Pakistan Economy - News & Updates - Archive

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Credit to agriculture rises by 25pc​

KARACHI, April 22: Penetration of commercial banks into agriculture sector has rapidly increased as their share in credit to agriculture sector has reached 70 per cent.

The State Bank of Pakistan on Tuesday reported that credit to agriculture increased by 25 per cent during the first 9 months of the current fiscal year.

The total disbursement of credit to agriculture sector reached Rs138.6 billion during the said period which was Rs27.4 billion higher than the corresponding period of last year.

The agriculture sector has been the lowest recipient of credit from commercial banks despite its high contribution to the GDP. The agriculture sector is 23 per cent of the GDP.The change was also noted in the pattern of disbursement as not only the five big commercial banks increased the share in credit to agriculture sector but other domestic banks also contributed significantly higher than last year.

The State Bank reported that overall credit disbursement by five major commercial banks including Allied Bank Limited, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited stood at Rs65.125 billion during July-March, compared with Rs48.962 billion during the corresponding period last year, depicting an increase of Rs16.163 billion in absolute terms or 33.01 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, disbursed Rs39.561 billion in the July-March period, compared with Rs40.881 billion last year, while disbursement by Punjab Provincial Cooperative Bank Limited stood at Rs3.935 billion, compared with Rs5.270 billion last year.

Besides, 14 domestic private banks also loaned a combined Rs29.976 billion during July-March period, up 86.39 per cent when compared with Rs16.082 billion disbursed last year.

The SBP has set a target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year, showing an increase of Rs40 billion.

During the last fiscal year, commercial and specialised banks had disbursed a total of Rs168.83 billion to the agriculture sector.

Credit to agriculture rises by 25pc -DAWN - Business; April 23, 2008

 

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Number of ‘food insecure’ people rises to 77m​

RAWALPINDI, April 22: Households in Pakistan are devoting a larger proportion of resources to food and cutting back on consumption, with the number of food insecure people increasing from 60 million to 77 million in 2007-08, resulting in increased levels of malnutrition.

The International Fund for Agricultural Development (IFAD) has issued a short paper with the objective of improving the understanding of what soaring food prices at the global level mean for poor rural people across the developing world.

The paper reveals that the prices of basic food commodities have increased rapidly over the past three years. In only the first quarter of 2008, wheat and maize prices increased by 130 per cent and 30 per cent respectively. The paper is based on a questionnaire sent to IFAD country offices and responses were received from over 40 countries, including Pakistan.

Rice prices, which increased moderately in 2006 and in 2007, rose 10 per cent in February, 2008, and a further 10 per cent in March. The threat to food security in developing countries is on the rise, the paper says.It is clear from the responses received that in almost all developing countries food prices have increased during 2007 and early 2008. In some cases, prices have more than doubled, and in some countries there have been absolute scarcities of food in local markets. Yet it is not immediately apparent that poor rural people face a single and uniform crisis of food prices.

On the contrary, the situation varies considerably from one country to another and in the urban and rural areas of each country. Not only does the extent of the price hikes differ enormously but also the factors shaping these prices vary profoundly. Feedback from many countries suggests that increasing fuel prices are a major driving force behind rising food prices. This has affected both input prices and transport costs. But in the final analysis, food prices are ultimately determined – today as they have always been – in large part by production levels and in a number of countries rising prices reflect, above all else, unfavourable agro-climatic conditions, the paper says.

In the most countries, IFAD’s target group – poor rural people – are both sellers of food commodities and buyers of foodstuff, at different times of year. Typically, they sell immediately after harvest to meet their immediate cash requirements and buy food in the months prior to the next harvest.

In all regions, and in most countries, prices paid to food producers have increased over the past year. The extent to which they have increased varies considerably country by country and crop by crop.

Number of ‘food insecure’ people rises to 77m -DAWN - Top Stories; April 23, 2008

 

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Rice exports to reach $4bn if ban not imposed ​

Thursday, April 24, 2008

ISLAMABAD: As the government faces huge twin deficits, rice exporters hope that they can fetch over $4 billion in exports, provided the government does not ban rice exports.

In a meeting with the Finance Minister Ishaq Dar on Tuesday night, representatives of rice exporters assured the government that their association would come up with a new mechanism, which would avert any future crisis by ensuring the availability of rice in the local market, Rice Exporters Association of Pakistan (REAP) Chairman Haji Muhammad Azhar Akhtar said while talking to The News.

Export figures will definitely double next year if the government does not curb export of the commodity, he hoped. Rice exports would touch $4 billion, while last year it was only $1.2 billion and were expected to remain at $1.5 billion this year.

Increasing prices of the commodity have made rice exporters quite optimistic to achieve this export target. It is also due to major rice producing countries being out of business because of domestic constraints, the REAP chairman said.

“We have accepted all the demands of the government and the government has accepted the demands from our side. However, the association is fine-tuning the modalities for making trade more liberal and transparent,” Haji added.

“Although some of our members have reservations about stocking one million tonnes of the commodity without pledging or taking finance from the government. We are doing it purely for the national interest,” REAP Chairman stated.

The Association is also working on setting up ‘fair price shops’ throughout the country. This will ensure supply of rice in the local markets at affordable prices, Vice chairman REAP, Abdul Basir said.

Besides providing nearly 800,000 tonnes of rice as strategic reserves, they would also provide 200,000 tonnes at less than 10 per cent of the market price for USC operation, Basir added.

Pakistan has a total requirement of 700,000 tonnes basmati rice and 1.5 million tonnes of broken rice, whereas it had an estimated production of 5.5 million tonnes for this year.

Rice exports to reach $4bn if ban not imposed

 

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HBL declares Rs4.3bn profit, Engro $819m ​

Thursday, April 24, 2008

KARACHI: Habib Bank has announced a consolidated net profit of Rs4.3 billion for the first quarter ended on March 31, 2008. This is 29.6 per cent higher than Rs3.3 billion that the bank recorded in the corresponding period last year.

The Board of Directors of HBL, at their meeting held here on Wednesday, have recommended no dividend, bonus, rights or other entitlement for shareholders, according to a notification by the bank dispatched to KSE.

Earning Per Share (EPS) of the bank enhanced to Rs6.17, from Rs4.74 EPS last year. This growth was mainly registered due to high mark-up and non mark-up interest income, which rose by 21 per cent to over Rs17 billion, against over Rs14 billion in the same period last year. On the provision front, the bank continued to recognize higher provisions in this quarter as well. The total provision and write-offs were recorded at Rs436 million as against Rs353 million in the same period last year.

On the other hand, operating expenditures of the bank remained more or less stagnant and stood at Rs4.7 billion, up by a mere five per cent from Rs4.5 billion in the last corresponding quarter.

Engro Chemical earned Rs819 million profit after tax in the first quarter ended on March 31, 2008, 153 per cent up from Rs323.5 million last year.

“This increase has been depicted on the back of massive increases in urea and DAP prices, compared to the same period last year,” reported JS Research House. Accordingly, the basic and diluted EPS of the Company surged to Rs4.23, from Rs1.81 in the first quarter of the last fiscal year.

Net sales of the company were recorded at Rs4.6 billion versus Rs1.9 billion in the same period last year, depicting an increase of 138 per cent on year-on-year basis.

HBL declares Rs4.3bn profit, Engro $819m

 

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Delay in TAPI project doubled its cost: ADB​

ISLAMABAD: The Asian Development Bank (ADB) has warned that the delay in the materialisation of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline has escalated the cost of the project from $3.3 billion to $7 billion, well-placed source told Daily Times on Wednesday.

The country director of Asian Development Bank, Peter L Feden, during the two-day meeting of steering committee on TAPI that started on Wednesday, warned all stake holders of the TAPI gas pipeline project that further delay in the implementation of the project would cause further escalation in the cost of the project.

Source said that the representatives of four countries, pledged to sign Frame Work Agreement (FWA) on the project in which the gas pricing, transit fee and security measure would be settled down.

Source said that during the concluding session of the TAPI gas pipeline deal talks on Thursday (today), the security situation, transit fee and gas pricing issues would come under discussion. They added that after finalisation of the issues of transit fee, gas pricing and security situation in Afghanistan, four countries representatives would sign FWA on the TAPI gas pipeline project on Thursday.

Source said that the country director of Asian Development Bank showed concern over the delay of the project and sought early implementation. He said that the cost of the project had jumped to $7 billion present from $3.3 billion. He assured all stakeholders of the project that ADB would fully finance it.

“We don’t want more delay in the implementation of the project and want immediate implementation,” source said quoting the ADB country director.

Pakistani and Indian sides insisted on Turkmenistan, during a meeting, to provide the certification of the gas reserves to move ahead on the project. During the meeting, it was decided that Pakistan would get 30 billion cubic meter gas annually under the project and Indian Petroleum Minister also committed to get 30 billion cubic meter gas annually. However, Afghanistan decided to get 5 million cubic meter gas annually under the TAPI project, sources added. Sources said that the gas pipeline would come from Afghanistan via Halmand and Kandhar to Pakistan.

Petroleum Minister of Turkmenistan, Dr BayMurad Haja Muhamedov, briefed about the gas reserves and said, “Turkmenistan had gas reserves of 8 trillion cubic meters”. He said, “the documented certification about the gas reserves would be provided to all stakeholders within next two months.”

Sources said that he assured commitment to provide the gas to Pakistan, Afghanistan and India without any disruption. He said that Dulatabad had enough gas reserves and the exploration for more gas reserves was in progress, therefore audited document of gas reserves would be provided within two months.

Sources said Petroleum Minister of Afghanistan, Muhammad Abrahim, told the meeting that they had planned more than 1,000 industrial units near the route of TAPI gas pipeline they would need gas to run those industrial units.

Afghan minister said that 300 industrial units near the route of TAPI gas pipeline had already been established and therefore the early implementation of the project was essential to meet their requirements.

Daily Times - Leading News Resource of Pakistan

 

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Country’s traditional exports grow by 17 percent​

KARACHI: Contrary to the disappointing export show of textile goods, country’s traditional export items made substantial gains during the first nine months of current year by posting 17 percent growth over the corresponding period of previous year.

Beginning the current fiscal year with a declining trend, export of these items recovered in last two to three months and helped to avert, to some extent, the shortfall in the overall exports caused by dismal performance of textile products.

The traditional items include: rice, sports goods, footwear, leather goods, surgical & medical equipment. The total export of these items stood at $1.948 billion during July-March of this fiscal year over $1.670 billion in the same period of previous year, official statistics released on Wednesday indicated.

Export of rice jumped to $956.376 million during this period from $834.871 million in the corresponding period of previous year, depicting a growth of 14.55 percent. The export of Basmati rice grew by almost 33 percent whereas export of other varieties of rice dipped slightly by 2.38 percent.

Sports goods export posted almost four percent increase to $214.446 million during this period against $206.312 million of the previous year. Football export declined by 6.14 percent, gloves up by 69.38 percent whereas other sports items declined by 21.47 percent.

Footwear exports also grew by almost three percent to $87.073 million in the first nine months of 2007-08 over $84.752 million.

Surgical and medical equipment exports were up by 35.33 percent to $175.739 million over $128.858 million in the last fiscal year. The export of leather manufactured goods also grew by 24.08 percent to $515.065 million against $415.098 million in the previous year. Leather garments and gloves posted 42.49 percent and 1.88 percent growth, respectively during this period.

Analysts termed the growth in export of these items encouraging and said, “government should focus more on boosting the export of these items as well as of other developing areas to boost the country’s export sector.”

“In view of stiff competition faced by the textile sector in international market any substantial jump in the export of textile goods seems difficult to be achieved,” analysts said adding that there is major potential for export of other items from the country to make up the losses caused by declining export of textile goods.

“Much relies on the new government on how it goes for increasing the exports, and major focus would be on the new trade policy”, they added.

Daily Times - Leading News Resource of Pakistan

 

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Saudi Arabia to finance projects of $473 million​

ISLAMABAD: Saudi Arabia has agreed to finance over ten projects amounting to $473 million under Saudi Fund for Development (SFD) aiming at providing concessional loans for infrastructure projects in social sector.

“Pakistan holds Saudi Arabia in high esteem and we greatly appreciate the continued economic assistance extended to Pakistan” said Senator Ishaq Dar, Minister for Finance, Revenue, Economic Affairs and Statistics in a meeting with Ali S Awadh Asseri, Ambassador of Saudi Arabia Wednesday.

The assistance of establishment of SFD for providing concessional loans for infrastructure projects in social sector such as health, education and water supply in rural areas were also appreciated. Under this facility Saudi Arabia has agreed to finance over ten projects amounting to $473 million. Out of this, projects worth $286 million are on going project. The remaining projects are in the pipeline.

The major projects being financed under this facility include, Makran Coastal Highway, reconstruction of AJK university, government hospitals, educational institutions and hospitals in AJK and NWFP.

Asseri assured Saudi government’s full cooperation for the democratic government. He said Saudi Arabia wants to see stable, strong, prosperous and democratic Pakistan and would continue to enhance its cooperation at bilateral and multilateral level to promote brotherhood between the peoples of the two countries.

Senator Ishaq Dar appreciated one time Saudi oil facility of $300 million to offset the impact of oil import bill due to the increase in international oil prices.

Pakistan appreciated Saudi pledge of $573 million as assistance for earthquake. Out of this amount $133 million was grant for the development projects in earthquake affected areas.

Daily Times - Leading News Resource of Pakistan

 

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UK firm to add 1200MW power in Pakistan​

ISLAMABAD: International Power (IP) of UK has planned to add 1,200MW power in Pakistan to overcome power shortfall that stands at around 3,000 MW, causing series of load shedding in the country.

IP has planned to invest more in Pakistan to expand KAPCO power plant by 400MW and Uch power plant by 600MW to meet the future growing demand of electricity. This was stated by Vince Haris, Regional Managing Director (Asia) of International Power, UK who called on the Federal Minister for Water and Power, Raja Pervez Ashraf, here in his office.

He said Pakistan has become an attractive power investment destination and stated that the company has also decided to invest for a 200MW project near Sialkot, which would be completed on fast track basis. He also shared the future investment strategy for power generation expansion in Pakistan with the minister wherein local and imported coal projects are a high priority.

The minister appreciated the confidence of IP in Pakistan and asked to look into the possibility of investment in indigenous coal fired generation. He said that power sector has great potential and the government would facilitate the investors in this sector and provide all assistance and cooperation. It may be mentioned here that IP investment holdings in Pakistan comprise HUBCO (1292MW), KAPCO (1638MW) and Uch (586MW).

Daily Times - Leading News Resource of Pakistan

 

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‘Pakistan will excel in livestock production’​

LAHORE: Pakistan will be a prominent focal point in the world with regard to livestock production in the coming days, said Governor Lt Gen (r) Khalid Maqbool.

He was addressing at the concluding session of a two-day International Livestock and Poultry Congress on Wednesday. The governor said that America and Europe had set up heavy machinery industry instead of dairy farming, due to which prices of food items were increasing rapidly. “It is a golden opportunity for us to enhance our potential in agriculture and livestock and get the share of the international market,” he added.

Maqbool said that Pakistan could prosper through breeding of cattle on a commercial basis. He said that there was a lot of potential for the promotion of sheep, goats, fish and chickens in the country, and 14 billion eggs had been brought to the market from the existing hatcheries of Pakistan in a year. He said that government was paying special attention to the promotion of the livestock sector.

Daily Times - Leading News Resource of Pakistan

 

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WAPDA looking into generating 25,000MW​

LAHORE: The Water and Power Development Authority (WAPDA) is carrying out feasibility studies and assessing engineering designs for a number of hydropower projects with a cumulative electricity generation capacity of more than 25,000 megawatts, and most of these studies are nearing completion, WAPDA Chairman Shakil Durrani said on Wednesday. Addressing a delegation attending a management course at WAPDA House, Durrani gave a briefing on the water and power situation in the country. He said that after its bifurcation in October last year, WAPDA had become more focused on harnessing the country’s hydropower resources.

Daily Times - Leading News Resource of Pakistan

 

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Britain grants 30m pounds as budgetary support to Pakistan ​

ISLAMABAD: April 24, 2008, The British Government has decided to provide 30 million Pound Sterling as budgetary support to Pakistan before the end of the current financial year.

This was stated by Robert Brinkley, British High Commissioner during a meeting with Finance Minister Senator Ishaq Dar here on Thursday.

He said that British assistance to Pakistan would be doubled to Pound Sterling 480 million gradually over three years under arrangements between the two governments for long term development partnership for ten years.

The assistance would be utilized for reducing poverty, improving financial management and fortifying the principles of democracy.

The two sides agreed to put in place a mechanism to make the assistance performance oriented.

Economic cooperation for high quality technical capacity development, reducing poverty, strengthening financial management and accountability, increasing incomes of the poor, service delivery in education and health under countries assistance plan to achieve Millennium Development Goals consistent with PRSP and MTDF was also discussed.

Ishaq Dar emphasized the need for DFID to expand their operation to other parts of the country especially far flung areas of Balochistan, Sindh and Fata under the upcoming country assistance plan.

He informed the British High Commissioner that his team was in the process of formulating tools of financial management to induct transparency in the system. He said that a council of economic experts would work on mechanism of targeting pro-poor measures.

Pakistan also sought British assistance for evolving coherent, uniform and credible system of compiling statistics and British support for the next census.

Britain grants 30m pounds as budgetary support to Pakistan : Business Recorder | LATEST NEWS

 

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1.5 million tons of wheat to be imported ​

ISLAMABAD (April 24 2008): The government will import 1.5 million tons wheat and procure 5 million tons locally to address the swelling flour crisis in the country that has deepened the miseries of the inflation-ridden masses. This decision was taken by the Cabinet in its meeting here on Wednesday, chaired by Prime Minister Yousaf Raza Gillani.

The Cabinet tasked the Secretaries' Committee, already established under the Finance Minister, to take up the issue of wheat procurement, supply, and import and to consult all stakeholders and suggest measures to be incorporated in the short and medium terms.

Briefing newsmen after the meeting, Minister for Information Sherry Rehman said that the Cabinet was given a detailed briefing about flour and energy crises in the country by the concerned ministries.

The Ministry of Water and Power briefed about its emergency, and short- and long-term plans to address the prevailing power crisis, affecting the industrial growth and the households. There would be no load shedding in the country by next three years, the meeting was told, and that 310 MW had already been brought into the system by conservation, and more 510 MW would be achieved by the end of this month.

She said that the Cabinet was informed that not a single penny was invested by the previous government in power generation, and only 7000 MW existed in the system, of which 5000 MW were set up by previous governments led by Benazir Bhutto.

About accountability, she said that those who plunged the country into crisis would be held accountable before the Public Accounts Committee (PAC) of the Parliament urging stakeholders (public) to use their right of public petition process to make the issue more forceful.

The Minister said that arrangements would be made for live coverage of the proceedings of Parliamentary committees in a bid to communicate accurate situation to the people.

Giving details about judges issues, she said a committee comprising six members, three from each party, was constituted that would meet on Thursday to finalise the modalities of judges' reinstatement in line with Murree declaration. The committee, being represented by Raza Rabbani, Sherry Rehman, Rehman Malik from PPP and Nisar Ali Khan, lshaq Dar and Muhammad Asif from PML-N would also hold meting with legal fraternity.

She said it was decided in the meeting that a resolution for seeking UN probe into the assassination of Benazir would be forwarded soon by the Foreign Ministry after finalising.

She said that the Prime Minister told the meeting that it would deliberate on the 100-day action plan. Referring to incidents in Lahore and Karachi, the Prime Minister regretted that despite the condemnation of what happened to Dr Arbab Ghulam Rahim and Dr Sher Afgan, widespread violence in Karachi was unleashed. The government would not tolerate any conspiracy to destabilise democracy through violence, he added.

The Cabinet approved an MOU with South Africa for cooperation in combating illicit trafficking of narcotics, and with Cuba on establishment of Pakistan-Cuba Joint Economic Commission to enhance bilateral economic cooperation.

Business Recorder [Pakistan's First Financial Daily]

 

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Cotton output target missed by 2.7 million bales ​

KARACHI (April 24 2008): The country has missed both its original and revised cotton production targets by about 0.2 million and 2.7 million bales respectively due to pest attack and delay in action by concerned officials. Despite three times revision of production target the production would not be more than 11.4 million bales.

However, the final data by Pakistan Cotton Ginners Association (PCGA) would be released during next week, Sources said. Another peculiar thing occurred during the current year, The ginners have cut the average weight of cotton bale from 170 kg to 155 kg. Therefore, a bale is some 15 kg less than the usual bale. Thus, if the cotton production of 11.4 million bales is converted into standard bales, then overall production would come to about 10.6 million bales.

The PCGA's last report regarding cotton production, issued on April 4, 2008 showed that till April 1, 2008 11.33 million bales had arrived in ginning factories. However, report for fortnight ending on April 14 has not been issued due to nominal arrivals of Phutti in the ginning factories.

"The PCGA would conduct its final survey next week for the collection of final production data. However, during the last 20 days of April only some 25,000 bales have arrived in ginning factories and at the end of the current season production would not be more then 11.4 million bales," said a trader Ghulam Rabbani.

He said that during the current season, first time in the history, Ministry of Food Agriculture and Livestock (Minfal) allowed sowing of Bt cotton in the country to get more production, but it failed to control the attack of pest.

He said that mealy bug damaged some 15 percent crop across the country comprising some 11 percent in the Punjab and 4 percent in the Sindh provinces. Cotton was cultivated on 31.8 million hectares in the country and Bt coton was sown on only one million hectares area, Rabbani said.

"In mid-September we projected that the country would miss its cotton production target, which was rejected by the government, and Minfal claimed that cotton crop was well progressing," he said. He said that decline in cotton production necessitated cotton import and compelled that government to spend more foreign exchange reserves for it.

Business Recorder [Pakistan's First Financial Daily]

 

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Work on both Tapi, IPI gas lines to be on fast track ​

ISLAMABAD (April 24 2008): All parties to Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline have agreed to make the project a reality on fast track basis and complete the modalities for it side by side with India-Pakistan-Iran (IPI) gas line.

Sources said that the Indian side is participating in the talks with a clear indication to stay on board for both Tapi and IPI simultaneously. Its Oil Minister Murli Duara is in Pakistan to participate in the talks being held here on the project for the last three days. The ministerial level talks on Tapi are going to conclude on Thursday and their outcome is likely to be announced by the teams' leaders at a press conference at a hotel here.

An official, part of Pakistan's team, told Business Recorder that talks held so far on Tapi were very fruitful and provided a clear vision for moving forward to complete the project on fast track basis. He said the project was economically feasible as it can supplement the interested parties' efforts to meet their growing energy demands from external sources in the future.

According to him, the Turkmen side had provided a certification showing adequate gas reserves at Daultabad gas field to ensure continuous supply for Tapi for at least 30 years.

Gas reserves certification was demanded by Pakistan in the last steering committee meeting held in Islamabad some one year back. The law and order situation in Afghanistan is another question mark for Tapi. Pakistan and other parties to it want a clear guarantee from Afghanistan for foolproof system for protection of the pipeline. The Tapi talks would be followed by a fresh round of bilateral talks between Islamabad and New Delhi on IPI.

Business Recorder [Pakistan's First Financial Daily]

 

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'India's direct trade volume with Pakistan amounts to $2 billion' ​

ISLAMABAD (April 24 2008): Major reforms in infrastructure, education, business climate and efficiency in public sector expenditure in India have been instrumental to a great extent, in raising potential output growth.

This was the crux of special lecture on "Economic Reforms and India's economic performance" by Dr Rajiv Kumar, Director and Chief Executive, Indian Council for Research on International Economic Relations (ICRIER) at a local hotel here on Wednesday.

The trade volume with Pakistan directly amounts to 2 billion dollar but via other routes such as Dubai, it might go up to 7-9 billion dollar. India's tax to GDP ratio is low (16 percent) as compared to average in developed countries (35 percent).

There was a tremendous shift in economic integration with the rest of the world from 1980's onwards, though India still faces economic challenges in the face of post-reform economic development.

The notion of self-reliance has been challenged, as the trade deficit grew from 19 percent of GDP in 1990-91 to more than 50 percent in 2007, but that is bridged with entrepreneurial and other remittances inflow from abroad, he opined.

He said one of the reasons could be the reduction in real interest rate as compared to rest of the world. It has a fair bit of impact of all global trends, eg there is negative relation of GDP to international oil prices. But that also shows week planning on the part of alternate energy sources development, as the real oil prices were the highest in 2006 after 1974.

Share of consumption fell in 2000, but still higher than in China. High growth driven by domestic investment, consumption and net exports in China, while net exports contribution was negative in India from 2001-07, he added.

Services sector has the highest share in economic growth of India (more than 61 percent) although agriculture being the major source of employment has only 18 percent.

He said Manufacturing growth rate was higher than services sector in 15 out of 31 quarters from 2000-01. Industrial growth subject to government price control, was lower than those firms, where prices are market-determined.

Analysing the employment situation in India, Rajiv said that overwhelming proportion of workforce is in the fast shrinking agriculture sector, as there is limited labour absorption in the booming services sector. Continued growth in manufacturing calls for employment growth. However, job opportunities grew during 2000-05 in all sectors and 61 million new jobs created during the above mentioned period.

Commenting on Balance of Payments (BoP) he said "widening trade deficit was compensated by rising invisibles surplus. Huge capital inflows continuing and to cross 9 percent of GDP this year. Trend shows that mounting gap represents lost opportunities to raise investment levels. Hence reforms were necessary to raise absorption capacity.

Now the direction of India's trade is major shift towards China. To a question Rajiv replied that there are income imbalances. Performance for reducing poverty, which is 24 percent is not satisfactory.

Responding to a question on role of education and infrastructure in alleviating poverty, he said "poor are intelligent enough to reap fruits of development if given opportunities. Rural infrastructure programme did not achieve in terms of poverty reduction. Money spent on education and infrastructure help the poor far more. This is why they want my (Rajiv) reforms agenda, he maintained.

Democracy is the key strength to overcome external pressures as it distributes resources on the basis of equity, balance.

With all the shortcomings quality of life has improved as 80 percent of the population in India earns 2.5 dollar a day, quoted from Dr Arjun Singh Gupta, but it is a fact.

To a question on rural poverty Rajiv commented that urban poor are more in trouble. Agriculture remains in India a controlled sector with heavy subsidies. Liberalisation would bring better results in the long run along with elimination of the role of middleman who takes major chunk of the profit.

Lastly, he concluded Information Technology (IT) revolution in India was a private sector endeavour, adding that when Chinese visited Banglore they complained to Asian Development Bank (ADB) that government has not briefed us on its IT policy. In fact there was no IT policy, private sector achieved all this. Shahnaz Wazir Ali (MNA) reaffirmed the four point reforms for Pakistan's current civilian democratic government.

Business Recorder [Pakistan's First Financial Daily]