Expectations from a growing economy

Led by a fairly robust growth, Pakistan's economy has been showing signs of recovery but it has a long way to go to attain its inherent potential. It can be safely presumed that the economy is in a stage of transition. Yet the people expect the fruits of progress reaching them year after year.

The latest Economic Survey, a pre-budget document released Thursday detailing the performance of the economy in the outgoing financial year also provides the canvas for the forthcoming budget. The official claim of the economy's turn-around has raised expectations that the new budget would be people-friendly. This means that the burden of new taxation will be minimal.

According to the Survey, almost all the commodity-producing sectors have performed well. The growth in the services sector is noticeable. All this has led to the economic growth of 5.3 percent and the next year's target is expected at six percent. Ultimately the economic growth rate is projected to be taken to seven percent.  Finance minister, while unveiling the salient features of the Survey at a news conference, said that incentives for the agriculture sector would be continued and the volume of agro-credit enlarged. However, the disbursement of credit to the farmers ought to be fully utilised. The increase in industrial output and larger flow of investment should be a matter of satisfaction.

On the external side, foreign exchange reserves have visibly increased. Exchange rate is stable. Given this comfortable situation, it is reasonable to believe that the need for and dependence on foreign loans will continue to reduce. The ground seems ready to move towards greater self-reliance. At the same time public debt also needs to be brought down which will reduce debt-servicing payments which has emerged as the largest item on current expenditure.

Trade deficit is an area where some focused attention is needed. Import growth, though largely due to higher demand of plant and machinery, must be supported by a rapid increased in exports. It is on the export side that the government and the private sector will be required to concert their policy and action.

Finance minister said that allocation for social safety has been increased manifold. Inflation, he said, has been low. But looking at the price levels from the point of view of a consumer with modest income, it is felt that steps are required not only to stabilise the prices but bring them down wherever possible. The instrument of fiscal policy can play an important role in this regard.

 For the people, statistical data might not be easily comprehendible although it has its own importance. They feel that an expanding economy will result in higher incomes, opening of job opportunities and reduction in poverty. Their needs also include access to affordable education, health and transport facilities. Frequent loadshedding of electricity remains a perpetual problem. These areas certainly need greater attention.

At the end, it must be said that a broad consensus on basic economic fundamentals will help not only in consolidating the gains which the economy has achieved but put it on a regular path of growth and progress.