‘Pak trade to get boost even if it captures 1% of India’s market

The trade with India can multiply five times if Pakistan captures even one percent of India’s market of 300 million middle class. In contrast, given Pakistan’s middle class of 30 million, India has to tap 10 percent of its market to match the benefit, former State Bank of Pakistan governor Ishrat Hussain said on Friday.
Addressing a discussion session organised by the Institute of Regional Studies, Ishrat said, “The Army is on board regarding trade with India and the weak industries can be protected through negative list.”
Referring to the World Trade Organisation (WTO) two-year trade waiver for Pakistan, he said that it would boost trade with EU if bed linen was taken off the list, the benefits would be reduced to 100 million Euros from 300 million Euros that was initially expected from duty-free access to the European markets to help the textile exports after devastating floods of 2010.
Ishrat said, “Pakistan can turn around its economy if it exercises strict fiscal discipline and plugs gaping holes caused by bad governance in different sectors of economy.” He argued, “The energy shortage iss crippling production, poor tax base and collection is worsening the tax to GDP ratio, sick public sector corporations are becoming a drain on budget, lack of prioritisation in federal and provincial governments’ development plans is causing delays and increasing cost of the projects, non-development expenditure are eating up meager resources, after 18th amendment the provinces have become richer but are not sharing burden of defense and debt servicing that is the sole responsibility of the federal government and finally, the lack of local government system is hurting social sector development.”
“The energy shortage can be managed by resolving the issue of circular debt. A five-year investment bond can be floated to meet the flow cost. The functioning of power companies should be streamlined, private vehicles should be switched over to petrol and industry should be provided with gas,” the former SBP governor said, adding that the government should go ahead with IPI and TAPI gas pipeline projects. The tax to GDP ratio can be improved by broadening tax base and better tax collection, he said. IRS member Brig (retired) Bashir Ahmed maintained that there should be reduction in the defense expenditure and the trade with India should be promoted. Also, railway, which is the cheapest way of movement of people and goods, should be revived. Mayaudon, the deputy head of the EU delegation in Islamabad, observed that the undocumented economy was sustaining Pakistan’s economy.
Speaking on the occasion, IRS President Ashraf Azim said that political will was required for getting economy out of the quagmire, while SDPI Economics Bulletins editor Tahir Dhindsa feared that Pakistan’s forex reserves may decrease if it paid the IMF loan from its cash reserves, which will also hit the public’s confidence.