective being to build and operate cross-country pipelines for transporting petroleum products. The company's name was subsequently changed to CPPL Limited in September 1992, and thereafter to its present name, Reliance Industrial Infrastructure Limited, in March 1994.[65] RIIL is mainly engaged in the business of setting up and operating industrial infrastructure. The company is also engaged in related activities involving leasing and providing services connected with computer software and data processing.[66] The company set up a 200-millimetre diameter twin pipeline system that connects the Bharat Petroleum refinery at Mahul, Maharashtra, to Reliance's petrochemical complex at Patalganga, Maharashtra. The pipeline carries petroleum products including naphtha and kerosene. It has commissioned facilities like the supervisory control and data acquisition system and the cathodic protection system, a jackwell at River Tapi, and a raw water pipeline system at Hazira. The infrastructure company constructed a 71,000 kilo-litre petrochemical product storage and distribution terminal at the Jawaharlal Nehru Port Trust (JNPT) Area in Maharashtra.[citation needed]Network 18, a mass media company. It has interests in television, digital platforms, publication, mobile apps, and films. It also operates two joint ventures, namely Viacom 18 and History TV18 with Viacom and A+E Networks respectively. It also have acquired ETV Network and since renamed its channels under the Colors TV brand.Reliance Eros Productions LLP, joint venture with Eros International to produce film content in India.[67]Associates[edit]Relicord is a cord blood banking service owned by Reliance Life Sciences. It was established in 2002.[68] It has been inspected and accredited by AABB,[69] and also has been accorded a licence by Food and Drug Administration (FDA), Government of India.Reliance Jio Infocomm Limited (RJIL) previously known as Infotel Broadband, is a broadband service provider which gained 4G licences for operating across India. [70] [71][72]Reliance Institute of Life Sciences (RILS), established by Dhirubhai Ambani Foundation, is an institution offering higher education in various fields of life sciences and related technologies.[73][74]Reliance Clinical Research Services (RCRS), a contract research organisation (CRO) and wholly owned subsidiary of Reliance Life Sciences, specialises in the clinical research services industry. Its clients are primarily pharmaceutical, biotechnology and medical device companies.[75]LYF, a 4G-enabled VoLTE device brand from Reliance Retail.[76]Employees[edit]As on 31 March 2018, the company had 29,533 permanent employees of which 1,521 were women and 70 were employees with disabilities. It also had 1,58,196 temporary employees on the same date which makes a total of 187,729 employees.[37]As per its Sustainability Report for 2011–12, the attrition rate was 7.5%. But currently, the same attrition rate has gone up to 23.4% in March 2015 as per latest report released by the organization.[77]In its 39th Annual General Meeting, its chairman informed the shareholders of the investment plans of the company of about ₹1,500 billion (US$21 billion) in the next three years. This would be accompanied by increasing the staff strength in Retail division from existing strength of 35,000 to 120,000 in next 3 years and increasing employees in Telecom division from existing 3,000 to 10,000 in 12 months.[78]Awards and recognition[edit]International Refiner of the year in 2017 at Global Refining and Petrochemicals Congress 2017 [79]International Refiner of the Year in 2013 at the HART Energy's 27th World Refining & Fuel Conference.[80] This is the second time that RIL has received this Award for its Jamnagar Refinery, the first being in 2005.[81]According to survey conducted by Brand Finance in 2013, Reliance is the second most valuable brand in India.[82]The Brand Trust Report ranked Reliance Industries as the 7th most trusted brand in India in 2013 and 9th in 2014.[83][84]RIL was certified as 'Responsible Care Company' by the American Chemistry Council in March, 2012.[85]RIL was ranked at 25th position across the world, on the basis of sales, in the ICIS Top 100 Chemicals Companies list in 2012.[86]RIL was awarded the National Golden Peacock Award 2011 for its contribution in the field of corporate sustainability.[87]In 2009, Boston Consulting Group (BCG) named Reliance Industries as the world's fifth biggest 'sustainable value creator' in a list of 25 top companies globally in terms of investor returns over a decade.[88]The company was selected as one of the world's 100 best managed companies for the year 2000 by IndustryWeek magazine.[12][89]From 1994 to 1997, the company won National Energy Conservation Award in the petrochemical sector.[12]Controversies[edit]De-merger of RIL in 2005–2006[edit]The Ambani family holds around 45% of the shares in RIL.[90]Since its inception, the company was managed by its founder and chairman Dhirubhai Ambani. After suffering a stroke in 1986, he handed over the daily operations of the company to his sons Mukesh Ambani and Anil Ambani. After the death of Dhirubhai Ambani in 2002, the management of the company was taken up by both the brothers. In November 2004, Mukesh Ambani, in an interview, admitted to having differences with his brother Anil over 'ownership issues'.[91]He also said that the differences "are in the private domain". The share prices[92]of RIL were impacted by some margin when this news broke out. In 2005, after a bitter public feud between the brothers over the control of the Reliance empire, mother Kokilaben intervened to broker a deal splitting the RIL group business into the two parts.[93]In October 2005, the split of Reliance Group was formalized. Mukesh Ambani got Reliance Industries and IPCL. Younger brother Anil Ambani received telecom, power, entertainment, and financial services business of the group. The Anil Dhirubhai Ambani Group includes Reliance Communications, Reliance Infrastructure, Reliance Capital, Reliance Natural Resources and Reliance Power.[94][95]The division of Reliance group business between the two brothers also resulted in de-merger of 4 businesses from RIL.[96][97]These businesses immediately became part of Anil Dhirubhai Ambani Group. The existing shareholders in RIL, both the promoter group and non-promoters, received shares in the de-merged companies.[25]Relationship with ONGC[edit]In May 2014, ONGC moved to Delhi High Court accusing RIL of pilferage of 18 billion cubic metres of gas from its gas-producing block in the Krishna Godavari basin.[98]Subsequently, the two companies agreed to form an independent expert panel to probe any pilferage.[99]Scams[edit]Seminar magazine (2003) detailed Reliance founder Dhirubhai Ambani's proximity to politicians, his enmity with Bombay Dyeing's Nusli Wadia, the exposes by the Indian Express and Arun Shourie about illegal imports by the company and overseas share transactions by shell companies, and the botched attempt to acquire Larsen & Toubro.[100]As early as 1996, Outlook magazine addressed other controversies related to fake and switched shares; insider trading; and a nexus with the state-owned Unit Trust of India. Five main allegations concerning Reliance, and which have plunged the Indian capital markets into a period of uncertainty unsurpassed since the days of the securities scam were:Reliance issued fake shares.It switched shares sent for transfer by buyers to make illegal profits.It has indulged in insider trading in shares.It established a nexus with the Unit Trust of India to raise huge sums of money to the detriment of UTI subscribers.It attempted to monopolise the private telecom services market through front companies.[101]Insider trading[edit]Stock market fraud regulator Securities and Exchange Board of India (Sebi) issued a show-cause notice to Reliance Industries Ltd. following a probe into alleged insider trading in Reliance Petroleum Ltd (RPL) shares in November 2007. SEBI probed transactions by entities that participated in and led to some three months of speculative rally after which the RPL stock surged to an all-time intraday high of ₹295 on 1 November 2007. In a separate and independent investigation related to the same issue, the income-tax (I-T) department looked at possible tax evasion by a dozen entities that Mukesh Ambani-owned RIL acknowledged to be its "agents".[102]In Jan 2011, Sebi barred Anil Ambani and four other officials of Reliance Group—until recently known as the Reliance-Anil Dhirubhai Ambani Group (R-Adag)—companies from investing in listed shares until December 2011. Two group firms, Reliance Infrastructure Ltd (R-Infra) and Reliance Natural Resources Ltd (RNRL) were barred from making such investment until December 2012. According to Sebi's investigations, R-Infra and RNRL were prima facie responsible for misrepresenting the nature of investments in yield management certificates/deposits, and the profits and losses in their annual reports for the fiscal years 2007, 2008 and 2009. It also found misuse of FII regulations. The then minister of state for finance Namo Narain Meena, on 1 December 2009, in a written response to a query raised in the Upper House of Parliament, said that three firms of R-Adag—R-Infra, RNRL and RCom—had violated overseas debt norms. These end-use violations were observed by the Reserve Bank of India (RBI) regarding two ECB transactions—of $360 million and $150 million—by R-Infra.[103]In another case, Sebi settled a dispute with Reliance Securities Ltd (RSL) with a consent order in June 2011, under which the brokerage will spend ₹1 crore within six months on investor education and not add any new clients for 45 days starting 15 June. In the settlement, it was also added that the brokerage will also pay ₹25 lakh towards settlement charges. This order followed a Sebi investigation into RSL's books and accounts for fiscal 2007 and fiscal 2008, which said that it had allegedly violated various clauses of Sebi stock brokers and sub-brokers regulations. The Sebi inquiry cited 20 irregularities, including the brokerage not informing clients about various charges at the time of opening accounts. RSL sought power of attorney in the name of Reliance Commodities Ltd from clients and used this to debit clients’ bank accounts, purchase and sell post office deposits and government of India bonds among other transactions. Brokerage, not fully equipped to handle its customer base at the time, used the name Reliance Money at all its offices and on employee visiting cards, instead of Reliance Securities, which was the registered trading member, leading to confusion. Brokerage was found to have received funds from other client bank accounts other than the ones available to it, thus failing to have a sound third-party check on the receipt of payments. RSL had failed to update client details despite the stock exchanges pointing this out in their inspection reports. The Sebi inquiry also said RSL collected higher securities transaction tax from its clients in 2006–2008, allotted more than one terminal in the same segment for a single user, and also collected cheques in the name of Reliance Money. Brokerage also did not maintain clear segregation between broking and other activities of group companies. Further, there were frequent disruptions in the brokerage's trading platform, which showed connectivity problems at the applicant's end.[104]NICL[edit]The Central Bureau of Investigation (CBI) filed a chargesheet in a Mumbai court against Reliance Industries Limited (RIL) and four retired employees of National Insurance Company Limited (NICL), including a former CMD, under provisions of the Prevention of Corruption Act for criminal conspiracy and other charges. Acting on a reference from CVC in March, 2005, the CBI started probing the conspiracy that led to the filing of the chargesheet on December 9, 2011. The 2005 complaint had alleged irregularities in issuance of insurance policies — for coverage of default payments — by NICL to RIL. Chargesheet also mentioned criminal offences with dishonest intention and causing wrongful loss totaling ₹147.41 crore to NICL and wrongful gain to the private telecom provider.[105]Two retired senior officials of National Insurance Company Limited and 11 others were awarded varying jail terms by a Delhi court in Jan 2014.[106]RIL plane grounded[edit]A business jet owned by Reliance Industries (RIL) was grounded by The Directorate General of Civil Aviation (DGCA) on 22 March 2014 during a surprise inspection, for carrying expired safety equipment on board; its pilot was also suspended for flying without a licence.[107]Krishna Godavari (KG) Basin gas[edit]The Reliance Industries Limited (RIL) was supposed to relinquish 25% of the total area outside the discoveries in 2004 and 2005, as per the Production Sharing Contract (PSC). However, the entire block was declared as a discovery area and RIL was allowed to retain it. In 2011, the Comptroller and Auditor General of India (CAG) criticized the Oil Ministry for this decision. The CAG also faulted RIL for limiting the competition in contracts, stating that RIL awarded a $1.1 billion contract to Aker on a single-bid basis.[108][109]Petition against Reliance Jio[edit]A PIL filed in the Supreme Court by an NGO Centre for Public Interest Litigation, through Prashant Bhushan, challenged the grant of pan-India licence to RJIL by the Government of India. The PIL alleged that RJIL was allowed to provide voice telephony along with its 4G data service, by paying an additional fees of just INR16580 million (US$280 million) arbitrary and unreasonable, and contributed to a loss of INR228420 million (US$3.8 billion) to the exchequer.[110][111]The CAG in its draft report alleged rigging of the auction mechanism, whereby an unknown ISP, Infotel Broadband Services Pvt Ltd, acquired the spectrum by bidding 5000 times its net worth, after which the company was sold to Reliance Industries.[112]