Punjab’s economy

Competition where art thou! Following the devolution Punjab seems to be racing ahead in so far as discussions of and planning the future of its provincial economy is concerned. Three recent developments demand attention.

First, the estimation of Lahore’s GDP by Dr Nadia Tahir under the umbrella of the Lahore Chamber of Commerce and Industry. That speaks well about just how organised Lahore’s chamber is compared to Karachi Chamber of Commerce and Industry.

Surely the idea of city-GDP is not new to Karachi. Dr Kaiser Bengali, the first economist to have produced provincial GDP in Pakistan, computed Karachi’s GDP way back in 1988. In fact, his methodology inspired the computation of Lahore’s GDP calculation. Whether businesses in Karachi will sponsor such a study depends on whether they have foresight or not.

Sticking to Lahore’s GDP (although it has been covered in yesterday’s columns), one would like to see Dr Nadia’s study being expanded to offer estimates of per capita income, income differentials, municipal revenues and other tax revenues relative to the size of city’s GDP and other such important indicators to contextualize Lahore’s economy and its fiscal performance.

The second development relates to the recent report by Punjab Economic Research Institute. That tome of a document is a great step forward to review the state of provincial economy and chart out its way forward. This column has long been arguing in favour of provincial GDP and provincial economic surveys, and PERI’s step is in the right direction, albeit this exercise should be done annually by the Punjab’s own bureaucracy rather than publishing one-off reports by technocrats or consultants. A periodic provincial GDP is one of the many items highlighted as the way forward in PERI’s report. “Producing reliable estimates of GDP and of provincial investment following as far as possible the methodology of the Federal Bureau of Statistics for all Pakistan,” says the report.

That is notable plan. But it falls short of what ought to be for it is unfortunate that despite being in the centre and in the biggest province by size of economy, the PML-N failed to bring the provinces on the table to work out their provincial GDPs in consultation with the Pakistan Bureau of Statistics. Failure to do so would mean that we would have various estimates floating about in the country, which in turn could potentially have policy implications. For example, take a look at the graph showing differences in sectoral share in Punjab’s GDP estimated by Dr Nadia and PERI.

The third interesting development that has recently surfaced is Punjab’s plans to build new economic cities. According to documents available with BR Research, Pindi Bhattian and Gujrat has been selected as the sites for building new economic cities. The key principles driving the need for new economic cities is the alleviation of the negative impacts of urbanisation and the provision of well-sited industrial land.

The two sites have been selected across a host of criteria including availability of land, population, availability of raw material, proximity to road and rail network as well as markets, citizen preference and liveability.

The implementation plan, financial model, and expected impact of the new sites has not been yet revealed, but this too shows just how ahead Punjab seems to be in charting the future course of its economy. Other provinces should take note!