Daily Times

China, Vietnam, Thailand, and Korea breathe new life into their economies by targeted growth in their agriculture sectors. What is consistent in the evolution of these agri-based economies is the extensive research and technology investment efforts by the respective government in irrigation, seeds, and land development. However, agriculture has not been the only sector in focus; these countries adapted multilateral growth approach suiting key sectors.

With the advent of the new FY budget 2021-22, politicians and economists have been quick to term it as representing ‘an agriculture growth year’ or being ‘industrial friendly’ or even a ‘balanced budget’. While all of these labels are appropriate — none accurately define it. Personally, I see this as a “structure budget”. That is, a budget well needed to mark the beginning of an “era of growth”.

The key is the multilateral growth strategy, as evident from the Financial Bill and the Budget 2021-22. Prime Minister Imran Khan recently tweeted that “this reflects the success of our govt’s economic policies while managing COVID 19 pandemic. Our V-shaped recovery is balanced between 3 major sectors: agriculture, industry & services”. However, in my opinion, the following sectors will prove to be game changers for Pakistan and emerge as key players in taking Pakistan towards a growth trajectory. Let’s take a closer look into the key sectors that will prove critical in meeting the government’s GDP target.

Agriculture: it is most unfortunate, indeed, ironic, that here in Pakistan — an agriculture-based country — the very backbone of our economy was ignored and left at the mercy of corrupt politicians. However, FY 2020-21 witnessed a growth of 2.77 percent in this sector. Record production of wheat (8.1 percent) rice (13.6 percent), maize (7.38 percent) and the second-highest production of sugarcane (22 percent) reminded the key leadership growth in the agricultural sector remains critical to ensuring the livelihood of 39 percent of the labour force that it employs (according to Economic Survey statistics for 2019-20). Development of the agriculture sector also plays an integral role in reducing poverty, increasing financial inclusion and financial capability, protecting bio-diversity and more.

The agricultural, industrial, IT and textile sectors will prove to be game changers for Pakistan. Indeed, all will emerge as key players in taking the country towards trajectory growth while meeting the government’s GDP target

The government is aiming to increase the income of small farm holders through focused attention and by reforms such as clean micro-financing of Rs1.5 trillion in farm credit. FY 2021 also saw the National Agriculture Emergency Programme undertake 13 mega projects at a total cost of Rs 277 billion and the government announcement of a Rs 5.4 billion-‘Rabi Package” to reduce input cost for farmers in a bid to increase wheat production.

Industries: Large-scale manufacturing (LSM) accounts for nearly 80 percent of the country’s total manufacturing and10.7 percent of the national output. Therefore the 9.1 percent year-on-year growth instills hope and motivation for a sound future. By incentivising and reducing Custom Duties and Addition Custom Duties on the import of raw material falling under 589 Pakistan Custom Tariff (PCT) codes, this serves to promote the hot-rolled coil steel sector, SME industry while boosting the automotive sector as well as the export sector, and more. All of which means that the government is sure to sure to reach the 6.2- percent growth target for industries during the new financial year.

Boosting the industry sector that recorded a growth of 3.6 percent in the FY 2020-21 is also a great way to achieve employment targets, increase revenue collection and strengthen the ‘Made in Pakistan’ initiative.

Information Technology: Aiming to set the IT sector for a colossal growth target of $5 billion in export remittances over the next three years, the government is boosting the industry through zero income tax on IT and ITeS exports (till June 2025), three years tax breaks for the PSEB-registered IT start-ups, up to 100 percent foreign ownership of IT and ITeS companies, and more. The new budget 2021-22 also provides for a special technology zone with a 10-year tax holiday; duty-free capital goods technology zones; and tax regime of 1 percent.

The decision is based on data that ranks Pakistan the third most popular country for IT Services and freelancing. Encouragingly, the eCommerce industry grew by Rs. 96 billion in the first quarter of 2021.

Textile Sector: Government incentives coupled with the Textile Policy 2020-2025 saw this booming sector surprise economists with a staggering 9-percent growth in textile exports during the last nine months of 2021. The government’s decision to either reduce or exempt various duties on fabric imports will become a major boost for textile. Another decision that must be lauded is the ‘no new’ electricity tariff which breathed new life into this electricity price-sensitive sector. Value-added exports from the textile sector are also expected to increase as they benefit from the 2021-22 and other reforms.

By presenting a well-rounded and holistic budget, the PTI government has not only established itself as a worthy contender for the next elections — it has also put the seasoned opposition to shame while living up to its promise of a Naya Pakistan. While many remain sceptical, I for one hope to see the successful implementation of reforms and policies to ensure that the year of growth turns into an era of growth.

The writer is Special Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and Foreign Research Associate (Centre of Excellence, China Pakistan Economic Corridor, Islamabad). He can be reached at hassnain.javed@hotmail.com