Varad
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Are we being misled on the $1,254 per capita income?
ISLAMABAD: The economic mandarins of the incumbent regime show the economy to have grown to a little over Rs18,000 billion. This expansion, however, is not due to meaningful growth but primarily because of inflation, which has apparently been factored into recalculating the per capita income as having increased to $1,254 in 2010-11 from $1,073 in the last fiscal year. This appears to be a misleading statistic, to say the least.
Yes, I agree that the per capita income figure is extremely misleading, Dr.Ashfaq H Khan, Dean of the Economics Department at the NUST Business School, told The News. In reality, there is a zero growth in per capita income, as the increased almost at the rate of real GDP growth, which has been estimated at 2.05 percent. This is the main reason that the masses are facing such hardships, Dr Khan said.
According to Finance Ministry sources, the economic mangers have decided to show the masses the success of their policies by inflating the size of the economy. GDP deflator (this is the ratio of GDP at current market price and GDP at constant market price), which is the broader definition of inflation, has increased by almost 20 percent in fiscal year 2010-11. In other words inflation in Pakistan as defined by changes in GDP deflator stood at about 20 percent. As a result of rise in inflation, the size of the GDP has jumped to 18000 billion rupees 2010-11.
Dividing by the average exchange rate for the year, the size of Pakistan s GDP in dollars terms has surged to slightly over Rs18,000 billion with per capita income surging to $1254.
This rise in per capita income presents, the source said, a misleading picture of the average prosperity of the people of Pakistan. In fact, when adjusted for inflation, the real per capita income has remained constant at last years level. In other words, the living standard of the people of Pakistan has not improved during the outgoing fiscal year 2010-11, the source said.
Domestic investment, according to the official, is down to a 40-year low at 13.4 percent, which is why the country will not experience GDP growth at a reasonable rate in the next 2 to 3 years, except 2-2.5 percent. This means that Pakistan s future growth prospects will remain clouded as a result of sharp decline in domestic investment It may be pointed out that the investment rate was all time high at 22.5 percent in 2006-2007.
The finance ministry official disclosed that the country had experienced a more than 9 percentage point decline in investment in the last 4 years, which did not auger well for future growth prospects. In the coming years Pakistan s unemployment and poverty will continue to rise with serious social consequences for the country, the official lamented.
As far as foreign direct investment (FDI) is concerned, the FDI has tumbled by 29 percent to $1.232 billion during July-April 2010-11 as against $1.725 million in last year.
The official also said the average inflation has been at 14 percent. Forty-five months in a row, inflation has been in a double digit which has broken the back of the fixed income group as well as poor and vulnerable sections of society. It is unparalleled in the 64 years of the history of Pakistan that inflation has persisted at a high double digit for so long a period. - Khalid Mustafa
Are we being misled on the $1,254 per capita income?
ISLAMABAD: The economic mandarins of the incumbent regime show the economy to have grown to a little over Rs18,000 billion. This expansion, however, is not due to meaningful growth but primarily because of inflation, which has apparently been factored into recalculating the per capita income as having increased to $1,254 in 2010-11 from $1,073 in the last fiscal year. This appears to be a misleading statistic, to say the least.
Yes, I agree that the per capita income figure is extremely misleading, Dr.Ashfaq H Khan, Dean of the Economics Department at the NUST Business School, told The News. In reality, there is a zero growth in per capita income, as the increased almost at the rate of real GDP growth, which has been estimated at 2.05 percent. This is the main reason that the masses are facing such hardships, Dr Khan said.
According to Finance Ministry sources, the economic mangers have decided to show the masses the success of their policies by inflating the size of the economy. GDP deflator (this is the ratio of GDP at current market price and GDP at constant market price), which is the broader definition of inflation, has increased by almost 20 percent in fiscal year 2010-11. In other words inflation in Pakistan as defined by changes in GDP deflator stood at about 20 percent. As a result of rise in inflation, the size of the GDP has jumped to 18000 billion rupees 2010-11.
Dividing by the average exchange rate for the year, the size of Pakistan s GDP in dollars terms has surged to slightly over Rs18,000 billion with per capita income surging to $1254.
This rise in per capita income presents, the source said, a misleading picture of the average prosperity of the people of Pakistan. In fact, when adjusted for inflation, the real per capita income has remained constant at last years level. In other words, the living standard of the people of Pakistan has not improved during the outgoing fiscal year 2010-11, the source said.
Domestic investment, according to the official, is down to a 40-year low at 13.4 percent, which is why the country will not experience GDP growth at a reasonable rate in the next 2 to 3 years, except 2-2.5 percent. This means that Pakistan s future growth prospects will remain clouded as a result of sharp decline in domestic investment It may be pointed out that the investment rate was all time high at 22.5 percent in 2006-2007.
The finance ministry official disclosed that the country had experienced a more than 9 percentage point decline in investment in the last 4 years, which did not auger well for future growth prospects. In the coming years Pakistan s unemployment and poverty will continue to rise with serious social consequences for the country, the official lamented.
As far as foreign direct investment (FDI) is concerned, the FDI has tumbled by 29 percent to $1.232 billion during July-April 2010-11 as against $1.725 million in last year.
The official also said the average inflation has been at 14 percent. Forty-five months in a row, inflation has been in a double digit which has broken the back of the fixed income group as well as poor and vulnerable sections of society. It is unparalleled in the 64 years of the history of Pakistan that inflation has persisted at a high double digit for so long a period. - Khalid Mustafa
Are we being misled on the $1,254 per capita income?
