Economic survey of Pakistan has estimated that the manufacturing sector is employing 14 percent of the workforce, and contributing about 63 percent of taxes and making 25 percent of the GDP. Another equally neglected area is the agriculture sector that employs 45 percent of the workforce contributes 22 percent to the GDP and paying only 1 percent in income tax.
This sector requires urgent reforms in terms of redistribution of cultivable land, bringing the sector into the tax net and improving the lot of the less fortunate peasantry.
But added value of the crops jumped to Rs. Inspite of this increase in value, no additional taxes are forthcoming. Moreover, the substantial share of profits from agricultural proceeds is pocketed by landed gentry.
More often than not, they are at the driving seat of the political system of the state as well. The land mafia is running the political show of the country in a way that furthers its vested interests. They discourage social and infrastructure development projects in their areas rather fiefdoms.
The gist of the matter is that the present politico-economic order favours the perpetuation of vested interests of the elitist groups in Pakistan today. The informal sector of economy, like agricultural, small and medium enterprises and services sectors employees more than 60 percent of the workforce, it contributes about 35 percent to 50 percent of the GDP.
This sector has yet to see the necessary reforms and regulations. According to an International Labour Organization report, the workers employed in the informal sector are more vulnerable to exploitation.
They are paid low wages, maltreated, over-worked and are not covered by social security nets. Tax evasions are rampant. The economic and political administrators need to pay special attention to modernize and regularize this expanding sector. The services sector, nevertheless, is a redeeming feature of the struggling Pakistani economy. This sector has seen phenomenal growth over the decade. This sector telecom, banking, real estate development marketing—contributes more than 50 percent of the GDP.
Its share in jobs and taxes is 41 percent and 36 percent respectively. These sector employees are educated and trained workforce. A sustainable economic growth requires a balanced growth in all the sectors of the economy.
It further requires reforms in the total system, reforms in energy sector. Uninterrupted provision of energy is the fundamental theme of sustainable economic growth. The infrastructure is too weak to support the march of economic growth. Developmental projects always feature as the lowest priority of the rulers of the country. Budgetary deficit and balance of payment are always procured from the developmental funds that are already on periphery of the budgetary schemes.
In such a block scenario foreign investors are reluctant to try their luck in our part of the economic world. Foreign Direct Investment FDI is welcomed as an impetus to the sustainable economic growth of a country especially of a developing one.
Industries and other business enterprises are facing acute shortages of electricity and gas. In the face of bleeding energy problems the economy is merely surviving, not thriving.
The manufacturing units are lying dead across the country. Alternate energy resources are increasing the cost of production, thereby losing the competitive value of Pakistan exports. Foreign investors are reluctant to invest in such a grim situation of economic growth. It further projected that energy crisis has eaten up over Rs. The incumbent government has failed to bridge the gap between electric generation 15, and demand 20, MW. Reforms in energy sector are needed on war-footing, lest the socio-economic landscape slides into oblivion and darkness.
The story of FDI in Pakistan is the bulk of foreign investment goes into the services sector like telecom, Banking etc. But now it has touched lowest ebb-about m USD has been reported to have invested by foreign investors during the fiscal years Foreign investors are reluctant to invest in Pakistan mainly for the following resources; energy crises, high interest rate, security situation in country, slow economic growth rate, fiscal crisis in the west and bad governance and corruption at home.
Government generates revenues to meet their expenditures and finance public sector development projects through collection of taxes.
But the story to tax collection is quite dismal in Pakistan. Hence we are, more often than not, in short supply of funds to meet expenditures and complete development projects on time. Pakistan is one of the lowest ranked countries in tax-to-GDP ratio.
Tax evasion is very common phenomenon in the tax regime of Pakistan. This discovered gentry pay no taxes. The system of tax collection needs overhauling. The tax-net needs to be widened to cover all formal and informal sectors of the economy. The tax evasion must be dealt with penal liabilities. Corruption on the part of tax collector should also be brought to an end. A transparency International report gave another but interesting account of tax evasion. It is yet to be seen if the scheme helps widen the tax net and generate more funds.
The key to improve the economic outlook lies in increasing the tax-to-GDP ratio. Yet another cause of sluggish economic growth is the excessive borrowing of the present govt. The government is also borrowing from the State Bank and the commercial Banks, hence doubting the domestic debt-liability. The national debt currently stands at Excessive borrowing is made to meet the fiscal deficit which stands at 08 percent of the GDP or Rs.
The other Herculean task being done by borrowed money is to keep the balance of payment going. Substantial amounts of the revenue go into debt servicing and interest servicing. To cap the fiscal deficit, government has asked for international loans from the IMF and so-called friends of Democratic Pakistan forum.
The IMF finished its program in Pakistan last summer when government failed to implement the economic policy reforms as agreed upon between Govt. The so-called friends of Democratic Pakistan forum had made pledges to extend financial support to Pakistan but failed to honour their commitments. If the history and the experience there if anything to go by, foreign aids and debts have done more harm than good to the socio-economic and political landscape of the country.
The alternate solution lies in the domestic resources mobilization. The perilous law and order situation has hampered the economic activities across the country. Terrorism and suicide bombing in Khyber Pakhtoon-Khwa have dealt a severe blow to the provincial economy. Target killings in Karachi the commercial capital of the country, have also messed-up the socio-economic and cultural and political activities in the metropolis.
The bad law and order situation has two dimensions. First, terrorism and related incidents have caused a loss of about 60 Bn USD to the business and property over the last 10 years.
The toll of life is still horrific. Investors, particularly the foreign investors are reluctant to invest in such a volatile atmosphere when both life and property are in great perils secondly, expenditures on defence and security apparatus have increased manifold over the last decade. Thus precious funds and resources that would have been spent on social and human development projects are going to the state security apparatus. It is however, yet to be seen whether the strong security apparatus or the strong economy helps the nations to sail through rough waters!
Political stability is the first and foremost perquisite for sustainable economic growth. Weak and unstable political govt. Economy cannot grow in an uncertain political environment as political stability is necessary to boost private investment, create jobs and increase production. Bad governance has contributed significantly to the incidence of poverty and slow economic growth rate. A report published by the Dr. Mabbob-ul-Haq centre Lahore , titled: The trade deficit stands at This deficit is mainly because of burgeoning bill of petroleum imports.
Our total imports are about Instead of generating revenues, government has to bail-out them over time and again. Mismanagement and corruption have retarded this potential to earn profits. If we want to turn these enterprises into profitable ventures, we will have to fix the problems of corruption and mismanagement and rectify the structural and institutional fault-limits.
Organizational structure need to be downsized and reduce expenditures regulations need to be introduced to make them competitive with their international counterparts.
The pernicious effects of sluggish economic out-look have varied and multifaceted implications for the social and psychological development of an individual and a society. Both parties are fiercely secular this time around. ANP, which has its roots in Khudai Khidmatgars, the Congress Party and to a certain extent the Azad Pakistan Party of left-leaning populist ex-Muslim Leaguers who had formed the NAP in the mid s, has over the years become confined to the Pushtun ethnic constituency Showed next characters.
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