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Contribution of the agricultural sector towards the economic growth of Pakistan

Published on 27th Jan, Edition 4, 2014

 

For Pakistan, the agricultural sector has always held great significance. The country has always had a great deal of potential in terms of the agricultural sector and at the time of independence as well, it was considered to be a country whose economy centered on this particular sector. As industrialization occurred in Pakistan and the birth of industries began, the economy of the country began to diversify. Despite this diversification, however, agriculture still continues to be an important element of the economy of the country and its presence has certainly not been removed despite the growth of the industrial sector.

The agricultural sector of the economy has a great deal of potential and thus the ability to contribute greatly towards the gross domestic product (GDP) of the nation. While the agricultural sector was responsible for holding a high share in the GDP of the country initially prior to the origination of the service sector, it does not have a similar share today as the service sector has now taken over a large share of the GDP of Pakistan.

Irrespective, the agricultural sector continues to play an important role in the country. Livestock and fisheries are an important source of employment for a great number of individuals as well as providing exports for the country. Furthermore, livestock accounts for 9 percent of the GDP and 4 percent of the entire agricultural sector.

Apart from being a source of employment, the agricultural sector also contributes greatly towards the foreign exchange earnings of the country. 65 percent of the total foreign exchange income is earned through the export of rice, cotton and cotton based products to name a few. The imports coming into the country in terms of equipment, technical skills and capital machinery are then used in order for the development of the sector.

Considering what the sector does for the population of the country can be seen through the findings of the UNDP. In a Human Development Report published in 2007-2008, it was stated that the population of the country is increasing at a rate of 2 percent per year. At the same time, FAO (Food and Agriculture Organization) of the United States stated Pakistan as being the 2nd most populated country in the Muslim world and the 6th most population country in the world.

In order to withstand such a large number of populations which is growing at such a fast rate, the agricultural sector is the only survival chance for Pakistan. Wheat for example is a food item which is the most consumed item in the country and happens to be cultivated in Pakistan as well. Had the nation not been an agriculture economy, wheat and other such necessary food items would have to be imported for such a large population thereby increasing expenses for the country. Therefore, the sector can be seen as performing a two-fold role; providing food for the large and ever growing population of the country along with decreasing the import of food items.

 

As stated, the agricultural sector is a source of employment for a number of Pakistanis. More than 50% of the population of the country resides in rural areas. In a report published by the UNDP in 2007-2008, it was stated that in 2005, 65% of the population was living in rural areas. Thus, for people residing in such areas, the agricultural sector is their only source of income.

An economic survey of Pakistan revealed that out of the total employment in the country, 46.61% is contributed to by the agricultural sector. the GDP of the country increases due to employment which also leads to a higher per capita income which means the people of the country have a better standard of living thereby requiring facilities such as the provision of basic needs, health and education, all of which lead to economic development. Therefore, it can be considered that employment resulting from the agricultural sector adds to the economic development of the country.

Economic development is a duty of the government. Projects related to the development of the nation are funded by the tax revenue generated therefore the greater the tax revenue collected, the more funds there are available for developmental purposes. With the agricultural sector contributing 20% towards the GDP and 43.61% towards the labor force of the country as of 2013, this leads to an increase in the per capita income. As per capita income increases, so does the tax revenue collected by the government. Thus, it can be seen that the agricultural sector too plays a vital role towards the generation of tax revenue which is much needed for bringing about changes in the institution of the country and to make it more efficient.

For the economic development of any country to occur, industries need to flourish. With the agricultural sector providing raw materials to industries of the country, it is helping towards the development of the nation. Cotton being an important export item for Pakistan is also considered to be a raw material for the textile industry thereby it is deemed to be a rather important crop. Likewise, sugarcane is also a vital crop and is used as the raw material in the sugar industry of the country. Livestock is also an important contributor towards making the raw materials required for manufacturing sports goods in the country which are a major export. Thus, such industries are examples of a few which are dependent upon the agricultural sector for not only their survival but their development and growth as well.

It can be seen that the agricultural sector is certainly very vital for the development of the country and has been contributing towards it since independence. Having such potential, it ought to be the responsibility of the government to bank on it and to announce policies which would help in raising the productivity of the sector and thereby aiding economic development greatly. Through effective action and steps, the economy of the country can be increased and in time, the GDP would also be affected positively bringing much desired improvements in the economy.

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