Evaluating the economy

The Economic Survey released by the government on Thursday, has unfolded a mixed trend of economic gains made during the outgoing financial year and the challenges that lie ahead. It has been observed that economic challenges remain both on domestic and external fronts. Thus by listing the economic gains and the challenges, the Survey seems to have presented a comprehensive view of the state of the economy.

The government has claimed much credit for a high economic growth which has been recorded at 5.8 percent saying that it is the highest in the last 13 years. This has been possible due to expansion in energy sector, large investment in infrastructure and renewed confidence in private sector.

It has also been claimed that agriculture, industry and services sector have contributed to this growth. However, seen against the growth targets for various sectors, the actual output is lower in quite a few areas.

A major challenge listed by the Survey is the current account deficit mainly caused by high imports and low exports. This clearly underlines the need to discourage imports, wherever possible, and provide the required incentives to accelerate exports.

In this area, the basic requirement remains to be competitive in international markets for which supporting policy measures would be inevitable. The improvement in the balance of payments position would be a major task before the next government.

Another area of concern is the rising public debt. The first six months of the current fiscal year saw both domestic and external debt rising by a wide margin. The government also resorted to bank borrowing to meet fiscal deficit. This is one area where much closer attention is needed. There is no harm in borrowing for development purposes but at the same time it has to be ensured that the economy also acquires sufficient repaying capacity.

The Survey talks about increase in allocation for education. Similarly, it has also made a mention on of higher allocations to health sector. But if the share of these sectors is seen as percentage of gross domestic product, it remains woefully inadequate. Lately there has been much talk about lack of social sector services and the ground reality that came to light is that both the federal and the provincial governments have to be more attentive and action-oriented to the needs of the people in these areas.

According to the Survey inflation rate has been brought down. That is a healthy sign but compared to the purchasing power of low income groups, the prices, especially of kitchen items, call for further stabilisation. While poverty exists and social safety nets are also need to be widened, the relief that can be provided to the people is to keep the prices stable.

The problems facing the economy are well identified. That it is on the growth path and should lead to their resolution. So is the case with the problems being faced by the people. It is to be hoped that the in days ahead economic progress will translate into greater welfare of the people.