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.”
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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.
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“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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