Different Aspects of pakistan's economy 2012

Commecs Institute of Business and Emerging
Sciences
Different Aspect of Pakistan Economy In
2012
By
Saad Iqbal
&
Asad Jamal
BBA 2
May 17, 2013

Table of Content
1. Executive Summary
2. Agriculture
a) Introduction
b) Recent Performance
c) Major Crops
3. Education
a) Introduction
b) National Education Policy 2009
c) Educational Institutional and Enrolment
4. Inflation
a) Introduction
b) Inflation By Income
c) Causes of Inflation In Pakistan
5. Taxes
a) A note on Tax Expenditure 2011-12
b) Income tax
c) Sales Tax
d) Customs duty
e) Consolidated Summary

Agriculture:
Introduction:
The agriculture sector continues to be an essential component of Pakistan’s economy. It
currently contributes 21 percent to GDP. Agriculture generates productive employment
opportunities for 45 percent of the country’s labor force and 60 percent of the rural population
depends upon this sector for its livelihood. It has a vital role in ensuring food security,
generating overall economic growth and reducing poverty.
Recent Performance:
During 2011-12, the overall performance of agriculture sector exhibited a growth of 3.1 percent
mainly due to positive growth in agriculture related subsectors, except minor crops. Major
crops accounted for 31.9 percent of agricultural value added and experienced a growth of 3.2
percent in fiscal year 2011-12 with negative growth of 0.2 percent in 2011.
Major Crops of Pakistan:
The significant growth in major Crops is contributed by rice, cotton and sugarcane.
Cotton:
Cotton is an important cash crop which significantly contributes to the national
economy by providing raw material to the local textile industry, such as cotton lint as
an export item.

Sugarcane:
The sugar cane is the second major cash crop and is used as a raw material in the
production of the refined sugar and gur. Its share in value added in agriculture in GDP is
3.7 and 0.8 percent, respectively.
Rice:
Rice ranks as second amongst the staple food grain crops in Pakistan and it has been a
major source of foreign exchange earnings in recent years. Pakistan grows a high quality
of rice to fulfill the domestic demand and also for exports. Rice accounts 4.9 percent of
the value added in agriculture and 1.0 percent of GDP.

Wheat:
Wheat is the basic staple food for most of the population and largest gain source of the
country. It contributes 12.5 percent to the value added in agriculture and 2.6 in GDP.
Wheat is cultivated in an area of 8666 thousand hectares in 2011-12, showing a
decrease of 2.6 percent over last year area of 8901 thousand hectares.

Education
Introduction:
The primary objective of government policy in the last few years has been to improve the level
and quality of education in Pakistan. The government vision is to expand primary education and
this measure can be used to assess whether government schools have increased their coverage,
by increasing enrolments faster than the growth in population, especially at the primary level
because that level forms the core of the literate population
National Educational Policy 2009
The National Educational Policy (NEP) 2009 is a milestone which aims to address a number of
issues including:
 quality and quantity in schools and college education
 universal primary education
 improved Early Children Education (ECE)
 improved facilities in primary schools
 provide demand based skills and increase in the share of resources for education in both
public and private sectors
Educational Institutions and Enrolment:
Pre-Primary Education: Pre-Primary education is the basic component of Early
Childhood Education (ECE). Prep or Katchi classes are for children between 3 to 4
years of age. An increase of 7.4 percent in Pre-Primary enrolment (9.41 million) in
2010-11 over 2009-10(8.76 million) has been observed and it is estimated to
increase by 4.8 percent to 9.86 million in 2011-12. [Table 10.4]
Middle Education (Classes VI-VIII): A total of 41,951 middle schools with
334,984 teachers were functional in 2010-11. An increase in middle enrolment (5.64
million) in 2010-11 over 2009-10 (5.50 million) has been observed during 2010-11. It is
estimated to increase by 1.3 percent (5.72 million) in 2011-12.
Secondary Education (Classes IX-X): A total of 25,209 secondary schools with
452,779 teachers were functional in 2010-11. An increase in secondary enrolment (2.63
million) in 2010-11 over 2009-10 (2.58 million) has been observed during 2010-11. It is
estimated to increase by 3.6 percent to 2.73 million in 2011-12

Higher Secondary / Inter Colleges (Classes XI-XI)
A total of 3,435 higher secondary schools and inter colleges with 81,183 teachers were
functional in 2010-11. An increase in secondary enrolment (1.19 million) in 2010-11 over
2009-10 (1.17 million) has been observed. It is estimated to increase by 8.7 percent to
1.291 million in 2011-12.
Degree Colleges Education (Classes XIII-XIV):
An enrolment of 1.02 million students is expected during 2011-12 in degree colleges
against an enrolment of 0.76 million in 2010-11. A total of 1,558 degree colleges with
36,349 teachers were functional during 2010-11

Universities Education (Classes XV onwards)
An enrolment of 1.41 million is estimated in 2011-12 in higher education (universities)
over 1.11 million in 2010-11. There are 135 universities with 63.557 thousand teachers
in both private and public sectors are functional during 2010-11.

Inflation
The global economy experienced significant financial crises in 2007-08. In the developing
countries, the crisis was seen at the time when they were already experiencing severe terms of
trade and slower economic growth. In Pakistan the affect was felt much severely as the country
was also experiencing internal security issues and campaign against terrorism. The surge in food
and commodity prices witnessed during 2008-09 pushed the consumer prices index (CPI) to a
record level of 25.3 percent in August 2008.
Food insecurity is a multi dimensional problem and deserves to be tackled through a multi
pronged strategic approach where demand, supply and distribution factors need to be taken
into account. Availability and access, two important components of food security needs to be
addressed simultaneously. Food carries the largest weight in three price indices and hence
influences the movement of these indices even with slight variation in prices. The most visible
impact of rising food prices on the economy is acceleration of inflationary pressure. In such a
situation controlling the inflation becomes unmanageable. Pakistan is experiencing double-digit
inflation over the last several years mainly due to increase in prices of food.
The Pakistan Bureau of Statistics (PBS) has changed the base year of the price indices from
2000-01 to 2007-08, which by comparison with the previous base has undergone considerable
change in terms of revision to commodity groups; their weights derived from Family Budget
Survey 2007-08; and, coverage of items to capture the changing pattern of consumption of the
people.

Inflation by Income Groups:
Inflation by income groups affects the consumption pattern of various income groups. The
current CPI covers the consumption of those households whose monthly income ranges from
Rs. 8,000 to Rs. 35,000 per month.
Inflation on year to year basis reveals that the CPI was highest in July 2011 at 12.4 percent.
However, in December 2011 it declined to single digit at 9.7 Inflation on year to year basis
reveals that the CPI was highest in July 2011 at 12.4 percent. However, in December 2011 it
declined to single digit at 9.7percent. Thereafter it increased steadily and Reached 11.3 percent
in April 2012. Food inflation on a year to year basis was highest in July 2011 and lowest in
January 2012 at 9.2 percent. Nonfood inflation was lowest in July 2011 at 9.2 percent and
highest at 11.6 percent in April 2012. Core inflation during the last nine months of the year
remained almost at double digit levels except in July 2011 when it dropped to single digit at 9.5
percent. The main factor contributing to the rise of non-food inflation was the upward
adjustment of energy, gas and fuel prices.
Causes of Inflation In Pakistan:
There are two reason of Inflation in Pakistan
1. Increase In Demand:
Increase in Money Supply
The major cause of increase in the price level is an increase in money supply. It may be
due to increase in currency or credit money. Increase in the stock of money induces
people to demand more and more of goods and services.
Increase in Velocity of Money
According to the Fisher’s Quantity Theory of Money, if there is an increase in the
velocity of circulation of money it also leads to inflation.
Non-productive Expenditures
Government of Pakistan has to make a lot of non-productive expenditures like defence
etc. Such unproductive expenditures lead to the wastage of economy’s precious
resources and also lead to inflation.

Corruption & Black Money
Corruption and black money leads to increase in aggregate demand, which is cause of
inflation. These evils increase aggregate demand and import volume.
Deficit Financing
Deficit financing is another cause of inflation. It increases the money supply and leads to
inflation.
Foreign Remittances
Increase in foreign remittances is increasing the money supply in our country. Increase
in money supply leads to inflation.
Foreign Aids
Foreign aids are also a source of mobilization of resources form rich countries to poor
countries. It is also a cause of inflation in Pakistan.
Consumption Trends
Due to demonstration effect people of our country want to copy the styles of people of
rich countries. In this way there is an increase in consumption trends that leads to
inflation.
Population Bomb
Population of Pakistan is increasing day by day. Increasing population is demanding
more and it creates inflation.
2. DECREASE IN SUPPLY:
Slow Agricultural Development
Low growth rate of agricultural sector caused in shortage of productivity. It results in low
supply and increase in price level.
Slow Industrial Growth
Our industrial sector is not at developed form due to use of backward techniques of
production. Its less production also creates shortage in market and caused in inflation.
Increase in Wages & Salaries
Increase in the prices of imports also leads to creation of inflation. If there is an increase
in the prices of oil and other imported raw material then it will cause to reduction in
supply.
Indirect Taxes:
The imposition of indirect taxes is a reason for increase in prices. Sometimes
government imposes taxes on some particular commodities. In this case producer may
start to decline the production of those goods

Devaluation
The value of our currency is decreased due to devaluation. It makes imported goods
more expensive and it leads to shortage of supply.
.
Tax Expenditure
A Note on Tax Expenditure 2011-12:
Estimates of tax expenditures are being prepared by FBR and reported in the Pakistan Economic
Survey since last few years as part of the budget process. The Tax Expenditure for the year
2011-12 works out to Rs. 185.496 billion. Details of Direct Taxes have been indicated first in the
report, followed by Sales Tax and Customs Duty. Federal Excise Duty has not been included due
to very restrictive base and exemptions. Detailed are as follows:
Income Tax:
The cost of exemptions, exclusions, subtractions, deductions, rebates and credit etc that cause
loss of Direct Taxes revenue comes to Rs. 69.608 (billion) has been reflected in Table -1 below:
Sales Tax:
Sales Tax exemptions are provided at the import stage and on domestic supply of goods and
services. Previously, Sales Tax exemptions were available on certain items including tractors,
fertilizers & pesticides etc. However, the Federal government rationalized these exemptions

during last year. From 15-03-2011 onwards, tractors, pesticides and fertilizers have been made
chargeable to Sales Tax, resulting in reduction in the cost of exemptions.
Tax Expenditure in respect of Sales Tax is estimated at Rs. 24.300 billion for fiscal year 2011-12.
Details have been worked out and are indicated in Table-2 below:
Customs Duty:
Under the Customs law, exemptions or concessions are granted to goods that are imported into
Pakistan through SROs, special classification in Chapter 99 of Pakistan Customs Tariff, and/or
through specific rate of tariff. On the basis of these provisions, the tax expenditure in respect of
Customs Duty has been estimated at Rs. 91.588 (billion) for 2011-12.
Consolidated Summary:
Based on the aforementioned estimates for individual taxes, the overall tax expenditure for
2011-12 has been estimated to be around Rs. 185.496 billion. The consolidated summary of the
tax expenditure for fiscal year 2011-12 is given in Table-4:

Different Aspects of pakistan's economy 2012

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Different Aspects of pakistan's economy 2012