The Panel of Economists has proposed to the government to initiate necessary structural changes and establish institutional framework for sustained inclusive growth. The high profile panel of economists constituted by the present government after coming into power to suggest measures that could be adopted to steer the country out of prevailing economic crisis has submitted 'Medium-Term Development Imperatives and Strategy for Pakistan.
The panel proposed a new approach to inclusive growth by establishing an institutional framework for the provision of productive assets to the poor as well as the capacity to utilise these assets efficiently. In this way, engaging poor in the process of investment, innovation and productivity could become the active subjects of economic growth rather than being merely recipients of a "trickle down" effect: Thus a sustained high growth could be achieved through equity. Inclusive growth so defined can become both the means and the end of GDP growth, it said.
The institutional framework of such an inclusive growth could have four broad dimensions, which include a small and medium farmer strategy for accelerated agriculture growth through the provision of land ownership rights to the landless and institutional arrangements for yield increases. An institutional framework for providing productive assets to the poor through equity stakes in large corporations owned by the poor and managed by professionals.
The third broad dimension is accelerated growth of small and medium scale industrial enterprises through an institutional framework for increasing the production and export of high value-added products in the light engineering and automotive sectors. And the last dimension proposed by the panel of economist in this regard is the process of localised capital accumulation through participatory development.
The panel of economists also suggested to the government that the next five-year plan, from 2010-11 to 2014-15, should focus on removal of physical constraints to growth rather than targeting previous plans for high growth rates of GDP of 7 percent to 8 percent. A realistic strategy has been proposed which is based initially on the removal of physical constraints to growth and an improvement in the investment climate within the next two years.
Thereafter, the expectation is that the growth process will pick up momentum. As such, from a GDP growth rate of about 3 percent in the base year of the Plan, the growth rate could rise to 5 percent by 2012-13 and approach 7 percent by 2014-15. Overall, the average growth rate expectation during the Plan period is just above 5 percent.
Financial sustainability of the Plan would need to be ensured by vigorous efforts at domestic resource mobilisation and strong economy in current expenditure. With the fiscal deficit falling to 4 percent of the GDP by the end of the Plan, there would be enough fiscal space to finance from the budget a Plan size of cumulative public investment during the next five years of Rs 3.4 trillion (at 2009-10 prices).
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