Pakistan Economic Survey 2015-16, A Sad Tale of Missed Targets

Summary

The incumbent government’s economic team has failed to achieve GDP growth target for the third consecutive year as overall key targets set for 2015-16 were missed by 0.8 percent due to poor performance of agriculture sector, Large Scale Manufacturing (LSM), food products, engineering products, transport and communication etc. Major achievements of the FY 2015-16 include: picking up economic growth, price stability, improvement in tax collection, reduction in fiscal deficit, worker remittances touching new height, and foreign exchange reserves remained high.

The GDP growth was recorded at 4.71% in 2015-16 against the growth of 4.04% in the last year.

Performance of Major Sectors

Agriculture Sector

The agriculture sector, which accounted for 19.82% of GDP and 42.3% of employment, recorded a negative growth of -0.19% against the growth of 2.53% last year.

Agriculture sector has four sub-sectors: crops, livestock, fisheries and forestry. Here is the performance review of these:

1. During FY2016, the production of Potatoes, Chillies and Onions grew positively witnessing growth of 3.4 percent, 2.1 percent and 0.2 percent, respectively, comparing to production of same period last year.
2. Cotton Ginning has witnessed growth of -21.26% against the growth of 7.24% in the previous year.

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• During July-April, FY2016 the share of direct tax in total FBR tax collection is 37.9 percent showing a growth of 14.4 percent during the period. Net collection has gone up from Rs. 775.9 billion to Rs. 888.0 billion.

The gross and net collection of Indirect taxes has witnessed a growth of 20.4 percent and 21.7 percent respectively. It has accounted 62.1 percent of total FBR tax revenues during the first ten months of the current fiscal year.

Overall Review

Economic Survey, released on 2nd June, 2016, a day earlier than the budget for FY17, is a painful reminder that despite high-sounding pronouncements of the government, the economy of the country is still not on a take-off stage. As per the findings of the Economic Survey of Pakistan 2015-16, the economy of the country performed poorly and many of the targets were missed. And those which were met were too insignificant to provide any considerable momentum to the economy. It is unfortunate that this year again the performance of the social sectors remained listless and pathetic. Like in past years, these sectors, especially education and health, suffered not only from relatively inadequate funding but also from being relegated almost to the bottom on the list of priorities.

The literacy rate during the year, according to the economic survey, had increased by a pathetic two percent, rising to a dismal 60 percent of the population aged 10 and above but with the gender and regional gaps remaining as wide as usual. Under the Millennium Development Goals, Pakistan was required to increase its literacy rate to 88 percent by 2015. There was deterioration in other social indicators with the proportion of population having access to water also dropping. Overall, the health sector remains the lowest priority of the federal government. Most health indicators in the economic survey showed a downward slide. Despite urgency to increase spending under this head, the health sector received only 0.45 percent of GDP during the first nine months of FY2015-16, which is almost unchanged from the share of GDP represented by health spending during the previous fiscal year.

World Bank statistics show that Pakistan spends $37 (Rs3,873) per capita on health, which is lower than the World Health Organisation’s prescribed level of $44 per capita (Rs4,606) — the minimum spending package required for essential health services. The public healthcare system in Pakistan is inadequate consisting of 1,167 hospitals, 5,695 dispensaries, 5,464 basic health units, 675 rural health centres and 733 mother-and-child health centres. There are 184,711 doctors — one doctor per 1,038 persons — while the 118,869 available hospital beds translate into one bed for every 1,613 people. Pakistan’s economy is primarily agriculture based, but the Integrated Food Security Phase Classification analysis conducted from March to June 2015 shows that 29 out of 148 districts in Pakistan are highly food insecure and require immediate attention. Of these 29 districts, four have been identified as “severely food insecure”.

There is, therefore, a dire need to expand service delivery, address the shortfall in health-related human resources, and make better use of technology. The poverty ratio in the country dropped to 29.5 percent in 2013-14. This translated into almost one-third of the country’s population living below the new poverty line. In absolute terms, 59 million people are now being recognised as poor against the earlier figure of 20 million. It goes without saying that the figures for the performance of the social sectors present a grim picture of the state of human well-being in Pakistan. Without improvement in these vital areas, all the government’s boasts about the country’s economic performance sound hollow.