SBP quarterly report
The Central Bank has released the third quarterly report of the last fiscal year on the performance of the economy in which the factors responsible for de-accelerated economic growth to 3.3 percent has been reflected threadbare which include insignificant increase in the agriculture and manufacturing sectors. Earlier the Economic Survey Book had revealed negative growth in large scale manufacturing, satisfactory increase in the production of small scale manufacturing and over one percent rise in the productivity of agriculture. The report has pinpointed the risks in external balance despite the appreciable increase in home remittance and falling imports and has predicted that still big financing gap will remain in foreign trade for which foreign currency loans will have to be acquired from bilateral and commercial sources. In the past loans from these sources has always been high interest bearing if commercial loans from China and the ones obtained by floating Sukuk Bonds are any guide.
Agriculture sector, which is still the main stay of national economy with its 20 percent share in the gross domestic product (GDP), is in the state of chronic crisis because of water shortages, its stealing and large scale wasting by big landlords; and unaffordable prices of inputs including high yield hybrid seeds, very expensive fertilizers, pesticides, insecticides and robbing tactics of small farmers of the actual price of their produce by middlemen in markets. Farming on the small and subsistence landholdings is no longer profitable as it used to be in the decade of 1960s. It is the small farmer who contributes in a big way to increase the production of various crops as he did in the shape of bumper cotton crop in 1989. Neither the agriculture sector packages in the past governments and nor the one approved by the PTI government will benefit much the small farmers. Great chunk of the concessionary credit is taken away by the feudal class depriving the small farmers of their due share of easy credit for buying agriculture inputs.
The composition of exports has always been tilted towards primary commodities like cotton, rice, wheat and wheat flour, sugar, and fruits. The prices of these commodities frequently fluctuate in the international market and the slowdown of global economy may reduce the export value of these commodities. The doors on the formulation of inventive and innovative industrial policy had remained closed since the implementation of deliberate and disastrous nationalisation policy of Z.A Bhutto government in1972.
It amply explains the reasons of Pakistan’s industrial base being stuck at the second generation technology and aversion to products’ innovations by the entrepreneurial class of the country. The moving away from planning and execution of power projects from renewable sources like hydel, wind; installation of very expensive imported fuel fired thermal power plants and shady power purchase agreements by the PPP and PML-N governments worked as the proverbial “ last straw on camel’s back” hindering the modernization and growth of industrial sector. These factors render the prospects of foreign direct investment bleak notwithstanding the exaggeratory claims that used to be made and are still made by PML-N government Federal Minister for Planning and Reforms AhsanIqbal about the windfall economic gains from relocation of Chinese industries and joint ventures with Chinese entrepreneurs under the CPEC frame work. Other developing countries like Bangladesh and Vietnam upgraded, modernized and expanded their industrial base with the application of fourth and fifth generation technology, skill development and vey low electricity prices.
These reforms enabled both the South Asian countries to achieve manifold increase in the exports of value-added products. Not a single cotton crop is grown in Bangladesh but its exports earnings from textile products alone are over $27 billion, S4 billion plus more than the total exports value of Pakistan. Will the PTI government introduce the reforms to reverse the willful and disastrous policies of the past governments, particularly lowering the electricity price when the staunch protector of the vested interest of IPPs owners Nadeem Babar has been appointed as advisor by the Prime Minister?