Crop losses due to floods: government may have to lower fiscal year 2014 growth target

The government may have to revise growth target of 4.4 percent downward for the current fiscal year due to losses caused to the agriculture crops by the recent floods in the country. Sources said that recent floods have affected paddy and cotton but actual losses are yet to be estimated. The accurate quantum of the damage to crops would be known after losses are reported to the federal government by the provincial governments. 

The weight of cotton production is significant in overall agriculture sector”s contribution to the GDP and any decrease in projected cotton production would negatively impact growth for the current fiscal year. The government has already revised the cotton production target downward – from 13.22 million bales to 12.65 million bales for the current fiscal year which may be further revised. 

Sources said energy crisis, if not fixed on sustainable basis, would have a major impact on growth hitting the industrial activity. Positive growth of large manufacturing sector in the last fiscal year must be maintained in the current fiscal year. A senior official of the Planning Commission said that manufacturing sector growth for June-July 2012-13 was recorded at 4 percent against 2.08 percent estimated for the last fiscal year on the basis of nine months figures in March 2013. This growth momentum needs to be maintained in the current fiscal year by ensuring energy supply to the industry. 

The official was optimistic that the implementation of the mega development projects in collaboration with the Chinese government would contribute to overall GDP growth in the country, not only in the current fiscal year but also in years to come. The government, he said, is aggressively pursuing these projects with China and has established a ”China Cell” in the Planning Commission to monitor them. The GDP growth target was projected at 4.4 percent for the current fiscal year on the basis of growth estimate of 3.8 percent in the agriculture sector, 4.5 percent manufacturing and 4.6 percent in services sector. 

He maintained that the damage to the agriculture crops by floods may have affected paddy and cotton crops but energy sector and law and order situation are considered the real threat to the attainment of the GDP growth target. He said various estimates suggest that power crisis accounts for an annual loss of 2 percent to the GDP and fuels unemployment in the country. Public Sector Development Programme (PSDP) allocation of Rs 1,155 billion was earmarked for the current fiscal year with the objective of stimulating growth in the economy. 

Copyright Business Recorder, 2013

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