In 1947, Pakistan had 30 million people with per capita income of 100$. Agriculture accounted for almost 50% of economic output with hardly any manufacturing, as all industries were located in India. From thereon, Pakistan has come a long
way. Today with 170 million people, our per capita income in 2008 was 1000$ which was ten times more. Pakistan is the third largest exporter of rice in the world and producing enough food grains to feed its people. 3 million tons of rice is exported every year by Pakistan which is surplus to our requirements. Pakistan is also one of the five major textile producing countries in the world. So if we measure in relation to where we were vis-à-vis structure of economy, agriculture has come down from 50% to 20%. Therefore, out of total national income, agriculture’s contribution is just 20%, but instead of being deficient in food production
Out of every hundred rupees of our
national income, we consume 85 rupees and save only 15 rupees, which means
that the amount of money which is available to invest for economic growth and
advancement is too little. Because to grow by 6%, you need at least 24-25%
investment rate - and if you want to relyon domestic savings, your saving rate
should be 25%. India’s saving rate was about the same, but last year they
recorded 34% saving rates. China’s saving rate is 50%, sothis is the contrast as
to why we are in serious difficulty because as a nation this is a problem which we
have to recognize.
Till 2007-2008, 80% of our imports were
financed by our export earnings. This ratio has come down to only 50%, it may
go up to 60% but a gap of 40% of financing needs in order to keep with the
import level still exists. As a nation we prefer to use even the basic commodities
of foreign countries rather than locally manufactured goods. Unless we do not
change this attitude of preferring the imported goods we have to keep on relying
on outsiders to fill in this gap b/w our imports and exports. Relying on outsiders’
means that there are cycles, ups, and downs i.e. when things are good, one gets
financing, and when things are bad one starves for financing.
Fiscal deficit is the difference between the revenues which are collected in a year and the total expenditure incurred by the Government. Pakistan’s government takes away
20% of national income as its own. 80% is left in the private sector and 20% in
the hands of the government is spent on defence, debtservicing, development
on education, health, general administrationetc. The revenue generated is only
15% of the GDP at best, and in the worst days it is 12 to 13%. Out of the every
rupee of income received by a Pakistani, on average, tax paid is only 9 paisas
and 91 paisas remain with the individual. In 2007-2008, Pakistan’s fiscal deficit
was more than 7% which means its income or revenues were only 13% of GDP
whereas, expenditures were 20%. Therefore, fiscal deficits have to be financed
from somewhere, so how do you finance them; you either go again begging the
external donors, or to the State bank of Pakistan. In 1990, Pakistan’s share was
0.2% of the world trade. After 20 years it has come down to 0.12% in a very
buoyant world economy. World trade has been growing faster as compared to
the world output. India in the same period had doubled its share from 0.7% to 1.4%, while Pakistan isgoing the other way and that is the reason why
exports/imports imbalance isincreasing. We are nottaking advantage of the
opportunities which a buoyant world economy is providing. Pakistan is stuck with
only a few commodities – textiles, leather, rice, sports, goods and the surgical
goods. We have not entered the markets for more dynamic products. All our
exports are to a few markets – the USA,EU and the Middle East. So this narrow
export base and very limited geographical spread are not allowing us to expand
our share.
