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Monday, November 26, 2012

INDUSTRIAL DEVELOPMENT IN PAKISTAN



INDUSTRIAL DEVELOPMENT IN PAKISTAN
 

Since ''Industrial Revolution' industrialization is regarded essential for rapid development of the country. The countries that solely relied on agriculture have remained poor and underdeveloped, whereas the nations which gave weight to rapid development to industry achieved high rates of development. The advanced countries of the world, America, Germany, Great Britain, Japan, Russia, encouraged industrialization on large scale. The advantages of technological change were channeled into agriculture. They developed industry which also brought revolution by mechanizations in agricultural sector. The national income increased. The balance of payments considerably improved. There was increase in employment. The country achieved balanced growth in various sectors of economy.

Pakistan is the sixth largest populous country of the world and according to the State Bank of Pakistan in its 2009 annual report of economy, 62 million population of Pakistan was fallen below poverty line. After poverty the second largest hurdle in the way of sustainable development in Pakistan is unrest from which people are suffering since very long. Continuous deteriorating law and order situation across the country is no hidden from anyone. Devil forces, terrorists are playing with the lives of the innocent people.

Our country mainly depends on agriculture sector, approximately 70 per cent of its income comes from agriculture and 80 per cent of working women are attached with agricultural work in Pakistan. There is need to reform this process as the other developed nation do, by aware and to educate them the importance. If we bring them in this process, they will perform a very significant role. There is need to work on this. To bring awareness among the masses, media can also play an important role about the issue.

Pakistan at the time of partition in 1947, had negligible industrial base. Since the division of the Subcontinent, the Government of Pakistan has been utilizing all available resources domestic as well as external for rapid development of the manufacturing sector. Pakistan has now attained a fairly diversified base in manufactures ranging from essential consumer goods of chemicals steel, heavy engineering and tool industries. Domestic production of items such as refined sugar steel, fertilizer, cement etc has helped in import substitution and has saved substantial amount of foreign exchange.

The industrial performance in terms of growth/productivity is examined in the following periods of time:
1. Growth of industrial sector from 1947 to 1950.                                            2. Growth of industrial in 1950's.
3. Performance of industrial sector in 1960's.                                                  4. Performance of industrial sector in 1970's.
5. Performance of industrial sector from July 1977 - 1997.                                                6. Performance of industrial sector from 1997 onward.

1. Growth of Industrial Sector from 1947 to 1950:
It had an area which produced a large share of agricultural, forest and animal products. Former East Pakistan was the main producer and supplier of jute. There was not a single jute factory in the former East Pakistan, cotton was produced but it had no big factories to process and manufacture cotton. They were all situated in the areas which went to the share of India. There was no steel industry are in Pakistan, whereas India had a sound industrial base at the time of Independence. Out of 921 industrial units operating in the British India, Pakistan got only 34 industries i.e. 4% of the total industries established in the Subcontinent. The rest were located in India. The industries which came to the share of Pakistan were of a comparatively small size and were based on indigenous raw material. These industries included small sugar mills, cotton ginning factories flour mills rice husking mills, canning factories etc....etc. The Government of Pakistan know the importance of industrial growth and in order to expand the scale of production, the private enterprise was to be encouraged to set up industries excluding the manufacture of arms apparatus. The Government also set up an Industrial Finance Corporation and an Industrial Investment and Credit Corporation in 1948. In the period from 1947 to 1950, The contribution of industrial sector was 6.9% to GDP in 1950.

2. Growth of Industrial Sector in 1950's.
The private sector due to lack of capital, technical know-how, absence of entrepreneurship etc, was shy in investing capital in heavy industries. The Government took the initiative and established Pakistan Industrial Development Corporation (PIDC) in 1952 to invest in those industries which require heavy initial investment, have a long gestation period, require high degree of know-how. In the First year Plan Year Plan 1955-60, a sum of Rs. 185.11 corer was allocated of the growth of industrial sector. A large number of new industries such as woolen and worsted yarn, cycle tyros and tubes, paints, varnishes and glass were established. The production capacity of the already existing units like fertilizers, jute, paper, DDT was considerably expanded. The reduction of export duties and the introduction of Export Bonus Scheme in 1958 increased export of the manufactured goods. There was all round development of industries particularly in agricultural processing food products and textiles. The share of industrial sector to GDP rose from 9.7% in 1954-55 to 11.9% in 1959-60.

3. Performance of Industrial Sector in 1960's.
The period from 1960-1970 covers two Plan periods, the Second Five Year Plan 1960-65 and the Third Five Year Plan 1965-70, The incentive push environments for investment, better co-ordination and political stability led to the widening of industrial base. The country achieved self-efficiency in essential the widening of industrial base. There was a shift in the establishment of consumer goods industries to heavy industries such as machine tools, petro-chemical, electrical complex and iron and and steel etc. In short the industrial performance in terms of growth, export and productivity increased, the share of industrial sector to GNP went up to 11.8% from 1960 to 1965.

4. Performance of Industrial Sector from 1970's onward.
The industrial performance in terms of growth, exports and production was disappointing from 1971 to 1977. There were various reasons for the poor performance of the manufacturing sector. One wing of the country (East Pakistan) was forcibly separated. The Country had to fight a war with India in 1970. The suspension of foreign aid, loss of indigenous market (East Pakistan), fall in exports, devaluation to the extent of 131%, the nationalization of industries in 1972 infected a heavy blow; labour unrest, unfavorable investment climate, floods, recession, reduction in investment incentives etc, caused a fall in the output of large scale industries. The annual growth rate fell to 2.8% in the industrial sector in this period.

5. Performance of industrial sector from July 1977 - 1997.                                              
From July, 1977 to 1980, the Govt, initiated a large number of measures to revise the economy. Cotton ginning rice husking and flour milling were denationalized. The private sector was encouraged to invest in large scale industries. The investment climate was gradually building up in the country. The annual growth rate in manufacturing sector was 8.2% in the 1989's. The growth of large scale manufacturing slowed down to an average of 4.7% in the first half and further to 2.5% in the 2nd half of the 1990's. and fall further due to lack of government interest, political instability and power battle between two political parties.

6. Performance of industrial sector from 1997 onward
In the year 1999-2000 the manufacturing, the share of industrial sector was 18.2% in GDP in 2003-04. However it increased to 15.6% in GDP in the year 2004-05. The main factors which contributed to rapid economic growth supporting were monetary policy, financial discipline, consistency and continuity of development policies, strengthening of domestic demand continuously improving macro economic environment a stable rate global expansion of markets due to liberalization of trade in 2005 etc. The overall manufacturing recorded growth of 9.9% in 2005-06 and 8.45% in 2006-07. The decline in the froth of manufacturing sector is due to multiple reasons like the reduced production of cotton crops sugar shortage steel and iron problems and global oil prices.

The industry in Pakistan is trying to grow but is facing many problems like a lack of government interest, frequent power outages, law & order and frequent terrorism. As such, the environment discourages many foreign industrialists. The locals are setting up industries but they also face problems like shortage of raw materials, so it can be said that the time is set for industrial revolution but all the factors are going against it.

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