Current Economic Scenario of Pakistan

Current Economic Scenario of Pakistan

According to the paper, Pakistan’s economy is facing numerous challenges, including twin deficits - current account deficit and fiscal deficit - as well as stagnant exports, tax revenues and almost a halted privatization process. Inflation is another big challenge for the upcoming economic managers and improving the supply side coupled with better management can reduce woes on this front. Pakistan is an agricultural country as 75% of its population relies on agriculture. Remaining 25% are workers, industrialists, government officials etc. Currently government is trying to improve the system of tax collection. As far as local industry’s production is concern, it is struggling due to several reasons. The main reason behind it is current energy crisis in Pakistan. Due to this crisis local products are very expensive. This created a big gap for countries like China who are capable of taking full advantage of this gap. Due to the increase in prices inflation rate is increasing. This results in the form of currency devaluation. One would say that, currency devaluation would result in increase the export and exporter would earn more revenue. There is another threat to its economy that is ‘terrorism’. It is preventing foreign investors from investing in Pakistan which is slowing down the economy’s growth. This threat is also affecting one more area which is ‘tourism’. Pakistan has a lot of potential in tourism department but, it is lagging behind due to this threat. This threat is not limited to Pakistan. It has struck its neighboring country Afghanistan. Afghanistan has no infrastructure. There is a lot of development going on in there. This is a very good opportunity for Pakistan’s economy.

1. Trade Gape

The amount by which the value of a country's visible imports exceeds that of visible exports; an unfavorable balance of trade

2. Budget

A budget is generally a list of all planned expenses and revenues. It is a plan for saving and spending.

Quality budget

i. Revenue surplus

ii. It should be balanced

iii. It should create environment for growth and development

iv. The budget should conciliate for macroeconomics fundamental.

v. As for as budget should be possible.

3. Low Tax

In Pakistan agriculture has been given a lot of benefits including tax remittance. So 75% of the population does not pay tax. From remaining 25% majority has monthly income less than applicable to tax payment. So government has very little collection of revenue in order to cater the problems of its population. Direct tax of our country is 10% but it should be 15%-16%.

4. Low Productivity

There are 45 million people are workforce out of 45 million people only 15% is in agriculture but it should be 23% percent this low rate of use work force is called low productivity.

5. Low Participation Rate

35% people are not playing role in economy and women participation rate is minimum. The reason of minimum participation of women is

· Higher population of children

· Custom and tradition does not allow to work

· The dependency of single person

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