The National Economic Council (NEC) on Monday scaled GDP growth down to 5.8 percent for the current fiscal year, and 5.5 percent target for 2008-09. The NEC, which met here with Prime Minister Yusuf Raza Gilani in the chair, approved Rs 541 billion Public Sector Development Programme (PSDP) for 2008-09. It includes Rs 371 billion of the federal government and Rs 170 billion of the provinces share.
It has a shortfall of Rs 45 billion. The NEC also decided to keep the public aware of the facts to give the real picture of the economy. One of the participants stressed for speaking all about truth on economy. He said: "Instead of bluffing, let''s be truthful to the nation of the factual economic situation". His approach was well taken by others.
Planning Commission Deputy Chairman Salman Faruqui told NEC that 2008-09 PSDP marked a sharp change in direction for immediate relief to the poor, and especially the poorest of the poor. He said the PSPD would focus on physical and social infrastructure projects for sustainable and equitable growth.
The NEC meeting was told that the economy was facing a difficult time. The economic growth has declined to 5.8 percent, against 7.2 percent target. Inflation has reached double digits with food inflation at 15 percent. Trade deficit has reached 15.2 percent of GDP and fiscal deficit has reached unsustainable levels. Exchange rate is under increasing pressure. To protect against sharp increases in international prices, the government is providing subsidy of Rs 1.2 billion per day.
The PC Deputy Chairman said that this economic situation was the result of ''flawed'' policies and ''inaction'' of the past government. He gave the examples of lack of supporting policies for the poor, power shortage and the wheat crisis. He listed following 5 priorities for PSDP.
a. First, providing a comprehensive safety net against severe hardship faced by the poor and vulnerable groups.
b. Second, overcoming the energy and water crisis in a planned and systematic manner.
c. Third, highest priority to the development and uplift of Balochistan and NWFP and Special Areas (FATA, AJK, Northern Areas).
d. Fourth, reviving growth in agriculture and manufacturing so as to overcome food shortages and generate vitally needed incomes and employment.
e. Fifth, building up human resources at all levels of education including technical education.
THE PRIME MINISTER''S INITIATIVES PROGRAMME FOR POVERTY ALLEVIATION:
-- Income support fund Rs 34 billion
EMPLOYMENT & SKILLS DEVELOPMENT:
-- ''Hunarmand Pakistan'' 2 billion.
-- Placement bureaus 10 million.
RURAL DEVELOPMENT: White revolution Rs 500 million. Village product specialisation, Rs 500 million. Cold chains Rs 10 million.
HEALTH SECTOR: Doubling lady health workers Rs 3.5 billion. Expansion & upgradation of BHUs, Rs 500 million.
HOUSING: housing for All: Revolving fund of Rs 10 billion, Rs 2 billion. Real estate investment trust Rs 300 million.
IMPROVING GOVERNANCE: Video conferencing facilities, Rs 100 million Promoting paper less governance, Rs 100 million.
SECTORAL ALLOCATION: The Social sectors have been allocated Rs 188 billion, 12 percent higher than 51 percent of the last year.
i) Infrastructure has been allocated Rs 166 billion, 45 percent.
ii) Power sector has been allocated Rs 14 billion, Rs 51 billion to be spent by Wapda from its own resources.
iii) Water sector has been allocated Rs 75.0 billion.
iv) Food, agriculture and livestock allocated Rs 20 billion.
v) Transport and communication sector has been allocated Rs 61.0 billion.
vi) Higher education has been allocated Rs 18.0 billion.
vii) Special Areas (AJK, northern areas and FATA) allocation increased to Rs 23.3 billion.
REVIEW OF ANNUAL PLAN 2007-08: GDP growth of 5.8 percent against the target of 7.2 percent.
Agriculture sector growth turned out to be 1.5 percent against the target of 4.8 percent. Manufacturing sector grew by 5.4 percent as against the target of 10.9 percent Services sector with 8.2 percent exceeded the target of 7.1 percent. Total investment as a ratio to GDP declined from 22.9 percent in 2006-07 to 12.6 percent in 2007-08.
Foreign private investment during July-April amounted to $3.6 billion against $5.3 billion during the same period last year. Inflation rate went into double digit, amounting to 10.3 percent with food inflation mounting to 15 percent. Export and imports in dollar terms registered growth rates of 15percent and 28.6 percent respectively. Worker''s remittances are expected to be around $6.6 b billion during the whole years. Current account deficit is estimated to be $14.1 billion (8.3percent of GDP) against $7.4 billion (5.1 percent of GDP).