Overcoming the most contentious deficit.

Since independence Pakistan has been suffering from two deficits - current account deficit and budget deficit. Analysts believed that these two deficits will be overcome with the passage of time. However, the bad governance of the successive government kept the borrowing appetite high.

Over the years governments have been borrowing to pay off the loans acquired in the past. Instead of improving tax collection, the governments have been increasing tax rates, which fueled inflation rate in the country and the wizkids resorted to hike in the interest rate to contain inflation. Persistent hike in interest rate and increase in electricity and gas tariffs have been eroding the competitiveness of the local manufacturers.

In an attempt to contain the trade deficit, the governments kept on experimenting various policies. Most of the time efforts were made for import substation rather than following export-led growth. Pakistan's exports were high till the time Textile quota regime was not phased out. Failure to boost indigenous production of cotton in general and long staple cotton kept textiles and clothing exports concentrated in 'low quality, low unit price' items. Despite enjoying various incentives the farmers failed in boosting production, yield and quality standards.

On top of all, use of uncertified seeds and rampant pest/ virus attacked ushered decline in annual production of cotton, an un-ceremonial fall from a peak of nearly 13 million bales to almost half. The result is that at present Pakistan's share in the global trade of textiles and clothing has shrunk to less than2.5 per cent.

Myopic policies

Over the years, the successive governments in Pakistan remained hostage of textiles and clothing industry. It is evident that the sub-sectors like spinning, weaving, and processing failed in undertaking timely BMR (balancing, modernisation and replacement). It is also evident that the sponsors of textiles and clothing industry ventured into cement manufacturing, power generation and automobile assembly.

Refining industry is also the victim of myopic policies of the government. While the existing capacity is capable of producing products far higher than demanded, the government kept on importing POL...