ISLAMABAD: A day ahead of laying the federal budget for the upcoming fiscal year in the parliament, the government, claimed that due to successful implementation of a comprehensive program of economic revival aimed at higher economic growth and macro-economic stability, Pakistan had seen a visible economic turnaround over the last five years,.
The Economic Survey for the outgoing fiscal year showed that the growth momentum remained above 5 percent for the last two years in a row and reached 5.79 percent in FY2018 which is 13 years high on account of a strong performance in agriculture, industry and services sectors which grew by 3.81 percent, 5.80 percent and 6.43 percent, respectively.
The highest growth in agriculture sector in last 13 years was achieved on the back of initiatives taken to improve the sector such as expansion in credit to agriculture sector along with agriculture Kissan Package, provision of better quality seeds including hybrid and high yield varieties and timely availability of agriculture inputs including fertilizer, pesticides etc.
Large Scale Manufacturing (LSM) also recorded a growth of 6.13% highest in ten years. Industrial sector growth improved by 5.80% the highest in ten years. Manufacturing grew by 6.24% highest in 11 years.
The performance of services sector witnessed a stable growth of 6.43% in last two years. Consumption is the largest component of aggregate demand followed by investment and net exports. During FY 2018, households’ average propensity to consume remained fairly constant at around 85.5 percent at constant prices and around 82.0% in current prices.
Contained inflation helped increase in consumption by private and general government. During July-March FY 2018, current account deficit remained $ 12.0 billion and is expected that it will cross $ 15.0 billion at the end of current fiscal year. The national savings and domestic savings as percentage of GDP remained almost at same level of last year.
National income remained less than expenditures during FY 2018 when compared with FY 2017 which resulted increase in saving-investment gap. The increase in saving-investment gap in turn resulted in higher current-account deficit. Gross Fixed Capital Formation (GFCF), considered as fixed investment stood at Rs 5,099.1 billion in FY 2018 compared to Rs 4,632.8 billion last year posting a growth of 10.1%.
The private sector GFCF posted a growth 5.2 percent as it increased to Rs 3,371.2 billion compared to 3,205.5 billion last year while the public sector GFCF increased to Rs 373.3 billion compared to Rs339.5 billion last year showing a growth of 9.9%.
The expenditure on GFCF incurred by federal, provincial and district governments has increased by 23.9%, 22.1% and 45.7%, respectively. During FY 2018, per capita income increased by 0.5 percent over last year to $1641.
Speaking at the launching ceremony for the Economic Survey of Pakistan, Federal Minister Planning Ahsan Iqbal said that energy, economy, elimination of extremism and education were the ‘four Es’ that PML-N had discussed in our manifesto. We created two plans ─ one was an immediate plan the other was our Vision 2025.
“The PML-N government faced major constraints and bottlenecks as a development framework was not present. Despite this, the government had, over the last five years, allocated Rs47 billion to higher education, built 1,750 kilometers in motorways, and added 11,000 megwatts to the power grid. We provided energy to industries so that the economy could grow. Record demand has been generated from [an increase in] energy in Pakistan” he maintained.
He said that the China-Pakistan Economic Corridor had become a reality today. Of a total investment of $46bn, $39bn was being used to build roads and infrastructure. We have used our own budget to curb terrorism, financing Operations Zarb-i-Azb and Raddul Fasaad.
Speaking on the occasion, Advisor on Finance and Revenue Dr. Miftah Ismail said the government couldn’t possibly have given a budget for just three months. What were we supposed to do? Raise salaries for three months, tell India to stop LoC firing for three months, and reduce taxes for three months? That is not how economics works. If we were to do this, it would have been a disservice to our country and we would not have been doing our jobs.
“The day the next government comes it has the right to change whatever it wants in the budget. Also, Ahsan Iqbal has left Rs100billion block for the next government to spend on development as they please. 95% of the same expenditures are faced by every government. Each government has to pay salaries and so on” he said.
Iqbal said that the provinces had to give a budget based on expenditures. They are given revenues which mostly come from the federal government. The federal government has to define the country’s economic policy for the next year. Through this, the industrialist decides the cost of production.