Bilateral ties: Don’t think emotionally in trade with India, says Pasha

Former finance minister says country needs to re-think policies


Our Correspondent July 09, 2015
Former finance minister says country needs to re-think policies. PHOTO: FILE

LAHORE:


Former finance minister and renowned economist Dr Hafeez Pasha has said that Pakistan should give trade incentives to India on items that are being imported from other countries, especially from China.


“We should think strategically, not emotionally, on trade issues,” he said. “Giving duty concessions to India on items that we import from China under the Free Trade Agreement will create competition between the two countries for the Pakistani market. This will economically benefit Pakistan.”

Read: Pakistan losing out on South Asian integration: experts

He further said that the global economy is in recession and bilateral trade is diminishing, however, in Pakistan’s case the scenario is worse as its imports are increasing more than exports and recently, the country has started importing items that had never been imported before.

“India’s exports to Pakistan have reduced 19%, whereas Pakistani exports to India have also witnessed a cut of 9% this year,” said Pasha. “Similarly, cotton yarn exports to China, which have witnessed a massive increase in previous years, have also observed a decrease of 20%.”

The former finance minister said that the country has to move on by giving access to India on those items that do not hurt its industry.

The best example of such commodities is agricultural items. Around 40% to 50% of our imports from India are agriculture based, he added.

This is due to the huge amount of subsidy which Indian government gives to its sector and this is the main reason why Pakistan, which before partition, was exporting agriculture items, is now importing those products.

“India is giving $37 billion subsidy to its agriculture sector, whereas in Pakistan, this subsidy is merely $1 billion,” he said.

Read: India-Pakistan relations on slippery slope

“Removing barriers in Pak-India trade will not boost growth rate immediately. It will have a modest impact on the economy. In some years, our GDP level would be higher.”

The economist added that the country needed to incentivise exporters.

“Pakistan doesn’t want to reduce its exchange rate when India has reduced it by 6%, Turkey by 22% and Brazil by 26%,” he said, adding that the policy of the Pakistani government on exchange rate does not make sense.

Published in The Express Tribune, July 9th, 2015.

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COMMENTS (38)

Union Jack | 5 years ago | Reply @Muhammad: "We have much bigger economies to do business." ..... but who wants to do business with you ? You should read more about China-Pak economic corridor before naming China. It might be shocking for naive like you that the sole beneficiary of the corridor will be China and few poitico businessmen in Pakistan for name sake. Truth is, Pakistan has become a tissue paper country for powers like USA, Russia and China. It is very easy to make Pakistan dance by giving them carrot of support vis a vis India. And regarding our toilets. Yes we are working on that. Sanitation planning is not as easy as installing a toilet seat. And this is an issue with half a billion. All the countries pointing finger at this grim situation in India do not even collectively have half billion population. Still we will finish this mamoth task someday soon. Inshahallah.
Muhammad | 5 years ago | Reply @Sandy: Who would in their right state of mind would like to compare with a low class baniyya country like yours? Our country must be good enough for people like you being so awesomely obsessed with.
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