The following article is written by Bilal Ahmad, a student of Miss Syeda Saba and Miss Iqra Ali. For years, Miss Syeda Saba has been known for her Grammar teaching methodology, and Miss Iqra Ali for being a top-notch writer and a writing coach.
The decade of the 1960s is considered the golden age of economic growth in Pakistan. Due to the policies of the Ayub Khan regime, economic growth was so impressive that it was seen as a model of economic development by many developing nations. Unfortunately, things continued getting worse thereafter and have now reached a point where most economists think that Pakistan is heading towards bankruptcy. The economic situation of Pakistan is at a critical stage. Today, the country faces serious economic challenges, the first one among which is the ballooning trade deficit. Pakistan is an import-driven country where imports surpass exports. Another challenge is the fiscal deficit, when the expenditure of a government is greater than its total revenue collection. Resultantly, the government has to borrow money from international and national financial institutions such as the World Bank, International Monetary Fund, and Asian Development Bank so that it can enable higher spending without having to increase taxes. The shortage of power and water is also a gigantic economic challenge. The prevailing energy crisis in Pakistan is eating up two percent of the economy; it is because all sectors of the economy are heavily dependent on power consumption. Frequent power outages have immensely damaged the industrial production and overall performance of all the other sectors of the economy. The water crisis is also the biggest issue for economic growth. The water crisis is hampering agricultural production, which has a significant share of the economy. The high cost of doing business is another challenge that needs to be addressed urgently.
Numerous problems and hurdles in the way of starting a business, such as a delay in communication, centralized decision making, lack of loyalty, lengthy registration procedures, and lack of skilled labour force, make it expensive and unaffordable for investors to start a business in the country. This is a serious barrier to economic growth. Another serious challenge Pakistan’s economy is faced with is poor governance, which has stymied smooth and sustainable development. Good governance comes through strong, independent state institutions. A country cannot grow unless the issue of poor governance is resolved. Political instability is like the sword of Damocles for our economy. There is no denying the fact that the political environment of a country has a profound impact on its economy. In a stable political environment, the government does not have to strive for its survival and is able to pay full attention to the economic well-being of the nation by devising long-term policies. Unfortunately, the political conditions of Pakistan have never remained stable. History reveals that since its inception, the country has been longing for a stable democratic government. The law and order situation has also taken a heavy toll on our national economy. Peace and progress are both intertwined. Peaceful conditions are crucial for attracting foreign and local investors.
First and foremost, Pakistan needs to ensure an environment conducive to investors so that foreign direct investment in the country can be increased. The government should offer tax incentives for the establishment of industrial units in various sectors as such units will provide employment to the youth and will also add to the government’s revenue collection. Second, the domestic investment must be encouraged through more flexible tax policies, particularly for small and medium enterprises. Such measures would stabilize the economy and reposition Pakistan on the international stage as an attractive destination for foreign investment. Third, Pakistan needs to focus on building up its domestic industry to expand its exports. All the hindrances to the development of domestic industry must be removed. Fourth, Pakistan must modernize its industrial and agriculture sector. New plants and equipment must be installed for the purpose of enhancing the quality and quantity of industrial production. Fifth, Pakistan needs to broaden its tax base. Currently, the agriculture sector is not being taxed, while large businesses are also often given a big tax break. The tax base can be widened by taxing the agricultural sector and undue tax amnesties to large businesses. Also, there is a dire need to introduce tax reforms and strengthen tax collection coordination at the national and provincial levels. Last but not least, advancement in the field of science and technology is the key driver for the acceleration of economic development. Pakistan needs to invest in the field of science and technology as it will have a positive influence on the agricultural and industrial output.
Taking everything into consideration, it can be said that the country’s severe economic challenges can be tackled if effective strategies and policies are devised and implemented. The country can revive its economy through institutional, educational, industrial, and agricultural reforms. In this way, it can be hoped that Pakistan will become a model of economic development for developing nations around the world.
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