Sindh’s per capita income slips: report

LAHORE: The per capita income in Sindh has slipped during the last 15 years, as Punjab has taken the lead; followed by Khyber-Pakhtunkhwa, according to a report on provincial economies prepared by former finance minister Dr Hafeez Pasha.
Speaking at the Institute of Policy Reforms, he stressed that each province must have a development and growth strategy for its economy.
However, planners are at a disadvantage, as Pakistan does not prepare provincial accounts, he said, adding that given paucity of data on sub-national economies, IPR’s research is truly exceptional.
In his presentation, Dr Pasha said that the federal and provincial Bureaus of Statistics should have undertaken preparation of data and accounts on provinces.
He felt that planning in Pakistan must reorient to a bottom-up approach, whereby provincial development plans must aggregate into a national plan. He presented estimates of provincial GDPs for 15 years between 1999/2000 and 2014/15.
The report reveals that Punjab has a 54 percent share in the national economy. Sindh has a share of 30 percent, KP 13 percent, and Balochistan three percent. Share of each province has changed in 15 years under review. The most pronounced shift is in KP whose share has increased from 11 percent in 2000 to 13 percent in 2015, whereas the share of Balochistan declined from 3.8 percent to 2.9 percent.
Looking at the productive sectors, Punjab’s share in agriculture production is 62 percent, Sindh 23 percent, and KP has a share of 10 percent. In industry, Punjab’s share is 40 percent; Sindh has a share of 42 percent and KP 14 percent.
The report reviews provincial growth rates across the three governments. During 2000/08 when the economy grew rapidly, Sindh was the best performing economy with high growth in large-scale industry. It is not surprising that provincial economic growth declined during the two succeeding periods of 2008-13 and 2013-15, with decrease in national growth rates.
The report also revealed that the economy of Sindh grows faster during periods of high national GDP growth. Punjab grows faster than other provinces during periods of slow growth. Throughout these periods, the KP economy has maintained a healthy rate of growth of five percent or above.
There are two major concerns. Growth in production of major crops in Punjab, which accounts for 75 percent of national value-added in these crops, has declined. This is an emerging structural problem for Punjab and national economies. Its causes appear to be water scarcity, diminishing returns from fertiliser use and land degradation. The report calls for immediate government attention to these concerns.
Deteriorating law and order in Karachi (coupled with power shortage) has slowed industrial growth in Sindh with its effect on the national growth. Since 2008, industry in Sindh has actually contracted, the report showed.
While the KP economy has performed well, the sustainability of its growth is open to question. Foreign remittances have largely driven KP’s growth, where 20 percent of the household income comes from remittances.
The corresponding figures for Punjab and Sindh are 10 percent and three percent, respectively. According to the report, KP has acquired the characteristics of a remittance-led service economy, with limited indigenous production base.
Balochistan has had the slowest economic growth where ‘real per capita income may have actually fallen’. Insurgency seems to be the major reason for this. Agriculture; however, has been buoyant in Balochistan.
Increase in provincial resources after the seventh NFC may have begun to have some impact on the province's economic growth rate.
The shifts in per capita income among provinces are profound. Employment has moved in a similar way. Between 2000 and 2008, Sindh had the highest growth rate of jobs of 4.5 percent. Currently, KP has the highest growth rate.
The report also revealed that with the increase in per capita income in KP, inequality among provinces has fallen, especially as Sindh has lost growth momentum in recent years. Balochistan remains a concern as slow growth may have increased inequality with other provinces.
Inequality in household income within each province is highest in Punjab and lowest in KP. Balochistan has the second highest inequality and Sindh is at number three.