PMS 2021 Solved Pakistan Affairs Past Papers | Industrial Sector of Pakistan: Problems and Suggestions.
The following question of PMS Pakistan Affairs 2021 is solved by Miss Iqra Ali, the best Pakistan Affairs Coach, on the guided pattern of Sir Syed Kazim Ali, which he taught to his students, scoring the highest marks in compulsory subjects for years. This solved past paper question is uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Question Breakdown
In this question, the examiner has asked you to highlight the main problems of the industrial sector of Pakistan and suggest measures for improvement. So, start with an introduction that must contain all the leading points of your answer. Then, give equal weightage to both the asked parts. However, strengthen your answer with reports, illustrations, case studies, and statistics. At last, end the question with a conclusion.
Outline
1-Introduction
2-What are the Main Problems in the Industrial Sector of Pakistan?
- ✓Weak Industrial Base
- ✓Recurrent Energy Short Falls
- ✓Lack of Efficient Infrastructure
- ✓Lack of Technological Advancements
- ✓Lack of Skilled Labor
- ✓Lack of Policy consistency
- ✓Trade Imbalances
- ✓Corruption of Bureaucracy
3-Way Forward- Measures for Improvement
- ✓Diversify the Sector
- ✓Improve Energy Infrastructure
- ✓Development of Modern Infrastructure
- ✓Promote Technological Upgradation
- ✓Encourage Skill Development
- ✓Policy Stability
- ✓Promote Export-Oriented Trade
4-Conclusion
Answer to the Question
Introduction
Industrial sector of Pakistan is a contributor of 28.11% of the country’s economy; hence, one of the leading elements for economic growth and development has faced numerous challenges that limit its productivity and efficiency, the efficacy required to contribute to economic development. Comprehensively, it includes manufacturing, electricity generation, mining, and construction. Myriad issues inhibit the sector from unlocking its potential in extracting mineral resources, energy production from renewable sources, and value addition in the textile and tourism sector. Indubitably, the issues are responsible for its dismal condition, a weak industrial base, recurrent energy shortfalls, lack of efficient infrastructure and technological advancement, lack of skilled labor and policy consistency, insurmountable trade imbalances, and corruption of bureaucracy. However, the solution to these issues is a truism, and it requires a multi-pronged reformative approach to abate these lingering issues. The state may tackle these problems by adopting significant and targeting measures for improvement, such as by diversifying the industrial sector (multi-products according to demand), modernizing the energy infrastructure, promoting technological upgradation, encouraging skill development, ensuring Policy Stability, encouraging Export-Oriented Trade, and Abate Corruption. Thus, a National Plan of Action is the need of the hour to strengthen the sector and revitalize it from the abyss of stagnation to restore the crisis.
What are the main problems in Pakistan’s industrial sector?
The following points encapsulates the leading issues faced by the sector through years. However, it also demonstrates the unique nature of the problems associated particularly with the dismal condition of other sectors of economy that has been influencing the efficacy of industrial sector.
- ✓Weak Industrial Base
First, the country’s sector inherits a weak foundation characterized by its dismal condition not only because of the lack of infrastructure but also its availability in underdeveloped areas. Reasonably, earlier, the sector depends on extracting raw materials and agricultural products in the Indian subcontinent. Myriad reasons contributed to its weak base. For example, the share of the manufacturing sector is narrow because it is not diversified and relies on garments, which are of low value. So, it weakened the country’s internal trade. Then, the state remained highly dependent on imports for energy and food, which created heavy trade imbalances and thus contributed to the weakening of its base. Other reasons behind its weakened base include the lack of Foreign Direct Investment (FDI), a repercussion of the country’s internal stability, further subtracting value from its already faltering condition.
- ✓Recurrent Energy Short Falls
Second, recurrent energy shortfalls are among the most perceptible problematic factors creating hindrances to the sector’s development. A dark picture of this issue portrays a few hours of energy outages and a few distorted energy supplies. Moreover, the problem impacted the efficacy and productivity of the sector in an unprecedented way. For illustration, according to the report of the State Bank of Pakistan (SBP), in recent years, power outages have been responsible for production losses of about 1-2% of the Gross Domestic Product (GDP) annually. Usually, factories, to inhibit a halt in production or manufacturing, use backup generators that cost a heavy amount to them. However, using backup generators raises the overall cost of the product, and in this way, factories maintain the fiscal deficits.
- ✓Lack of Efficient Infrastructure
As far as the issue of the lack of infrastructure is concerned, outdated infrastructure affects overall productivity, exacerbates operational costs, and decreases product efficiency and competitiveness. The following points discuss the leading infrastructure issues faced by the sector. First, the issue of inconsistent energy supply is anathema for the manufacturing sector, which accounts for 12.5 % of the industrial sector’s overall contribution to the Gross Domestic Product (GDP). According to a report, the textile industry in Punjab, Sindh, KPK, and Balochistan, which is the backbone of the manufacturing sector, experienced losses of 1500,700, 350, and 80 feeders of loading shedding in the fiscal year of 2023-24. Besides, power outages in the industrial areas faced significant financial losses. Thus, the issue is one of the alarming constraints affecting its productivity. However, it is inevitable to adjust the increased operational costs to make the sector able to compete in the global markets. Then, the dismal condition of transportation and logistics infrastructure, especially Railways, restraints timely deliveries. It increases transportation and product costs, thus impacting overall competitiveness for exports. Besides, inadequate port facilities impacted the efficiency in terms of delivery.
- ✓Lack of Technological Advancements
Relatively, the lack of technological advancements in the industrial sector is one of the main reasons contributing to the wreaking of its foundation. Generally, modern industries require robust digital infrastructure. However, Pakistan lags in internet accessibility and penetration, digital connectivity, and broadband quality. As I discussed, the country’s weak industrial base demonstrates the availability of industries in the rural areas. So, it restricts the adoption of modern technology, limits data analytics, and disrupts supply chain management systems. The issue remains persistent, affecting the sector’s efficacy. For example, according to the Pakistan Telecommunication Authority (PTA), internet penetration in 2024 is about 45%. For businesses looking for robust modern adventures, this issue led to a reduction in the efficiency of manufacturing operations and supply chains.
- ✓Lack of Skilled Labor
Third, the shortage of skilled workers is a leading challenge facing the industrial sector. The following points demonstrate the factors leading to the issue of the lack of skilled labor. Indubitably, the literacy rate is low in the country, leading to a lack of availability of an educated workforce. Besides, those educated are less skilled because of limited vocational training and technical education programs in universities. For example, according to the National Vocational and Technical Training Commission (NAVTTC), only 49,000 people out of 24 million are formally trained in technical skills and certified in 2024. Now, the government of Pakistan is taking initiatives to invest more in skill development programs, but a lack of fiscal resources restrains the true potential of the initiatives. Besides, those skilled opted to work in foreign countries because of improved wages and living conditions. Last but not least, gender disparity and limited female participation in the workforce affect the talent availability in the sector.
- ✓Lack of Policy consistency
Another problem confronting the industrial sector of Pakistan is the lack of policy inconsistency. Due to political instability, the government mandates change without completing the legitimate tenures. The successive governments prioritize their political agenda and do not continue the former policies. As a result, uncertainty creates in investments, and investors are hesitant to invest in businesses because they fear low returns. Then, the lack of policy consistency caused boom and bust cycles of growth followed by delays or closure. Furthermore, relief packages are provided to compensate for the policy changes that inhibit the state from prioritizing long-term structural reforms. All these approaches are unsustainable and temporarily affect overall growth and development.
- ✓Trade Imbalances
Fourth, trade imbalances are further adding fuel to the smoldering fire of the deteriorating industrial sector. The issue stems from the state’s dependency on imports for manufacturing, such as raw materials and machinery. When global prices rise, the textile industry requires imported goods. As a result, local value addition decreases with an increase in the prices of products. Next, recurrent power cutoffs, high cost of electricity, and infrastructure issues impact the overall productivity of the sector. As I discussed, complex trade policies discourage investment, especially in small and medium-sized enterprises (SMEs). Resultantly, domestic workers remain incompetent compared to foreign workers, further widening the trade gap. However, when currency depreciates, the cost of imported products increases because of the country’s limited trade capacity and high import dependency.
- ✓Corruption of Bureaucracy
Next, corruption of bureaucracy impacts the governance of other sectors, along with the industrial sector. Corruption in the industrial sector involves illegal practices to increase profit and evasion of governmental regulations and orders, such as tax evasion, monopoly, and exploitation of the workforce. Kinship ties with the authorities help aspiring businessman pursue their designs that reduce transparency and corruption.
Way Forward- Measures for Improvement
The following points encapsulate measures for improvement of the problems discussed previously.
- ✓Diversify the Sector
First, the government should promote small and medium-sized enterprises (SMEs) to diversify the sector, which must involve encouragement of innovation and reduction in reliance on large companies. It may include tax exemptions, tax breaks, and less complicated policies. Further, the sector must take pragmatic steps to reduce its reliance on textiles only. Multiple products but competitive globally can help to abate the issue. Moreover, diversification provides resilience, job creation, and high-profiting competitive products.
- ✓Improve Energy Infrastructure
Second, it is necessary to improve energy infrastructure to support economic growth. It can also reduce power outages inevitable to meet the demand sustainably. It can include the development of sustainable energy sources, such as investing in solar power, wind power, and hydropower. Next, the government can take steps to modernize the grid infrastructure, such as innovative grid technologies and microgrid systems. It can improve efficiency by managing the issue of supply and demand of electricity. Also, by increasing the overall capacity of traditional power plants, the sector can diversify fuel sources for the industries. On the other hand, expansion in energy storage can help to mitigate the issue, such as battery storage, hydro pump storage, or innovative technologies. It helps to reduce reliance on expensive electricity generators.
- ✓Development of Modern Infrastructure
Developing modern infrastructure must involve innovative transportation systems, such as efficient road and railway networks. The state can take steps to advance industrial zones and parks to attract FDI. Then, encouraging manufacturing technology can help to abate the issue of long-term costs. In addition, high-speed railways and highways can help reduce transit time and lower costs. It must include improvement in energy and utilities infrastructure. To enhance supply chain resilience, using digital supply management can assist with tracking, supplier management, and demand forecasting to ensure smoother operations.
- ✓Promote Technological Upgradation
Next, technological upgradation of the industrial sector may contribute to enhanced efficiency and productivity because it promotes tech-savvy industries that perform better in the global markets. In addition, it creates jobs and supports skill development. However, to encourage technological upgradation, the government must take steps to reduce the fiscal burden on companies by offering tax exemptions, credits, subsidies, low-interest loans and grants, and investing in technology infrastructure. Then, it can also done by promoting research and development (R&D) by encouraging public-private R&D partnerships. Furthermore, strengthening digital transformation and industry can also help to advance the sector.
- ✓Encourage Skill Development
Then, encouraging skill development can help reduce reliance on a foreign workforce and improve the overall productivity of the sector. It may include expansion in the technical and vocational education and training programs (TVET), public-private partnership to encourage skill development, promotion of the on-the-job training and upskilling programs, development of sector-specific skill programs, and incentivizing skill development for women. Although the government takes significant steps to promote skill development, it requires sustainable implementation for robust outcomes.
- ✓Policy Stability
As I discussed, how policy inconsistency creates impediments to the way of development of the industrial sector. So, devising a pragmatic solution for the issue is the need of the hour. It can include steps such as developing a long-term industrial policy framework with a clear vision and goals, but the policy must be consistent across political cycles. The state must take steps to strengthen regulatory and legal frameworks to reduce bureaucratic delays, enhance investor confidence, and increase overall productivity.
- ✓Promote Export-Oriented Trade
Next, the state can promote export-oriented trade by taking the mentioned measures for improvement. Indubitably, export oriented trade helps to boost economic growth and reduce current account deficits. It helps the domestic industry to strengthen its grip and raise its potential to become competitive in the global market. However, it requires a pragmatic approach and robust but consistent policy for desired outcomes.
Conclusion
The country’s industrial sector inherits a weak foundation characterized by its dismal condition not only because of the lack of infrastructure but also its availability in underdeveloped areas. The state remained highly dependent on imports for energy and food, which created heavy trade imbalances and thus contributed to the weakening of its base. The recurrent energy shortfalls are among the most perceptible problematic factors creating hindrances to the sector’s development. Outdated infrastructure affects overall productivity, exacerbates operational costs, and decreases product efficiency and competitiveness. Besides, the lack of technological advancements in the industrial sector is one of the main reasons for the wrecking of its foundation. The literacy rate is low in the country, leading to a lack of availability of an educated workforce. Another problem confronting the industrial sector of Pakistan is the lack of policy consistency, causing boom and bust cycles of growth followed by delays or the closure of projects. However, trade imbalances are further adding fuel to the smoldering fire of the deteriorating industrial sector. Corruption in the industrial sector involves illegal practices to increase profit and evasion of governmental regulations and orders, such as tax evasion, monopoly, and exploitation of the workforce. Thus, the government should promote small and medium-sized enterprises (SMEs) to diversify the sector. The government must take steps to improve energy infrastructure, develop modern infrastructure, revitalize technological upgrades, encourage infrastructural development, prioritize Policy Stability, and promote export-oriented trade.
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