Economic growth may fall below 6 per cent
Economic growth may fall below 6 per cent
By Khaleeq Kiani
ISLAMABAD, April 5: Pakistan’s economic growth rate is likely to fall below six per cent during the current fiscal year against the budgetary target of seven per cent owing to a substantial shortfall in the agricultural output, it is learnt. “The country may not be able to achieve even six per cent growth rate if the estimates finalized by the federal committee on agriculture are correct,” said a senior government official.
He said the government had revised last month the GDP (Gross Domestic Product) growth rate to 6.5 per cent from the original target of seven per cent due to a reduction in expected share of major crops to 1.9 per cent instead of original 6.6 per cent, but now it seemed that even six per cent growth might not be realized.
The official said the GDP target was revised due to a reduction in cotton output target and factoring all other crops, but the government had expected to witness a bumper wheat crop. Wheat has a major share in GDP as it contributes over 13 per cent to value-added and about 3.2 per cent to country’s GDP.
He said that 20.5 million tons of wheat output meant that the share of value-added in agriculture would be zero and a definitely sizable impact on GDP. “One should ask the government as to what has been the outcome of support price,” a finance ministry official said.
A shortfall of about 1.5 million tons would have a significant impact on the growth rate, said the official but warned that it was just a first estimate and would be updated twice in May and June.
The finance ministry official questions the wheat output figures at 20.5 million tons on the ground that even two days ago the prime minister was informed about a bumper crop and resultantly price crash in Sindh. He said if the crop was not good, there was no need for the prime minister to announce: “If required, the government will buy the entire wheat crop and export the surplus.”
“There was no ‘magic disease’ that wiped out more than 1.5 million tons of wheat in just 24 hours,” the official said and added that economic targets might have to be revised after calculating the impact of wheat output.
He said the United States Department for Agriculture (USDA) last week had also predicted more than 21 million tons of wheat in Pakistan based on satellite imaginary of crops.
He said Minfal had deliberately understated the wheat output as a strategy to pre-empt collapse of wheat prices in Punjab where harvesting was to start by the end of this month. “If there was a shortfall of wheat, then why prices have declined in Sindh to Rs360-370 per 40 kg as against a support price of Rs415,” said an official at the Planning Commission.
He explained that wheat prices in Sindh crashed to Rs360 per 40 kg when the provincial authorities estimated the output between 2.8-3 million tons. The crop in Punjab was even better, he said.
The official said the ministry of food and agriculture was following a ‘price-centric policy’ which had met with complete failure.
He said historically, Pakistan’s wheat output had hovered around 19-20 million tons, and if there was a good rain in March, the output increased by one million tons.
He said last year the Minfal had set a target of 10.7 million bales of cotton, which was revised to 11.1 million bales, then 12.2 million bales, followed by 13.2 million bales and finally settled at 14.6 million bales. The cotton output estimates were gradually increased last year to maintain high prices of cotton. This year the same policy is being followed in wheat.
The government has been increasing the wheat support price for the last three years to encourage growers to bring more areas under cultivation but the result has been the same. “We will recommend to the prime minister to ask Minfal as to why the common man was forced to pay higher prices when the output did not increase, although wheat price was one of the major reasons behind the high inflation rate in the country.
By Khaleeq Kiani
ISLAMABAD, April 5: Pakistan’s economic growth rate is likely to fall below six per cent during the current fiscal year against the budgetary target of seven per cent owing to a substantial shortfall in the agricultural output, it is learnt. “The country may not be able to achieve even six per cent growth rate if the estimates finalized by the federal committee on agriculture are correct,” said a senior government official.
He said the government had revised last month the GDP (Gross Domestic Product) growth rate to 6.5 per cent from the original target of seven per cent due to a reduction in expected share of major crops to 1.9 per cent instead of original 6.6 per cent, but now it seemed that even six per cent growth might not be realized.
The official said the GDP target was revised due to a reduction in cotton output target and factoring all other crops, but the government had expected to witness a bumper wheat crop. Wheat has a major share in GDP as it contributes over 13 per cent to value-added and about 3.2 per cent to country’s GDP.
He said that 20.5 million tons of wheat output meant that the share of value-added in agriculture would be zero and a definitely sizable impact on GDP. “One should ask the government as to what has been the outcome of support price,” a finance ministry official said.
A shortfall of about 1.5 million tons would have a significant impact on the growth rate, said the official but warned that it was just a first estimate and would be updated twice in May and June.
The finance ministry official questions the wheat output figures at 20.5 million tons on the ground that even two days ago the prime minister was informed about a bumper crop and resultantly price crash in Sindh. He said if the crop was not good, there was no need for the prime minister to announce: “If required, the government will buy the entire wheat crop and export the surplus.”
“There was no ‘magic disease’ that wiped out more than 1.5 million tons of wheat in just 24 hours,” the official said and added that economic targets might have to be revised after calculating the impact of wheat output.
He said the United States Department for Agriculture (USDA) last week had also predicted more than 21 million tons of wheat in Pakistan based on satellite imaginary of crops.
He said Minfal had deliberately understated the wheat output as a strategy to pre-empt collapse of wheat prices in Punjab where harvesting was to start by the end of this month. “If there was a shortfall of wheat, then why prices have declined in Sindh to Rs360-370 per 40 kg as against a support price of Rs415,” said an official at the Planning Commission.
He explained that wheat prices in Sindh crashed to Rs360 per 40 kg when the provincial authorities estimated the output between 2.8-3 million tons. The crop in Punjab was even better, he said.
The official said the ministry of food and agriculture was following a ‘price-centric policy’ which had met with complete failure.
He said historically, Pakistan’s wheat output had hovered around 19-20 million tons, and if there was a good rain in March, the output increased by one million tons.
He said last year the Minfal had set a target of 10.7 million bales of cotton, which was revised to 11.1 million bales, then 12.2 million bales, followed by 13.2 million bales and finally settled at 14.6 million bales. The cotton output estimates were gradually increased last year to maintain high prices of cotton. This year the same policy is being followed in wheat.
The government has been increasing the wheat support price for the last three years to encourage growers to bring more areas under cultivation but the result has been the same. “We will recommend to the prime minister to ask Minfal as to why the common man was forced to pay higher prices when the output did not increase, although wheat price was one of the major reasons behind the high inflation rate in the country.
posted by India News Watch at 7:57 AM
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