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Manufacturing, Mining and Investment

The growth performance of overall manufacturing in general and large-scale manufacturing to particular has been lackluster at best in the 1990’s. After growing at an average rate of 8.2 percent in the 1980’s. The growth of large-scale manufacturing slowed to an average of 4.7 percent in the first half and further to 2.5 percent in the second half of the 1990s. During the first 9 months (July-March) of the current fiscal year, overall manufacturing has grown by 1.6 percent as against 4.7 percent of the corresponding period of the last year. The performance of large scale manufacturing when viewed in terms of statistics, has been weak during July-March 1999-2000. As against 2.7 percent growth of comparable period of last year the large-scale manufacturing has registered an almost zero growth in this year.

The true performance of large-scale manufacturing has been over shadowed by a massive 24 percent decline in sugar production. With a relatively larger weight of sugar in the overall quantum index of manufacturing, the otherwise impressive and broad based performance of large-scale manufacturing has been overshadowed. Excluding sugar, the large-scale manufacturing has registered an impressive growth of 6.4 percent in the first 9 months of the current fiscal year. As soon as the adverse impact of sugar started filtering into the overall statistics, the performance of large-scale manufacturing got distorted.

The group-was break-up of growth indicates that the performance of two out of 11 major groups exhibited substantial decline. These include food, beverages & tobacco group, which depicted a decline of 18.2 percent and automobile group by 19.2 percent. The major items, which depicted a negative growth in the food, beverages and tobacco group, include sugar (24.0 percent), cooking oil (6.2 percent), tea blended (8.4 percent) and cigarettes (11.2 percent); and jeeps & cars (23.5 percent), light commercial vehicles (43.2 percent) and motor cycles/ scooters (3.8 percent) in automobile group.

The six major groups that exhibited tremendous increase in production include textile & apparel group (12.1 percent); paper & board group (14.1 percent); chemical, rubber & plastic group (7.0 percent); basic metal industries group (13.1 percent); and metal products, machinery and equipment group (15.7 percent). The major items that depicted positive growth include cotton yarn (9.3 percent), cotton cloth (15.1 percent) and cotton ginned (27.1 percent) in textile & apparel group; footwear (18.0 percent) and sole leather (16.9 percent) in leather group; liquids/syrup (6.8 percent), caustic soda (17.7 percent), nitrogenous fertilizer (6.8 percent), phosphatic fertilizer (33.4 percent), flakes & detergents (30.7 percent) and Cosmetics (39.5 percent) in chemicals, rubber & plastics group; paper & board (14.1 percent) in paper group; steel products (13.5 percent ) in basic metal group, and diesel engine (24.1 percent), tractors (53.9 percent), wheat thrashers (182.6 percent), refrigerators (8.4 percent) and T.V sets (8.3 percent) in metal products, machinery and equipment group.

The industrial investment or capital formation in the manufacturing sector witnessed an increase of 20.4 percent during 1999-2000. The private sector investment in large-scale manufacturing registered a sharp increase of 30.6 percent during the course of the year while public sector investment recorded a marginal increase of 0.6 percent growth.

The net foreign private investment 9FPI) inflows stood at us $ 415.0 million in the comparable period of last year, thereby, showing an overall increase of 8.3 percent. The portfolio investment was severely affected by the external and internal shocks last year but recovered from US$ 7.4 million during July-April 1998-99 to US$ 57.1 million in July- April 1999-2000. However, the foreign direct investment (FD1) inflows declined marginally to US$ 392.5 million during July-April 1999-2000 as against US $ 407.6 million in the same period last year, which implies a decline of 3.7 percent.

The value addition in the mineral sector is concentrated in three principal minerals like coal, natural gas and crude oil. These three minerals account for four-fifth of the weight in the total value addition in the mineral sector. Due to healthy growth in the value addition in these three minerals during the year 1999-2000, the overall growth in the mineral sector is estimated at 7.7 percent as against 3.6 percent in 1998-99.


Manufacturing, Mining and Investment Policies

Manufacturing is the second largest sector of the economy accounting for 17 percent of the Gross. Domestic Product (GDP). Its growth performance in financial year 2000-2001 general and large-scale manufacturing in particular has been lackluster at best in the 1990’s. After growing at an average rate of 8.2 percent in the 1980’s, the growth of large-scale manufacturing slowed to an average of 4.7 percent in the first half and further to 2.5 percent in the second half of the 1990s.

Profile of Small-Scale Industries

It is generally recognized that economic growth of the developing countries crucially depends on development of small and medium enterprises (SMEs). It provides employment at lesser cost and its capital requirement is also low. It provides 80 percent of employment in manufacturing sector and generates one fourth of the export earnings.

The growth of small-scale industry is mainly hampered by the non-availability of credit facility. Realizing this constraint, the government has decided to open a micro-credit bank, which is expected to be operational from July 2000. Small investment in small-scale has come from the private sector.

The net inflow of foreign investment has declined sharply from 823 million dollars to 403 million dollars in last tow-years. Economic sanctions imposed by some developed countries after the nuclear tests as well as the complicated IPPs (Independent Power Projects) issue did not help in restoring foreign investor’s confidence.




1.         ESTIMATES of the amount required in the year ending 30 June 2001, to defray the Salaries and other Expenses of the Chief Executive’s Office

            Authorized                                                                 Rs. 540,229,000

ii.         FUNCTION – cum- Object Classification under which this Grant will be accounted for on behalf of the CABINET SECRETARIAT.

                                                                        1999-2000       1999-2000       2000-2001

                                                                          Budget            Revised            Budget

                                                                        Estimate         Estimate         Estimate

   Rs.                    Rs.                   Rs.

Functional Classification:

01000 Organs of State                                   162,220,000    324,737,000    540,229,000

Total   ……………..                          162,220,000    324,737,000    540,229,000






(Rupees in Thousands)

Demand presented on behalf of the

Ministry of Industries and Production

Development Expenditure on Capital Account

154 Capital Outlay on Industrial Development                                          636,275

                                                                                                Total               636,275

ANNUAL PLAN 2000-2001




REVIEW 1999-2000

In federal PSDP an allocation of Rs. 260.100 million was made for manufacturing sector projects, which includes Rs. 250.00 million for Development Project of Rehabilitation of Peoples Steel Mills Limited Karachi and Rs. 10.00 million for Establishment of special Industrial Zone, Nawabshah and token allocation of Rs. 0.1 million for T.A Project for Institutional Support for the Trade Regime. Against this allocation, an excess utilization of Rs. 3000.50 including FEC of Rs. 113.00 million has been reported by Peoples Steel Mills, Karachi upto April and the project namely Establishment of Special Industrial Zone, Nawabshah has spent Rs. 10.00 million against the same allocation. T.A Project for Institutional Support for the Trade Regime has reported no utilization.

PROGRAMME 2000-2001

A PSDP allocation of Rs. 692.265 million for 2000-2001 has been made for the Manufacturing Sector Projects. This includes two ongoing schemes namely a Development Scheme for Rehabilitation of Peoples Steel Mills Ltd., Karachi with an allocation of Rs. 330.00 million and a Special Industrial Zone Nawabshah with an allocation Rs. 25.00 million. For the following five new projects an allocation of Rs. 337.265 million has been made. Production data for manufacturing sector for the year 1999-2000 and targets fixed for 1999-2000 and targets fixed for 2000-2001 are gien at Annexure-1.3.

  Rs. In million
 –Balancing and Modernization of workshop facilities at PITAC Lahore83.200
 –Institutional strengthening/capacity enhancement of BOI16.575
 –Modernization of custom administration Karachi165.250
 –Technical Assistance Project for Institutional Support for the Trade Regime21.310
 –Institutional Mechanism for anti-dumping/Tariff analysis NTC,50,930


A sub-group on Industry, Investment, and Privatization has been constituted under Economic Advisory Board (EAB). The sub group is reviewing and monitoring existing industrial and investment policies and is analyzing their efficacy for stimulating economic growth. The sub-group has made recommendations on Industrial policy, with reference to overall focus of the policy, design of sub-sector initiatives in key industries including textiles, sugar, cement, engineering, chemicals; financing needs and source for industrial growth; promoting employment through industrial development. The sub group is also suggesting measures required to restore viability and efficiency of public sector enterprises and alternatively, in case of economically irredeemable corporations and firms, suggest ways to disengage public sector from inefficient operations to lessen the burden on public resources. In this regard Corporate and Industrial Restructuring Corporation (CIRC) has been set up for reviving sick industrial units. Simultaneously for the development of Small and Medium Industries, a Micro credit finance Bank is being established.

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