At the time of partition Pakistan had thirty million people with per capita income of nearly $100, where agriculture contributed almost 50 % to the economic output. At the time of partition the land that came under Pakistan was industrially backward and so the contribution of industrial output was negligible, as all industries were located in territories that came under India.
According to economic survey, In 2008 it is claimed with population over 170 million people, the country’s per capita income was $1000 which is almost ten times more than it was at the time of partition where agriculture accounts for only 20% of our national income with 40 % of the country’s labor force engaged in agriculture. Industrial and manufacturing contributes almost 25 % of the income. Services sector has been the most dynamic sector that generates 50 % of national income and employs nearly the same proportion of the labor force.
The root cause of our failure is that we did not utilize our potential at the to maximum level. A survey of Pakistan’s economy depicts the country has achieved 5 % increase in the average annual growth rate in the last 60 years of its existence, with much higher growth in the 1960s, 1980s and early 2000.
In the period from 2002-07 Pakistan’s economy grew at 7 % annual and the rate of poverty and unemployment reduced, external debt levels lowered, international financial markets were easily reachable thus Pakistan attracted sizeable foreign direct investment.
Pakistan’s economy suffered severely during the last three years, mainly due to the oil and commodity price hike of 2007, then the handover to a democratic government from dictatorship. To curtail the situation, the administration took some tough decisions such as limiting many of the untargeted subsidies and introduced cash transfer scheme for the poor. However in this process the country has accumulated external debt that has raised the Public Debt – GDP ratio, sacrificed public sector investment for infrastructure and human development and raised overall interest rate structure. In order to get a hold of the situation the challenges include trade deficits, mounting internal and external debts, unemployment, inflation, inefficient tax collection and deteriorating social indicators.
Key indicators of economic performance in 11 months show a slow recovery in the running fiscal year from a record slow down in FY09 keeping despite the global financial crisis and Great Recession of 2008-09. Inflation declined but a spike in international fuel and food prices, excessive government borrowings from the central bank and unchecked business malpractices like hoarding and cartel-making kept inflationary pressures alive. Tax revenue grew in FY10 but is likely to fall short of the target of $1.38 trillion. The total national debt to GDP and external debt to GDP ratio remained high thus increasing the government expenses on debt servicing.