CONTRIBUTION OF SINDH IN PAKISTAN'S ECONOMY

S.M.ABBAS ZAIDI,
Research Analyst
, PAGE
Sep
 07 - 13, 2009

Sindh is the second largest economy of Pakistan. Historically, Sindh's contribution to Pakistan's GDP has been between 30% to 32.7%. Its share in the service sector ranges from 21% to 27.8% and in the agriculture sector from 21.4% to 27.7%. Performance wise, its best sector is the manufacturing that has a share of in between 36.7 - 46.5%.

Endowed with coastal access, Sindh is a major centre of economic activity in Pakistan and has a highly diversified economy ranging from heavy industry and finance centred in and around Karachi to a substantial agricultural base along the Indus River.

Manufacturing sector includes machine products, cement, plastics, and various other goods. Agriculture is very important in Sindh with cotton, rice, wheat, sugar cane, bananas, and mangoes as the most important crops. Sindh is the richest province in terms of natural resources of gas, petrol, and coal.

INDUSTRIAL PRODUCTION & EMPLOYMENT

SELECTED INDUSTRIES

UNIT

FACTORIES COVERED PRODUCTION EMPLOYMENT (NOS.)
Vegetable Ghee '000 M.Tons 29 321 2,255
Cooking Oil -do- - 179 -
Sugar -do- 30 1,553 12,753
Cement -do- 10 4,302 2,498
Fertilizer (Urea) -do- 3 2,417 1,602
Cotton   91 354 37,958
Cotton Cloth Mn. Sq. - 126 -
Cigarettes Mn. Nos. 2 14,719 710
Source: Sindh Development Review

AGRICULTURE

Agriculture is the backbone of Sindh province with cotton, rice, wheat, sugarcane, bananas, and mangoes as the most important crops. Cotton accounts for 7.5% of the value added in agriculture and about 1.6 % to our GDP. The crop was sown on the area of 3054 thousand hectares, 0.6% less than last year (3072 thousand hectares). The cotton area sown in Sindh was 6 % higher than the last year.

PROBLEMS

Sindh's natural endowments consist mainly of agriculture, fisheries, livestock and poultry, arid zones, coastal and marine ecosystems, water resources etc. The natural assets of the province are under stress due to poor management, lack of financial and human resources and the non-involvement of communities in the management and development forces. Increasing poverty and unemployment further restrict sustainable natural resources management.

ELECTRICITY & GAS

CONSUMPTION

ELECTRICITY (MN. KWH)

NATURAL GAS (MN. CUB.)

.

KESC

WAPDA

KARACHI

INDUS

. .

2007-08

.
TOTAL 9,569 9,176 7,807 2,315
Domestic 3,973 2,542 1,260 421
Commercial 1,083 317 238 39
Industrial 3,357 1,226 6,309 1,855
Agricultural 95 695 - -
Others 1,061 4,396 - -
Source: Sindh Development Review

POOR IRRIGATION SYSTEM

Indus water is crucial to Sindh's survival as 95 percent of its farmland acquires water from the Indus Basin Irrigation System and 97 percent of all water is used for agriculture. The ground water available in Sindh amounts to only three to five Million Acre Feet (MAF) and is potable only in 28 percent of Sindh's geographical area. Sindh is plagued by acute water insecurity. In 1971-72, when Sindh's population was about 14.0 million, water availability was 39.3 MAF. In 1988-89, when the population rose to 30 million, water availability was reported at 48.5 MAF. The water problem is further aggravated by defective irrigation practices, like flood irrigation, lack of drainage facilities and the absence of properly organized management and distribution system of this resource. The absence of lining in canals and water channels result in leakages that cause water logging and seepages in the urban water transmission and the distribution system. Meanwhile sea intrusion in the delta has made most of the subsoil in the aquifer saline. Sindh is major producer of grain fruit and vegetables. However, crop yields are low having been almost stagnant for the last decade. This is due to salinity caused by leakages from canals and from sea intrusion in the delta and control districts. Over irrigation and badly managed water distribution also contribute to crop yields.

CURRENT ECONOMIC SITUATION

Sindh's recent economic performance has been affected by the same adverse international and domestic factors that have affected the national economy. The provincial economy has significantly slowed during the past fiscal year. Fiscal conditions have already deteriorated. The FY09 budget estimated the fiscal deficit at PRs14.1 billion (about $175 million, or about 0.6% of provincial GDP), 72% higher than the previous year.

Total provincial development expenditure grew at a staggering rate of 68.7% from FY03 to FY08. This rate has declined to 24.2% in FY09 with net provincial development outlay were PRs77.3 billion. The budgeted size of the annual development plan (ADP) reflects efforts by the government of Sindh to maintain relatively strong growth in development spending. The rate of increase of recurrent expenditure has been kept at 14.1%, which is low real growth given the current high rate of inflation.

CONCLUSION

No doubt, Sindh is the backbone of Pakistan's economy. It generates almost 80% of the total national tax revenue (86.8% in the last two years). The federal government, however, transfers only 23% of the federal tax pool to the province. Therefore there is a need for proper and just allocation in Sindh by the federal government in order to exploit untapped resources of Sindh.