Friday, August 21, 2009
Economic Planning and Development
Pakistan is a developing country. The standard of living of the people of Pakistan as compared to the developed countries in very low. The facilities for housing, education and health are inadequate. The literacy rate is very low. Low savings and low investments are the main hurdles in the way of progress. The population growth rate, in comparison to the available resources, is very high. Like many other Third World Countries, Pakistan is one of the developing countries.
The natural and human resources of Pakistan are vase. There are numerous social, economic and international hurdles which hamper the efforts of exploring and exploiting these resources. For example, due to paltry income the capacity to save is negligible which renders the level of investment backwardly at a low level. Which the help of adequate and effective economic planning, many financial obstacles could be removed. Taking advantage from the experiences of developed nations, Pakistan too is striving hard to get rid of the economic and financial stringencies through economic planning and development in science and technology. Human and material resources could be used in a better way through economic planning. Thus, targets fixed for economic and social welfare could be achieved.
The purpose of economic (development) planning is that the people of a country should be provided with ample opportunities to lead a happy, prosperous and contented life. it is possible, only when there is considerable growth in the national product and the national income is raised to such an extent that it overtakes the population growth rate. At present, the population of Pakistan grows at an annual rate of 2.6 percent which means that each year provision for food, clothes, education, health and other facilities, has to be made for three million more people. The purpose of all the development schemes in Pakistan is to increase the national income to such an extent that even if the present rate of population growth persists even the total development action remains undisturbed. It should be remembered that if the population growth rate is more than the rate of national income growth then the per capita income would fall considerably which will result in the slow pace of economic development. The economy of Pakistan can hardly afford to bear it. Therefore, all our efforts are directed towards achieving progress in science and technology for accelerating the pace of economic and financial development. The Eighth Development Plan (1993 – 2008) reflects these objectives.
Economy of a state is just like a living body. There are many aspects of it such as agriculture, industry, trade and commerce, sources of transportation and communications, constructions, electricity and gas, housing, sanitation, health etc. etc. Economy works just like an integrated whole. Through development schemes different segments are directed towards progress at a particular rate and in a well-connected way, towards a determined destiny for ensuring growth in economy at a particular pace.
Political Instability: The political instability, lack of proper planning, heavy taxes etc are also responsible for the lagging behind of manufacturing sector. Since partition, the political system of Pakistan has remained unstable. Frequent changes in the government have been taking place until now. There were only two long period governments, but these governments were run by military men, while in this age of democracy all over the world, people do not like Martial Law because investors remain hesitant in making investment in the industrial sector.
Government Measures for Industrial Development:
Since independence, our government has realized the importance of the industrial sector. That is why, from time to time, many steps were taken by different ruling parties for the development of industrial sector which are as follows:
1. Establishment of Financial Institutions:
Many financial institutions were established for provision of finance to industrial sector. These are given as follows:
(I) Pakistan Industrial Development Corporation (PIDC): Pakistan Industrial Development Corporation was established in 1950. It assumed operation in 1952. The purpose of PIDC was to invest in those industries in which private investors were hesitating to invest. It was set up with an authorized capital of Rs. 10.00 million divided into 100,000 shares of Rs. 100 each. PIDC, from 1952 to 1974, expanded the industrial base and developed heavy industries and completed 60 projects e.g. fertilizer, shipbuilding, jute mills, cement factories, chemical plants and coal mines etc.
(II) Industrial Development Bank of Pakistan (IDBP): IDBP was established on August 1, 1961. The bank provides medium and long term loans to the industrial sector. The main objectives of establishing this bank was to grant credit to the projects which use indigenous raw material and are technically feasible and export oriented. Now it offers a full range of commercial banking services.
(III) Pakistan Industrial Credit and Investment Corporation (PICIC): Pakistan Industrial Credit and Investment Corporation was established in 1957. It has a paid up capital of Rs. 19.63 million. PICIC advances loans to firms for a period of 7 to 15 years. The loan is given in Pakistan and foreign currency to large industries for the purchase of fixed assets. The loan is paid in instalments as the project advances.
A new scheme of Merchant Banking has been started by the facility of opening of cash, letter of credit, provision of working capital, export financing equity, long term financing in local and foreign currency in the form of a package deal provided by the same bank.
(IV) Investment Corporation of Pakistan (ICP): The investment Corporation of Pakistan was established in 1966. The authorized capital of ICP was Rs. 200 million which was mainly subscribed by State Life Insurance and the Federal Government. The main objectives for the establishment of ICP are as follows:
1. To develop a sound capital market in the country.
2. To broader the base of equity investment.
(V) National Development Finance Corporation (NDFC): NDFC was set up in 1973. Its main objective was to provide finance to industries in the public sector. NDFC not only helps in the establishment of industries in the public sector, but it also assists in balancing, modernization and expansion of these industrial units. Under certain conditions, the Corporation also finances industries in the private sector. NDFC provides finance and project assistance to boost up industrial expansion and also to raise the productivity level in the public sector as well as private sector.
(VI) National Investment Trust (NIT): The National Investment Trust was established in 1962. The trust was set up to mobilize saving of the people and provide finance for the expanding needs of the corporate sector. The paid up capital of the Trust is Rs. 1.2 million and its main office is in Karachi. NIT has made investment in cotton textile, woollen textile, sugar, power engineering, transport and communication. It has switched over to interest free banking since 1979. It has played an effective role in the development of capital market in Pakistan. It provides underwriting cover to equity buying and selling in the stock market.
(VII) Bankers Equity Limited (BEL): BEL started its operation in January, 1980. Its paid up capital is Rs. 334 million which provides a strong capital base for investment. BEL is a public limited company which meets the working and fixed needs of the industry. It offers the entire range of services excluding direct equity investment, underwriting of public issues of shares, financing in both local and foreign currencies etc.
2. Establishment of Industrial Estates:
To encourage industrialization estates are designed in different cities throughout Pakistan. These industrial estates are provided with water, gas, power, roads and communication facilities. Residential facilities to workers are also provided. By establishment of these industrial estates, many problems of industries are solved. These estates are located in Karachi, Hyderabad, Larkana, Sukkur, Lahore, Gujranwala, Sialkot, Gujrat, Peshawar and Quetta.
3. Industrial Research and Training:
Lack of trained and skilled labour is a major obstacle in the way of industrial development. To meet the requirements of research and training Science and Industrial Research Department has been established since 1949. Institute of Personnel Training was attached to Pakistan Industrial Development Corporation and World Labour Organization. Under the research council, research laboratories are operating in Karachi, Lahore and Peshawar.
About : Raja CRN
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