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Ten Year Perspective Development Plan 2001-11 and Three Year Development Programme 2001-04 To provide a direction to the economy while maintaining flexibility required in present time, the first Ten Year Perspective Development Plan 2001-11 of the country operationalied through Three Year Development Programme was released by the Planning Commission on 6-9-2001. The Plan is being implemented from fiscal year 2001-02. This is a model for other countries. 2. The Sectoral Strategies were developed after lengthy discussions at Federal and Provincial levels. Before finalizing the Plan, Presentations to Chief Executive were made several times in which Federal Ministers and Secretaries, Governors and Provincial Ministers were participated. 3. This is a completely home grown plan to visualize the required long-term macroeconomic and sectoral growth strategies. As effective implementation is the key, a steady movement towards 2010-11 will be vigorously pursued through operational strategies embodied in the Three Year Development Programme, which will roll over every year. Objectives 4. The key objectives of the Perspective Development Plan are: • Accelerating GDP growth, reduce unemployment and alleviate poverty; • Financing growth increasingly by Pakistan’s own resources; • Government to improve its income-expenditure configuration to contain domestic borrowing; • Private Sector to transform a larger proportion of its saving into foreign exchange through exports. This is to contain external borrowing; • Improvement in competitiveness by promoting productivity, efficiency, and quality; • Build human capital base for long-term, self-reliant growth; • Institutionalize social capital conducive to sustainable development. Plan Size 5. The total size of the Plan and its distribution between public and Private sectors is given below: (Current Prices Rs. Billion) Public Sector Development Programme Private Sector Total 6. First Three Years 2001-04 460 1,519 1,979 % 23.2 Total Ten Years 2001-11 2,540 % 22.5 76.8 100.0 8,747 11,287 77.5 100.0 Projections for the private sector can at best be indicative, the realization of which will depend on the continued investment-friendliness of the policy framework in all sectors, as virtually all fields of the economy are now open to the private initiative. The public sector will concentrate on poverty reduction and human development. Its allocations have been planned tightly: priorities have been worked out for the ten-year allocation of Rs.2,540 billion; Rs.460 billion have been proposed for the first three-year period 2001-04 to initiate, accelerate and complete the priority projects and programmes. A higher budgetary provision of Rs.130 billion further raised to 140 billion has made for the first year, 2001-02, to front-load the implementation of key projects and programmes in water and agriculture so as to overcome the impact of droughts and promote rural employment, and information technology to force productivity and generate urban employment opportunities. Rs. 134 billion have been earmarked under PSDP for the second year 2002-03 of the Ten Year Perspective Development Plan. Growth Rate 7. The macroeconomic framework projects an increase in the growth rate from the drought-related low of 2.6 per cent in 2000-01 to 4 per cent in 2001-02, takes it to 5 per cent in the medium-term i.e. by 2003-04 and then accelerates it to 6.3 per cent by 2010-11. Strategy 8. A four pronged strategy has been envisaged for economic growth: (i) Gradual acceleration in GDP growth: The overall GDP growth in real terms has been planned to accelerate from 2.6 percent estimated for 2000-01 to 6.3 percent in 2011. This level of growth is required to improve living standards, expand employment, generate government revenues, and enhance exportable surplus. With population growth assumed at 1.8 percent per annum by 2011, the envisaged growth is expected to raise the per capita income in real terms from Rs 24,188 in 2001 to Rs 34,444 in 2011; (ii) Maintaining the tempo of agricultural growth rate: During the past 15 years, agriculture sector has grown, on average, at 4.2 percent per annum. Maintaining this tempo will be essential to having a balanced growth of the economy, keeping inflation low, and maintaining employment; (iii) Revitalizing manufacturing growth rate: Industrial growth suffered a setback during the 90s and averaged only 4.8 percent per annum. In the long-term perspective, the objective would be to sharpen the industrial activity and push up the manufacturing growth from 4.8 percent of the 90s, to 7.8 percent by 2011; (iv) Improvement in Productivity and Quality: This will have to be accomplished through appropriate policies such as exchange rate, domestic input pricing, and credit availability on the one hand, and setting up close linkages between high value added production structure and training and HRD facilitation, on the other hand. Macro Economic Framework 9. The macro economic projections upto 2011 are given below: Growth, Structural Change and Investment ____Projections___ Benchmark 2000-01 2003-04 2010-11 Growth Rate (%) GDP Agriculture Manufacturing Services Shares (% of GDP) Agriculture Manufacturing Services Investment ( % of GDP) Total Fixed Public Private 2.6 -2.5 7.1 4.4 5.0 3.5 6.9 5.2 6.3 4.2 7.8 6.6 25.0 15.7 52.0 23.8 16.6 52.3 21.3 18.7 52.6 14.7 13.1 2.2 10.9 16.5 14.9 2.5 12.4 20.6 19.0 3.2 15.8 External Scenario (in Constant $ of 2001) Trade Balance Exports Imports Invisibles Balance Current Account Balance (as % of GDP) Benchmark 2001 -1304 9350 10654 350 -954 -1.6 (Million $) Projections 2004 2011 -1015 -67 10739 16171 11754 16238 267 -539 -747 -1.1 -606 -0.6 Public Finance (As % of GDP) Benchmark __Projections__ 2001 2004 2011 Tax Revenue 13.5 15.4 19.9 Non-Tax Revenue 2.8 2.8 3.0 Current Expenditure 18.6 17.8 20.0 Development Expenditure 3.2 3.9 4.5 Overall Fiscal Deficit 5.3* 3.5 1.7 * Adjusted for Rs -8.2 billion on account of net lending to PSEs. 10. Inflation rate has been assumed to be between 4-5.5 percent per annum during the Perspective Plan period. Nevertheless, most of the projections in the Perspective Plan have been made in real terms. The Monetary expansion is likely to range between about 10 percent to 11 percent per annum.