EDITORIAL: Asad Umar, Federal Minister for Planning and Development (which administratively controls the Pakistan Bureau of Statistics), chief National Command and Control Centre (NCOC) spearheading the Covid-19 containment measures, and chairman of the Cabinet Committee on Energy, tweeted that large scale manufacturing (LSM) sector grew by 14.5 percent November 2020 and by 7.4 percent July-November 2020, concluding that “industrial growth is clearly accelerating.” Umar, however, did not dwell on the policy changes that may have fuelled this growth, particularly the marked reversal of the May 2019 onwards severe contractionary policies agreed with the International Monetary Fund (IMF) specifically: (i) fiscal policies that included reduced taxes as well as utility rates for the productive sectors, mainly the export-oriented sectors though Federal Board of Revenue (FBR) has met the half-yearly target through widening the tax net effectively; and (ii) monetary policies inclusive of special rates for specific industries/sectors, predominantly construction and export sectors as well as relief/deferral of repayment of debt.
In addition, Business Recorder would like to draw the attention of Asad Umar to PBS data items on LSM that require a clarification. First, provincial bureau of statistics reported 6.36 percent positive percentage change between July-November 2020 and 2019 against Ministry of Industries’ claim of 8.43 percent positive change; with the year on year differential estimated at (positive) 1.85 percent by provincial bureau of statistics and 5.46 percent by the ministry of industries. Additionally, the month on month growth impact of Ministry of Industries is cited at 2.03 percent against provincial bureau of statistics data of negative 0.62 percent while year on year impact of ministry of industries is estimated at 12.26 percent against provincial bureau of statistics’ 2.03 percent.
In addition, the Ministry of Industries index shows the largest increase in food, beverages and tobacco (with a weightage of 12.3) at positive 21.28 percent July-November 2020-21 and positive 57.58 percent in November 2020 though, disturbingly, food items continue to witness the highest price rise in recent years. Inexplicably, PBS did not provide sugar data for July-November 2019-20 or November 2019, cigarettes witnessed a growth of 19.2 percent, hessian grew by 27 percent and steel, coke and pig iron growth is given as zero with no data provided – items with a low weightage in terms of LSM calculation. Iron and steel witnessed negative 0.16 percent year on year cumulative growth and automobiles’ growth was 0.32 percent year on year cumulative while it was 1.97 percent in November year on year though in November 2020 the growth is 44.5 percent against negative 45 percent in November 2019.
Oil Companies Advisory Council indicated a marginal rise of 1.5 percent July-November 2010-21 compared to the same period of last year and the year on year impact at 0.09 percent with November 2020 month on month impact at negative 0.05 percent and year on year at positive 0.07 percent.
It is therefore important to note that the general perception, backed by PBS data, indicates that the productive sectors have re-energized in response to government policy changes and this is particularly evident in the construction sector – with cement dispatches rising from 16,852,000 tonnes to 20,442,000 tonnes during July-November 2020 against the comparable period of the year before with textiles accounting for 20.9 percent weightage registering a 2.4 percent rise July-November 2020. It is therefore earnestly hoped that the government continues to hold back the harsh contractionary policies that were being implemented right up to March 2020 when the pandemic hit the country. This newspaper supports the reform agenda detailed in International Monetary Fund’s documents on the Extended Fund Facility programme but at the same time urges the team to ensure it is appropriately phased out over the entire programme duration.
Copyright Business Recorder, 2021