The current slump in Pakistan's industrial productivity is in sharp contrast to the sector's vibrancy in the 1960s. The decline is attributable largely to conceptual flaws in Pakistan's successive industrial policies, many of which were allegedly formulated without adequate feedback from the stakeholders. There is consensus among analysts that achieving specialisation at too early a stage, and then restricting the advantage to only a few industries has had a long-term detrimental impact on country's industrial growth rate. Pakistan's industrial output accounting for around 24 percent of the GDP.
Pakistan's industrial sector needs a comprehensive master plan for revival, because it cannot survive in the highly competitive environment of international market.
Our industrial sector has a huge untapped growth potential, which must be realised through targeted investment and policy initiatives. A factor of equal importance is speedy and faithful implementation of policies.
The solution lies in reducing the cost of production, and enhancing the tax-to-GDP ratio from its present level of around 10 percent to 15 percent, which will not be possible without withdrawing tax exemptions and bringing agriculture sector under the tax net. Raising the tax-to-GDP ratio can enable the government to curtail the burden of indirect taxes, and subsidise power supply for industrial use. As a related issue is to put due focus on R&D inputs, there is a need to encourage rapid technological advancement, without which it would be hard to realise a knowledge-based economy. Low labour productivity and lack of adequate investment in modernisation of infrastructure have served as a major impediment to the growth not only of industrial, but of other sectors as well.
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