Nov 26 - Dec 2, 2012

Local as well as foreign experts agree that a large percentage of Pakistan's population lives below the poverty line. Some cynics go to the extent of saying if one excludes a few big cities of the country the GDP growth rate and per capita income of Pakistan come as low as that of any African country. They attribute the prevailing situation to 'rich getting richer and poor getting poorer' phenomenon. It is also said that less than one percent of total population owns more than 90% of total wealth of the country. Experts say most of the policies followed by the government are aimed at making the rich richer.

Earning of a person is directly dependent on education, vocational and professional training. To begin with the country suffers from urban/rural divide. Nearly 60% of the total population lives in rural areas which don't have arrangements for imparting primary, secondary, vocational and professional education. Policy planners allocate paltry 3% of annual budget for education, which is less than kitchen expenses of President House. The result is most of the schools are 'open air' having hardly any infrastructure, people assigned the job of teaching lack appropriate education and above all local feudal lords consider education their worst enemy. As a result students belonging to rural areas can't get admission in institutions imparting higher/professional education. Even when these people marry and grow their own family they also don't have the money to send their children for higher education and the cycle continues.

Over the decades Pakistan has been given huge funds for containing population growth but aid and grants received for imparting education, particularly in the rural areas were paltry. Since there are fewer job opportunities in villages and smaller towns migration of people from rural to urban areas continues. Large cities suffer from their own typical problems. Since the commencement of global economic down turn in 2008 the situation in big metropolis has also got precarious. On top of all industrial units that should be operating for 365/7/24 are operating around 5 hours a day. If output of an industrial unit goes down or there is reduction in profit the axe falls on unskilled workers. At present industrial units in Pakistan are operating below optimum capacity utilization and the sponsors are least interested in creating new productive facilities. If there is no increase in productive facilities there are also no new jobs.

Rural areas suffer from some contentious problems that include, shrinking landholding; shortage of irrigation water and inadequate availability of credit to farmers. Fragmentation of landholding does not allow mechanized farming and the result is that yields currently achieved are even lower than those obtained two decades ago. As a result farm income is on the decline and farmers insist on raising support prices of wheat, sugarcane and cotton. The government often increases price but farmers are unable to obtain higher yield. Ironically, farmers seem to be suffering from the perception that by producing lesser quantities they can earn more.

The policy planners are fully cognizant of the problems resulting from low education, poor income and failure of farmers and industrialists to improve productivity but are hardly willing to take the corrective steps. Despite fully aware of disappointingly low yield, the government has not been able to convince the farmers to cultivate high yielding varieties, keep fertilizer and tractor prices at modest levels.

The role being played by State Bank of Pakistan (SBP) in achieving food security must be appreciated. Over the years it has succeeded in convincing the financial institutions to enhance their landing to farmers, at present annual disbursement of agri loans hover around Rs300 billion. However, the most disgusting point is that feudal lords are using this money to buy properties in urban areas and expensive cars. One of the reasons for lower borrowing by the farmers is high interest rate charged by the financial institutions. However, experts are of the view that most of the farmers don't have clean title of the land, which stops financial institutions from lending any money to them.

Economy of every country is driven by micro, small and medium enterprises and not by conglomerates. This can be best understood by looking at automobile manufacturing. Though, often credit goes to the assemblers/brand holders but the real impetus is provided by the manufacturers of parts and accessories, at an average over 3,000 components are used to make a complete car. In Pakistan around half a dozen assemblers operate by the number of units providing parts and accessories exceeds 2,000.

There is also a perception that spinners are the real foreign exchange earner for the country, which is not correct. Manufactures of garments and made ups adds up real value. At an average a spinning unit established at a cost of Rs400 million provides direct employment to around 100 people but investment of around the same amount in made-ups manufacturing generates employment for thousands of people, particularly females.

First Women Bank was established to work for the welfare of weaker gender. Along with full range banking services, it also offers training programs for women, offer then credit to own and operate their own business. The time has come to create special departments at all the commercial banks for extending loans to women entrepreneurs. Some of the NGOs working for the welfare of women have also established micro finance banks.

It is necessary to highlight that the interest rate charges from the women entrepreneurs is much higher when compared to the rate applicable of corporate entities. There is a suggestion that banks allocate one percent of their total deposit for extending soft-term loans to micro and small enterprises and women entrepreneurs. If that sound too punitive for banks than the SBP should ask the commercial banks to deposit equivalent of half a per cent of their deposit in an escrow account, from which lending to micro enterprises and SMEs can be ensured.