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Sunday, 31 July 2011

Define planning and discuss the role and importance of planning in the less developed or developing countries

The meaning of economic planning differ from country to country and person to person. Keeping in view the various definitions we can say that aim of all the plans is to utilize the available resources more effectively achieving the well defined objectives during given period of time.

Importance or Objectives or Advantages of Planning

1. In crease in National Income :-
The objective of planning is to utilize the resources of the country in such a manner that it should increase the size of national income. In the developing countries planning is very useful for increasing the production of the country.

2. Superior Decisions :-
The decision of planning authority are more superior as compared to the individuals. Planning authority keeps in view the interest of the whole nation. It prepares the plan keeping in view the economic condition of the country.

3. Achievement of Full Employment :-
In the less developed countries and in the advanced countries the objectives of planning is to achieve the full employment.The main objectives of the planning to create jobs for the people of the country.

4. Equal Distribution Of Wealth :-
In the capitalistic countries the gap between rich and poor is increasing. It creates social evils. Through planning we can reduce the inequalities in income.

5. Elimination or Regional Disparity :-
Through planning the regional economic disparities can be removed. In the plan special fund can be allocated for the development of backward areas. It is the one of main objective of planning that there will be reduction in the regional disparity.

6. Improvement in The Balance Of Payment :-
The balance of payment of developing countries remains deficit. It adversely affects the rate of economic growth. Through planning government can reduce the imports and can increase the exports.

7. Balanced Economy :-
If one sector of the economy is developed the country will not achieve maximum rate of development. Through planning resources of the country can be allocated in such a manner that it provides balance to the economy.

8. Control of Economic Crises :-
Due to economic crises, economy faces many problems. Through planning depression can be controlled and production can be increased.

9. Solution of Over Population :-
When the size of population is greater than the size of natural resources it can be adjusted through effective planning.

10. Self Sufficiency In Food :-
Each country wants to become self sufficient in food. So this objective is also achieved through planning. In the each development the target was proposed for the agriculture sector.

11. Industrial Development :-
Today without industrialization no any country can improve its economic condition. For the establishment of new industries, planning is very effective.

12. Increase In welfare Program :-
The provision of social services is main aim of the planning. For example some developing countries plan various facilities like housing, schooling, transport and water provided to the people.

13. Increase In Capital Formation :-
Without increasing the rate of capital formation, we can not increase the rate of development. In the less developed countries rate of saving is very low and due to this rate of investment is low. Through effective planning we can increase the rate of savings in the country.

14. Elimination of Poverty :-
Through planning we can increase the rate of economic development in the country. National income and per capita income will rise and poverty will remove.


What is meant by market imperfection it is an impediment in the achievement of optimum allocation of resources

Imperfection of Market :-
In a free enterprise economy demand and supply forces determine the prices of various goods and services.The reward of four factors of production is also determined according the demand and supply. The allocation of resources is optimum and if improves the production of various sectors. If any authority interferes in the working of free enterprise economy it reduces the rate of development.
In the under developed countries the working of market is imperfect which causes low production.

Causes of Market Imperfection or Defects in the Market System

1. Immobility of Factors of Production :-
In the less developed countries factors of production are not ready to move from one place to another and from one sector to another for higher return.

2. Rigid Price System :-
In the less developed countries rate of profit, rate of investment, rate of employment is very low due to the rigid price system. If the prices are allowed to fluctuate according to the demand and supply it will increase the rate of profit and rate of investment in the country of competition among the buyers and sellers.

3. Rigid Social Structure :-
In the less developed countries social structure is also creating obstacles in the way of market perfection. Producer and consumer both are suffering a loss because of competition among the buyers and sellers.

4. Role of Middleman :-
In the developing countries middleman is enjoying maximum profit. Producers are unable to achieve the reasonable prices of their production. It makes the market imperfect.

5 Ignorance About Market Condition :-
In the developing countries buyers ans sellers don't know the market condition. So the same price can not prevail in the market.

6. Lack of Specialization :-
There is a lack of specialization in the production process. The developing countries are unable to produce the commodities on large scale. Cost of production is also high and due to this demand is low. It makes the market imperfect.

7. Attitude of the People :-
In the less developed countries people generally purchase the commodities from the nearest shop instead of checking the price on various shops. Sometimes consumer likes to purchase the goods from their friends even they charge high prices it makes the market imperfect.

8. Monopolies :-
Producers generally create monopolies to earn maximum profit. These monopolies are the main obstacles in the way of perfect market.

9. Hoarding :-
Sometimes businessman creates shortage of goods in the market by hoarding the production. Due to this our market is imperfect.

10. Unequal Distribution of Wealth :-
In most of developing countries distribution of wealth is not equal. So it is also the main cause of market imperfection.


1. Increases Mobility :-
The mobility of the factors of production should be improved to make the market perfect.

2. Improvement in Transport System :-
To improve the market system of the country government should improve the transport and communication system in the country.

3. Monopolies Should be Discouraged :-
Government should adopt such measures that monopolies should be discouraged.

4. Market Information :-
Government should provide all the information's about the market conditions. In this regard newspapers, radio and T.V can play its role more effectively.

5. Utilization of Resources :-
There should be a maximum utilization of productive resources. It will improve the market condition.

Summing up we can say that market mechanism can play very effective role but in the present age the interference of the government is essential upto some extant for the economic development of any country.


Friday, 29 July 2011

Write a note on the following 1. Pakistan Railway 2. Air transport in Pakistan (PIA) 3. Road transport in Pakistan 4. Communication system in Pakistan

Pakistan railway is an important source of transport in the country. In the world war second railway was used a very important source of transportation. But its condition was miserable at the time of independence.

Pakistan has paid special attention for the development of railway. In every plan a sufficient amount was allocated for its development. The development of railway can be judged by the following facts :

1. Project Completed :-
1. Karachi circular railway constructed.
2. Kot-Adu, D.G.Khan, Kasmore link completed.
3. Marshalling yar and pipri completed.
4. Mehran Bridge Kotri completed.

2. Project Near Completion :-
1.Work on phase of Margala to Islamabad is in hand.
2. Construction of Karachi Terminal Station is near completion.
3. Oil yard at Mahmood Kot is also completed.
4. Improvement in telecommunication is under process.

3. Fast Trains :-
Fast trains and rail cars are introduced between various cities of Pakistan. There are many comfortable trains, Shalimar Express is very fast train between Lahore and Karachi.

4. Electric Train :-
Pakistan railway has also introduced electric trains between Lahore and Karachi and Khanewal. Further it will be extended from Lahore to Karachi.

5. Workshops :-
A number of workshops have been set up on various stations. The workshops on Mughalpura Lahore is making wagons and carriages.

6. Factories :-
Various factories has been set up in the country for the production of wagon and carriages. These are set up in Islamabad, Shukhur, Jehlum, Kohat, Kotri, Khanewal.

7. Export :-
Now Pakistan is also exporting the wagons and carriages to other countries like Bangladesh.

Problems of Pakistan Railways :-
The Pakistan railway out put is very low because private trucks and NLC have adversely affected its earnings. Railway has also to operate the uneconomical routs. The passengers misuse the trains. Management has shown inefficiency and railway is suffering a loss.

In 1949 there were only three small air companies in 1955, Pakistan International Air Line was set up.

Objectives of PIA :-
It was set up to provide safe and efficient transport services on domestic and international routs according to the international standard.

PIA Performance :-
PIA has made rapid progress is increasing the domestic and international flights. All the important cities of Pakistan are now provided air transport services. On the international route, PIA has extended its services to all the important countries of the world. In the world PIA is considered an efficient airlines. PIA earned profit Rs. 11813 million during 1993. During the period of 6th five year plan PIA added :
1. One 747.
2. Six Boeing's.
3. Two Twin others.
4. Three Air Buses and two Fokker to its Flee.
5. PIA fleet is comprised 48 aircraft of different types.

Problems of PIA :-
In the last few years there are complaints that ticket are being black marketed. Reservation problem is also fell by the people. To improve the efficiency of PIA last government had banned the union and provided engineering facilities. But now again government has decided to restore the union in PIA Govt. has also approved 13 private parties to operate new domestic lines. Now there are four private carriers operating on various routes on 24.9.2000.

Road transport is an important means of conveyance in Pakistan. Buses, Trucks, Cars, Rickshaws and Motor Cycles are included in the road transport. About 82% passengers in the country use the road transport. At the time of partition roads were inadequate to meet the needs of the country.The government of Pakistan paid special attention on the improvement and construction of new roads. During the 6th five year plan almost Rs. 19 billion were allocated for the development of road in the country. In the 8th five year plan sufficient amount was allocated.

Advantages of Road and Transportation :-
1.It has increased the revenue through taxes.
2. Road transport is cheaper than rail and air.
3. It has great importance for agriculture and industrial sector.
4. The return of road transport investment is quick.
5. It facilities the trade.
6. It is an important source with the urban areas.
7. Villages are connected with the urban areas.

Operation :-
In Pakistan mainly road transport is in the hands of private sector. To improve the urban transport government had set up the transport corporation. In 1977 Punjab and Karachi transport corporation was set up.

If in any country communication system is well developed and cheap it expands the market of various goods and saves the time. In the development of Pakistan it is playing very effective role.
In Pakistan following are the important means of communication :

1. Postal Services :-
In Pakistan our postal system s well organized. The officers of this department are selected through Federal Public Commission by the competitive Examination (CSS). These postal training centers have been set up to train the postal stuff. Post offices are also collecting the small savings of the people. Now letters are lifted by air from the important cities.

Urgent Mail Services :- Post office department has introduced urgent mail services. Within 24 hours letter can b received in the important cities. It is great advantage for the people.

2. Telecommunication :-
In 1947, there were only seven telegraph offices and 12346 telephones in the country. In 2000 it has been increased 3035000 and now it linked all over the world through satellite communication system.

3. Radio :-
There were only two radio stations in 1947, one at Lahore and other at Peshawar. The government of Pakistan improved this sector and set up various radio stations in Multan, Quetta, Karachi, Rawalpindi and Bahawalpur. In 1972, it was converted into corporation. Radio is an important source of political awareness.

4. Television :-
A private limited company introduced television in November, 1964 in Pakistan. In 1967, this company was converted into public limited company. In Pakistan T.V is operated on commercial lines. PTV covers 82% population of the country. The license fee is also charged. Noe government has introduced the other channels for students education, PTV has also introduced the morning programmes.

5. The Pakistan Motorway :-
This project was initiated by the former Govt. Nawaz Sharif, At present there is one National Highway No. 5 in Pakistan. It is also called Karachi, Lahore, Rawalpindi, Peshawar Highway. It carries about 56% traffic of the country. Due to Central Asian Republics there is great trade potential for Pakistan.

1st Section :- The first section is the six lane Islamabad, Lahore, motorway which is 335km in length.

2nd Section :- It is from Islamabad to Peshawar which is 154 km in length.

3rd Section :- It is from Sheikupura to Multan. Its length is 317 km.

Completed Section :- Gwader Road Motorway is 895 km Karachi-Hub-Kakar is 341 km. These have been completed in 1998.and Lahore to Islamabad and Islamabad to Peshawar Motorway is also completed and Pindi Bhatian to Faisalabad motorway too completed..

Objectives :-
1. To promote international trade.
2. To promote the infrastructure to the industries.
3. To reduce the traffic pressure on the present roads.
4. To provide fast and cheap transportation.
5. To create the new jobs.
6. To remove the regional disparity.
7. To boost up the industrial zones.
8. To improve GDP.

It was a controversial project. Some people say that it is very costly and it has no immediate necessity. They consider a luxury. The construction contract of first section of 6 lane was given to South Korean Company. Its cost was 30.5 billion. The contract for second section was given to Turkish Company.
The PPP Govt. was not satisfied from this project and if brought some changes in it. The delay was also taken place. The change in the contract also lowered the prestige of the country.
In-spite of various problems it is a fact that Motorway role can not be ignored in the development of the country.


Discuss the role of transport and communication sectors to the economic development and discuss the importance of transport and communication

Importance of Transport and Communication :-
Rail, road, air and ships are including the transport sources. While postal, telephone, telegraph, internet, radio and T.V are included in the communication sources. These sources play very effective role in the economic development of any country. The importance of these sectors can be judged by the following facts :

1. Mobility of Factors of Production :-
If the means of transport and communication are improved, quick and cheap they will increase the mobility of factors of production. The reward of all the factors will become equal.

2. Stable Prices :-
The developed system of transport and communication helps in stabilizing prices of the commodities through our the country.

3. Supply of Raw Material :-
Due to the quick and cheap transport system, raw material can be easily supplied to factories on lower cost. Even from out side the country it can reach in time.

4. Supply of Manufactured Goods :-
From the factories goods can be easily transported to the markets if transport is efficient.

5. Use of Natural Resources :-
To use the idle resources of the country transport sector plays very important role. The production of the country can be increased with the development of transport and communication. Minerals like coal, gas and oil can be explored easily.

6. Extension of Market :-
If the means of transport and communication are cheap and fast then commodities can be easily carried over to long distance and the size of the market will expand. Today domestic and international market has been expanded due to the modern transport system.

7. Specialization :-
If the transport and communication system is developed the different areas will adopt the process of specialization. Due to specialization the cost of production reduces.

8. Stimulates Trade :-
The cheap and quick means of transport simulates the trade inside and outside the country.

9. Agricultural Development :-
Due to developed transport system fertilizer and seeds can be provided in time to the framers. It will increase the production of agriculture sector.

10. Industrial Development :-
The machine and raw material can be imported from other countries for the industrial sector. If our means of transport and communication are fast and then experts services can also be hired.

11. Importance for Emergence :-
In case of food shortage we can import the food from other countries. Transport and communication importance can not be ignored in case of floods and storms also.

12. Increase in Employment :-
This sector is providing the employment to a large number of people. With the development of this sector we can reduce the rate of unemployment.

13. Increase in the Income of the State :-
The development system of transport and communication increases the income of the state.

14. Spread of Education :-
If the developed transport system is available in the country then students can visit from different areas to receive education. Radio , T,V also plays its role in increasing the education in the country.

15. Improves the Sense of Brotherhood :-
Improved transport and communication system has developed the sense of unity and brotherhood. Today every person can move from one place to another easily.

16. Increase in Social Welfare :-
Due to the developed system of transport and communication we can provide the basic needs of life to the poor nations.

17. Sound Defence :-
A well developed transport and communication system enables the government to defend the country on sound footing.

18. Political Awareness :-
Radio, T.V, internet and cheap transport facilities create the political awareness. They are in a better position to know their economic and social problems. They can also cooperative to solve these problems.


Thursday, 28 July 2011

Write a note on delinking of rupees from dollars

In 1971, Pakistani rupee was linked with the US Dollar. In 1982 it was from delinked from US Dollar. Now the value of our currency will be determined according the demand and supply of foreign exchange market. If the domestic economic condition is stable balance of payment is favorable then value of currency increases, otherwise it falls. The exchange rate is fixed daily by the State Bank of Pakistan.

Causes of Delinking :-
1. Eighty nine countries out of 142 has adopted the managed floating exchange rate. Pakistan also followed them.
2. It will increase the export of traditional and non traditional exports.
3. It will ensure the positive and independent exchange rate policy.
4. It will discourage the out flow of capital.
5. It will encourage the Pakistanis working abroad to send their income in Pakistan.
6. It will reduce the prices of exports arid with attract the foreign buyers.

1.Devaluation :-
The delinking of rupee has devalued the currency.

2. No Increase in Exports :-
The delinking could not increase the exports of the country.

3. Deficit Increased :-
The balance of payment deficit is increasing day by day because as the value of our currency is falling deficit is increasing.

4. Increase in Debt :-
The total volume of debt has been increased.

5. Import Volume Increased :-
By delinking the value of imported goods is increasing.

The delinking of dollar was a good step but we can not reap the benefit due to the contraction in the world trade.


How would we correct the unfavorable balance of payment of Pakistan?


1. Proper Utilization of Resources :-
The less developed countries like Pakistan should utilize their natural resources properly. It will increase the production and exports of the country.

2. Increase in Labour Intensive Industries :-
Pakistan should prefer the Labour Intensive industries. Because labour is cheap as compared to the machinery. It can reduce the import of machines and can reduce the cost of production. The demand of cheap goods can increase.

3. Increase in Small Scale Industries :-
We should increase the small scale industries like Korea, Taiwan and Hong Kong. We can increase our production and exports with small capital. We can increase the exports of sports and carpets. Pakistan can not afford to import the heavy machinery.

4. Change in Export Pattern :-
Since Independence we are exporting raw material and few primary goods. Now if we want to correct our balance of payment we shall have to increase the ex[ports of manufactured goods.

5. Decrease in the Imports :-
The consumption goods may not be imported and people should use the local manufactured goods. People shall have to motivated to use Pakistani goods.

6. Denationalization :-
All the sick and nationalized industrialized industries should be handed over to the private sector to improve the production of the country. The private sector has the capacity to revived the sick units.

7. Improvement in Quality :-
We should improve the quality of the product to capture the world market by attracting the quality of the product.

8. reduce the Cost :-
For increasing exports it is necessary that we should reduce the cost of production. Because in the competition lower prices attract the other countries.

9. Joint Projects :-
We can increase the industries with the help of foreign investors. It will be useful for increasing the exports.

10. Reduction in Invisible Imports Services :-
We should reduce the expenditure on diplomats shipping to insurance to make our balance of payment favorable. Foreign fours and members of delegations should be curtailed.

11. Reduction in Export Duties :-
The government should reduce the export duties and should provide incentives to the exporters. It will increases the exports. Credit and License facility should be provided to exporters.

12. Revision in Import and Export Policy :-
The government should frame such type of import and export policy that if should encourage the exports and discourage the imports.

13. Devaluation Policy :-
Sometimes devaluation policy is also adopted to correct the balance of Payment. The delinking of dollar policy was also adopted to correct the balance of payment in Pakistan.


Distinguish or Difference between balance of trade and balance of payment and what are the causes of unfavorable balance of payment of poor countries

Balance of Trade :-
Balance of trade is the difference between the various exports and imports of visible goods of a country during a given period of time. If the value of visible items exports exceeds then the value of visible goods imports then balance of trade is said to be favorable.

Balance of Payment :-
Balance of Payment is a record of economic transaction between residents of the one country and the rest of the world during the period of one year. Under balance of payment we include visible as well as invisible goods.

Favorable Balance of Payment :-
If the total value of imported goods and services exceeds than the total value of exported goods and services during a year the balance of payment is said to be unfavorable. In case of opposite situation it will be unfavorable.

Most of developing countries balance of payment condition is not satisfactory. Accept few years they facing deficit in their balance of payment. The deficit is met by the loans. The deficit is increasing day by day.

1. Import of Machinery :-
Developing countries are importing machines and technology to improve the industrial; sector. It has made the balance of payment unfavorable because the value of capital goods is increasing day by day and we want to industrialize our economy.

2. Export of Raw Material :-
Exports of developing countries depend upon raw material and semi manufactured goods. The prices of raw material are very low in the world market. So poor countries balance of payment remains unfavorable. For instance the product of cotton reduced in Pakistan in 1995 due to virus so it also affected adversely in balance of payment because Pakistan imported cotton instead of exporting.

3. Dependence on Agriculture :-
Many countries like India, Pakistan, Bangladesh and other developing countries mainly rely on exports of primary goods like rice and cotton. If climate is unfavorable then production of agriculture sector decreases which affects the balance of payment badly.

4. Payment for Foreign Services :-
Every year most of underdeveloped countries pays a lot of foreign exchange for various services like transport, Insurance and Experts. It makes their balance of payment unfavorable.

5. Increase in the Sick Industrial Units :-
In some developing countries due to nationalization a number of units are suffering a loss. These units are not producing goods according to their full capacity. The low production has reduced the exports and increased the deficit of the budget.

6. Unfavorable Terms of Trade :-
Poor countries are paying higher prices of imports as compared to the prices at which it gets from exports.

7. Poor Performance of Public Sector :-
The performance of public sector industries is also not satisfactory in developing countries. it waste lot of foreign exchange of the country.

8. Political Unrest :-
many less developed countries are facing political unrest which is the main cause of low production. Ultimately balance of payment remains unfavorable. In this situation investor fears to do the investment.

9. Advanced Countries Policies :-
The import policy of advanced countries is not favorable for the poor countries. They impose restrictions on the imports and create problems for the poor countries. They have also created unions against developing countries.

10. Import of Oil and Fertilizer :-
Developing countries are spending a lot of foreign exchange every year on the import of oil and fertilizer. It has increased the deficit in the balance of payment.

11. Import of Wheat :-
Poor countries are facing the food shortage problem and spending a huge amount of foreign exchange on its import.

12. Import of Consumption Goods :-
The people of less developed countries prefer to consume the imported goods. Even people are not ready to wear their on country cloth. This attitude has increased the imports. Cosmetics and basic consumption goods are even imported.


Discuss the major exports of Pakistan and discuss their importance

Major Exports of Pakistan :-
Following are the important exports of Pakistan :

1. Cotton :-
It is the most important cash crop of Pakistan. Now due to its importance our farmer in increasing its cultivation. In 1993-94, 8.0 million bales were exported to other countries. Pakistan earned 3.083 billion dollars foreign exchange in 1993-94. govt. has also allowed the exporters to purchase cotton directly from the Ginners. China, Hong Kong, Japan are the buyers of raw cotton. Pakistan faced the cotton crises in 1995 due to low product.

2. Rice :-
Pakistan is earning a lot of foreign exchange by exporting rice to Middle East countries. Pakistan has monopoly in the trade of Basmati Rice. In 1993-94 Pakistan earned 8214 million dollars. Pakistan shall have to pay special attention to the quality and cost of rice. India and China are our competitors in the world trade of rice.

3. Cotton Clothe :-
It has an important position in the exports of Pakistan. Pakistan exports billion dollar's cotton cloth to various countries like U.K and Japan. we can increase the Textile exports by using the latest technology.

4. Cotton Yarn :-
During the last five years Pakistan has doubled the production of cotton yarn. no doubt the spinning capacity of the cotton mills is very low. Pakistan has earned million dollars every year by exporting cotton yarn. The main buyers are Japan, Hong Kong and Germany.

5. Carpets :-
Pakistan exports the hand made and machine made carpets. Pakistan has a tough competition with China and India. Pakistan earned million dollars every year by exporting it is West Germany, Switzerland, U.S.A, France, U.K and Italy.

6. Leather :-
In the field of exports Pakistan leather industry is playing very important role. Our leather industry has improved the quality of product according the world market standard Italy, Japan, Spain are the main buyers.

7. Vegetable and Fruits :-
The export performance of vegetable and fruits is very poor. Because processing and grading facilities are not available in Pakistan. Vegetables and fruits are exported to the middle east and gulf countries. Onion, chillies, pees and potatoes can be also exported to various countries.

8. Sports and Surgical Goods :-
Various other items like sports surgical goods and jewellery is also ex[ported to other countries. During 1995-96 Pakistan earnest million dollars by exporting these goods.

9. Fish and Fish Product :-
The export of fish and fish product export is increasing day by day. Pakistan earns million dollars foreign exchange by exporting it every years.


Wednesday, 27 July 2011

Discuss the export performance of Pakistan or discuss the trend of foreign trade in Pakistan

Export Performance :-
After partition the foreign trade of Pakistan was also affected like other sectors of the economy. But after the establishment of some industries exports were increased. We can study the export performance under three different periods :

1. Performance From 1948 to 1971 :-
Before the partition internal and external trade was controlled by the English Rulers so foreign trade was affected very badly after 1947. In 1948 the government of Pakistan increased the import of consumer goods t remove the shortage in the country. It expanded the volume of exports. About 60% of the total exports of Pakistan were purchased by the India in the early years.

2. Demand of Devaluations Refused :-
In 1949 Pakistan refused to devalue the currency and India refused to purchase the Jute and Cotton of Pakistan. So Pakistan decided to develop the trade relations with other countries like U.K, France, Germany and Italy.

3. Effects of Korean War :-
The exports of Pakistan's raw material increased due to Korean war. India government also decided to import the Jute of Pakistan. But the prices of Pakistan's exports increased. The exports value decreased due to fall in the prices of raw material in the world market.

4. Devaluation of Currency :-
The government of Pakistan reduced the value of Pakistani currency upto 30% in 1955 to encourage the exports. There was a continuously fall in exports except one year after devaluation.

5. Martial Law 1958 :-
In 1958 Martial Law was imposed and government introduced export Bonus Scheme. It increased our exports but due to heavy imports our balance of trade remained unfavorable.

6. Second Five Year Plan Period (1960-65) :-
In the second five year plan due to liberal import policy our balance of trade remained unfavorable.

7. Third Five Year Plan Period (1965-70) :-
In this period also export performance remained very poor due to many reasons like political disturbance and increase in imports. Later on the war of 1965 created more problems for exports.

8. Separation of East Pakistan :-
After the separation of East Pakistan export policy was revised by the government.
Following measures were taken to increase the exports of the country.
1. Export Bonus Scheme was abolished.
2. Currency was devalued upto 131%.
3. Multiple exchange rate system was finished.
4. Trade agreements were made with Muslim Countries.
The above measures increased the exports in 1971-72 to Rs. 10161.2 million. There was a marginal increase in the value of exports upto 1976-77.

Following were the main causes of low exports :
1. Nationalization of industries.
2. Frequent changes in fiscal and monetary policies.
3. Floods.

During the 1977-81 there was an increase in the exports. However in 1981-82 the increase in as fallen upto 17%. It has the following reasons :
1. The consumption of goods increased at home and exports reduced.
2. The demand of our exports reduced in the world market.
3. Fall in the terms of trade.
4. Unfavorable Global conditions.
5. Afghan Refugees Problem.

Relinking of Dollar in 1982 :-
The government of Pakistan adopted various measures like relinking of dollar to improve the exports. In the year 1987-88, Pakistan earned 4.4 billion dollar from exports. Cotton and cotton product is the major source of foreign exchange. The present government is also stressing more on the export of manufactured goods and value added goods. The total value of export during 1993-94 was 6.75 billion dollars. The trade deficit during 1995-96 was 3.75 billion dollars. During the year 1998-99 the trade deficit was 1.65 billion dollar and 1.60 in 2000-2001.
After studying the exports performance we can say that now the share of manufactured goods is increasing in the exports and it is good sign for Pakistani economy.


Tuesday, 26 July 2011

Discuss the various measures to solve the problems of cottage and small scale industries or Discuss the role of state in solving the problems of small

Any government can take advantages by their cottage and small scale industries if they take some important steps for this industry. We discuss the important measures to solve the problems of cottage and small scale industries under these headings :

1. Credit Facilities :-
The government should provide the credit to small and cottage industries at lower rate of interest. Further commercial banks are also providing loan to develops the industries.

2. Industrial Estates :-
The government has set up the number of industrial estates in the different cities. These areas have been provided various facilities like, roads, banking, and transport facilities to encourage the small scale industries.

3. Testing Laboratories :-
The government has established the testing laboratories to maintain the prescribed standard of cottage industries product.

4. Supply of Designs :-
The government also provides the new models and designed to producers to improve the qualify of cottage industry.

5. Publicity :-
The government has set up the display centers and show room,s inside and outside the country to increase the sale of cottage industry product.

6. Facility of Raw Material :-
The government imports the raw material for the cottage industries from abroad and provides them at lower price to encourage them.

7. Purchase of Cottage Industry Product :-
The government also purchases finished products from them and sells it at show room. Govt display centers in side and out side the country are creating the demand.

8. Protection Against Foreign Competitions :-
The government has also provided protection to home industry by imposing heavy duties on the imports. Still there is a need of further protection. Smuggling should be also controlled.

9. Establishment of Training Institutions :-
The government has set up various institutions like industrial, vocational, commercial and polytechnic institutions to provide the qualified workers to the cottage and small scale industries.

10. Carpet Centers :-
For the training of weavers the small corporation have set up carpet training development centers. These are working very usefully.

11. Handicraft Centers :-
Handicrafts development centers have been set up to promote the handicrafts.

12. Advisory Services :-
The small scale industries advisory services has been set up in each province to provide guidance to the new comers in small scale industry.


Saturday, 23 July 2011

What are the problems of cottage or small scale industries and suggest measures to improve these industries

No doubt small scale industry has great importance in economy but unfortunately this sector was neglect in the past.
Following are the main problems of cottage or small industries :

1. Lack of Finance :-
The cottage and small scale industry is facing the problem of capital shortage. The financial institutions are not ready to provide the credit on low rate of interest. It is an obstacle in the ways of small scale industry development.

2. Competition :-
There is a stiff competition between the large scale industry and small scale industry and usually small scale industry suffers a loss.

3. Import Policy :-
The import [policy of the government is also not favorable for the small scale industry. It discourages the small scale industry.

4. Smuggling :-
Smuggling of large scale consumer goods from Russia, Iran and Singapore has also discouraged the small scale industry.

5. Problem of Raw Material :-
The owner of the small scale industry can not get enough raw material what he wants. Poor quality of raw material is provided on higher prices to the small industry.

6. Old Methods of Production :-
Small industries use old machines and old methods of production. Due to this the quality of small scale industries product is very poor. So they are helpless to sell the product at low rate.

7. Lack of Marketing Facility :-
The marketing facilities are inadequate in the country. The small and cottage industries are selling their product at the low prices in the hands of middleman. Even they can not advertise their product on T.V because they have not sufficient capital for this purpose.

8. Lack of Qualified Staff :-
The cottage industries can not employ the qualified engineers and economists. It reduces the quality of product.

9. Shortage of Electricity :-
There are a large number of villages where electricity is no available. The non availability of electricity is an obstacle in the way of small scale industries.

10. Breakdown of Electricity :-
The regular break down of electricity has also affected the production of small scale industry adversely. Prices of electricity are also rising day by day. Higher prices has increased the cost of production.

11. Lack of Standardization :-
The mixing of good and bad product creates problems of marketing inside and outside the country. The product is not standardized.

12. High Cost of Production :-
The mostly cost of cottage industry is very high. Because the process of production is very slow and raw material is also bought at higher prices. Rates of electricity charges are also increasing.

13. Entrepreneur is Uneducated :-
Mostly cottage industries are owned managed and controlled by literate people. They follow the old methods and production remains very low.

14. Lack of Roads and Transport Facilities :-
There is a lack of roads, transport, water supply, electricity and telephone facilities for the small scale industry. When infrastructure will not be available how those can flourish.

15. Lack of Storage Facilities :-
The small scale industry in particularly in villages is lacking storage facilities. A huge product is wasted due to the problem.


What is cottage and small scale industry? discuss its importance in the economic development or What are the main advantages of cottage and small scale industry

Cottage Industry :-
It means the industry is run in the home usually with the help of family members. Simple implements are used and workers are not paid wages.

Small Scale Industry :-
In the small scale industry the male members of the family along with hired labour work together. In small industries, electric power and improved machines are mostly used in subcontinental the firm employing less than 10 person are classified as small. In subcontinental Carpet industry , poultry farming, bee keeping, tailoring and furniture making is included in the cottage and small industry.

Importance :-
There is a shortage of capital and technical skill in subcontinental. It is not possible to establish the heavy industries. While it is very easy to increase the number of small scale industries. The examples of Japan, Hong Kong and Taiwan are before us.
Following are the main advantages of small scale industry in subcontinental :

1. Increase in Industrial Product :-
There is a shortage of manufactured goods in our area. We spend a lot of foreign exchange on the import of these goods every year. So we should increase the small scale and cottage industry to remove the shortage of these goods.

2. Increase in Employment :-
The rate of unemployment is increasing day by day. To control unemployment it is necessary that we should increase the small scale industries because these are labour intensive. Our farmer can also easily work in small scale scale industry. It is not possible to provide Govt. jobs to all the unemployed people. It may also increase the self employment.

3. Increase in Foreign Exchange Earnings :-
the various kinds of goods like carpets and sports sold in the international market. We earn a lot of foreign exchange by exporting these goods.

4. Use of Industrial waste :-
The waste of large scale industries like cotton and steel can be used by the small scale industry. In this way we can save a lot of capital.

5. Provides Employment to Women :-
Our women is engaged in the cottage and small scale industry and increasing the production. Because in our society women can not work with other men in the factories. We should increase the number of cottage industries to make the female sector a real asset of the nation.

6. Increase in The Income :-
Increase in the production of goods on small scale increase the income of the people. The rise in income improves the standard of living. In rural areas there is great need of small scale industry.

7. Cheaper Production :-
The small scale industry is labour intensive while labour is cheap in subcontinental, so the production of small scale industry is cheaper. Due to low prices people purchase more goods and market expands.

8. Proper Distribution of Wealth :-
The small scale industry increases the income of the people and reduces the gap between rich and poor. We can reduce the poverty by expanding the small scale industry.

9. establishment With Small Capital :-
We can establish these industries with small capital. In subcontinental most of the people are poor, so they can start the production with small capital.

10. Development of Backward Areas :-
We can develop backward areas by establishing the small scale industry in these areas. It will remove poverty from backward areas.

11. Reduction of Population Pressure :-
The development of small scale industry reduces the pressure of population on land and increases the income of the people.

12. Reduction in Migration :-
The unemployed labour force is migrating to the other countries. If we expand the small scale industry, it can serve the nation instead of serving the other countries.


Friday, 22 July 2011

Why the government adopted the policy of privatization deregulation or what are the advantages or objectives of privatization policy

The government of Pakistan has decided to adopt the policy of privatization which has produced some encouraging results.

Meaning of Privatization :-
Privatization is described as a process for the transfer of state owned enterprises (Soes) to the private sector.

Objectives of Privatization :-
1. To improve efficiency.
2. To generate revenue.
3. To broad base ownership.
4. To develop capital markets.

The Govt. of Pakistan set up a privatization commission on Jan. 12, 1991 to implement the privatization policy. In the industrial sector 118 industries are to be privatized out of this 67 have been privatized. The buyer include 8 ex-owners, 9 employers group and 5 foreign firms. The 2nd phase of privatization had been started in July 1994. ABL and MCB has been transferred to private sector, NBP 10% shares offered for sale.
Following are the main causes of privatization :

1. Increase in Efficiency :-
The profit seeking behavior of new private sector managers will reduce the cost of production. When cost of production will be low it will attract the customers. The aggregate demand of various goods will increase and market will expand, experience shows that private entrepreneur is more efficient as compared to the Govt. Officer because his personal interest is involved.

2. Decrease in Govt. Burden :-
Now government has handed over the various industrial units to private sector and the loss which was beard by the Government, now such loss will be saved.

3. Increase in Production :-
Now private managers will manage the sick units with full devotion and personal efforts. So there will be an increase in production. Policy of privatization will promote competition, among the various producers. They will compete in quality, price and quantity, so consumer will enjoy the maximum benefits.

4. Increase in Saving and Investment :-
Secondary capital markets will expand due to privatization and in this way rate of saving and investment will rise.

Example :- Allied Bank of Pakistan after one year of privatization has increased the industrial financing up to 406%. There is 59% increase in the inflow of capital from other countries.

5. Sense of Ownership :-
After privatization the sense of ownership and confidence among the people has been developed. For example Allied Bank shares are purchased mostly by the employees. Now they are partners of the bank, so they have shown the positive attitude and profit amount has risen.

6. Economic Freedom :-
One of the objectives of adopting this policy is to provide greater freedom to the economy to respond to market prices and to allow the the economy to grow according to its full potential.

7. No Political Influence :-
After privatization of financial institutions loans will not be issued on political basis, a private manager will issue the loan keeping in view the interest of the institution. The borrower will also realize that there is no chance of right off so he will not misuse the credit.

8. Quick Decisions :-
When the personal interest of the managers will be involved in the profit of the institution they will not waste the time and quick decisions will be made.

For Example :- In case of recovery some times quick and bold steps are not taken by the executives of banks which becomes the cause of loss.

9. Better Services :-
After privatization customers will find better services from the various institutions. Because the private sector provides better incentives to those employees who perform their duties honestly and efficiently.

10. Increase in Foreign Investment :-
Privatization process has inspired confidence and trust among the foreign investors. The Japanese, Koreans and a couple of others are keenly interested in Pakistan for investment. So foreign investment will rise if consistency remains in our economic policies.

11. Increase in Economic Development :-
Privatization was only remedy to bring improvement in the state of affairs facing the country. Govt. officers were running the public sectors industries without much success. Because they had no interest in the promotion and development of these units. They were also not answerable to any body. So the public sector was almost received with huge losses to the government budget. On the other hand private sector managers are answerable to the investors. They will be removed if they failed to run the units efficiently. When industries will run efficiently their rate of production, employment and profit will rise which will lead to over all development.

12. Increase in Revenue :-
Aggregate revenue of the Govt. will also increase from the industries through taxes.
No doubt there are various advantages of privatization but it must not lead to monopolies and concentration of wealth and no room should be left to suspect for unfair ideals.


Discuss the main sources of industrial financing in Pakistan

1. Industrial Development Bank Of Pakistan :-
it was set up in 1961. Its paid up capital was Rs. 1,570,000. It is an important source which supplies the funds for industrial development. It provide medium term and long term credit facilities. The loans are granted for the establishment of new Industrial Units and for the replacement needs of the old units. The major objective of this bank is to spread the benefit of industrialization in all the classes of the people. It issues the loans on behalf of the government and provides finance in the form of equity. It also encourages the establishment of industries in the less developed areas of the country. It pays due regard to the export oriented industries and those industries which are based on domestic raw materials. It is acting as a monitoring agency of World Bank and Asian development for small scale industrial units.

2. Pakistan Industrial Credit and Investment Corporation (PICIC) :-
The Pakistan Industrial Credit and Investment Corporation was established in 1957 with the help of government of Pakistan and World Bank. The private domestic investors hold 65% shares and the remaining 35% has been taken by foreign investors from Japan, U.K, West Germany and France. A board consists upon the 20 members. Five members are foreign share holders. The Pakistan Industrial Credit assistance to the new industries. Before advancing loan it examines the profitability ant its importance to the economy. The objective of the PICIC is to support the private industrial sector in the form of local and foreign currencies. It also provides technical skill to the industrialists. Corporation also arranges loans direct from abroad.

3. National Development Finance Corporation (NDFC) :-
Its main objective is to promote the industrial expansion and economic growth in the country. It provides technical and financial assistance to the new and old projects. Railway, Airlines, Shipping, Ports, Steel Mills and textile is financed by the NDFC.
Any one firm or individual can purchase the NDFC certificates. It provides large term and small term loans. NDFC offers higher rate schemes in the country with maximum safety and security, NDFC,s financial resources comprise of capital and reserve deposits in local and foreign currencies. World Bank, Asian Development Bank and Islamic Development Bank also provide finance to this institution. The Board of Directors comprises of six Directors including Chairman all are appointed by the Federal Government.

4. Investment Corporation of Pakistan :-
It was set up in 1966. Its major objective was to develop the capital market in the country. It has to provide the capital market in the country. It has to provide the sound base for investment in Pakistan. The authorized capital of the ICP is 200 million rupees. It has opened the branches in important cities to increases the share holders in the country. This corporation has also started the scheme of profit and loss sharing in 1980. The ICP Mutual Funds are operated on interest free return. It mobilizes the savings of public inside and outside the country. The fund amounting to Rs. 230 million has been fully subscribed. On Board of Director Supervises it which has eleven members including chairman. These are appointed by the Federal Government.

5. National Investment Trust (NIT) :-
The NIT was set up in 1963. It is a joint stock company with paid up capital of 1.2 million. The NIT was converted into interest free organization in 1979. It was established to mobilize the savings to meet the growing needs in the country. It announces the rate of profit on the unite after every quarter. Now its branches are available in the big cities of the country. The National Bank of Pakistan acts as trustee of NIT. It also undertakes sale and purchase of units along with other commercial banks. Zakat is charged on the NIT units.

6. Equity Participation Fund (EPF) :-
It was established in 1970. Its major objective was to improve the growth of small and medium size of industry in the private sector. It had given to the priority to the less developed areas of the East and West Pakistan. After the Dhaka fall it was recognized. The authorized capital of the fund is Rs. 200 million, which is contributed by the Federal and Provincial and Govt. State Bank and Institutional investors to provide equity support to the less developed areas to improve their economic conditions.

7. Banker's Equity Limited :-
It has started functioning in 1980. Its objects is to improve the private sector investment and capital market. It also works on the basis of interest free loans upto 1984. Its approved financial aid for 3 to 5 projects.

8. Insurance Companies :-
In Pakistan there are three insurance companies which are playing very effective role for the capital market. State Life Insurance Corporation was set up in 1972 and its position is the strongest than the others while Pakistan Insurance Corporation and National Insurance Corporation Services also cannot be ignored in this regard.

9. Combines Companies :-
Pak Saudia Company, Pak Kuwait and Pak Japan Companies are also playing important role to improve the industrial and agricultural sector in the country. These are providing finance to the different sectors and improving the Capital market in the country.

10. Small Business Finance Corporation :-
It was set up in 1972. Its main aim to provide financial aid to the small business to increase the rate of production and employment in the country. Those people who have some technical know how but they are financially poor. They can get finance from this corporation. Its head office is of Islamabad. Cottage and small scale industry is financed by this corporation. The corporation has also Islamized its operation in 1980 eliminating the interest. It was recognized in 2001.

11. Stock Exchange :-
It is a market foe existing securities which are issued by the public authorities. Stock exchange provides a place to the buyers and sellers of the shares and securities. Stock exchange indicates about the Govt. or bad health of the economy. If the share prices are rising it means country is running on the path of development and prosperity. If the share prices are falling it is a sign of downfall of the economy. At present there are two stock exchanges in Pakistan. The Karachi Stock Exchange was registered in 1949 and Lahore Stock Exchange in 1971.


Thursday, 21 July 2011

Pakistan Industrial Development Corporation (PIDC), National Fertilizer Corporation of Pakistan (NFC), Steel Mill

It was set up in 1950. In 1952 it started its work. It had completed 60 projects in 1973.

Capital Structure :-
It was set up with authorized capital of Rs. 10 million.

Performance :-
During the period of 1952 to 1974 it expanded the industrial base. It developed the heavy industries like fertilizers, ship building, jute mill, cement factories etc. PIDC was regarded a symbol of inspiration to the private sector.

Problems :-
The nationalization of 1972 affected performance of PIDC very badly. Now it is also facing the financial problems. It has to depend on the Annual Development Plan Funds. It can not set up project valuing Rs. 50 lacs or above without government approval.

Suggestions :-
The government should increase the funds of Pakistan Industrial Development Corporation (PIDC). The Pakistan Industrial Development Corporation (PIDC) should be encouraged to established agro base industries. It should also be encouraged to take smaller projects. The losses suffered by Pakistan Industrial Development Corporation (PIDC) units in backward areas.

It was set up in 1973 at Multan. In June 30, 1980. Its authorized capital was Rs. 1000,00 million and paid up capital was Rs. 700.23 million. This project is completed at a cost of Rs. 2243 million. Some modification is also made in the plant and now it is operating around 90% capacity.

The steel mill project was started with the help of Russia on December 30, 1973. It has a great importance in our history. Because without steel industry we can not bring industrial revolution in the country.

Capital :-
The cost of steel mill project is Rs. 25.5 billion. Its productive capacity is 1.1 million tons.

1. Importance for Industrial Development :-
The annual production capacity of steel mill is 1.1 million tons which can he expanded to over 2 million tons.

2. Development of Engineering Industry :-
The production of steel mill will improve the engineering industry of Pakistan.

3. Increase in Employment :-
It provided the job to twenty thousand persons for the construction work. Further 15,000 persons will be required to operate the plant at fully capacity.

4. Self Reliance :-
The steel mill has provided the sound base for industrialization and reliance to industrial sector.

5. Foreign Exchange Savings :-
Our imports will be reduced due to steel mill product and it will save a lot of foreign exchange. It has saved 3.5 billion foreign exchange during 1999-2000.

6. Supply of Electricity :-
It is also supplying surplus electricity to the Karachi Electricity Supply Corporation.

7. Important for Construction :-
The Pakistan steel mill has also provided the iron for the construction work. The production of electrical and mechanical instruments have been increased.

8. Importance for Agriculture :-
The production of tractors, thrashers and tube wells is now easy due to the steel mill production. It will increase the production of agriculture sector.

The government of Pakistan has protected the steel mill from foreign competitions through import duties. But still it is suffering loss due to many reasons.


Discuss the advantages and disadvantages of nationalization or Why industries were nationalized in 1972 in Pakistan

In the period of Mr. Zulfiqar Ali Bhutto government nationalized basic industries in 1972. Life insurance company was also nationalized in the late 1972. Vegetable ghee units were nationalized in 1973. Commercial banks and shipping were take it over in 1974. While flour mills, rice bushing and cotton ginning factories were nationalized in 1976.

Following were the main causes of nationalization :

1. Equal Distribution of Wealth :-
The government nationalized the industries and banks to provide equal distribution of wealth. Because few families had full control over the major portion of national wealth. So government decided to provide equal chances of earning to the people by nationalizing the units.

2. End of Monopoly :-
There was complete hold of few capitalists over the supply of the market. They were charging higher prices from the consumers. To remove the monopolies government nationalized the industries, so that goods should be provided to the public at lower price.

3. Check on Smuggling and Hoarding :-
The government nationalized the various banks on this ground that capitalists were misusing the savings of the whole nation. They used the credit for hoarding and smuggling.

4. Fair Distribution of Credit :-
The banks were nationalized to provide the fair distribution of credit. All the classes of the public will enjoy the credit facilities. Small farmer and small businessman was ignored by the banks before nationalization.

5. Economic Stability :-
It was also argued that all the business institutions will adopt uniform policy after nationalization. It will provide economic stability.

6. Effective Planning :-
It was also argued that after nationalization government will prepare the plans more effectively and the rate of out put will rise.

7. Increase in Production :-
It was also argued that after nationalization the labour will work more honestly and efficiently to increase the production of these units.

8. Increase in Social Welfare :-
Before nationalization all the profit of industries and banks was in few hands. But after nationalization it will be used for the best interest of the whole nation.

9. Price Stability :-
It was also climes that state bank can minimize the fluctuation in the economic activity with the help of nationalized commercial bank.


1. Increase in Corruption :-
The nationalized industrial units were handed over to the government officials and it increased the corruption in this sector. Efficiency of the units reduced after nationalization.

2. Fall in Production :-
After the nationalization production of various units decreased and rate of profit removed. The managers of those units did not pay proper attention.

3. Sick Industries :-
In the short period these industries suffered a loss and were declared sick industries.

4. Carelessness of Labour :-
After nationalization workers became careless about their duties and this attitude of labour affected the production adversely.

5. Public Sector Over Weighted :-
Public sector has become overweight and it is health risk for the economy. More over public sector is flourishing at the expenses of private sector.

6. Private Sector Discouraged :-
The nationalization policy discouraged the private sector, and due to this rate of investment decreased. Even the target of private investment in the 8th five year plan could not achieved due to the fear of nationalization.

Keeping in view above defects government of Pakistan denationalized the various industries. Now in the present budget of government has provided various incentive to promote the private industrial sector. Present government is trying is best to encourage the private industrial sector.


Discuss in brief the principal industries of Pakistan

Principal Industries :-
In 1947, condition of industrial sector was very poor. The basic facilities were not available and industrial sector was facing many problems. The government of Pakistan has paid special attention to this sector and now the heavy industries like steel, iron and fertilizers are in advance stage.
Following are the important industries in Pakistan :

1. Textile Industry :-
In Pakistan, it is the largest industry it is providing 38% of industrial employment to the people. Its share in the total industrial export is almost 60%. No doubt the competition in the world market is increasing and there is an heed of proper guidance to improve the quality of the product. In 1993-94 due to fall in cotton production this industry suffered the set back.

2. Sugar Industry :-
In 1947, we had only two sugar factories in Pakistan. Now we have 78 sugar factories. The consumption of sugar is also increasing with the rise in population. The production of sugar is satisfactory and now, it is in the open market. The government of Pakistan is trying its best to become self sufficient in sugar. In this regard we will have to establish new mills, and we will have to encourage the farmers.

3. Cement Industry :-
Now there are 25 cement factories in Pakistan. In the private sector there are 21 factories, while in the public sector there are 4 factories. Still the demand of the people is greater than the supply. We can achieve the self sufficiency stage by increasing the number of units. The State Cement Corporation of Pakistan is providing the cement to the people through stockists and various agencies. But sometimes these people create shortage to sell it at higher rates. Now Govt. has privatized the cement factory to encourage private sector.

4. Chemical Industry :-
There was no any chemical industry in 1947. Now there are 12 Chemical Projects in Pakistan. Its share the GNP is more than 3%. Now their demand of chemical and related products is increasing day by day in Pakistan. Every year government spends a lot of money on the important chemicals. We can increase the supply of chemicals by increasing the new units and adopting the new methods of production.

5. Woolen Industry :-
Now in Pakistan 16 woolen mills are working. In 1947, there was no any single woolen mill. Now these mills are not only meeting the domestic needs but also exporting the woolen cloth, woolen yarn and carpets to other countries.

6. Vegetable and Cooking Oil :-
In Pakistan now 166 vegetable ghee factories are working. Only seven factories are in the public sector and 159 are in the private sector. The Ghee Corporation of Pakistan is operating the public sector units.

7. Jute Industry :-
Now we have paid proper attention to this industry. At present there are 12 jute mills in the country. We import the raw material from Bangladesh and China for this industry.

8. Pakistan Steel Mills :-
The establishment of steel mills in Karachi is the milestone in the history of Pakistan. This project is built with the help of Soviet Union. But at present the industry is suffering a loss. In 1987-88 it has suffered a loss of Rs. 1.93 billion. We hope that in the long run it will improve its performance. It has 19684 employees. Its main product is Coke, Iron, hot rolled, coils and billets.

9. Engineering Goods Industry :-
In Pakistan four heavy engineering industries are working in various parts of the country. There are also a large number of light and medium industries which are producing machine tools for various factories.

10. Paper and Board Industry :-
The demand of paper and board is increasing day by day. In Pakistan at present there are more than 30 units which are producing paper and board but the production of these units is not sufficient to meet the demand. Every year a lot of foreign exchange is being spent on the import of paper and board.We should increase the number of unit is to meet the demand of the country.

11. Fertilizers :-
At present there 10 units in Pakistan. These are meeting 70% of the total demand. Total out put is 4651 thousands tons.


Wednesday, 20 July 2011

Role of private sector in the development of industrial sector in Pakistan or Describe the ups and down of private sector in Pakistan

Pakistan's economy is a mixed economy. The private and public sectors are walking side by side. If we examine history of Pakistan, we will find that private sector has played very effective role in the development of industrial sector.During the period of 1947-67 the private sector share in the investment was very encouraging in the 2nd five year plan the performance of private sector was appreciated and it is considered the golden period of industrial development. The country became self sufficient in most of the industries with the help of private sector. In order to encourage the private sector government of Pakistan also provide various facilities during 1947 to 1965.
1. Government provides tax concessions to the private sector.
2. Protection was given to infant industries against the foreign competition.
3. To provide basic facilities to the private sector ten industrial estates were set up.
4. Export Bonus Scheme was introduced to increase the exports.
5. Import licenses were issued to private sector to import machinery.
6. The commercial banks and insurance companies also helped the private sector.
7. Export processing zones were set up at Karachi and Lahore.

Downfall of Private Sector :-
In 1972, government of Pakistan nationalized the ten basic industries. This step of the government discouraged the private sector and it reduced the private investment. In 1970-71 the private investment was Rs. 1358 million. While in 1976-77 it decreased up to Rs. 650 million. Following were the main causes of its downfall.
1. The industrialist families were disgraced.
2. Fear of further nationalization created unrest in the private sector.
3. The nationalized industries were not paid real compensation
4. The social and political unrest reduced the level of private investment.
5. Fear of nationalization and political unrest discouraged the foreign investors.
6. The government devalued the currency up to 131%. It increased the cost f imported machinery and discouraged the private sector.

Revival of Private Industrial Sector :-
The government of Late Mr. Zia-ul-Huq adopted various measures to revive the private industrial sector.
1. The government adopted the denationalized policy to encourage the private sector.
2. For underdeveloped areas government announced the tax holiday for five years for the new industries.
3. Two heavy industries were returned to the former owners.
4. The government also issued ordinance for the protection of private investment.
5. The government also issued the industrial investment schedule for the guidance of private investment.
6. Overseas Pakistani were allowed to import machinery without custom duty.
7. There was also exemption from official sanction for industrial investment up to Rs. 10 million.
8. A tax free industrial estates around Lahore has been set up for new industries.
Due to these measures private sector had been encouraged but still industrialist is fearing from the new government policy. Tax survey has also created panic.

Fiscal Concessions in the 7th Five Year Plan 1988-1993 :-
In the 7th five year plan government has decided to allow the establishment of private commercial banks to promote industrial sector.
All the country is declared a tax free zone for the next four years for new industries. This concession is for eight years in the backward areas.

Budget :-
In present budget liberal policy is adopted for the private industrial sector. One window system has been started to obtain the various infrastructure facilities.

Present Govt. Policy :-
The present government has also assured the private sector that there will be no more nationalization. The government has also decided to provide various incentives to the private sector. The government has also allowed the establishment of private investment companies and banks. The foreign investors are also invited for investment.
We hope that now private sector will play its role more effectively without the fear of nationalization. Privatization process is continue to privatize the various units.


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