Policy failure

Reduced production in the textile sector is just another example of how flawed government policies, framed at whims of policymakers, have distorted the economy and fuelled unemployment. While suspending power supplies to Punjab, the planners failed to realise that over 70 per cent of exports originate from Punjab. They did not evaluate the impact of gas suspension of textile sector that is the largest earner of foreign exchange for the country and the largest employer in the industrial sector as well. It is pertinent to note that over 75 per cent of textile industry of the country is located in Punjab.
Discrimination in the government load management policies cost the Punjab textile industry a loss of some Rs51 billion, while the country suffered an export loss of around $1.5 billion during the last fiscal year. The situation will further aggravate during the current year as the government does not seem interested in addressing the energy problem.
Textile titans claim that several textile units in the Punjab missed their production targets and deadlines due to acute gas and electricity shortage during the previous fiscal. Meanwhile, cotton prices in the international markets witnessed a decline and the whole mess cost the provincial textile industry a loss of around Rs51 billion in unutilised cotton stocks. They estimate that if the textile industry was provided gas and electricity for manufacturing, the country could earn an additional $1.5 billion through exports.
A cotton crop of approximately 16 million bales is expected during the current season. The Ministry of Food and Agriculture is considering it another feather in its cap, but, in fact, bumper cotton crop possesses a big challenge both for the government and textile industry. Figures indicate that the country produced some 11.5 million cotton bales during the last year, which could hardly be consumed by the domestic textile industry despite the highest ever cotton prices in international markets.
Experts underscore that if the government does not address energy issues and the country grows some 16 million cotton bales, it would be a blessing in disguise. It would neither help in boosting exports nor farmers would get due reward of their input. An additional four million bales would only bother farmers, industry and the government.
Distortions and discriminations in government policies is one of the biggest challenges for domestic manufacturing. The government has recently guaranteed 80MMFCD gas supply to a local fertiliser manufacturer, which is providing employment to some 1,000 workforce. Experts agree that enhancing efficiency is good, but if it is at the cost of hundreds of thousands in workforce, one has to rethink. They estimate that if the same volume of gas is provided to textile industry it could generate some 300,000 jobs in addition to handsome amount of foreign exchange.
Experts also highlight that despite discriminations, it is the textile industry which helped the country sustain international or US pressure and survive without IMF money during the last fiscal year. Some $6 billion were thrown in the national economy ($4 billion through additional textile exports and $2billion from remittances), which also helped in keeping the exchange rate stable.
Economic and industry experts are constantly warning the government to avert from the political decisions and populous policies. The survival of the economy and industry is dependent only upon job creation, which might not be possible without addressing the energy problem. Experts believe that if the government accommodates gas and electricity load management pressure in the textile industry, the country could easily live without IMF, World Bank or the US pressure, as demand of Pakistani textile and apparel is witnessing a major increase in the international markets.

The writer is Business Reporter, Pakistan Today