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The Economic Survey 2014-2015 released by the government on Thursday looks like a tale of missed targets. Key sectors like agriculture, large-scale manufacturing, investment and credit to private sector and exports did not show the recovery that was expected at the start of the year.
The end result of all this is that economic growth fell behind the target set up at the beginning of the year. The blame can be put on any number of factors but the fact of the matter is the kind of performance the economy has shown would require some basic structural changes in the overall policy direction.
Clearly, the agriculture sector needs to be given such incentives as would boost farm production both in absolute terms and per acre yield. Farmers, especially small farmers, have been complaining that market prices of certain commodities grown by them are unfavourable as compared to the cost of production.
As for large-scale manufacturing, the Survey says, that it also fell behind the target. Admittedly, investment has been low. Credit to private sector has not expanded in comparison to last year. It would only indicate that business environment needs to be further improved. The decrease in the growth of energy sector to less than one half against last year may be yet another reason for low industrial production.
On the positive side, the rate of inflation has fallen to the lowest in over a decade’s time. This is mainly due to fall in international oil prices during the year. The people expect that the government will avoid measures that impact the price level adversely.
The new budget should be particularly watchful of the fact that it does not disturb the price pattern to the discomfort of the common man.
The problem of a huge public debt seems to have worsened during the year. According to the Survey, the total public debt stood at Rs16, 936 billion. As much as Rs940 billion were added to the debt portfolio in the first nine months of the current
financial year.
This appears to be a matter of considerable concern. The debt servicing is now the largest charge on the government’s current expenditure.The problems in sectors like education, health and other civic amenities have remained unresolved. It is in this area that the provinces have to apportion their share of blame. These subjects deserve much more focused attention both at the Federal and the provincial level.
Every year, the government sets broad economic targets and initiates measures, especially in the budget, to create conducive atmosphere for their attainment. Lagging behind a number of targets itself raises fundamental questions. When the National Economic Council was fixing the growth target for the next financial year, the Prime Minister is reported to have emphasised upon its achievement.
In essence, two basic things look necessary. The economic targets that are set every year should be more realistic and less ambitious. Their monitoring should be strengthened and policy changes brought about when and where necessary. Hopefully, the story of missed economic targets will not be repeated.
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