Daily Insights

Industrial Growth and Private Sector Financing 

By 25/04/2022 0 Comments

Industrial growth plays an important role in economic development by making optimal use of a country’s scarce resources. It increases the quantity and quality of goods manufactured and provides employment opportunities in small- and large-scale industries, contributing to the Gross National Product (GNP) and increasing productivity and community income.  

A rise in income raises the standard of living of the people. It provides economic stability and improves the balance of payment by changing the foreign trade pattern and increasing the export of manufactured goods. Foreign capital investment and technical skills play an important role in enhancing industrial growth.  

The private sector is a key stakeholder in Pakistan’s economic development and a major contributor to national income, and the principal job creator. It provides around 90% of employment in the country (including formal and informal jobs), delivers critical goods and services and contributes to tax revenues and the efficient flow of capital. Commercial banks often finance the private sector to carry forward projects. 

Recently, the loans given by the commercial banks to the private sector-maintained growth momentum showing an increase of 21.6% to Rs7.79 trillion in March compared to Rs6.41 trillion in the same month last year. Growth in the loan disbursement to the private sector surged due to several concessionary and subsidised schemes such as the low-cost housing scheme called Mera Mera Pakistan and projects announced for industries, including small and medium-sized enterprises (SMEs). The enhanced borrowing has helped the industry grow despite tough competition in the international market. However, the government should continue to focus on improving the private sector’s technical and financial performance through suitable administrative and institutional measures. 

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