 CASH CROPS OF PAKISTAN

Pakistan is an agriculture country and 72 percent of her population lives on

agriculture. Broadly speaking, our cultivators produce two types of crops- food crops and
non-food crops. The non-food crops are also called cash crops by the economists. Though
food crops occupy nearly 75 percent of our cultivable soil, yet contribution of cash crops to
the gross national product of the country is significant. The major cash crops of Pakistan are
cotton, rice, tobacco, oil seeds, etc.
Cotton is the principal cash crop of Pakistan. It is grown in Sindh and the Punjab.
InSindh cotton is grown in the districts of Tharparkar and Sanghar, while in the Punjab, districts
ofMultan, Sahiwal and Faisalabad are well known for the cotton production. Cotton is the
majorexport of our country at present.
Rice comes next to cotton as foreign exchange earner of the country. It is grown on
alarge scale in Sindh and the Punjab. In Punjab it is grown on 150 million hectares. Pakistan
isproducing some of the finest varieties of rice, which have a worldwide demand. Its
contributionto foreign exchange earnings is estimated at 22 percent.
Sugarcane is another popular cash crops. Almost every cultivation has
someportion of his reserved for this crop. Its average cultivation is 50 tons per hectares. In
moderntimes this crop has become very important. It is grown in almost every province.
Pakistanproduces enough sugarcane to feed a sizeable sugar industry. A lot of foreign exchange
can be earned of our farmers increase the production of sugarcane because sugar is ceded
everywhere inthe world.
Tobacco is one of the important cash crops of Pakistan. The soil of Pakistan is
verysuitable for this crop. Tobacco industry provides jobs to a large number of workers in the
field atthe time of crop production and also in tobacco factories. Tobacco of a common quality
is grownin the Punjab and Sindh. The areas in and around Peshawar are rich in the production of
Virginiatobacco, which is the world famous quality of tobacco.
Fruits like mangoes, apples and oranges are also sold abroad, but it is the mangoes
which top list. Major markets are in the Middle East. Gulf countries, Singapore, Malaysia,
London, Germany, and Sweden.
Since cotton is grown extensively in our country cottonseeds are the by-products of this crop.
Sunflowers are also becoming popular as cash crop. Beside there are rapeseeds and mustard
seeds all these seeds are used in manufacturing vegetable ghee which is commonly used in
the country for cooking and a small percentage is also exported.
The importance of cash crops may be stressed from one more angle of vision.
Pakistan’s agriculture cannot provide employment to a fast-growing population. It is only in
the field of industry where our surplus population can seek and get jobs. As there are no notable
mineral resources in Pakistan the pattern of industrialization should be such as will depend of
agriculture for raw materials. And so we have established cotton textile industry sugar-industry
cigarette factories vegetable ghee factories etc. these industries engage nearly 80percent of our
industrial labour force.
Effort should be made to increase their production. Naturally this will have a healthy
effect on the economic and social development of the country. If we want to make
Pakistanmarch on the road of progress, we will have to accelerate in the field of agriculture. We
have richsoil and hardworking farmers that can really produce such crops as to bring foreign
exchange.

 INDUSTRIES OF PAKISTAN

Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and
apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the
merchandise exports and almost 40% of the employed labour force. Other major industries
include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery, and food
processing.
The government is privatizing large-scale industrial units, and the public sector accounts for a
shrinking proportion of industrial output, while growth in overall industrial output (including the
private sector) has accelerated.

Automotive Industry
The automobile industry in Pakistan includes companies involved the production/assembling of
passenger cars, light commercial vehicles, trucks, buses, tractors and motorcycles. The auto
spare parts industry is an allied of the auto industry. The auto & allied industry form a major
sector in Pakistan.

Agriculture
Agriculture constitutes the largest sector of our economy. Majority of the population, directly or
indirectly, dependent on this sector. It contributes about 24 percent of Gross Domestic Product
(GDP) and accounts for half of employed labour force and is the largest source of foreign
exchange earnings.
It feeds our whole rural and urban population. Realizing its importance, planners and policy
makers are always keen to have reliable area and production statistics of agricultural crops well
in time. Policy makers primarily need accurate and timely statistics for the important crops such
as wheat, cotton, rice, sugarcane, maize etc. However, in recent years, due to persistent hikes in
the prices of essential commodities like pulses, onions, potatoes, chillies and tomatoes these
crops have also gained in economic importance.
Mining Industry
Mining is an important industry in Pakistan. Pakistan has deposits of several minerals including
coal, copper, gold, chromite, mineral salt, bauxite and several other minerals. There are also a
variety of precious and semi-precious minerals that are also mined. These include peridot,
aquamarine, topaz, ruby, emerald, rare-earth minerals bastnaesite and xenotime, sphene,
tourmaline, and many varieties and types of quartz.
The Pakistan Mineral Development Corporation is the responsible authority for the support and
development of the mining industry. Gemstones Corporation of Pakistan looks after the interests
of stake holders in gemstone mining and polishing as an official entity. Baluchistan province is
the richest in mineral resources available in Pakistan. While recently Sindh discovered coal
deposits in Thar. Khyber Pakhtoonkhwa is rich in gems. Most of the mineral gems found in
Pakistan exist here. Apart from oil, gas and some mineral used in nuclear energy purposes which
comes directly under federal control mining of other minerals is provincial issue. Currently
around 52 minerals, are mined and processed in Pakistan.
Khewara Salt Mines are the world’s 2nd largest salt mines.
IT Industry
The Government of Pakistan has provided a reliable IT infrastructure and its package of
incentives have been instrumental in the IT industry's development. As a result, an increasing
number of foreign IT companies have chosen Pakistan for their outsourcing operations.

 POPULATION TREND

Pakistan's latest estimated population is 207,774,520 (excluding autonomous regions Azad

Kashmir and Gilgit Baltistan). This makes Pakistan the world's fifth-most-populous country, just
behind Indonesia and slightly ahead of Brazil. Including Azad Kashmir, the population would be
211.819 million. Gilgit Baltistan region has an additional estimated population of 1.8 million.

During 1950–2011, Pakistan's urban population expanded over sevenfold, while the total
population increased by over fourfold. In the past, the country's population had a relatively high
growth rate that has been changed by moderate birth rates. Between 1998-2017, the average
population growth rate stood at 2.40%.

Dramatic social changes have led to rapid urbanization and the emergence of megacities. During
1990–2003, Pakistan sustained its historical lead as the second-most urbanized nation in South
Asia with city dwellers making up 36% of its population.[4]Furthermore, 50% of Pakistanis now
reside in towns of 5,000 people or more.

Pakistan has a multicultural and multi-ethnic society and hosts one of the largest refugee
populations in the world as well as a young population.

The Demographic history of Pakistan from the ancient Indus Valley Civilization to modern era
includes the arrival and settlement of many cultures and ethnic groups in modern region
of Pakistan from Central Asia, Middle East and Europe

Population size and growth

 Population: 207,774,520 (2017)

 Growth rate: 2.10% (2016)

According to OECD/World Bank, the population in Pakistan increased by 23 million from 1990
to 2008, with a 54% growth in population compared to 34% growth in India and 38% growth
in Bangladesh.
  RURAL URBAN MIGRATION

Pakistan, like other developing countries in the region, has witnessed accelerated process of
urbanisation. Rural to urban migration is seen as a two-stage process. During the first stage, the
unskilled workers spend some time in informal urban sector from which they move on to the
second stage, where they find a more permanent modern sector job in the formal sector, thus
further intensifying double-dualism.

Between 1951 and 1981, the urban population quadrupled. By early 1994, about 32 percent of all
Pakistanis lived in urban areas, with 13 percent of the total population living in three cities of
over one million inhabitants each Lahore, Faisalabad, and Karachi.

The urban migrant is almost invariably male. Although he has moved to the city, in practice he
retains his ties with his village, and his rights there are acknowledged long after his departure. At
first, the migration is frequently seen as a temporary expedient, a way to purchase land or pay off
a debt.

Typically, the migrant sends part of his earnings to the family he left behind and returns to the
village to work at peak agricultural seasons. Even married migrants usually leave their families
in the village when they first migrate. The decision to bring wife and children to the city is thus a
milestone in the migration process.

Although this migration has had little effect on Pakistan demographically, it has affected its
social fabric. While a man is away from his family, his wife often assumes responsibility for
many day-to-day business transactions that are considered the province of men.

For the women involved, therefore, there has been a significant change in social role. They tend
to feel a sense of social isolation, culture shock, and are depressed by the harsh working
conditions in these countries. They also suffer from a sense of disorientation resulting from the
sudden acquisition of relative wealth and from the guilt associated with leaving their families.
  ROLE OF EDUCATION IN ECONOMIC DEVELOPMENT OF PAKISTAN

Education is considered to have a strong correlation with social and economic development. In
contemporary times when the focus is on the 'knowledge economy' the role of education
becomes all the more important in the development of human capital.Education can reduce
poverty and social injustice by providing the underprivileged resources and opportunities for
upward social mobility and social inclusion. Yet, until the National Education Policy (NEP)
2009 was unveiled, the budgetary allocation for education in Pakistan was on the decline.

The lack of political commitment of the state has resulted in multiple educational systems which
are inherently discriminatory and biased in nature. A large number of students are unable to
attend schools. According to the Education For All Global Monitoring Report (2007), almost 6.5
million children in Pakistan do not go to school. Countries like India, Ethiopia, Mozambique,
Ghana, Niger, Kenya and Mali are placed in relatively better positions. The only country that has
a worse situation than Pakistan's is Nigeria, with more than eight million children out of school.

A large number of students who make it to schools, however, drop out by class five. According
to NEP, about 72 per cent make it to grade five which means a dropout rate of 28 per cent. This
significant figure further brings down the chunk of the population that makes it to school.

Such a large number of students outside school means that they are deprived of the opportunity
to learn and acquire skills for playing a meaningful role in society. Social exclusion is a great
loss at the individual and societal levels. Most of these out-of-school children experience poverty
and unemployment and some get involved in criminal activities as well. Constitutionally, the
provision of basic education to citizens is the state's responsibility. Is the state carrying out its
responsibility? The state needs to analyse the reasons be hind the number of out-of-school
children. They come from poor families and cannot afford the luxury of education despite their
desire for it.

The real issue of educational apartheid comes to the surface only after joining a school. Enrolling
in a school does not ensure the provision of quality education. There is one question which is
central to quality: what kind of school is it? The answer to this question may include the state of
the building, faculty, management, curriculum, textbooks, examination system and medium of
instruction as well as the socio-economic background of the children.

The reference to socio-economic background is crucial as schools - like social classes - are
stratified in terms of social status. So social exclusion is not only at the access level but also at
the quality level. The widening difference between private and public schools is responsible for
the gaping chasm between resources and opportunities given to the poor and the rich. Children
from elite schools have enhanced chances of employment and social integration whereas children
from public schools, no matter how bright they are, are disadvantaged in terms of getting
exposure to quality education.

The famous slogan 'education for all' needs to be revisited. Is it sufficient to enrol every child in
school? The continuance of disparity and exclusion goes on depending on the quality of the
school. Thus the slogan needs to focus on 'quality education for all'. It is the quality aspect which
is missing in disadvantaged schools. Instead of taking some constructive measures to improve
the conditions the state is taking the easy route of offering private schools as an alternative.

Government officials publicly give statements that public schools have failed and the only
alternative left is private schools. I do not intend to underplay the significant role private schools
can play in the uplift of the educational system in Pakistan. My only contention is that they are
there to complement the system and should not be presented as an alternative to public
education.

Education has failed miserably to reduce poverty gaps, social injustice and oppression. The
education policy suggests that "the educational system of Pakistan is accused of strengthening
the existing inequitable social structure as very few people from public-sector educational
institutions could move up the ladder of social mobility".

 MAJOR DISEASES IN PAKISTAN

Diseases can be infectious, genetically related, airborne, food-borne, non-communicable

and lifestyle or age-related. The scary part is that there are over 100,000 human diseases in the
world! It is a wonder humans are alive.
According to surveys conducted by government and reviews of statistics, these are the top 10
deadliest diseases in Pakistan.

1. Acute respiratory infection (51%) is one of the most lethal diseases in Pakistan. Most victims
are children under the age of 5 with weak immune systems. It is caused by viral infections,
pneumonia and Influenza

2. Malaria (16%) greatly affects the lower-class people in Pakistan who live in rural areas or
slums. The high incidence of malaria is due to the presence of stagnant bodies of water and
unsanitary conditions where mosquitoes breed.

3. Approximately, 12 million people are infected with either hepatitis B or C.

4. Cholera, infection of the small intestine, is controllable but it is still prevalent, particularly
during the rainy season.

5. Dengue fever is another controllable but highly infectious disease with frequent epidemics.

6. Tuberculosis is one of the major diseases in Pakistan. It is the fifth TB high-burden country
worldwide. Not only that, globally, it has the fourth highest prevalence of multidrug-resistant TB
(MDR-TB)

7. Breast cancer is the most common cancer in Pakistan. About one in every nine women in
Pakistan suffers from breast cancer. Approximately, 40,000 women die every year of breast
cancer in Pakistan.

8. Cardiovascular diseases kill 200,000 annually in Pakistan. Over the last few years, obesity has
become an health issue in our country that eventually leads to coronary heart diseases and
diabetes.
9. Pakistan has the highest percentage of people in South Asia with diabetes. Right now, there
are 7 million people in Pakistan with diabetes.

10. Lung cancer takes the lives of 100,000 people every year in Pakistan, and almost 90% of the
cases are caused by chain smoking. In South Asia, Pakistan has the highest consumption of
tobacco.

 ROLE OF TOURISM IN PAKISTAN

Tourism activities are considered to be one of the major sources of economic growth. It can be
regarded as a mechanism of generating the employment as well as income in both formal and
informal sectors. Tourism supplements the foreign exchange earnings derived from trade in
commodities and some times finance the import of capital goods necessary for the growth of
manufacturing sectors in the economy. On the other hand rapid economic growth in the
developed economies attracts foreign travels (Business travels), which leads to an increase in the
foreign reserve of the country. Over the past several decades, international tourism has been
gaining importance in many economies of the world. According to the World Tourism
Organisation (2002), expenditures by 693 million international tourists traveling in 2001 totaled
US $ 462 billion, roughly US $ 1.3 billion per day worldwide. In addition, tourists spending have
served as an alternative form of exports, contributing to an ameliorated balance of payments
through foreign exchange earnings in many countries. The rapid growth of tourism led to a
growth of household incomes and government revenues directly and indirectly by means of
multiplier effects, improving balance of payments and provoking tourism-promoted government
policies. As a result, the development of tourism has generally been considered a positive
contribution to economic growth. However, there arises a question whether tourism growth
actually caused the economic increase or, alternatively, did economic expansion strongly
contribute to tourism growth instead? According to the studies of Kulendran and Wilson (2000)
and Shan and Wilson (2001), their empirical analyses of Australia and China respectively
observed a strong reciprocal relationship between international trade and international travel. In
the case of Korea, economic growth has attracted much business travels, it suggests that
economic expansion leads to tourism growth. furthermore tourism growth and economic growth
have a reciprocal causal relationship, since export driven economic growth causes tourism
receipts to fall. Finally, if there is no causality relation between tourism growth and economic
development, then strategies such as enthusiastic tourism- promotion may not be as effective as
tourism managers and decision-makers currently believe. Tourismled growth tends to occur
when tourism demonstrates a stimulating influence across the overall economy in the form of
spillovers and other externalities [Marin (1992)]. However, empirical studies of the correlation
between tourism and economic growth have been less rigorous in tourism literature. In the field
of tourism, Pakistan offers many allures in the developing world. The historical and cultural
heritage of the nation presents a testimony for glory of this ancient land, the country inherits
numerous tourist attractions at Swat, Kalam, Malam Jaba, Shangla, Balakot, Ayubia, Murri,
Chitral, Gilgit, Naran and Kaghan valleys, and other mountains ranges, historical, and
archaeological places in the other parts of the country. There are few places on the earth that
posses the majesty and grandeur of the northern region of Pakistan. Northern Pakistan remains a
land of contrasts, unique in its legacy of landlocked civilisation and blessed as no other
destination with an amazing array of some of most beautiful valleys, lakes, rivers and mountains.
The junction of four of the world’s most formidable mountain ranges Karakoram, Hindukhsh,
Himalayas, and pamirs forms a unique point in the northern areas; it has climbers, trekkers,
mountaineers, hikers and unheeding rock, the flow of countless glacial streams, which attracts
millions of tourists annually. Few areas in the world offer such a unique blend of breath taking
natural beauty and a rich diversity of culture, socioeconomic traditions, history and lifestyle as in
the Hindukush-Himalayan region of Pakistan. Furthermore Pakistan has a tremendous potential
in the fields of echo and safari tourism. The arrival of foreign tourists is increasing day by day in
these areas. Pakistan achieved a record growth in tourist arrivals of number of tourists, 798260 to
be specific, from all tourist generating markets, which is 23.3 percent increase from the previous
year (2004). Pakistan’s share in the region has increased from 8.6 percent in 2004 to10.1 percent
in 2005. In the world tourist arrivals, Pakistan’s share is 0.10 percent compared to southern
region share of 10.1 percent in 2005. Tourism in Pakistan has potential, the tourist travels are in
the continuous line that about 42 million domestic visitors traveled with in the country in 2005.
Nearly 90 percent tourist traveled by road, 8.5 percent by rail and only 1.8 percent traveled by
air. Tourism industry has played a significant role in the socio-economic development, and has
promising future and growth potential in the country
  ROLE OF TRANSPORTATION IN PAKISTAN ECONOMY

Motorway network of any country is of vital importance of its economic development and effect
positive on different fields of economy. An economy seems to developed and industrialized if
widespread transport system. It is extremely difficult to put the economy on the high rapid path
without an efficient transport system. An efficient communication system is essential for trade,
national commerce and integration. Pakistan's economic development depends upon
improvements and modernization of its transport system.

In 1947 depends on roads was only 8 %, now it is more than 96% of inland freight and 92% of
passenger traffic. Now it is a backbone of Pakistani's economy.

Motorway boost Pakistan economy

Motorway increase positive effect on production, Supply and employment

Fiscal impact of motorway

Motorway and land use

Motorway speedy access to labour, education, Health.

Motorway transport and poverty

Motorway and environment

National Highway Authority (NHA)

It is responsible for the development and maintenance of national highways and motorways. The
total length of roads under the NHA is 12000 which accounts 4% of the entire road network and
take 80% of Pakistan's commercial traffic. Road density is an indicator of development. Current
road density is 0.32 km/km2, which is much less even from regional standard. The government
wants to bring double digit of 0.64 km/km2. Pakistan's current road network is now more than
260000 km.

Pakistan's motorways are part of Pakistan's "National Trade Corridor Project", which aims to
link Pakistan's three Arabian Sea ports (Karachi Port, Port Bin Qasim and Gwadar Port) to the
rest of the country and further with Afghanistan, Iran, India, Central Asia and China.
SIGNIFICANCE OF TRANSPORTATION

Road transport is the backbone of Pakistan's transport system. The 9,574 km long National
Highway and Motorway network, which is 3.65 percent of the total road network, carries 80
percent of Pakistan's total traffic. Over the past ten years, road traffic, both passenger and freight,
has grown significantly faster than the national economy. Currently, it is accounting for 91
percent of national passenger traffic and 96 percent of freight.

Port traffic in Pakistan grows at 8 percent annually in recent years. Two major ports, Port
Karachi and Port Qasim, handle 95 percent of all international trade. Port Gwadar, which was
inaugurated in March 2007 and is being operated by Singapore Port Authority, is aiming to
develop into a central energy port in the region. 14 dry ports cater to high value external trade.

Pakistan Railways (PR) has a broad gauge system (with a small network of meter gauge in the
South East). The network consists of the main North - South corridor, connecting the Karachi
ports to the primary production and population centers in Pakistan. The track is in good condition
with an axle-load of 23 tons and maximum permitted speeds of 100/110 kph.

There are 36 operational airports. Karachi is Pakistan's main airport but significant levels of both
domestic and international cargo are also handled at Islamabad and Lahore. Pakistan
International Airlines (PIA), the major public sector airline, though facing the competition from
a few private airlines, carries approximately 70 percent of domestic passengers and almost all
domestic freight traffic.

The transportation sector accounts for about 10.5 percent of the country's GDP and 27.4 percent
of Gross Fixed Capital Formation (GFCF) in FY06. It provides over 6 percent of employment in
the country and receives 12 to 16 percent of the annual Federal Public Sector Development
Program (PSDP). Government agencies dominate the sector.

Although the sector is functional, its inefficiencies with long waiting and traveling times, high
costs, and low reliability are dragging the country's economic growth. These factors also reduce
the competitiveness of the country's exports, increase the cost of doing business in Pakistan, and
constrain Pakistan's ability to integrate into global supply chains which require just-in-time
delivery. The poor performance of the sector is estimated to cost the economy 4-6 percent of
GDP each year.
Roads

Over half the national highways network is in poor condition, and the road safety record is poor.
The country's truck fleet is mostly made up of obsolete, underpowered, and polluting vehicles,
and trucks are often grossly overloaded. Truck operating speeds on the main corridors are only
40 - 50 kph for container traffic, half of the truck speeds in Europe. For trucks carrying bulk
cargoes, the journeys take 3-4 times longer than in Europe. Bridge between South Asia and
South West Asia; Iran and Afghanistan are energy abundant while India and China are lacking
of. China finds way to Indian ocean and Arabian Sea through Korakaram. China with its fastest
economic growth rate of 9%; is developing its southern provinces because its own port is 4500
km away from Sinkiang but Gawader is 2500km away. Pakistan offers to CARs the shortest
route of 2600 km as compared to Iran (4500 km) or Turkey (5000 km). Land locked Afganistan
now at the phase of Reconstruction, finds its ways through Pakistan. Gawader port with its deep
waters attracts the trade ships of China, CARs and South East Asian Countries.

 MAJOR EXPORTS AND IMPORTS OF PAKISTAN

Pakistan has bilateral and multilateral trade agreements with many nations and international
organizations. It is a member of the World Trade Organisation, part of the South Asian Free
Trade Area agreement and the China-Pakistan Free Trade Agreement. Fluctuating world demand
for its exports, domestic political uncertainty, and the impact of occasional droughts on its
agricultural production have all contributed to variability in Pakistan's trade deficit. The trade
deficit for the fiscal year 2013/14 is $7.743 billion, exports are $10.367 billion in July–
November 2013 and imports are $18.110 billion.

EXPORTS:

Pakistan exports includes rice, kinnows, mangoes, furniture, cotton

fiber, cement, tiles, marble, textiles, clothing, leather goods, sports goods (renowned for
footballs/soccer balls), cutlery, surgical instruments,
electrical appliances, software, carpets, rugs, ice cream, livestock meat, chicken, powdered
milk, wheat, seafood (especially shrimp/prawns), vegetables, processed food items, Pakistani-
assembled Suzukis (to Afghanistan and other countries), defense equipment (submarines, tanks,
radars), salt, onyx, engineering goods, and many other items. Pakistan produces and exports
cements to Asia and the Middle East. In August 2007, Pakistan started exporting cement to India
to fill in the shortage there caused by the building boom. Russia is a growing market for
Pakistani exporters. In 2009/2010 the export target of Pakistan was US $20 billion. As of April
2015, Pakistan's exports stand at US $29 billion.

IMPORTS

Imports into Pakistan during February, 2017 amounted to Rs.462,764 million (provisional) as
against Rs. 494,721 million (provisional) in January, 2017 Main commodities of imports during
February, 2017 were Petroleum products (Rs.49,062 million), Petroleum crude (Rs.23,873
million), Power generating machinery (Rs.23,487 million), Electrical machinery & apparatus
(Rs.21,053 million), Palm oil (Rs.17,888 million), Iron & steel (Rs.17,614 million), Plastic
materials (Rs.17,545 million), Natural gas, liquified ( Rs.14,577 million), Raw cotton (Rs.13,454
million) and Pulses (Leguminous vegetables) Rs.11,345 million).

 FISCAL AND MONETARY POLICY OF PAKISTAN

In economics and political science, fiscal policy is the use of government revenue collection
(mainly taxes) and expenditure (spending) to influence the economy. According to Keynesian
economics, when the government changes the levels of taxation and government spending, it
influences aggregate demand and the level of economic activity. Fiscal policy is often used to
stabilize the economy over the course of the business cycle.

Changes in the level and composition of taxation and government spending can affect the
following macroeconomic variables, amongst others, in an economy:

 Aggregate demand and the level of economic activity;

 Savings and investment in the economy;
 Income distribution
Fiscal policy can be distinguished from monetary policy, in that fiscal policy deals with taxation
and government spending and is often administered by an executive under laws of a legislature,
whereas monetary policy deals with the money supply, lending rates and interest rates and is
often administered by a central bank.

The three objectives of fiscal policy are:

 Neutral fiscal policy is usually undertaken when an economy is in equilibrium. Government

spending is fully funded by tax revenue and overall the budget has a neutral effect on the
level of economic activity.
 Expansionary fiscal policy involves government spending exceeding tax revenue, and is
usually undertaken during recessions. It is also known as reflationary fiscal policy.
 Contractionary fiscal policy occurs when government spending is lower than tax revenue,
and is usually undertaken to pay down government debt.

Methods of funding

Governments spend money on a wide variety of things, from the military and police to services
like education and healthcare, as well as transfer payments such as welfare benefits. This
expenditure can be funded in a number of different ways:

 Taxation
 The benefit from printing money
 Borrowing money from the population or from abroad
 Consumption of fiscal reserves
 Sale of fixed assets (e.g., land)

MONETARY POLICY OF PAKISTAN

Monetary policy is the process of which the monetary authority of a country, like the central
bank or currency board, controls the supply of money, often targeting an inflation rate or interest
rate to ensure price stability and general trust in the currency.

Further goals of a monetary policy are usually to contribute to economic growth and stability, to
lower unemployment, and to maintain predictable exchange rates with other currencies.
Monetary economics provides insight into how to craft an optimal monetary policy. Since the
1970s, monetary policy has generally been formed separately from fiscal policy, which refers
to taxation, government spending, and associated borrowing.

Monetary policy is referred to as either being expansionary or contractionary. Expansionary

policy is when a monetary authority uses its tools to stimulate the economy. An expansionary
policy increases the total supply of money in the economy more rapidly than usual. It is
traditionally used to try to combat unemployment in a recession by lowering interest rates in the
hope that easy credit will entice businesses into expanding. Also, this increases the aggregate
demand (the overall demand for all goods and services in an economy), which boosts growth as
measured by gross domestic product (GDP). Expansionary monetary policy usually diminishes
the value of the currency, thereby decreasing the exchange rate.

The opposite of expansionary monetary policy is contractionary monetary policy, which slows
the rate of growth in the money supply or even shrinks it. This slows economic growth to
prevent inflation. Contractionary monetary policy can lead to increased unemployment and
depressed borrowing and spending by consumers and businesses, which can eventually result in
an economic recession; it should hence be well managed and conducted with care.

Monetarist economists long contended that the money-supply growth could affect the
macroeconomy. These included Milton Friedman who early in his career advocated
that government budget deficits during recessions be financed in equal amount by money
creation to help to stimulate aggregate demand for output. Later he advocated simply increasing
the monetary supply at a low, constant rate, as the best way of maintaining low inflation and
stable output growth. However, when U.S. Federal Reserve Chairman Paul Volcker tried this
policy, starting in October 1979, it was found to be impractical, because of the highly unstable
relationship between monetary aggregates and other macroeconomic variables. Even Milton
Friedman later acknowledged that direct money supply targeting was less successful than he had
hoped.

Therefore, monetary decisions today take into account a wider range of factors, such as:

 short-term interest rates;

 long-term interest rates;
 velocity of money through the economy;
 exchange rates;
 credit quality;
 bonds and equities (debt and corporate ownership);
 government versus private sector spending/savings;
 international capital flows of money on large scales;
 financial derivatives such as options, swaps, futures contracts, etc.

 INFLATION

In economics, inflation is a sustained increase in the general price level of goods and services in
an economy over a period of time. When the price level rises, each unit of currency buys fewer
goods and services; consequently, inflation reflects a reduction in the purchasing power per unit
of money – a loss of real value in the medium of exchange and unit of account within the
economy. A chief measure of price inflation is the inflation rate, the annualized percentage
change in a general price index, usually the consumer price index, over time. The opposite of
inflation is deflation.

Inflation affects economies in various positive and negative ways. The negative effects of
inflation include an increase in the opportunity cost of holding money, uncertainty over future
inflation which may discourage investment and savings, and if inflation were rapid enough,
shortages of goods as consumers begin hoarding out of concern that prices will increase in the
future. Positive effects include reducing the real burden of public and private debt, keeping
nominal interest rates above zero so that central banks can adjust interest rates to stabilize the
economy, and reducing unemployment due to nominal wage rigidity.

Economists generally believe that high rates of inflation and hyperinflation are caused by an
excessive growth of the money supply. Views on which factors determine low to moderate rates
of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real
demand for goods and services, or changes in available supplies such as during
scarcities.However, the consensus view is that a long sustained period of inflation is caused by
money supply growing faster than the rate of economic growth. Inflation may also lead to an
invisible tax in which the value of currency is lowered in contrast with its actual reserve
ultimately, leading individuals to hold devalued legal tender.

Today, most economists favor a low and steady rate of inflation.Low (as opposed to zero or
negative) inflation reduces the severity of economic recessions by enabling the labor market to
adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary
policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is
usually given to monetary authorities. Generally, these monetary authorities are the central banks
that control monetary policy through the setting of interest rates, through open market
operations, and through the setting of banking reserve requirements

 UNEMPLYMENT

The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a

percentage by dividing the number of unemployed individuals by all individuals currently in
the labor force. During periods of recession, an economy usually experiences a relatively high
unemployment rate. According to International Labour Organization report, more than 200
million people globally or 6% of the world's workforce were without a job in 2012.

There remains considerable theoretical debate regarding the causes, consequences and solutions
for unemployment. Classical economics, new classical economics, and the Austrian School of
economics argue that market mechanisms are reliable means of resolving unemployment. These
theories argue against interventions imposed on the labor market from the outside, such as
unionization, bureaucratic work rules, minimum wage laws, taxes, and other regulations that they
claim discourage the hiring of workers.

Keynesian economics emphasizes the cyclical nature of unemployment and recommends

government interventions in the economy that it claims will reduce unemployment during
recessions. This theory focuses on recurrent shocks that suddenly reduce aggregate demandfor
goods and services and thus reduce demand for workers. Keynesian models recommend
government interventions designed to increase demand for workers; these can include financial
stimuli, publicly funded job creation, and expansionist monetary policies. Its namesake
economist John Maynard Keynes, believed that the root cause of unemployment is the desire of
investors to receive more money rather than produce more products, which is not possible
without public bodies producing new money.

In addition to these comprehensive theories of unemployment, there are a few categorizations of

unemployment that are used to more precisely model the effects of unemployment within the
economic system. The main types of unemployment include structural unemployment which
focuses on structural problems in the economy and inefficiencies inherent in labour markets,
including a mismatch between the supply and demand of laborers with necessary skill sets.
Structural arguments emphasize causes and solutions related to disruptive
technologies and globalization...Discussions of frictional unemployment focus on voluntary
decisions to work based on each individuals' valuation of their own work and how that compares
to current wage rates plus the time and effort required to find a job. Causes and solutions for
frictional unemployment often address job entry threshold and wage rates. Behavioral
economists highlight individual biases in decision making, and often involve problems and
solutions concerning sticky wages and efficiency wages.

For centuries, experts have predicted that machines would make workers obsolete and increase
unemployment.

Causes of unemployment

(i) Caste System: In many cases, the work is not given to the deserving candidates but given
to the person belonging to a particular community. So this gives rise to unemployment.

(ii) Slow Economic Growth: Indian economy is underdeveloped and role of economic
growth is very slow. This slow growth fails to provide enough unemployment opportunities
to the increasing population.

(iii) Increase in Population: Constant increase in population has been a big problem in India.
It is one of the main causes of unemployment. The rate of unemployment is 11.1% in 10th
Plan.

(iv) Agriculture is a Seasonal Occupation: Agriculture is underdeveloped in India. It

provides seasonal employment. Large part of population is dependent on agriculture. But
 agriculture being seasonal provides work for a few months. So this gives rise to
unemployment.

(v) Joint Family System:

In big families having big business, many such persons will be available who do not do any
work and depend on the joint income of the family.

CAPITAL MARKET


The Pakistan Stock Exchange (PSX) is the stock exchange of Pakistan with trading floors
in Karachi, Islamabad and Lahore. PSX was reclassified as a MSCI Emerging Market in May
2017. While, the FTSE classifies PSX as a Secondary Emerging Market.

PSX was established on 11 January 2016 after the merger of individual stock exchange's
of Karachi, Lahore and Islamabad. PSX's origin's where laid with the establishment of
the Karachi Stock Exchange in 1947, the Lahore Stock Exchange in 1970 and the Islamabad
Stock Exchange in 1992. As of May 28, 2016, there are 560 companies listed in PSX and the
total market capitalisation is $98billion.

The investors on the exchanges include 1,886 foreign institutional investors and 883 domestic
institutional investors along with about 0.22 million retail investors. There are also about 400
brokerage houses which are members of the PSX as well as 21 asset management
companies. PSX is among the world's best performing stock market's, between 2009 and 2015 it
delivered a 26% a year. In December 2016, PSX sold 40% strategic shares to a Chinese
consortium for $85 million.

The Pakistan Stock Exchange (PSX) came into inception in January 2016 when the Government
of Pakistan decided to merge the three large exchange markets of the country into one combined
market.

Karachi Stock Exchange

UK's Foreign Secretary William Hague rings the closing bell at the Karachi stock exchange

Founded on 18 September 1947, Karachi Stock Exchange Limited (KSE) was registered
in Pakistan. The Karachi Stock Exchange Limited (KSE), was a stock exchange located at the
Stock Exchange Building (SEB) on Stock Exchange Road, in the heart of Karachi's Business
District, I. I. Chundrigar Road, Karachi, Sindh Province of Pakistan. It was Pakistan's largest and
one of the oldest stock exchange in South Asia. Karachi Stock Exchange was also listed among
10 best stock markets in the world in 2015. According to Bloomberg, the Pakistani
benchmark stock market index is the third-best performer in the world since 2009. In June
2015, Khaleej Times reported that since 2009, the Pakistani equities delivered 26 percent a year
for US dollar investors, making Karachi the best-performing stock exchange in the world. As of
10 July 2015, total market capitalization reached Rs. 7.33 trillion (US$72 billion approximately).

Lahore Stock Exchange

Islamabad Stock Exchange Toweris now the office of PSX

Lahore Stock Exchange is located in Lahore, Pakistan. It was formally inducted into the national
Pakistan Stock Exchange on 11 January 2016. The Lahore Stock Exchange (Guarantee) Limited
came into existence in October 1970, under the Securities and Exchange Ordinance of 1969 by
the Government of Pakistan in response to the needs of the provincial metropolis of the province
of Punjab. It initially had 83 members and was housed in a rented building in the crowded Bank
Square area of Lahore.

Islamabad Stock Exchange

Islamabad Stock Exchange or ISE was the youngest of the three stock exchanges of Pakistan and
is located in the capital of Islamabad. Islamabad stock exchange (ISE) was incorporated as
a guarantee-limited company on 25 October 1989 in Islamabad. ISE tower is a 22 storey
building, which makes it the second highest building of Islamabad after the Telecom Tower.
Area covered by the building is 562,629 sq ft (52,269.9 m2), it consists of three levels of
basements and ground plus 18 floors above.