Punjab underperforms economically than other provinces

LAHORE: In the last decade, the Punjab province lagged behind in agriculture and industrial growth compared with rest of the Pakistan while its overall growth was much lower than the Indian Punjab.

The Institute of Public Policy (IPP) has conducted a detail research on economic growth in Punjab in the last decade. The research team for the report included renowned economists Sartaj Aziz, Shahid Javaid Burki, Aisha Ghaus Pasha, Pervez Hassan and Hafeez Ahmad Pasha. They were assisted by students of the Beacon House University.

According to the report, agriculture accounts for 24 percent of Punjab’s gross domestic product (GDP) while its overall share in Pakistan’s GDP is 17 percent. Industry accounts for 21.2 percent of Punjab’s GDP while it is 31 percent for rest of Pakistan. Services sector accounts for 54 percent of Punjab’s GDP while it is 52 percent for the whole of Pakistan.

Based on estimates of the IPP, the average agricultural growth in Punjab during 1999-2000 to 2010-11 decade was 2.5 percent compared with agricultural growth of 2.7 percent in rest of Pakistan (comprising all other provinces) during the same period.

The period from 2006-07 to 2010-11 was the worst for the agricultural growth in Punjab during which it was averaged only 1 percent while rest of Pakistan posted a healthy growth of 3 percent.

Share of Punjab in large scale manufacturing was 40.3 percent that declined to 35.9 percent by 2006-07 and then recovered to 39.2 percent in 2010-11. The province lost substantial share in yarn production that declined from 37.8 percent in 1999-00 to 29.3 percent in 2010-11. Cotton cloth production decreased even more as Punjab’s share declined from 59.3 percent in 1999-00 to only 36.9 percent in 2010-11. In automobiles production share of Punjab declined from 48.9 percent in 1999-00 to 37.8 percent in 2010-11.

According to the report, industry in Punjab grew at 6.9 percent during 1999-00 to 2006-07 period while the rest of Pakistan posted a growth of 7.8 percent. From 2006-07 to 2010-11 period, industries of Punjab posted a better growth of 3.3 percent compared with rest of Pakistan that grew at 1.6 percent.

Punjab’s share in sugar production increased from 54.2 percent in 2000 to 59.4 percent in 2010-11. The production share of cigarettes during this period increased from 45.4 percent to 58 percent. In cement production its share increased from 46.2 percent to 51.1 percent. In fertiliser sector, its production share dropped from 60.6 percent to 58 percent. The province enjoyed almost monopoly in chemical production where its share has increased to 97.9 percent from 92.1 percent in 1999-00. In re-rolled steel products its share increased from 5.8 percent to 13 percent.

Punjab’s share in national revenues was 34.2 percent in direct taxes in 2006-07 that has declined to 33.7 percent in 2010-11. Domestic sales tax share of Punjab was 29.9 percent in 2006-07 that has increased to 44 percent. In excise duty the revenue share of Punjab was 53.2 percent in 2006-07 which now stands at 42.9 percent.

In an interesting comparison of Pakistani and Indian Punjab, the report pointed out that the average annual growth of Indian Punjab (comprising Punjab, Haryana and Himachal Pardesh) in the last decade averaged around 8 percent while Pakistani Punjab posted average growth of 4.5 percent. The agricultural growth rate of Pakistani and Indian Punjab was similar but the industry in Indian Punjab posted average growth of 10 percent compared with 7 percent in Pakistani Punjab. Yields of wheat, rice and sugarcane in Indian Punjab is 65 percent, 77 percent and 18 percent higher.

Courtesy The News