KARACHI, May 16: What are Pakistan’s economic growth prospects for next fiscal year? Will Pakistan be able to achieve 4.7 per cent growth during 02-03 as indicated in three years Medium Term Budgetary Framework? This budgetary framework was incorporated in the current fiscal year’s budget documents released June last year.

The answer to this question is both yes and no. There are businessmen who are convinced of the strength of Pakistan’s economic fundamentals’ and are confident of even going beyond 5 per cent growth next year if Finance Minister Shaukat Aziz comes out with the promised “growth oriented and investors’ friendly budget” next month.

But then there are industrialists and economists who foresee a bleak prospect of economic growth in coming days as the government policies are distinctly biased towards services sector particularly the financial sector and tend to discourage investment and production in industry.

“Just look at the fabulous post-tax profits that banks in Pakistan make and their 8 per cent spread,” Asad Saeed, a noted economist remarked, who does not foresee interest rates coming down significantly in the coming months. Dr Vohra, Chairman of SITE Association of Industry Manghopir is bitter on the high utility tariffs and the increase in petroleum products prices announced on Wednesday that is bound to push up production cost. He doubts if there would be any significant breakthrough in economic growth during coming months.

But there are a large number of businessmen who say that if government effectively tackles law and order situation, takes bold political decision in domestic and foreign affairs and ensures stability there is no stopping for Pakistan from moving ahead on growth and development at a speed that was never seen before.

Cotton and textiles, a large section of businessmen believe, will be the leader of Pakistan’s growth in the coming years in realm of investment, technology acquisition, management, production, marketing and exports.

“Textiles in Pakistan is all set to give a big impetus to national economic growth,” Iqbal Ibrahim leader of one of the top business groups in the country said. He said that textile groups have invested more than 1 billion dollars to modernise their production techniques in last two and three years.

“What textile groups in Pakistan need now is to prepare themselves for social compliance after 2005 when textile quotas would be phased out completely and foreign buyers will demand application of universal labour laws, pollution-free production environment and contamination-free industrial inputs.

Akbar Hashwani, many times Chairman of Karachi Cotton Association (KCA), is confident of Pakistan’s growth going beyond 5 per cent and may touch even 6 per cent mark.

He said that Pakistan has harvested two consecutive bumper wheat and cotton crops in wake of severe drought. “What more proof of Pakistan’s economic resilience one needs,” he said.

Akbar disclosed that there is now a mounting demand pressure on industrial plots in Karachi and some other cities reflecting that industrial activities have started picking up.

“An industrial plot of one acre at prime location in Karachi now cost around Rs20 million plus,” he said. It was quoted at about Rs10 million a few months ago.

The Managing Director of SITE Limited, Hashim Reza confirmed that prices of industrial plots in Karachi are on rise. He said the industrial plots at newly developed site in second phase of Super Highway are being sold at Rs2.5 to Rs2.6 million an acre against official price of Rs1.5 million.

Another indicator of a pick-up in business activities is about 12 per cent growth in import of textile machinery in last ten months. Official statistics show import of textile machinery at 335 million dollars during July 01 to April 02 period as against about 300 million dollars in same period last fiscal. A more than 26 per cent rise is seen in import of metals during this fiscal. Metals constitute vital inputs in construction and engineering industry.

All said and done, but political uncertainty, persisting budget deficit beyond 5 per cent of GDP, a crippling tax structure and unabated spread of poverty are the factors that even force the optimists to reconsider their assessments and hopes for the coming months.

The 01-02 budget document promised a growth rate of 4 per cent for the current fiscal. But the indications are that it would hardly be 3 per cent, almost same as the national population growth ratio. A drought that seems to have hit only Sindh but has apparently spared Punjab, and fall out of September 11 events are the causes of economic slowdown.

Growth in agriculture during the current fiscal was predicted at 2 per cent. The government projects agricultural growth in the next fiscal to go up to 4.7 per cent. Only timely rains in next two or three weeks will perhaps give some hopes of achieving this target.