KARACHI: The traditional manufacturing sectors seem to have lost the race with fast emerging food and beverage industry as it has grabbed the highest share from banks’ money.

The latest report of the State Bank indicated a new trend which showed that among the manufacturing sector food and beverage was the top borrowers from banks, even double than the textile sector which is still the backbone of the economy.

The revealing report showed the food and beverage got a total amount of Rs116 billion from banks during first 10 months (July-April) of the current fiscal year. The textile sector, which still has the highest weight in the large-scale manufacturing (LSM) sector, borrowed Rs59bn during the period.

The oldest textile sector that earns largest amount of export proceeds for the country looks stagnant with no expansion and no innovation. The borrowed money is usually used for working capital, which is why its total borrowed money from banks is not going up.

However, the food and beverage accumulated a total borrowing of Rs422.8bn till end April, 2014 compared to Rs574bn of the textile sector.

Another report of the State Bank showed that the food and beverage has shown tremendous growth compared to the textile sector.

The textile sector, which has the adjusted weight of 29.7 per cent in the list of LSM, showed a growth of 1.44pc during first nine months (July-March) of this fiscal year.

Compared to textiles, the food and beverage, which has the adjusted weights of 17.6pc in the LSM, grew by 7.78pc in the same period.

The country largely depends on textiles to raise its export earnings and governments have been making policies to boost this sector. However, it looks that other sectors with relatively strong potential are ignored.

The government will announce budget and its economic strategy next month to improve the health of the economy which could hardly show a growth of 4pc at the end of this fiscal year 2013-14.

Dozens of proposals by different trade and industry bodies have submitted to the Ministry of Finance which may help the government to understand the growth trend.

However, analysts believe the growth strategy should not be textile-focused as several options like food and beverage are available whose performance can be improved. Several top international food brands are in Pakistan and have been earning billions for years but the government has yet to come out to use their expertise for exports.

Other sectors like pharmaceuticals also need attention as it has gone down to negative growth from 6.16pc growth last year. The sector has a weight of 5.15pc in the LSM.

Analysts also said the economy requires cheaper money from banks but the State Bank kept the interest rate at 10pc. The trade and industry has been asking the government to reduce the borrowing cost which may help boost the economic growth.

If the State Bank decides to reduce the interest rate with the beginning of new fiscal year (2014-15), the hope for diversified growth is possible.

Published in Dawn, May 27th, 2014