SHARE OF PUNJAB IN PAKISTAN'S ECONOMY

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
Apr 13 - 19, 2009

Punjab is the most industrialized province of Pakistan. Its manufacturing industries produce textiles, sports goods, machinery, electrical appliances, surgical instruments, metals, bicycles and rickshaws, floor coverings, processed foods etc. The province manufactures 90% of the paper and paper boards, 71% of the fertilizers, 65% of the sugar, and 40% of the cement in Pakistan.

Despite its dry climate, extensive irrigation makes the province a rich agricultural region. Its canal-irrigation system is the largest in the world. Wheat and cotton are the largest crops in Punjab while others include rice, sugarcane, millet, corn, oilseeds, pulses, fruits and vegetables. Livestock and poultry production are also important.

Punjab contributes about 68% to annual food grain production in the country. In different parts of the province, 51 million acres lands are cultivated and 9.05 mn acres are cultivable.

Lahore and Gujranwala divisions have the largest concentration of small light engineering units. The district of Sialkot excels in sports goods, surgical instruments and cutlery goods. Punjab is also a mineral rich province with extensive mineral deposits of coal, rock salt, dolomite, gypsum and silica sand.

SHARE IN NATIONAL ECONOMY

Punjab is a significant contributor to national GDP, accounting for 58.5% of Pakistan's national income. The province accounts for 62.6% of community and social services, 61.3% of wholesale and retail trade, 57% of agriculture and 58.2% of industrial value-added in the national GDP. Overall, Punjab contributes more than 50% to the GDP in almost every sector in the national accounts.

ECONOMIC PERFORMANCE

In FY07 Punjab's Gross Provincial Product (GPP) grew at 7.8% over the previous year. In absolute terms it amounted to Rs. 3,067,033 mn, 58% of the national gross domestic product (GDP). The services sector is by far the largest sector, contributing about 54% to the GDP. Agriculture accounts for 20.3% and industry 25.7%. Changes in the sectoral breakup of GPP over the years are indicative of structural changes away from a reliance on agriculture. Around 44% of Punjab's labor force is employed in the agricultural sector.

AGRICULTURE

Agriculture is the mainstay of provincial economy, with a 20.3% share in the GPP. Major crops contribute about 46.5% of value-added to agriculture in Punjab, while livestock contributes 39.1%. The Government of Punjab is taking several initiatives to optimize agricultural resource utilization (particularly of fertilizer), improve seed quality, and promote farm mechanization, plant protection, and access to agricultural credit. Other potential areas to increase agriculture productivity and production include promotion of nontraditional agricultural products (e.g. off-season vegetables) and livestock, and the expansion of effective research and extension.

EDUCATION

The Government of Punjab has taken the development of education as a key challenge and the slogan of 'Parha Likha Punjab' exemplifies its vision. Gross enrolment rates at primary, middle, and matriculation levels have increased over time for both males and females, although a large rural-urban gap still exists. Total expenditure on education as a percentage of Punjab's GPP has increased steadily after FY04, especially following the initiation of the Punjab Education Sector Reform Program. Allocation to education is expected to triple from Rs. 9,200 mn in FY06 to Rs. 21,480 mn in FY09.

SECTORAL SHARE IN GROSS AGRICULTURE PRODUCT IN PUNJAB (%)
SECTOR 2003/04 2004/05 2005/06 2006/07
Crops 58.4 61.1 59.1 59.9
Major crops 44.5 48.1 45.6 46.5
Minor crops 13.9 13 13.5 13.4
Livestock 40.3 37.6 39.7 39.1
Fishing 0.7 0.6 0.7 0.7
Forestry 0.6 0.6 0.6 0.3
Agriculture 100 100 100 100
Various sources

INDUSTRY

Punjab has played a significant role in the industrial development of Pakistan, accounting for almost 60% of the country's industrial production. Punjab has more than 48,000 industrial units and 39,033 small and cottage industrial units. The number of textile units is 11,820. The ginning industries are 6,778. There are 6,355 units for processing of agricultural raw materials including food industries. The industrial sector's share in GPP is 25.7%, compared to roughly 17% in FY 2000. The large and small scale manufacturing sub-sectors accounted for 14.14% and 5.27% of GPP respectively in FY07. The share of the services sector now exceeds that of all the commodity producing sectors. The wholesale and retail trade sub-sector is most important in Punjab in terms of its large share, followed by transport, storage and communications, and social, community and personal services.

MAJOR INDUSTRIAL GROUPS IN PUNJAB
(SHARE IN %)
Textile and Apparels 39
Food Beverages and Tobacco 24
Industrials and other Chemicals 13
Others 12
Machinery 5
Paper and paper products 3
Drugs and Pharmaceutical products 2
Leather and Leather products 1
Sports and Athletic goods 1
Various sources

WATER

Punjab, like the rest of Pakistan, is a water-scarce area both with reference to needs of irrigation, drinking water, and sanitation. Meeting production targets would require the cropped area to increase to 30.88 mn hectares (Mha) by 2010 and to 31.83 Mha by 2025. Alternatively, cropped area needs an increase up to 26.1 Mha by 2010 and to 26.26 Mha by 2025.

CONCLUSION

Punjab makes a significant contribution to the national economy in both the commodity producing and service sectors. Provincial growth rates have been above 7% in the last 4 years. However, the volatility in agricultural production, and the downward trend in the growth rates of the manufacturing sector indicated by the available GPP estimates need to be monitored and corrected swiftly if Punjab's growth momentum is to be maintained over the medium term.