Economic survey 2010-11 | Pakistan Today

Economic survey 2010-11

Core inflation about 9.5pc: Core inflation (non-food, non-energy measure), estimated at 9.5 percent during the year 2010-11, remained subdued over corresponding increase of 11.2 percent on the back of tight monetary policy, weaker economic activity and base impact. The Economic Survey 2010-11 released on Thursday said that Pakistan’s domestic structural problems and global commodity price movement collectively provided momentum to inflation in recent months. The cumulative inflation rose to 14.1 percent in July-April 2010-11.  During most of the period, food remained the major driver of inflation on the back of major supply disruption owing to flood. The category-wise analysis of the CPI basket shows that food inflation has worked as stimulant in the index with its 18.4 percent increase. The non-food category is categorized in further sub-groups. The highest increase among these sub-groups at 16.5 percent has been observed in transport group followed by energy group 14.9 percent, medicine group 14.5 percent and textile group 11.7 percent. These three groups have an impact of pass through of higher global fuel and commodity prices. Another important contributing factor has been the higher prices in the crop sector of agriculture, which injected additional cash of Rs.444 billion in the rural areas in a single year 2010-11 as against increment of just Rs.415 billion in eight years (2000-08) and during last three years cumulative injection of Rs906 billion. This is translating into creation of additional demand for goods and services in the rural areas.

Around 3.05m unemployed: According to the labour force survey 2009-10, around 3.05 million people are unemployed in the country while the total labour force is 54.92 million, out of which including 42.44 million are males and 12.48 million are females. According to the Economic Survey of 2010-11, launched by the Finance Minister Hafeez Sheikh he said that about 51.87 million people are employed in the country whereas a 55.5 percent male and a 13.5 percent female participation in the labour force has been observed. The volume of labour force increased in Punjab and Sindh while it followed a declining trend in Khyber Pukhtoonkhawa and Balochistan. According to employment status by gender, the following data was collected in the labour force survey 2009-10,  male employers constitute 1.6 percent and females a 0.1 percent, the self employed bracket includes 40 percent male 13.6 percent females, unpaid family helpers include 18 percent males and 66.3 percent females and employees show 39.7 percent male and 20 percent female figures, respectively. Without productive employment, achieving the goals of decent living standards, social and economic integration, personal fulfillment and social development becomes a chimera. Enterprise promotion and human resource development are key elements in achieving these goals.

Public credit rises by 13.1pc: Public debt increased by Rs1,162 billion in the first nine months of 2010-11 and outstanding amount reached Rs1,002 billion showing an increase of 13.1 percent. The primary source of increasing of public debt during July-March has been a sharp rise in local currency components that accounted for 69.7 percent of the total increase of total debt, said Economic Survey launched here Thursday.The external debt component grew by Rs275 billion.Public as present  to GDP has decreased to 55.5 percent by the end of March 2011 after hovering around to 60 percent of GDP for two years.During the first nine months of the current fiscal year 2010-11 the country’s total external debt increased from $ 55.9 billion at the end of June 2010 to $59.5 billion by end March 2011. An increase of $ 3.6 billion or 6.4 percent which is low growth in the EDL in the last five years. Domestic debt is positioned at Rs5462.2 billion at end March 2011 which implies net addition of Rs803.9 billion in the nine months of current fiscal year. In relation to GDP the domestic debt stood at 30.2 percent of GDP which is lower then end-June 2010 level at 31.4 percent. The domestic debt grew by 17.3 percent which is lower then last year’s growth of 20.7 percent.

Govt tries to limit circular debt: The government is taking solid steps to resolve issue of circular debt, bringing down its volume to Rs103,939 million. According to the economic survey report released at a press conference by Finance Minister Abdul Hafeez Sheikh as result of remedial measures the position of overall circular debt is witnessing a declining trend during July-April 2009-10. The Survey says as the end-month, the net position of overall circular debt declined from Rs190,953 million in July 2010 to Rs103,939 million in the month of April 2010. It adds the circular debt problem plaguing the power sector stems from a disparity between cost and tariffs of Energy. The false stability in consumers’ energy tariff prior to FY07-08 even though generation cost kept increasing and gave rise to substantial cost-tariff differentials. This situation was further complicated by the increase in the international price of oil during 2008, a major input in the generation of electricity. As the subsidy element (difference between cost and tariff) grew, large amounts of circular debt were created whereby power producing companies were unable to receive payments from distribution companies, in turn the power producers could not make payments to the fuel suppliers. Currently, the government is regularly revising the power tariffs in line of international oil prices changes to recover the cost of power. Rising furnace oil prices increased electricity prices.

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