ISLAMABAD: After missing the economic growth target in its first year because of a poor show by agriculture and services sectors, the PML-N government has set an ambitious target to expand the economy at a rate of 7.2 per cent by the financial year of 2016-17.

A meeting of the cabinet, presided over by Prime Minister Nawaz Sharif on Thursday, cleared the “Budget Strategy Paper 2014-17”, envisaging fiscal deficit at 4.8pc for the next financial year, rate of inflation at 7.5pc, federal development programme at Rs525 billion and tax revenue at Rs2.810 trillion.

The meeting was informed that the federal budget was being planned for presentation in the National Assembly on June 3.

The macroeconomic targets for the next fiscal year and an outline for the two subsequent years were finalised after the annual meeting of the National Accounts Committee in the morning approved data on the country’s economic performance during the current fiscal year.

The committee provisionally concluded that the growth rate stood at 4.14pc of GDP during the current fiscal year against a target of 4.4pc. This performance, however, was better than last year’s 3.7pc. The committee has powers to approve the country’s real economic indicators based on

actual data. A lacklustre performance by the agriculture sector was the major reason behind slower than targeted economic growth rate. During 2014-15, the agriculture sector is estimated to have showed a growth rate of 2.12pc, significantly lower than a target of 3.8pc envisaged in the budget strategy paper last year. It was even lower than last year’s 2.9pc growth rate.

This was despite a bumper wheat crop of 25.3 million tons against last year’s 24.2m tons. Cotton output this year was, however, reported at 12.7m bales against last year’s 13m bales.

The industrial sector was the major driving force behind 4.14pc GDP growth rate. It grew by 5.84pc during the current fiscal year against a target of 4.8pc. This showed a significant improvement over about 1.4pc of the last year.

Among the industry’s sub- sector’s, large-scale manufacturing grew by 5.31pc against a target of 4.5pc and last year’s growth rate of 4.1pc. A major improvement was seen in the electricity sector which grew by 3.7pc against a negative performance of 16.33pc last year.

The services sector posted a growth rate of 4.29pc against a target of 4.6pc and last year’s growth rate of 4.85pc.

An official statement said the finance minister informed the cabinet that the government was reframing the budget structure for the next three years, placing emphasis on major policy objectives. As a consequence, some indicators set for three years as part of BSP last year would need to be changed.

The cabinet was informed that an increase in the industrial sector and import of machinery for use in large-scale manufacturing was an indicator of growing economy. The performance of credit towards the private sector has increased approximately three times as compared to corresponding period of the last financial year.

The cabinet also discussed the budget proposals for 2014-15.

The prime minister praised the finance team for its persistent efforts to improve the overall economy and for coming up with a balanced three-year budgetary framework.

Explaining his vision, Mr Sharif directed for taking all possible economic measures to place Pakistan amongst emerging economies of the region while ensuring maximum relief for people. He said the appreciation in the value of Pakistani rupee against the US dollar and consequent reduction in the prices of POL was possible because of pragmatic economic measures taken by the government.

Mr Sharif stressed the need for maintaining the pace of development and economic growth in the coming years.

Published in Dawn, May 16th, 2014