GOVERNMENT OF PAKISTAN PLANNING COMMISSION

DEFFINITION
Economic policy refers to the actions

that government takes in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions in to the economy.

Economic Strategy
The changing domestic and international

economic environment also calls for a fresh look at how a realistic Plan must be formulated. The Pakistan economy is becoming increasingly privatized and globalized; this means that economic decision-making is progressively moving under the control of non-government actors.

Economic Strategy
Moreover, many of the tools of government

control, such as import licensing or the Industrial Investment Schedule no longer exist or are seriously diluted. Therefore, if the private sector is to continue to be the main engine of growth for the economy, the government's role in influencing that sectors decisionswhich are essentially motivated by profitsmust become clearer and socially desirable.

The Role of the Government

The process of generating wealth may be

divided into five main areas: policy, regulation, ownership of assets, financing of assets, and production/management of assets. The government will increasingly confine itself to the first two segments, i.e. policy and regulation. The remaining functions, in line with global practices, will be left to the market.

Government Role
The

governments role must be to concentrate on protecting public interests and rights, providing necessary public goods, enforcing laws, punishing exploitative practices, and operating with transparency and accountability. This may well be a counsel of perfection, but it is the direction in which the government must increasingly move.

The 18th Amendment and the National Finance Award (NFC)

The new NFC and the 18th Amendment to

the Constitution of Pakistan will impact the manner in which the federation and provinces interact. The change can be quantified in terms of provincial autonomy, abolishing the concurrent list, strengthening the Council of Common Interests, and devolving more subjects to the provinces.

Connectivity
Connectivity is important for economic

growth because it makes it easier for people to interact with each other and it reduces production and transport costs. People who benefit from these factors are more likely to do business with each other, and to do it more efficiently. Connectivity in the modern sense includes both a hardware element.

Connectivity
such as the transport infrastructure and

information and communication technologyas well as a software elementsuch as trade and professional associations, labour unions, tribal affiliations, and religious obligations.

Multi-stakeholder consultations
I)

Pakistans support for the Multilateral Environment Agreements (MEAs) Stakeholders welcomed the fact that Pakistan had ratified fourteen major global environment conventions, protocols and agreements including the UNFCCC and the Kyoto Protocol; the Vienna Convention on the Ozone Layer and its Montreal Protocol.

 V) Participation of stakeholders in development planning and decision-making

Planning Commission has recently launched a new series of consultations with the provincial governments with a view to ensuring that the principles and guidelines of the Framework are mainstreamed in the development plans prepared by the provincial governments.

 Stakeholders suggested that the engagement

of stakeholders in decision making needs to be made more meaningful at all levels of government (district, provincial, federal). The capacity of the civil society to undertake policy-relevant research and to influence the content of policies and monitor their follow up warrants significant enhancement

New and emerging challenges likely to affect the prospects for sustainable development in Pakistan. Mechanisms in place to address the challenges, at local and national level.
(lack of) security;

Stakeholders agreed that the

(poor) governance; demographic issues; (depleting and deteriorating) water, energy (crisis); (fragile and inadequate) food security; (overstretched, weak) disaster management and (multidimensional) climate change impacts enumerated in the Stocktaking Report were indeed serious impediments to the attainment of sustainable development and Millennium Development Goals.

CONCLUSIONS
The ongoing war on terror and related security

challenges has impacted the socio-economy of Pakistan in multifarious ways. These include a declining GDP, reduction in foreign investment, loss of employment, incomes and exports, damage to physical infrastructure, diversion of resources towards military operations, cutbacks in Public Sector Development Programme, capital and human flight, exchange rate depreciation and inflation. According to the Economic Survey 2010 the estimated direct and indirect loss to the economy since 2002 due to the war on terror is around $43 billion.

Policy Recommendations
As concerned the matter of impact of democracy on

economic growth, we found democracy has significant direct connection with GDPV during study period. Positive correlation between democracy and national income is not unpredicted, because we use the ARDA (Alliance for Reforms and restoration of Democracy in Asia) methodology for measurement of democracy here in Pakistan.

Policy Recommendations
In addition, other measures such as improving tax ad

ministration and reinstating tax audits have been taken. The cumulative effect of these policy meas ures is expected to be an increase of Pakistans TaxtoGDP ratio to 13 percent by 2013 (from 8.9 percent in 200809). A Cabinet Committee on Restructuring (CCOR) has be en formed to restructure key Public Sector Enterprises (PIA, PEPCO, Railways, TCP, USC, Pakistan Steel Mills, NHA) with a view to stop leakages caused by annual losses amounting to approxi mately 1.5% of GDP. The eventual aim is to turnaround these PSEs into profitable, selfsustai ning ventures under PublicPrivate Partnership mode.

Policy Recommendations
Under reform of the power sector, electricity tariffs have be

en raised between 4055% in less than two years, in an effort to reduce the level of subsidies absorbed in the budget, while simultaneously moving to a full costrecovery tariff for the power utilities. Under a new Act of parliament, adjustment in tariff for changes in fuel prices fo r power generation has been made automatic. The government successfully concluded the Seventh Nati onal Finance Commission (NFC) Award only the fourth in Pakistans entire history, and the first fo r the last 19 years. ThisAward greatly augments the quantum of resource transfer from the Centre to the Provinces.

REFFERENCES

Aftab, S. and J. M. Sohail. Storage. Innovative Development Strategies. Study for the Ministry of Commerce, Government of Pakistan. Islamabad, 2011. Ahmed, K., et al. Tree Plantation for Intercepting Canal Seepage and Controlling the Water Table." Pakistan Journal of Water Resources 11 (2), 2011. Ahmed, V. ,and C. ODonoghue. "External Shocks in a Small Open Economy: A CGEMicrosimulation Analysis." Lahore Journal of Economics 15 (1), 2010. Ahmed, V., and C. ODonoghue. "Redistributive Effect of Personal Income Taxation in Pakistan." Pakistan Economic and Social Review 47 (1), 2011. Ahmed. V., and A. W. Farooq. "Nexus between Aid and Security: the Case of Pakistan." Ahmed, R. A., and M. Rider. "Pakistan's Tax Gap: Estimates by Tax Calculation and Methodology." Andrew Young School of Policy Studies, Atlanta, Georgia, 2011. Ahmed, S., V. Ahmed, and A. Abbas. "Taxation Reforms: A CGE-Microsimulation Analysis for Pakistan." Development Economics ejournal 2:182 October 2010. Ahmed R. C., and M. H. Sial, Estimating the Contributions of Growth And Redistribution to Changes In Poverty In Pakistan. Pakistan Economic and Social Review 48 (2) 2010: 279-306. Aubert, J. "Promoting Innovation in Developing Countries: A Conceptual Framework." World Bank Institute, Washington, DC, 2010. Bresnahan, S., and G. Traitenberg. "General Purpose Technologies: Engines of Growth?" Journal of Econometrics 65 (2), 2011.