REPORT



 
Punjab has a strong economic record and contributes about 54.2 percent to the national GDP, and
employs approximately 37.6 million people. This makes the national economic performance highly
dependent on Punjab’s economy.

To sustain growth, Government of the Punjab has been investing heavily in infrastructure such as roads,
energy, mass-transit and the provision of social services such as education and health. These invest-
ments were made in view of the government’s priorities set under the previous Growth Strategy, “Acceler-
ating Economic Growth and Improving Social Outcomes.” But what the province lacked over the period of
the previous strategy was a focus on building human capital and attaining regional equalization across the
province.

This strategy for “equalization” is an attempt to

do this. It highlights the key performance drivers of the province; takes stock of the current situation and
the constraints faced both at the national and provincial levels; and presents a clear set of strategic priori-
ties and plans to generate economic growth that is both inclusive and sustainable. The strategy realises
the macroeconomic pressures at the national level and the squeezing of development budget in the prov-
ince with certain looming liabilities. Therefore, it proposes that over the next five years, the government
spends the first two focusing on stabilisation and then target for rapid higher growth.

The strategy draws its strength from the significant amount of data and evidence used for the analysis and
drawing out key growth drivers. It draws on detailed profiling of Punjab and its sectors, as done in the
Punjab Economic Report 2017 over a period of 10 years, and has estimated the Gross Provincial Product
(GPP) of Punjab with all sub-components. The strategy going forward requires the government to make
a strategic shift in its development priorities by moving away from mega structures to investing more in
human capital, water, SMEs and on attaining regional balance. In addition to providing the strategic priori-
ty setting of the government, the strategy provides key set of actions to be taken within each of the major
sectors of the economy. These actions have been developed through an inclusive approach of consulta-
tion and use of evidence led by the sectoral departments and supported by the Planning & Development
Board.

While the strategy provides a comprehensive economic plan for the government to bring positive and
sustainable change, this will not happen by itself; it will require a major change in attitude and seriousness
of the implementers. And the first requirement for such a change is to recognise that a change in neces-
sary and required – as the Holy Quran says:“
” It is in the spirit of this injunction that the
government aims to deliver the promise of change made to its citizens.



Review of PGS 2018 and Structure & Performance of Punjab’s Economy 1
Review of Punjab Growth Strategy 2018 2
The Structure & Performance of the Punjab’s Economy 4


Salient Features of The Punjab Growth Strategy & Recommended Growth Path 9


Creating an Enabling Environment for Growth 25
Growth through Private Sector Development 26
Industrializing Punjab & Unleashing its SME Potential 43
Enhancing Value in Agriculture and Livestock 54
Realising the Potential of Services Sector 64


Growth Infrastructure 74
Water Resource Management 75
Energy Efficiency & Conservation 79


Human Capital Formation 84
Skilling the Punjab’s Labour Force 85
Launching Punjab’s Knowledge Economy & Digital Dividends 93
Reforming Education to Harness Punjab’s Human Capital 101
Ensuring a Healthy Punjab 105
Focus on Water, Sanitation and Hygiene 111
Women Development - Striving Towards Gender Equality 117
Population Welfare 122


Urban Development and Housing 127


Regional Equalization 132


Aligning Priorities with International Committments 137
Sustainable Development Goals 138
China-Pakistan Economic Corridor 140


Monitoring & Implementation Framework 143
 
’

Table 1.1: Population Trends, Punjab & Pakistan, 1972 to 2017

Table 1.2: Sectoral Share (%), Punjab & Pakistan, 2012-13 to 2017-18
Table 1.3: Average Sectoral Growth Rates (%), Punjab & Pakistan, 2012-13 to 2017-28
Table 1.4: GDP by Expenditure, Punjab & Pakistan, 2015-16
Table 1.5: Level of Investment, Public and Private, 2013-14 to 2017-18 (% of GDP)
Table 1.6: Labor Force, Employment and Unemployment Rate, Punjab and Pakistan, 2012-13
to 2017-18 (Million)
Table 1.7: Unemployment Rate of Workers with Different Level of Education (2017-18) (%)
Table 1.8: Sectoral Distribution of Employment, Punjab & Pakistan 2012-13 and 2017-18 (%)
Table 1.9: HDI of the Districts of Punjab




Table 2.1: Impact on Provincial Economic Magnitudes of National Macroeconomic Variables

Table 2.2: Projected Magnitudes of Policy Instruments, 2018-19 to 2022-23
Table 2.3: Share of Punjab in each Sector and Location Quotient of the Sector, 2015-16
Table 2.4: Impact of increase in Public Capital Stock on Productivity in Different Sectors of
Punjab's Economy
Table 2.5: Distribution of the Labor Force and the Employed by Level of Education in
Punjab,2017-18 (%)
Table 2.6: Trend in Own-Revenues of the Government of Punjab (Rs. in Billion)
Table 2.7: Provincial Share of Punjab in Total Revenue Transfers from Federal Government
(Rs. in Billion)
Table 2.8: The Extent of Gender Inequality in Punjab 2014-15
Table 2.9: New Jobs Created from 2012-13 to 2017-18 (000)
Table 2.10: New Housing Units built from 2011-12 to 2015-16 (000)
Table 2.11: Required Rate of Progress in Achieving Selected SDG Targets by 2030
Table 2.12: Average Annual Growth Rate in the two Scenarios (%)
Table 2.13: Average Annual Growth Rate in the two Scenarios (%)
Table 2.14: Level of Own revenues (Rs. in Billion)
Table 2.15: Transfers to the Provinces
Table 2.16: Level of Credit to SMEs and Agriculture
Table 2.17: Level of Private Investment in Punjab
Table 2.18: Shares of ADP by Sector
Table 2.19: Projected Level of Employment
Table 2.20: Employment Growth of Male and Female Workers (%)
Table 2.21: Rate of Progress towards meeting the SDG targets



Table 3.1: Key Investment Sectors in Punjab



Table 3.2: Agro-climatic zones of Punjab

Table 3.3: Proposed Agricultural Transformation Plan for Punjab



Table 4.1: Seasonal Water Shortage

Table 4.2: Capacity of Dams
Table 4.3: Technology-wise Electricity Generation in Pakistan and Punjab


Table 5.1: Access to drinking water supply by source in Punjab

Table 5.2: Safely Managed Drinking Water
Table 5.3: Access to sanitation in Punjab

–

Table 5.4: Pakistan’s GII for 2017 relative to selected countries

Table 5.5: Women’s Socioeconomic Status in Punjab



Table 5.6: Population Count and Growth Rate, 1981-2017

Table 5.7: Key Facts Regarding Population of Punjab
Table 5.8: Key Indicators related to Reproductive Health



Table 7.1: Division/Region wise incidence of Poverty, 2017-18 (%)

Table 7.2: Education Indicators
Table 7.3: Health Indicators
Table 7.4a: Percentage of Health and Education Expenditures (South vs Rest of Punjab)
Table 7.4b: Health and Education Expenditures per million population (South vs Rest of Punjab)



Table 8.1: Targets of Punjab Growth Strategy 2023

Table 8.2: Targets for Public Investment & Fiscal Effort
Table 8.3: Key Milestones & Targets for Private Sector Development
Table 8.4a: Indicators for Productive Sectors
Table 8.4b: Key Initiatives for Productive Sectors
Table 8.5a: Indicators for Agriculture Sector
Table 8.5b: Key Initiatives for Agriculture Sector
Table 8.6a: Indicators for Services Sector
Table 8.6b: Key Initiatives for Services Sector
Table 8.7a: Indicators for Skills Development
Table 8.7b: Key Initiatives for Skills Development
Table 8.8: Goals for Health
Table 8.9: Goals for Education
 
’

Figure: 1.1: Economic Growth in Punjab, 2014-18(%)

Figure: 1.2: Private Investment in Punjab, 2013-18(USD, Millions)

h

Figure 2.1: Punjab's Share in Key National Magnitudes (%)

Figure 2.2: Sectors in which Punjab has a Comparative Advantage and the Extent of the Advan-
tage
Figure 2.3: The Direct and Indirect Contribution of Agriculture to the Growth of Punjab’s Economy
Figure 2.4: Annual Growth Rate of Punjab’s GPP in Different Growth Scenarios
Figure 2.5: Size of the Provincial ADP
Figure 2.6: Sectoral Distribution of Private Investment
Figure 2.7: Growth Rate of Different Forms of Financing of the Development of Punjab (%)
Figure 2.8: Sectoral Distribution of Employment



Figure 3.1: Private Investment in Punjab

Figure 3.2: Average Annual Per-Capita Development Expenditure per District 2014-18 (PKR)
Figure 3.3: Investment & Employment Relationship in Key Industries (%)
Figure 3.4: Problematic Factors for Doing Business in Pakistan, 2017 (% of Firms)
Figure 3.5: Perception of Investors about Investment & Operating Conditions in Pakistan, 2017
(% of firms)
Figure 3.6: Average Time to Resolve a Commercial Dispute through the Courts
Figure 3.7: Competitive Sector for Pakistan, (2013-17) (%)
Figure 3.8: Pakistan’s Growing Sectors with Constant World Demand, 2013-17 (%)
Figure 3.9: Pakistan’s Non-Competitive Exports, 2013-17 (%)



Figure 3.10: Performance of the Industrial Sector in the Punjab, 2009- 2018 (%)
Figure 3.11: Spatial Mapping of Large Scale Industry and SMEs in Punjab (%)



Figure 3.12: Performance of the Agriculture Sector, 2009-18 (%)

Figure 3.13: Heat Maps Showing Production of Key Crops across Punjab
Figure 3.14: Potential Agricultural Crops Zone



Figure 3.15: Growth of the Services Sector, 2009-18 (%)

Figure 3.16: Share of Services in Provincial GDP, 2009-18 (%)



’

Figure 5.1: Number of Skills Trainings per Year, 2015-18 (numbers)

Figure 5.2: Training Count by TVET Sector Institutions, 2015-18
Figure 5.3: Spread of Trainings Provided by P-TEVTA (2015-18) (%)
Figure 5.4: Spread of Trainings Provided by PVTC (2015-18) (%)
’

Figure 5.5: Comparative Ranking of Pakistan in Economic Incentives Regime

Figure 5.6: Comparative Ranking of Pakistan in ICT
Figure 5.7: Comparative Ranking of Pakistan in Human Capital
Figure 5.8: Comparative Ranking of Pakistan in Innovation
Figure 5.9: Areas of Future Growth in Pakistan’s IT Industry (%)
Figure 5.10: Key Constraints Faced by the IT Industry (% of respondents)



Figure 5.11: Water Quality Vulnerable Areas in Punjab

Figure 5.12: Distribution of different contaminants in groundwater sources across Punjab

–

Figure 5.13: Economies with half or more of adults unbanked



Figure 5.14: Tehsil-Wise Population of Punjab, 1998 & 2017



Figure 7.1: Patterns of Poverty in Punjab

Figure 7.2: District-Wise Deprivation Rankings in Education
Figure 7.3: District-Wise Deprivation Rankings in Health
Figure 7.4: District Disparity in Water
Figure 7.5: District Disparities in Living Standard
 

ADP Annual Development Program

ADR Alterna�ve Dispute Resolu�on
ADRM Alterna�ve Dispute Resolu�on Mechanisms
ASEAN The Associa�on of Southeast Asian Na�ons
BCC Behaviour Change Communica�on
BERF Business Environment Reform Facility
BHU Basic Health Unit
BOP Bank of Punjab
BOT Build, Operate, Transfer
CBOs Community Based Organiza�ons
CCA Culturable Command Area
CCPP Community Colleges Pilot Program
CCU Cri�cal Care Units
CDU Community Development Unit
CHWs Community Health Workers
COMSATS Commission on Science and Technology for Sustainable Development in the South
CPEC China Pakistan Economic Corridor
CPR Contracep�ve Prevalence Rate
CRVS Civil Registra�on and Vital Sta�s�cs
CSA Climate Smart Agriculture
CYII Crop Yield Insurance Index
DGHS Directorate General Health Services
DHMT District Health Management Team
DHQ District Head Quarter
DISCOs Distribu�on Companies
DoH Department of Health
EB Entrepreneurship Bootcamp
ECBC Energy Conserva�on Building Codes
ECD Early Childhood Development
EOBI Employees Oldage Benefits Ins�tu�on
EPA Environmental Protec�on Agency
EPD Environmental Protec�on Department
ESCOs Energy Servicing Companies
ESMAP Energy Sector Management Assistance Program
FBR Federal Board of Revenue
FDI Foreign Direct Investment
FHC Family Health Clinic
FIEDMC Faisalabad Industrial Estate Development and Management Company
FIFA Fédéra�on Interna�onale de Football Associa�on
FMD Foot-and-mouth disease
FP Family Planning
FTA Free Trade Agreement
GDP Gross Domes�c Product
GER Gross Enrolment Rate
GHG Greenhouse Gases
GIS Geographic Informa�on System
GP General Prac��oner
GPP Gross Provincial Product
GRP Gross Regional Product
GSMA Groupe Spéciale Mobile Associa�on
GVC Global Value Chain
HDI Human Development Index
HED Higher Educa�on Department
HEIs Higher Educa�on Ins�tutes
HR Human Resource
HUD&PHED Housing, Urban Development and Public Health Engineering Department
HVA High Value Agriculture
IBTS Ins�tute of Blood Transfusion Services
ICRU Investment Climate Reform Unit
ICSA Ins�tute for Climate Smart Agriculture
ICT Informa�on and Communica�ons Technology
IMR Infant Mortality Rate
IRMNCH&N Integrated Reproduc�ve Maternal Newborn, Child Health and Nutri�on Program
IT Informa�on Technology
ITES Informa�on Technology Enabled Service
IWRM Integrated Water Resources Management
JMP Joint Monitoring Program
KE Knowledge Economy
KLM Karachi Lahore Motorway
LDA Lahore Development Authority
LGCDD Local Government and Community Development Department
LHWs Lady Health Workers
LMIS Logis�cs Management Informa�on System
LUMS Lahore University of Management Sciences
LWMC Lahore Waste Management Company
MACs Men Advisory Centers
MAF Million Acre-Feet
MCL Metropolitan Corpora�on Lahore
MDGs Millennium Development Goals
MICS Mul�ple Indicator Cluster Survey
MNC Mul�na�onal Corpora�on
MNCH Maternal, Neonatal and Child Health
MoU Memorandum of Understanding
MSME Micro Small and Medium Enterprises
MSW Municipal Solid Waste
MTDF Medium Term Development Framework
MW Mega Wa�
MWRA Married Women of Reproduc�ve Age
NAVTTC Na�onal Voca�onal & Technical Training Commission
NCD Non-Communicable Disease
NEPRA Na�onal Electric Power Regulatory Authority
NER Net Enrolment Rate
NGOs Non-Governmental Organiza�ons
NNS Na�onal Nutri�onal Survey
NOC No Objec�on Cer�ficate
NTDC Na�onal Transmission and Dispatch Company
NUST Na�onal University of Sciences and Technology
OECD Organiza�on for Economic Co-opera�on and Development
OFM Online Feedback Mechanism
OICCI Overseas Investors Chamber of Commerce & Industry
OOSC Out of School Children
P&SH Primary and Secondary Health Care Departments
PARB Punjab Agriculture Research Board
PATS Pakistan Approach to Total Sanita�on
PBIT Punjab Board of Investment and Trade
PBTE Punjab Board of Technical Educa�on
PCRWR Pakistan Council of Research in Water Resources
PCSW Punjab Commission on the Status of Women
PDHS Pakistan Demographic and Health Survey
PERI Punjab Economic Research Ins�tute
PESSI Punjab Employees Social Security Ins�tu�on
PFA Punjab Food Authority
PGS Punjab Growth Strategy
PHC Punjab Healthcare Commission
PHEC Punjab Higher Educa�on Commission
PIEDMC Punjab Industrial Estates Development and Management Company
PIFRA Project for the Improvement of Financial Repor�ng & Audi�ng
PITB Punjab Informa�on Technology Board
PKR Pakistani Rupee
PLGA Punjab Local Government Act
PLRA Punjab Land Records Authority
PMDC Pakistan Medical and Dental Council
PPD Public-Private Dialogue
PPDB Punjab Power Development Board
PPIB Private Power Infrastructure Board
PPP Public–Private Partnership
PPRA Public Procurement Regulatory Authority
PRA Punjab Revenue Authority
PRU Police Response Unit
PRU Police Response Unit
PSDA Punjab Skills Development Authority
PSDF Punjab Skills Development Fund
PSIC Punjab Small Industries Corpora�on
PSPU Policy & Strategic Planning Unit
PSTA Punjab Skills Tes�ng Agency
PTA Pakistan Telecommunica�on Authority
P-TEVTA Punjab-Technical Educa�on & Voca�onal Training Authority
PVTC Punjab Voca�onal Training Council
PWD Public Works Department
R&D Research and Development
RHCs Rural Health Centres
SBIC Small Business Investment Company
SCFs Small Commercial Farmers
SDGs Sustainable Development Goals
SECP Securi�es and Exchange Commission of Pakistan
SH&ME Specialized Healthcare & Medical Educa�on
SMART Strengthening Markets for Agriculture and Rural Transforma�on
SME Small and Medium Enterprises
SMEA Small and Medium Enterprise Ac�vity
SMEDA Small and Medium Enterprises Development Authority
SPS Sanitary and Phytosanitary
SRO Statutory Regulatory Order
TDAP Trade Development Authority of Pakistan
TEPA Traffic Engineering and Planning Agency
TEVTA Technical Educa�on & Voca�onal Training Authority
TFP Total Factor Produc�vity
TFR Total Fer�lity Rate
THQ Tehsil Head Quarters
TTB Trade Tes�ng Board
TVET Technical and Voca�onal Educa�on and Training
UAE United Arab Emirates
UN United Na�ons
UNDP United Na�ons Development Program
USAID United States Agency for Interna�onal Development
USD United States Dollar
VOSS Virtual One Stop Shop
WASA Water and Sanita�on Agency
WASH Water, Sanita�on and Hygiene
WHO World Health Organiza�on
WTO World Trade Organiza�on
MESSAGE FROM CHIEF MINISTER
Punjab has tremendous potential; its large population, extensive agricultur-
al resources, vibrant SME sector, sound manufacturing base and rapidly
growing service industries form the foundation of future growth and pros-
perity. Our challenge, now, is to streamline our priorities, strengthen gover-
nance, and ensure transparency in order to realise this potential.

The vision of our government is clear. We will work day and night to deliver
rapid, sustainable and regionally equitable growth. We will focus on the
provision of employment opportunities to empower our youth. It is my
primary responsibility to ensure that no one must be left behind in the push
for development and prosperity: the benefits of a strong economy must be
felt by all.

The plans to achieve this are laid out in the Punjab Growth Strategy 2023.
It has prepared recommendations based on a thorough analysis of existing
constraints and strengths by utilizing regional and international data. It is a
strategy that supports the private sector, and places this onus on our
institutions as facilitators. What delights me the most is that it is, above all,
a people-centric strategy.

In the face of existing fiscal and economic challenges, this strategy will
guide us in our work towards achieving increased levels of economic
growth and human capital development, in order to realize our goal of a
developed and prosperous Punjab, where every citizen can enjoy a decent
quality of life. I look forward to delivering against the promise of a Naya
Punjab and Naya Pakistan.

SARDAR USMAN AHMED KHAN BUZDAR


 MESSAGE FROM MINISTER FOR FINANCE

In order to address the socio-economic issues facing the province, the imme-
diate task for the Government of Punjab was, to draw up a strategy with a
pragmatic and viable framework for restructuring development, ensuring
equitable socio-economic progress, reforming the public finance manage-
ment system, and improving public service delivery. To avoid a whimsical
decision-making process prevalent in the past, Punjab Growth Strategy 2023
has been formulated using a macroeconomic model with time series data as
an effective policy tool for evidence-based strategic planning and policy
making.

The primary focus of the Strategy is to attain a 7% per annum growth of the
provincial GDP by the terminal year 2023, using key drivers of development
through a bottom-up approach. The Strategy also emphasizes on the need
to focus on social sector and human development by allocating resources in
an outcome-oriented model rather than an input model.

The strategy takes cognizance of the fact that government in the current year
and possibly in the next has a very limited fiscal space hence it is focused on
rationalizing spending while developing an equitable development and
growth model. With an aim to bring parity in the level of development across
the province, the strategy outlines a balanced spending approach with prob-
lem driven targeted investments that reduce segmentation in the province.

The Punjab Growth Strategy 2023 is the result of collaboration between

many agencies, government departments, academia, and private sector
which have worked along with the Planning & Development Board in rethink-
ing the development process that will guide Punjab’s reforms till 2023. The
task is challenging but with our strong will and commitment, we will Insha’Al-
lah bring Punjab on road to economic growth and prosperity.

MAKHDUM HASHIM JAWAN BAKHT


MESSAGE FROM CHAIRMAN
PLANNING AND DEVELOPMENT BOARD

Economic management of the largest and the most populous province of

Pakistan is an exceptionally challenging task. Planning & Development
Board is at the forefront of managing the provincial economy effectively. A
key responsibility of the Board is to provide the political government with an
overarching plan that is grounded in both evidence and addresses contex-
tual problems faced by the province. To this accord, Government of Punjab
has formulated Punjab Growth Strategy 2023 which provides a compre-
hensive strategic roadmap that the government will follow over the next
five-years for attaining its committed development and growth targets.

The strategy is targeting to attain a 7% growth rate of GDP (provincial) by

2023 with the aim of creating over 6 million jobs, and 3 million housing
units. The strategy correctly emphasizes the need for doing much more in
public private partnerships to address the fiscal constraints and leverage
effectively the private capital. The strategy is built on the approach of
regional equalization which is the top priority for Government of Punjab.
The strategy apart from industrial and agricultural development also focus-
es on SMEs support which is an essential component for spurring econom-
ic growth and discusses options for export of digital services.

Given the importance of human capital in development and economic

growth, the strategy focuses on building skills through improved education
systems, vocational training, and robust healthcare. Women empower-
ment and its dividends for economic growth have also been recognized
and included in the strategy.

This comprehensive and inclusive growth strategy has been formulated

in-house under the mentorship of Senior Economist, and Professor Emeri-
tus Dr. Hafiz A. Pasha, and the overall coordination and support of Chief
Economist, Dr. M. Aman Ullah, and Mr. Usman Khan. The Planning &
Development Board also acknowledges the support and assistance of the
research team at Punjab Economic Research Institute (PERI) for the
Punjab Growth Strategy 2023.

HABIB-UR-REHMAN GILANI

 
Development of Punjab Growth Strategy 2023 is the result of collaborative efforts of government
departments, academia, private sector, and sector specialists. The government would like to thank
Dr. Hafiz A. Pasha (Senior Economist and Ex-Federal Finance and Planning Minister) for overall
guidance, development of Punjab’s Growth Model and quality assurance to the process and
Dr. M. Aman Ullah (Jt. Chief Economist, P&D Board/ Director PERI) and Mr. Usman Khan (Policy
& Planning Expert, DFID, UK Support to GoPb) for providing technical support to model, strategy
development and authoring and supporting our researchers at PERI. The strategy also acknowl-
edges the support provided by PERI researchers especially Muhammad Imran and Imtiaz Ahmad
for doing considerable data work on the growth model. The government owe a great debt to
numerous representatives of the private sector for their time and support in various discussions
and consultations for the development of private sector development strategy. The strategy would
not have reached its successful conclusion without the guidance and strategic insights provided by
Mr. Habib-ur-Rehman Gilani (Chairman P&D Board) and valuable inputs and encouragement
extended by Mr. Hashim Jawan Bakht (Minister for Finance).

The critical role played by the line departments with full support of their Secretaries’ and various
Sections of P&D Board, in the development of Punjab Growth Strategy 2023 is what makes it
unique and inclusive. Sector specific strategic priorities shared by the departments, that are conse-
quential in developing meaningful and action oriented interventions is admirable.

Lastly, I would like to thank the following PGS team members from P&D Board and PERI, for their
tireless efforts in supporting the strategy development process.

Gulalai Khan, Ayesha Ghazanfar, Mian Nabeel Ashraf, Dr. Avais Tahir, Dr. Ayesha Ashraf,
Dr. Shahzada Naeem, Dr. Sobia Rose, Ahmed Chaudhry, Annus Azhar, Asima Ihsan, Bushra
Fatima, Irfan Malik, Mannan Hassan Khan, Muhammad Nadeem, Rashid Hussain, Sitara Gill,
Hassan Hameed Khan, Muhammad Shahzad and Uzooba Hareem.

IFTIKHAR ALI SAHOO


REPORT

 
Government of Punjab has set out to create a dynamic and a regionally equitable economy for the prov-
ince. Reaching this goal will not be easy, and is made more difficult due to a fragile national macroeco-
nomic situation. Mounting fiscal and external deficits, a rapid depreciation of the currency and rising cost
of capital have made the achievement of this goal more challenging. The Punjab will thus need to strategi-
cally leverage its opportunities and address its short and medium-term challenges. To this end, the
government has developed a people-centric growth strategy to address the fundamental issues that the
province faces, in order to move towards sustained and equitable economic growth and development
over the next five years.

The strategy has been developed after a considerable amount of research and strong engagement with
the responsible departments over the last five months. The engagement with the departments has
ensured that sector interventions are fully owned by the implementing departments. One of the main
features of the research is the estimation of the Gross Regional Product (GRP) of the province by sector
and by expenditure component. A time series of the GRP of Punjab has been constructed from
1999-2018, which made it possible to identify key drivers of growth and areas of competitive advantage
for the province.

This has helped in building the first ever Punjab Growth Model which makes this strategy different from
any work on growth done in Punjab before. Further, the Human Development Index (HDI) has been
estimated for each division and district of the province. The strategy also draws upon the recently
published Punjab Economic Report 2017, which captures the entire socio-economic dynamics of the
province over a period of ten years and has performed an assessment of the previous growth strategy
against its stated targets.

Finally, the strategy has integrated key elements of the Punjab Spatial Strategy, 2018 to develop actions
that fully exploit Punjab’s location advantage. The Punjab Growth Strategy 2018-2023 is based on an
extensive set of evidence explaining the dynamics of the Punjab’s economy and aiming to achieve 7
percent per annum growth in the province by 2023 and creating almost 6.0 million jobs.

The Strategy has identified five main pillars of growth in the Punjab. Firstly, the strategy requires
increased focus on agriculture and the SME sectors, as Punjab has a clear significant comparative
advantage in these sector as compared to the national economy. Secondly, it emphasises private sector
development as main engine of growth and provides a detailed road map for horizontal and vertical inter-
ventions to address key constraints.

Thirdly, formation of human capital takes the place of the central pillar in the strategy due to its significant
direct and indirect impact on growth. Fourthly, the strategy using the growth model has presented the
most optimal allocation of public investment (ADP) for the province in terms of growth outcomes. Finally,
the strategy identified the key national policy variables on which Punjab should strongly advocate with the
federal government. To ensure effective implementation, the strategy identifies the resource requirement
over the five-year period and highlights the sources of these finances and supports regional equalization
as a precondition to attain sustainable growth.
 ’
The provincial economy of the Punjab contributes a major part of Pakistan’s GDP. Growth in the economy
of Punjab, therefore, plays a significant role in determination of the overall growth rate of the national
economy. In terms of population, Punjab houses 110 million people, equivalent to 52.95 percent of the
national population, down from 57.58 percent in 1972. This is attributable to Punjab’s population growing
slower (2.1%) than the national population (2.4%). Moreover, Punjab is blessed with a young population
which offers a conditional advantage as the dividends from this demographic advantage can only be
reaped if enough productive jobs can be found for the youth entrants into the labour force.

In terms of its economic size, Punjab’s share in national economy was at 54.2 percent in 2017-18. Given
the share in population is just under 53 percent, the per capita income of Punjab is 2 percent higher than
the national average. The performance of Punjab’s economy has moved in tandem to national economy,
and over the last five years the average annual provincial GDP growth rate was 4.9 percent. The econom-
ic structure of Punjab now comprises 62.4 percent of services, 20 percent of agriculture, and 17.6 percent
of industry. The industrial share at the national level is 20.9 percent showing a structure difference
between Punjab and the national economy. Furthermore, the Punjab’s economy has a higher share in
private and public investment and in net factor income from abroad. Punjab also has a significantly higher
savings rate; however, the net trade deficit of Punjab is somewhat higher than that at the national level.

The labour force participation rate in Punjab is higher than the national average. This difference is primar-
ily due to the higher labour force participation rates of females in Punjab. The employment level is also
slightly higher in Punjab. The unemployment rate of Degree/Post-graduate holders, in particular, is as
high as 18.9 percent, suggesting a sub-optimal use of Punjab’s human capital.



The Punjab Growth Strategy 2018-2023 presents the five-year socio-economic plan of the government to
address some of the fundamental issues and structural anomalies faced by the provincial economy as
well as the set of strategic actions required to trigger the main growth drivers of the economy. The Vision
2023 set by the government is:

“A globally connected and competitive, equitable, culturally vibrant and technologically advanced
Punjab with sustainable economic growth driven through a dynamic private sector, an efficient
public sector, rich and productive human capital and, a regionally equalized development footprint
by 2023”


The Punjab Growth Strategy 2023 sets ambitious targets for the government over the next five-years.
However, all these targets are consistent with the national targets set by the government. Implementing
the PGS is expected to result in:

Attainment of a sustainable economic growth of 7 percent annual growth of the provin-

cial GDP by terminal year 2023.

Create on average 1.20 million new jobs annually over the next five years, thereby
contributing 60 percent to the national target of 10 million jobs.
Reducing the idle youth in Punjab from 10.3 percent in 2017-18 to 8.8 percent by 2023.

Reducing the Multi-dimensional poverty in the Punjab from 26.2 percent in 2017-18 to
 19.5 percent by 2023.

Increase the average number of new housing units to 640,000 annually over the next
five years, thereby contributing 64 percent to the national target of 5 million new
houses.

The strategy is based on a dynamic sub-national growth model powered by provincial GDP data over last
20 years and 142 national and provincial policy variables. The key pillars of the strategy include:

             

The strategy identifies that Punjab has a comparative advantage in 11 out of the 18 national sub-sectors
of the economy. The top-4 sectors that have the highest comparative advantage include major crops,
small-scale manufacturing, cotton ginning and livestock. The strategy therefore emphasis a significant
focus on the development of these sectors which are captured under agriculture and small-scale manu-
facturing.

It is a striking finding that 1 percent growth in the agriculture sector leads directly plus indirectly to over
0.4 percent growth in the overall economy of the Punjab. Therefore, a corner stone of the growth strategy
is to 
–The strategy contains specific initiatives for augmenting
the agriculture growth rate, however, the emphasis is on augmenting and achieving greater efficiency in
the utilization of water resources and other inputs, enhancing the quality and access of agriculture
research and transforming the cropping pattern based on changed climatic profile and productivity yields
of main agricultural zones. Within livestock the focus is on export markets by ensuring disease free zone
and improving the quality of milk. 


Punjab hosts almost 68 percent of the SMEs in the national economy. This sector is important both
because of its contribution to employment and foreign exchange. Therefore, the strategy places signifi-
cant emphasis on the growth of the SME sector by suggesting interventions to enhance credit to SMEs,
create space for entrepreneurship and innovation and ensure provision of key business development
services and support for technology upgradation.        




The private sector in Punjab produces more than 90 percent of the goods and services in the economy.
The strategy thus places private sector development as the main pillar of its growth strategy. The main
focus of the interventions is on reducing the cost and burden of doing business, facilitating investment in
the province and promoting Punjab as a hub for business and investment. 


The interventions include both soft and hard measures. A key intervention to be taken by the government
is the full implementation of the “ ” This will significantly reduce the regulatory
burden for new and existing businesses in the Punjab. The strategy suggests measures to be taken to
address the time and cost of “” and recommends easing out “
” especially for development of SME businesses.

The strategy puts a strong emphasis on improving investment facilitation in the Punjab and increase
efforts to market Punjab internationally competitive.

The government will soon approve the first “” for the province and launch the “
” The government will also look at adopting the Limited Liability Partnership Act 2017 at
the provincial level to reduce the risk exposure of investors and will advocate with SECP more suitable
regulations for innovative and high powered equity such as venture capital and crowd funding.

The strategy maintains an“”and has identified key sectors of Punjab that are internationally
competitive or present areas of future growth. The government will expand its cluster development initia-
tives to enhance exports from the province. Finally, the strategy also identifies key sectors for “
 ”            



Development of human capital has the most significant impact on growth and performance of all sectors
across the Punjab. The most significant impact is realised in the finance and insurance sector, large-scale
manufacturing and construction. The strategy therefore takes a holistic approach to forming strong
human capital in the Punjab.

The strategy builds on the previous achievements made by the skills sector of training 2 million youth by
enhancing this target to  and by allocating the resources strategically.
The skills training agenda over the next five years will have a balanced focus on skills developed through
strongby considering future demand especially in light of CPEC,
affirmative action for

The human capital formation approach includes a strong focus on improving the education, healthcare,
water and sanitation, gender equality and population welfare outcomes. The strategy provides separate
treatment to all these key areas of development. Moreover, the strategy has integrated the performance
against the key and provides an estimate of progress based on the implementation of the
strategy.



Public sector investment has a major catalytic impact on growth of the economy. The case of Punjab is
not any different, however, unfortunately the historic process of setting ADP priorities have been a result
of abstract planning rather based on net growth impact on the economy. The strategy identifies the
growth impact of capital investments made by the government in a number of sectors.

It also identifies that a single percent increase in ADP results in almost 0.6 percent increase in current
expenditures. Using this evidence, the strategy presents 



’
The strategy identifies key national policy variables such as, the federal PSDP on water, crop procure-
ment and support prices and subsidies on agriculture inputs to have significant growth consequences in
the agriculture sector of Punjab. The national export incentives, quantum of electricity generation and
distribution, power outages and credit to SMEs all have a high bearing on performance of both
large-scale manufacturing and SMEs in Punjab. The level of nominal interest rates has an impact on
private investment in agriculture, industry and services and growth of financial and insurance sector. 

’

Additionally, the strategy requires a correction of the capital city centric approach and diversification of
urbanization by 


The implementation of the strategy is based on certain conditions and inputs that the government will
have to ensure over the period of five years to achieve its strategic targets.
Firstly, the PGS requires the provincial government to launch a vigorous fiscal effort to raise its own
source revenues. The government will aim in the next five years to increase the provincial revenue to
This will be achieved by further
expansion of the sales tax base and on development of other taxes like the Urban Immoveable Property
Tax and the Agriculture Income Tax. The government will soon launch its Revenue Mobilization Strategy
for the next five years.

Secondly, the PGS is based on the assumption that Punjab’s share in the NFC Transfers will at least
remain unchanged. The 9th NFC has recently been constituted and the PGS strongly argues that case
’This will need a strong
push from the province’s financial managers and the NFC team.

Thirdly, the PGS takes cognisance of the current macroeconomic and fiscal situation and therefore has
divided the five-year period into two segments; 
 To follow this trajectory, a certain amount of development spending will be required. The
PGS requires the 
 with lower values in the first two years and then greater jumps from year three onwards. More-
over, the strategy also requires stronger planning and governance of the public investment portfolio and
recommends the       as an integrated planning tool for P&D to approve
projects.

Finally, the PGS requires greater  within the province. The strategy makes recom-
mendations to reduce disparities by increasing public investments, taking an targeted approach and
establishing stronger public sector administration and implementation units in South Punjab.



The PGS has a strong bottom-up approach supported by strong evidence and analysis of the provincial
economy. The strategy therefore provides guidance and strategic direction of sectoral priorities that have
been identified by the line departments. This approach ensures better understanding and effective imple-
mentation of the sectoral plans required under the strategy. The key sectoral priorities are summarised
below:

The government intends to increase focus on preventive healthcare and attainment of SDGs. The
government plans to expand programmes such as; (i) stunting reduction programme; (ii) prevention and
control of hepatitis; (iii) immunization; (iv) integrated reproductive maternal, new-born and child health; (v)
TB control programme; (vi) HIV/AIDs control programme and; (vii) infection control and non-communica-
ble diseases (NCDs) control programme. In terms of infrastructure, the government plans to invest in
improving the basic facilities, use of new technology, strengthening drug testing laboratories and estab-
lishing bio-medical workshops. On tertiary sector, the focus will be expanding the health insurance
programme, enhancing the quality and coverage of medical education, build international partnerships to
improve quality of services and hospital facilties and their management.

A continuous investment is required to improve the school infrastructure. In term of infrastructural needs,
over 4,000 schools need to be reconstructed, over 4,200 schools are still with missing facilities, over
3,000 schools do not have access to grid power and a solar solution is required to power these premises
while over 27,000 school need to be equipped with science labs and electronic libraries.

On the quality side, over 70,000 new classrooms require increased enrolments and many poorly perform-
ing schools are in need of partnerships and outsourcing. Additionally, teacher training needs to be
sustained. Finally, for affirmative action, the education sector will be investing in creation of government
degree colleges of special education, special education centres and shelter workshops for the visually
impaired. The government also intends to initiate joint education and skills programmes for developing a
more productive workforce.

A large number of villages and citizens have been provided with better drinking water and improved sani-
tation facilities, but there still remain large uncovered areas especially in southern districts. The govern-
ment will be focusing on provision of these facilities as per the recently approved policy and action plan.

Irrigation and water are the lifeline of Punjab’s agriculture and industry. The province has targeted to
increase water availability to at least 71 Million Acre Feet from the existing value of 62 Million Acre Feet.
This will require significant investment in improving water course, introducing water conservation and
management and building smaller dams to store water. This will involve upgrading agriculture practices
to move towards more advanced water efficient irrigation technologies.

The government has developed a comprehensive industrial policy that has shaped up the contours of the
strategy. The strategy looks to focus on reducing the cost of doing business, improving environmental
compliance, adherence to labour standards and development of stronger clusters. There will be an
increased focus on SMEs, especially on ensuring adequate and suitable credit and business develop-
ment services. Similarly, in agriculture, the focus is going to be on improving productivity and enhancing
agri-credit and expanding the scope of SMART agriculture. The focus in livestock will be on improving
quality and targeting high value export markets for meat and dairy.



The strategy is presented in nine chapters, the brief details and structure is as follows:

Review of 2018 PGS Targets: This chapter provides a comprehensive review of the perfor-
mance of Punjab against the targets of the previous growth strategy. The chapter uses the evidence
developed under the new growth strategy to trace results achieved.

The Structure & Performance of the Punjab’s Economy: This chapter provides detailed data and analysis
on the structure and performance of the Punjab’s economy, labour force and unemployment dynamics
and the estimates the district HDI performance of Punjab.

 Salient Features of the Punjab Growth Strategy & The Recommended Growth Path: This
chapter provides the evidence and analysis from the Punjab Growth Model on setting the strategic targets
of growth, employment, poverty, SDGs, housing and presents the key growth triggers for the economy
and the conditions required pto implement the growth strategy.

Growth through Private Sector Development: This chapter provides a comprehensive review
of the key issues faced by the private sector and states the response by the government to address these.

Industrialising Punjab & Unleashing its SME Potential: This chapter cover the dynamics of Punjab’s
industrial sector and provides an implementable set of actions required to achieve the objective of the
recently approved Punjab Industrial Policy.

Enhancing Value in Agriculture and Livestock: This chapter provides the strategic response of the
government to achieve higher and sustained growth in the agriculture and livestock sector of the econo-
my.

Realising the Potential of the Services Sector: The services sector contributes more that 62 percent to the
provincial economy. This chapter provides the key institutional, taxation and facilitative actions that the
government will take to ensure sustained growth from the sector.
Chapter 4: Growth Infrastructure: Water Resource Management & Energy Efficiency & Conservation:
Availability of water is seen as an immediate threat to Punjab’s prosperity and energy sector continues to
be a key input for growth sectors in the Punjab. This chapter presents the response of Punjab Govern-
ment to address the key constraints in these sectors.

  Formation of Human Capital: The strategy realizes that formation of human capital is not
linked to education or skills but requires a much broader approach. The human capital domain covers
seven specific areas:

Skilling the Punjab’s Labour Force

Launching Punjab’s Knowledge Economy & Digital Dividends

Reforming Education to Harness Punjab’s Human Capital

Ensuring a Healthy Punjab

Focus on Water, Sanitation and Hygiene

Women Development-Striving Towards Gender Equality

Population Welfare

Urban Development and Housing: This chapter presents the key interventions based on the
Punjab Spatial Strategy 2018 that will enable a more organized and diversified urban development in the
Punjab.

Regional Equalization: This chapter provides stark disparities that prevail with the province
and presents the government’s commitment in addressing these over the next five years.

Aligning Priorities with International Committments: This chapter captures the existing efforts
of the Punjab Government to attain compliance with SDGs and to exploit the potential presented by
CPEC. It also covers the furture response of the government in making meaningful porgress towards
these international committments.

Monitoring & Implementation Framework : This chapter provides the framework for monitor-
ing the implementation and the results of the growth strategy along with the responsibility matrix.
 

The Growth Strategy 2018 envisioned Punjab as “    

” The strategy focused on the private sector as the main driver of provincial growth. The
strategy rightly placed a strong emphasis on equitable growth, given the intra-provincial disparities,
particularly between districts in southern Punjab and the rest of the province. The Growth Strategy 2018
identified certain key challenges to achieving its vision of secured and sustainable economic growth. The
challenges included an underutilised manufacturing capacity and stagnant exports; low productivity of
physical and human capital; unemployment, under-employment and skills shortage; failure to meet the
Millennium Development Goals (MDGs) and slow progress towards the SDGs; and a precarious security
situation. However, the performance against the major targets was lacklustre. There was a strong discon-
nect between the strategy which was set at a very “high level” and implementing departments that were
not able to take ownership or develop initiative inline with the strategy.

This chapter provides quick performance review against the key targets.

Target 1: The Growth Strategy had set up an ambitious target that economic growth will reach 8
percent by the year 2018. Figure 1.1 below provides the GPP growth rates in Punjab over the last five
years.
Figure 1.1: Economic Growth in Punjab, 2014-18(%)

5.5 5.4
5.2
5.0
5
4.6
4.5
4.2

3.5

3
2013-14 2014-15 2015-16 2016-17 2017-18

Source: Punjab Growth Strategy Team

Punjab’s economy grew at a rate of 5.4 percent in the terminal year of the Growth Strategy, 2.6 percent
l of 8 percent, but 1.2 percent higher than the growth rate in 2013-14. The provincial
economy started showing improvement from 2016 onwards on the back of improved electricity situation
in the province and reduced activities of extremism against the state, and an enhanced public expenditure
accruing of trade deficits due to high imports. The consequences of which are left to be handeld by the
present government.



Against a target of USD 17.5 billion, the investment in the terminal year of the Growth Strategy reached
USD 15.3 billion (See Figure 1.2). The private investment increased from USD 13.6 billion in 2013-14 to
USD 16.8 billion in 2016-17: part of this growth came from private sector investments in energy projects.
However, no major reforms were implemented to enhance private sector investments and the PPP portfo-

2
lio remained non-operational.

Figure 1.2: Private Investment in Punjab, 2013-18(USD, Millions)

Source: Punjab Growth Strategy Team


Against the target of 1 million jobs, the economy of Punjab was able to produce 830,000 jobs per annum
on average. The average improved in the last two years, as the growth rate increased, creating more
employment opportunities. However, this number is still a fraction of the over 11 million idle youth in
Punjab and the increasing labour force entrants due to the increasing young population.


The Skills Sector Plan under the Growth Strategy provided specific targets to P-TEVTA, PVTC, PSDF
and the private sector to train 2 million skilled graduates over a period of 4 years. Major contributors were
P-TEVTA at 70,000 per annum, PVTC at 54,000 per annum and PSDF at 20,000 per annum, in addition
to 20,000 trained by the private sector. The government spent significant resources to train the 2 million,
however, most trainings (more than 50%) were in very short-term courses (3 months or less) not oriented
to growth.

Target 5: Increasing Punjab’s exports by 15% every year until 2018

Pakistan’s and thus Punjab’s exports have performed badly over the Growth Strategy period. Exports in
2014 amounted to USD 24.7 billion, and were down to USD 21.9 billion in 2017. The government failed
to enhance exports resulting in huge trade deficit.



Pakistan only met 9 out of the 38 MDGs targets, and Punjab’s performance was the same. The strategy
lacked in bringing any priortization or focus towards SDGs despite commitment.



Whereas little success was achieved on improving relations with India and Bangladesh, Pakistan and
Punjab made progress in improving the situation of law and order. The National Action Plan agreed by all
political parties was the key behind the success.

3
 Structure & Performance of Punjab’s
Economy
The economy of Punjab contributes a major part to the GDP of Pakistan. Growth in the economy of
Punjab, therefore, plays a key role in determination of the overall growth rate of the national economy.
The objective of this chapter is to describe the salient features of the economy of Punjab. Emphasis is
placed on identifying the key characteristics, which play a major role in determining the growth rate of the
regional economy. A comparison is made wherever possible with the national economy.


According to the latest Population Census of 2017, Punjab has a population of 110 million, equivalent to
52.95 percent of the national population. As shown in Table 1.1, the share has declined from 57.58
percent in 1972. This is attributable to a lower rate of population growth between 1998 and 2017. The
population growth in the province was 2.1 percent. This is significantly lower than the national population
growth rate of 2.4 percent. Punjab has had some success in controlling the rate of population growth. The
extent of urbanisation in Punjab is at 36.7 percent. This is only marginally higher than the total rate of 36.4
percent for Pakistan. However, the rate of urbanisation is in proportion to the growth rate of urban popula-
tion of 3 percent.
Table 1.1: Population Trends, Punjab & Pakistan, 1972 to 2017
Popula�on (Million) Growth Rates (%)
1972 1981 1998 2017 1972 1981 1998 2017
Punjab 37.6 47.3 73.6 110.0 3.6 2.6 2.6 2.1
% Urban 24.4 27.6 31.3 36.7 4.8 4.0 3.4 3.0
% Rural 75.6 72.4 68.7 63.3 3.3 2.1 2.3 1.7
Pakistan 65.3 84.2 132.3 207.8 3.9 2.9 2.7 2.4
% Urban 25.4 28.3 32.5 36.4 5.0 4.1 3.5 3.0
% Rural 74.6 71.7 67.5 63.6 3.5 2.4 2.3 2.1
Source: Popula�on Censuses, Pakistan Bureau of Sta�s�cs, Government of Pakistan

Punjab is blessed with a young population. Although information on the age distribution of the provincial
population has not been made available from the Population Census 2017. As far back as 1998, the
share of young (up to the age of 24 years) population has risen to almost 63 percent. This is certainly a
favourable position, but only if enough productive jobs can be found for the youth entering the labour
force.

The growth of urban population is leading to a more imbalanced hierarchy of cities in the province. The
primate city, Lahore, has grown rapidly in the intercensal period, 1998 to 2017, and the growth rate has
exceeded 4 percent. Over the next five years, efforts will have to be made to develop the major secondary
cities of Punjab so as to reduce the pressure of migration into Lahore.

’
The estimated share of the economy of Punjab in the national GDP was 54.2 percent in 2017-18. This
implies that given the share in population of just below 53 percent, the per capita income of Punjab is 2
percent higher than the national average. This indicates that in terms of USD, it is $1,673. The growth rate
of Punjab’s economy has been close to the national growth rate. During the last five years, the average
annual provincial GDP growth rate has been 4.9 percent.


The sectoral composition of Punjab’s economy is given in Table 1.2. The share of agriculture in 2017-18
was 20 percent. Over the last five years, the share has declined from 23 percent in 2012-13. Simultane-
ously, the shares of the industrial and service sectors have increased. A comparison with the share of
different sectors in the national economy reveals that agriculture and services in Punjab have a compara-
tively larger share, while the industrial share is smaller.

4
 Table 1.2: Sectoral Share (%), Punjab & Pakistan, 2012-13 to 2017-18
Sector 2012-13 2015-16 2017-18
Punjab
Agriculture 23.0 20.8 20.2
Industry 17.2 17.4 17.5
Services 59.8 61.8 62.4
Pakistan
Agriculture 21.4 19.8 19.0
Industry 20.4 20.9 20.8
Services 58.2 59.3 60.2
Source: PERI, Government of Punjab and PBS, Government of Pakistan
The sectoral growth rates during the period between 2012-13 and 2017-18 are presented in Table 1.3.
There is very little variation in these growth rates of Punjab and the country as a whole. The overall aver-
age rate during the last five years is just under 5 percent. The main factor contributing to lower growth is
the poor performance of the agriculture sector, with a growth rate of only 2.0 percent. One of the primary
objectives of the Punjab Growth Strategy will be to boost the growth rate of the agriculture sector of the
province.
Table 1.3: Average Sectoral Growth Rates (%), Punjab &
Pakistan, 2012-13 to 2017-18
Sector Punjab Pakistan
Agriculture 2.0 2.1
Industry 5.2 4.7
Services 5.7 5.4
GDP 4.9 4.7
Source: PERI, Government of Punjab and PBS, Government of Pakistan
The decomposition by expenditure of the provincial and national GDP is given in Table 1.4.
Table 1.4: GDP by Expenditure*, Punjab & Pakistan, 2015-16**
Punjab Pakistan Punjab’s Share of
Indicators Level Share of Level Share of Pakistan
(Rs in GDP (%) (Rs in GDP (%) (%)
Billion) Billion)
Household Consump�on 4,987 78.2 9,196 78.3 54.2
Expenditure
Government Consump�on 699 11.0 1,321 11.3 52.9
Expenditure
Private Investment 729 11.4 1,278 10.9 57.0
Public Investment 241 3.8 421 3.6 57.2
Change in Inventories 102 1.6 188 1.6 54.2
Net Imports -383 -6.0 -650 -5.5 58.9
GDP at Market Prices 6,375 100.0 11,755 100.0 54.2
Total Domes�c Savings 689 1,238 55.6
Net Factor Income from 418 675 61.9
Abroad
Total Savings 17.4 16.3
*at constant prices of 2005-06 **more recent data is not available
Source: PERI, Government of Punjab and PBS, Government of Pakistan
Overall, Punjab’s economy has a higher share in private and public investment, as well as in Net Foreign
Factor Income (NFFI). Also, Punjab has a significantly higher saving rate. The net trade deficit of Punjab
is somewhat higher at 6 percent of the provincial GDP.


Table 1.5 highlights the trend of investment, both in private and public, in Punjab and in Pakistan for the
years 2013-14 to 2017-18. There is evidence that the overall level of investment in Punjab is higher.

5
 Table 1.5: Level of Investment, Public and Private, 2013-14 to
2017-18 (% of GDP)
Investment Type 2013-14 2014-15 2015-16 2016-17 2017-18
Private Investment
Punjab 11.7 12.5 13.0 12.6 12.1
Pakistan 11.4 12.0 12.5 11.6 11.4
Public Investment
Punjab 3.3 4.1 3.8 5.1 5.6
Pakistan 3.2 3.7 3.6 4.5 5.0
Total Investment
Punjab 15.0 16.7 16.6 17.7 17.7
Pakistan 14.6 15.7 16.1 16.1 16.4
Source: PERI, Government of Punjab and PBS, Government of Pakistan


The labour force participation rate is higher in Punjab than the national average. From 2013-14 to
2017-18: it averaged at 48.4 percent as compared to 44.9 percent of Pakistan’s. The difference is largely
due to the higher labour force participation rates of females in Punjab. The growth rate of labour force and
employment is given in Table 1.6. The labour force growth rate is the same in Punjab and the country as
a whole. Employment growth has been slightly faster in Punjab. However, the unemployment rate in
Punjab during 2017-18 at 6 percent is somewhat higher than 5.8 percent in Pakistan.
Table 1.6: Labor Force, Employment and Unemployment Rate,
Punjab and Pakistan, 2012-13 to 2017-18 (Million)
Indicators 2012-13 2017-18 Annual Growth Rate (%)
Punjab
Labor Force 36.0 40.0 2.1
Employment 33.7 37.6 2.2
Unemployment Rate 6.4 6.0

Pakistan
Labor Force 59.1 65.5 2.1
Employment 55.6 61.7 2.0
Unemployment Rate 6.0 5.8
Source: Pakistan Labour Force Survey, PBS, Government of Pakistan

A critical area with regard to the conditions in the labour market is the extent of utilisation of the human
capital in the labour force. This is indicated by the variation in the unemployment rate of workers with
different levels of education. The critical area is the unemployment rate of workers who completed their
post-graduation. It is as high as 18.9 percent in Punjab as compared to 16.3 percent in Pakistan.
Table 1.7: Unemployment Rate of Workers
with Different Level of Education (2017-18) (%)
Indicators Punjab Pakistan
Illiterate 3.6 3.2
Literate 7.7 7.5
Pre-Matric 5.1 4.6
Matric 6.0 6.5
Intermediate 11.2 12.0
Degree/Post-graduate 18.9 16.3
Overall 6.0 5.8
Youth Workers 11.6 11.1
Source: Pakistan Labour Force Survey, PBS, GoP
Productive absorption of highly educated workers will represent a big challenge in the formulation of the
Punjab Growth Strategy. Table 1.7 indicates that youth unemployment rate is also high at more than 11
percent. There will also have to be a focus on providing enough jobs in the presence of the ‘youth bulge’.
The sectoral distribution of employment is given in Table 1.8 for 2017-18. Punjab has a higher share of
employment in both agriculture and manufacturing. The latter is due to the stronger and more pervasive

6
presence of small-scale manufacturing units in the province, with strong export orientation.
Table 1.8: Sectoral Distribution of Employment, Punjab & Pakistan 2012-13 and
2017-18 (%)
Sector Punjab Pakistan
2012-13 2017-18 2012-13 2017-18
Agriculture, Forestry and Fishing 44.7 40.0 43.7 38.5
Manufacturing 15.4 17.7 14.1 16.1
Construc�on 7.4 7.0 7.4 7.6
Wholesale and Retail Trade 15.3 14.2 14.4 14.9
Transport and Communica�ons 4.4 4.9 5.5 6.2
Community, Social and Personal Services 10.8 10.8 13.3 14.7
Others 2.0 5.4 1.6 2.0
Total 100.0 100.0 100.0 100.0
Source: Pakistan Labour Force Survey, PBS, Government of Pakistan
The general expectation is that as development proceeds, the share of employment in agriculture will
decline. This is also visible in Punjab and elsewhere in the country. In Punjab, the share has fallen
relatively fast from almost 45 percent in 2012-13 to 40 percent in 2017-18. Employment has been diverted
to the manufacturing and other sectors.

The level of Human Development Index (HDI) has been derived for each district of Pakistan in the latest
Human Development Report for Pakistan by the UNDP. The HDI estimates for the districts of Punjab are
given in Table 1.9.

Table 1.9: HDI of the Districts of Punjab

Na�onal HDI District Human Development Index
Rank**
High level of Human Development
1 Lahore 0.877
3 Rawalpindi 0.834
5 Sialkot 0.834
6 Jhelum 0.829
High-Medium Human Development
7 Gujrat 0.795
8 Chakwal 0.792
9 A�ock 0.786
10 Faisalabad 0.782
11 Gujranwala 0.769
12 Toba Tek Singh 0.763
15 Narowal 0.748
16 Nankana Sahib 0.740
17 Sheikhupura 0.738
19 Layyah 0.729
20 Sargodha 0.728
21 Multan 0.718
23 Mandi Bahauddin 0.716
24 Kasur 0.714
25 Sahiwal 0.710
26 Khushab 0.706
27 Okara 0.705
28 Hafizabad 0.705
Medium Human Development
30 Khanewal 0.699
33 Jhang 0.682
39 Pakpa�an 0.66
41 Lodhran 0.659

7
 42 Chiniot 0.657
43 Vehari 0.655
46 Bahawalpur 0.645
47 Mianwali 0.645
49 Bahawalnagar 0.63
50 Bhakkar 0.628
51 Rahim Yar Khan 0.625
Low Medium Human Development
58 Muzaffargarh 0.584
64 Dera Ghazi Khan 0.535
69 Rajanpur 0.506
Low Human Development
No District fall in this category
*Source: Human Development Report 2017, UNDP Pakistan
There are four districts, namely, Lahore, Rawalpindi, Sialkot and Jhelum, which have achieved a high
level of human development. The medium level of HDI has been attained by 29 districts. Only three
districts, namely Muzaffargarh, Dera Ghazi Khan and Rajanpur, have been identified at the low level of
human development. All of these districts are located in southern Punjab.

8
 

The Punjab Growth Strategy (PGS) represents a unique combination of the national macroeconomic
framework with the regional dimension of the economy of Punjab. This represents the process of decen-
tralization following the 18th Amendment whereby provincial regional planning can be made consistent
with a national plan prepared by the Federal Planning Commission for a period of five years.

The development of the PGS has become possible only after extensive research. This has included
estimates of the Gross Provincial Product (GPP) by sector and by expenditure component. A time series
of the GPP of Punjab has been constructed from 1999-2000 to 2017-18. Further, the Human Develop-
ment Index (HDI) has been estimated for each division and district of the province. This quantifies the
extent of regional disparities in Punjab, particularly with regard to South Punjab. Today, the HDI of South
Punjab is 32 percent lower than the rest of Punjab. Also, the incidence of poverty is two and half times
that of the rest of the Punjab.


The salient features of the PGS are highlighted below. The second part of the chapter presents the mag-
nitudes which describe the key elements of the strategy for the period, 2018-19 to 2022-23.


The majority of variables in the PGS are influenced by national macroeconomic variables as highlighted
in Table 2.1. In particular, the production and investment in different sectors of Punjab are impacted by a
large number of macroeconomic variables.
Table 2.1: Impact on Provincial Economic Magnitudes of National Macroeconomic Variables
Provincial Variable Dependence on which Na�onal Variables
Produc�on by
Crop Sector Federal PSDP on Water; Crop Procurement/Support
Prices; Subsidies/ Taxes on Agricultural Inputs
Large Scale Manufacturing Na�onal Export Incen�ves and Policies; Quantum of
Electricity Genera�on and Incidence of Power Outages
Small-Scale Manufacturing All policy variables for LSM & Total Credit to SMEs
Construc�on Size of Federal PSDP; Taxa�on of Building Materials

Finance and Insurance Level of Interest Rates

Wholesale and Retail Trade Volume of Imports
Transport and Communica�on Prices of Petroleum Products
Social, Community Services Level of Home Remi�ances
Investment in
Agriculture, Industry and Services Level of Interest Rates

The crop sector of Punjab, for example, is impacted by the size of Federal PSDP on water, level of
procurement, support prices and subsidies/taxes on agricultural inputs like fertilizer, light diesel oil, elec-
tricity, etc. The other side of the two-way relationship is from the regional to the national economy. Clear-
ly, if Punjab’s economy performs better it raises the growth rate of Pakistan’s GDP significantly.

As shown in Figure 2.1, Punjab has a higher share in relation to its population share in the national value
added in agriculture, net imports of goods and services, employment, total investment, services value
added and the national GDP. The only relatively low share is in industrial value added. The province has
relatively underdeveloped mining and quarrying, and electricity and gas sectors. However, the share in
small scale manufacturing is large at over 68 percent.

10
 Figure 2.1: Punjab's Share in Key National Magnitudes (%)

55

Source: Punjab Bureau of Sta�s�cs, Pakistan Labour Force Survey and Pakistan Economic Survey
              

Pakistan needs to go through a period of stabilization given the extremely large national current account
and budget deficits. The likelihood is that Pakistan will go into an IMF Program through access to the
Extended Fund Facility (EFF) for three years. The federal government has already moved on the path of
stabilization soon after its induction into power. Contractionary fiscal, monetary and trade policies have
been adopted to control the level of aggregate demand and reduce the level of imports. Simultaneously,
measures have been taken to promote exports.

Table 2.2 shows the path that is likely to be followed by the various policy instruments from 2018-19 to
2022-23. Initially during the first two years, big adjustments are likely to be made with a quantum depreci-
ation of the rupee, hike in interest rates, big increases in gas, electricity and petrol prices and sizable cut
back in the Federal PSDP. The Government of Punjab has also opted for a big reduction in ADP so as to
generate a relatively large cash surplus and thereby make a significant contribution to reduction of the
consolidated fiscal deficit in 2018-19.
Table 2.2: Projected Magnitudes of Policy Instruments, 2018-19 to 2022-23
Indicator 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Deprecia�on of the Exchange Rate (%) 16 25 15 10 10 5
Nominal Interest Rate (SBP Policy Rate) (%) 6 12 9 8 7 6
Rate of increase in Energy Prices (%) 5 25 8 8 8 8
Growth in Federal PSDP (%) -18 -13 5 10 15 15
Source: Punjab Growth Strategy Team
The expectation is that the process of stabilization will be completed by the end of 2019-20 and both the
national and provincial economies can then get on a trajectory of higher and more sustainable growth. As
such, there will be a resort to more expansionary fiscal and monetary policies from 2020-21 onwards.


The location quotient of each sector and sub-sector of Punjab is given in Table 2.3 The sectors with the
comparative advantage are shown in Figure 2.2. The biggest comparative advantage of Punjab is in two
sectors, viz., major crops and small-scale manufacturing. Other sectors with significant comparative
advantage are livestock, social and community services, transport, storage and communications, minor
crops and construction. Three emerging sectors of comparative advantage are finance and insurance,
wholesale and retail trade and public administration and defense.

The PGS focuses on the sectors of comparative advantage. This will also contribute to stronger integra-

11
tion and inter-provincial trade within Pakistan. Sectors like large-scale manufacturing will need special
support in Punjab so as to enhance their share in the national economy.

Table 2.3: Share of Punjab in each Sector and Location Quotient of the
Sector, 2015-16
Share of Punjab Loca�on
in Na�onal Sectoral Quo�ent
Value Added (%)
Agriculture 62.2 1.148
Major crops 74.5 1.375
Minor crops 56.1 1.035
Co�on ginning 67.2 1.240
Livestock 59.5 1.098
Forestry 22.4 0.413
Fishing 48.1 0.887
Industry 40.2 0.742
Mining and Quarrying 12.8 0.236
Manufacturing 43.9 0.810
Large-scale 39.5 0.729
Small-scale 68.5 1.263
Slaughtering 52.7 0.972
Construc�on 55.6 1.026
Electricity and Gas distribu�on 39.3 0.725
Services 56.3 1.038
Transport, Storage and Communica�on 58.2 1.073
Wholesale and Retail Trade 55.3 1.020
Finance and Insurance 55.1 1.017
Ownership of Dwellings 53.4 0.985
Public Administra�on & Defense 55.2 1.018
Social and Community Services 58.9 1.086
Source: Punjab Growth Strategy Team

Figure 2.2: Sectors in which Punjab has a Comparative Advantage and the Extent
of the Advantage (%)

Source: Punjab Bureau of Sta�s�cs and Pakistan Economic Survey

Source: Punjab Growth Strategy Team

Punjab Has Compara�ve Advantage in 11 out of 18 sectors

12


Historically, agriculture has been the backbone of Punjab economy and through its many linkages has
facilitated the overall growth of the province. Today, bulk of the agricultural exports of Pakistan is from
Punjab and there is enormous potential for enhancing this contribution. Figure 2.3 highlights the contribu-
tion of agricultural growth to growth in sectors like manufacturing, wholesale and retail trade and trans-
port. 

Figure 2.3 : The Direct and Indirect Contribution of Agriculture to the Growth of Punjab’s Economy

1% Growth in
Agriculture of
Pakistan

0.703% Growth 0.328% Growth

in Large-scale in Transport &
manufacturing Communication

0.425% Growth 0.408% Growth

in W&R in The Economy
Trade of Punjab

Therefore, PGS looks to accelerate the growth rate of agriculture from about 2% in the last five years to
between 3.5% to 4% in the next five years. This alone will add 0.6 to 0.8 percentage points to the overall
growth rate of the economy of Punjab. Specific initiatives in the PGS for augmenting the growth rate of
agriculture are described in a subsequent chapter.


The production module of the PGS Model estimates production function of each sector as dependent on
the private capital stock, employment, stock of public investment and other demand related variables.
The results are presented below in Table 2.4.
Table 2.4: Impact of increase in Public Capital Stock on Productivity in Different Sectors of
Punjab's Economy
1% Increase in Public Capital Stock in*
Impact on Sector Produc�vity Agriculture Irriga�on Roads & Urban Energy Educa�on**
Transport Development
Crops 0.504 0.504 0.063 - - -
Livestock 0.340 - 0.340 - - -
Large-scale manufacturing - - 0.631 0.137 0.137 0.876
Small-scale manufacturing - - - - - -
Construc�on - - 0.335 0.335 - 1.126
Finance and Insurance - - 0.391 0.391 - 1.284
Wholesale and Retail Trade - - 0.116 0.057 0.116 1.027
Transport and Communica�ons - - 0.216 0.079 0.216 0.586
Social, Community Services - - - - - 0.198
*Health and Water Supply and Sanita�on impact mostly on health indicators and quality of life
**Via the impact on the human capital endowment of the employed
Source: Punjab Growth Strategy Team

13
Sensitivity analysis of the sectoral ADP allocations has been undertaken to determine where an increase
in share of allocations has the maximum impact on the rate of growth of Punjab’s economy. The ranking
of the impact is given below:

1. Education
2. Agriculture and Irrigation
3. Roads and Transport
4. Urban Development


The present position with regard to the education level of the labor force of almost 40 million workers in
Punjab is given below in Table 2.5. Less than 8% are graduates or with post-graduate qualifications.
Employment opportunities are limited for these workers and unemployment rate is extremely high at close
to 19 percent. The PGS will not only target for increasing substantially the number of educated workers
but also ensure their productive absorption.
Table 2.5: Distribution of the Labor Force and the Employed by Level of Education in Punjab,
2017-18 (%)
Labor Force Employed Unemployed Unemployment
Rate
Illiterate 41.4 42.4 24.8 3.6
Literate 58.6 57.6 75.2 7.7
Pre-Matric 33.5 33.8 26.9 5.1
Matric 12.6 12.6 12.6 6.3
Inter 4.7 4.4 8.7 11.2
Degree, Post 7.8 6.8 24.9 18.9
Graduate
Total 100.0 100.0 100.0
Number (million) 39.98 37.60 2.38 6.0
Source: Pakistan Labour Force Survey, PBS, Government of Pakistan
There is another serious issue with regard to employment. The ‘youth bulge’ in the population of Punjab
needs to be provided employment. The unemployment rate among young workers, aged 15-24 years is
11.6 percent. Currently, there are as many as 11.4 million “idle” male and female youth in Punjab, with 30
percent male youth. Given the possibility of religious extremism and crime especially among male youth,
it will be essential to launch Youth Programs to ensure that they also have a productive role in the econo-
my.
                

The Government of Punjab has put in a significant fiscal effort between 2012-13 and 2017-18. The

Table 2.6: Trend in Own-Revenues of the Government of Punjab

(Rs. in Billion)
Indicators 2012-13 2017-18 Annual Growt h Rate (%)
Tax Revenues 77.3 197.5 20.6
Sales tax on Services 37.0 105.9 23.4
Other Taxes 40.3 91.6 17.8
Non- Tax Revenues 28.1 61.6 17.0
Total Own -Revenues 105.4 259.1 19.7
% of Punjab’s GPP 0.9 1.4
Extent of Self -Financing 15.0 18.3
Source: Finance Department, Government of Punjab
However, much of the increase in the tax revenues has come from the imposition of the sales tax on
services following the 18th Amendment. The emphasis over the next five years will be on further expan-
sion of the sales tax base and on the development of other taxes like the Urban Immoveable Property Tax

14
and the Agriculture Income Tax. Similarly, non-tax revenues will also be augmented, especially by
enhancement in the rates of Abiana, in an effort to increase efficiency of water use. A feasible target for
the next five years is to raise the provincial own-revenues to GPP ratio from 1.4 percent in 2017-18 to
almost 2 percent by 2022-23.
’

The share of transfers to Punjab out of the Federal Divisible Pool and in the form of straight transfers is
given in Table 2.7 below. The share has risen somewhat from 46.9 percent in the 2012-13 to 48.6 percent
in 2017-18. The transfers were equivalent to 76.4 percent of the total revenues of the Government of
Punjab.
Table 2.7: Provincial Share of Punjab in Total Revenue Transfers from Federal
Government (Rs. in Billion)
Total Federal Transfers to Provinces Transfers to Punjab Share of Punjab (%)
2012-13 1215.0 569.3 46.9
2013-14 1406.3 646.3 46.0
2014-15 1538.7 726.9 47.2
2015-16 1862.2 901.5 48.4
2016-17 1965.8 928.8 47.3
2017-18 2217.4 1078.8 48.6
Source: Ministry of Finance, Government of Pakistan
The 9th NFC has recently been constituted and has already had its first meeting. The PGS Model has
made projections of the economy of Punjab on the assumption that the share of the province in federal
transfers will not fall below the level in 2017-18 of 48.6 percent. The model reveals that even a 5-percent-
age point drop in the share could reduce the annual GDP growth rate of Punjab by as much as 1 percent-
age point.

There is a significant gap in the literacy rate, school enrollment, labor force participation rate, employ-
ment-to-population ratio and level of wages between the male and female population of Punjab, as shown
in Table 2.8.

Table 2.8: The Extent of Gender Inequality in Punjab 2014-15*

Indicator Unit Female Male Ra�o
Literacy Rate % 72 78 0.923
Primary GER % 93 87
Middle GER % 58 56
Secondary GER % 35 33
Overall School Enrollment Rate % 68 64 0.941
Labor Force Par�cipa�on Rate % 50 20
Unemployment Rate % 5.4 7.5
Employment-to-Popula�on Ra�o % 47.3 18.5 0.391
Average Wage** Rs. per month 13,537 15,631 0.866
Index of Gender Inequality 0.535
*The labor related data is for 2017-18
** In an intermediate occupa�on
Source: Bureau of Sta�s�cs, Government of Punjab and Pakistan Bureau of Sta�s�cs, Government of Pakistan

The target in the PGS is to reduce the gender gap by at least half in the next five years. This will require
a disproportionate allocation of new schools and teachers for girls. There will be a need to expand
employment opportunities at a sufficient rate and in occupations for faster and larger absorption of female
entrants into the labor force. Removal of wage discrimination will require appropriate legislation and its
implementation.

15
REPORT



‘’
‘’
Table 2.9 highlights the performance of the economy of Punjab in the process of job creation over the last
five years. Between 2012-13 and 2017-18, the number of new jobs on average annually was 834,000.
This represents a high proportion, 74 percent of the total jobs created in the country.

The required rate of job creation will have to be 50 percent more annually in Punjab if the province is to
make a befitting contribution to attainment of the target. In other words, the number of new jobs will have
to be on average 1,250,000 annually over the next five years.

Turning to the target of new housing units, the performance in Punjab has been slower than the country
as a whole. During the period, 2011-12 to 2015-16, the number of new housing units in the province has
averaged 377,000 annually as compared to the national average of 826,000 units. Over the next five
years, the number in Punjab will have to be increased to 566,000 if an adequate contribution is to be
made to achieving the government's target.
Table 2.9: New Jobs Created from 2012-13 to 2017-18 (000)
2012-13 2017-18 Annual Job Growth Rate
Created (%)
Employment
Punjab 33,430 37,600 834 2.4
Pakistan 56,010 61,710 1,140 2.0
Punjab a s % of Pakistan 59.7 60.9 73.8
Required Rate of Enhancement in Job
Crea�on to Achieve Target (%) 50*
Target of Job Crea�on in Punjab to Achieve
government's Target
*With Punjab crea�ng 63% of the new jobs in the country.
Source: Punjab Growth Strategy Team

Table 2.10: New Housing Units built from 2011-12 to 2015-16 (000)
2011-12 2015-16 Annual New Houses
Constructed
Housing Units
Punjab 15,968 17,477 377
Pakistan 28,116 31,423 826
Punjab as % of Pakistan 56.8 55.6 45.6
Required Rate of Enhancement in Construc�on of
Housing Units to Achieve Target 53*
*With Punjab construc�ng 56% of the new housing units.
Source: Punjab Growth Strategy Team


The focus of PGS is also on accelerating the rate of progress on some of the key targets in the Sustain-
able Development Goals (SDGs) of the UN. These are listed in Table 2.11.

16
 Table 2.11: Required Rate of Progress in Achieving Selected SDG Targets by 2030
Indicators Base Year 2017 -18 Target Required Annual Rate of
Value Progress
Incidence of Poverty (%) 26.2 ½ of base -1.0
year
Stun�ng and Was�ng of Children 31.0 0 -2.4
(%)
Child Mortality (per 1000 live 69.0 25 -3.4
births)
Net Enrollment Rate (%)
Primary
Boys 65.6 100%* 2.6
Girls 66.3 100%* 2.7
Secondary
Boys 36.3 100%* 4.9
Girls 35.9 100%* 4.9
Index of Gender Inequality 0.521 1 5% growth annually
*Both boys and girls.
Source: MICS 2018, Bureau of Sta�s�cs, Government of Punjab



These are with the terminal growth rate of 5 percent and 7 percent respectively in 2022-23.
The 5 percent growth scenario corresponds, more or less, to the base scenario. The higher
growth rate scenario highlights the extra effort that will need to be made to raise the growth
rate of Punjab’s economy. Also, the 7 percent growth rate scenario builds in the impact of a
change in sectoral allocations in the ADP towards education. The recommended strategy is
to attempt the achievement of 7 percent growth rate in 2022-23.

Figure 2.4 below highlights the two growth paths of Punjab’s GPP. The growth rate achieved by the
Punjab economy was at 5.4 percent in 2017-18. However, the two years, 2018-19 and 2019-20, are likely
to see a perceptible fall in the growth rate to only 3.7 percent in 2018-19 and 5.1 percent in 2019-20 for
achieving 7 percent growth by 2022-23. This loss of growth momentum is attributable to the fact that in an
attempt to stabilize the economy, contractionary monetary and fiscal policies will be adopted both at the
national and provincial level. The provincial budget of 2018-19 has cut the size of the PSDP substantially
so as to generate a sizeable cash surplus and thereby make a significant contribution to the reduction of
the consolidated fiscal deficit.
Figure 2.4: Annual Growth Rate of Punjab’s GPP in Different Growth Scenarios

7.5
% 7
7

6.5 Projected Scenario 6.3

5.9
6
5.5
5.4
5.5
5.1
5
4.9 4.9
5 4.8

4.4
4.5 4.2 Base Scenario
3.9
4 3.7
3.5
3.5

3
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
7% Growth Scenario Reduced Growth Projection Base Scenario (original expectations)

Source: Punjab Growth Strategy Team 1

17
Punjab’s economy is expected to get on to a higher growth trajectory by 2020-21. The growth rate should
approach 6 percent by 2020-21 and rise to 7 percent by 2022- 2023. Over the five years, the faster growth
of the economy will mean that in 2022-23 the provincial GPP will be 7.5 percent larger than in the base
scenario.

The average annual sectoral growth rates in the two scenarios are given in the Table 2.12 below. The
average growth rate of agriculture approaches 4 percent in the recommended growth path while industry
will average 7 percent and services above 6 percent.
Table 2.12: Average Annual Growth Rate in the two Scenarios (%)
Agriculture Industry Services Total GPP
5% Growth Scenario 3.0 4.7 4.8 4.4
7% Growth Scenario 3.9 7.0 6.1 5.8
Source: Punjab Growth Strategy Team


The financing of the development of the Punjab will come from the development spending through the
ADP and by private investment in different sectors of the regional economy. Clearly, achievement of the
financial targets will be the basic pre-condition for staying on the path for achieving the 7 percent growth
target. The analysis below also indicates the extra effort that will be required in relation to the base
scenario.

The required size of the provincial ADP is given in the Table 2.13. The ADP has been cut sharply in
2018-19 as highlighted earlier. In the recommended scenario, some recovery in size will be possible in
2019-20. Thereafter, with relatively rapid growth, the size of the ADP will need to be increased to Rs. 865
billion to achieve the growth rate of 7 percent in 2022-23.

Table 2.13 also indicates that the extent to which the size of the ADP will need to be larger than in the
base scenario. Cumulatively, over the five years, the ADP will need to be larger by over Rs. 440 billion.
However, increasing the share of education in the cumulative ADP from 2018 to 2023 can lead to a saving
of over Rs 350 billion in order to achieve the 7 percent growth in 2022-23. This saving is in relation to the
required size of the cumulative ADP if the share of education is not increased.
Table 2.13: Average Annual Growth Rate in the two Scenarios (%)
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Base 5% scenario 411 238 386 463 560 700
(-42.1) * (62.1) (19.9) (21.0) (25.0)
Recommended 7% scenario 411 238 433 563 690 865
(-42.1) (81.9) (30.0) (22.6) (25.3)
Extra Size (%) 0 12.2 21.6 23.2 23.6
*Annual Growth Rate
*Figure 3.5 presents visually the increase in ADP size
Source: Punjab Growth Strategy Team
The implied levels of own-revenues of the Government of Punjab and transfers from the Federal Govern-
ment are highlighted in Table 3.14 and 3.15 respectively.

18
 C

CM

MY

CY

CMY

K
Based on the levels of availability of credit, the required level of private investment in Punjab to achieve
7 percent growth by 2022-23 is given in Table 2.17.
Table 2.17: Level of Private Investment in Punjab
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Growth (%)
5% Scenario 2,304 2,596 3,021 3,525 4,109 4,826 15.9
7% Scenario 2,304 2,596 3,055 3,642 4,336 5,150 17.4
Addi�onal Investment (%) 0 1.1 3.3 5.5 6.7
Source: Punjab Growth Strategy Team
The growth rate of private investment in the higher growth path will have to be high at 16 percent over the
five year period. The focus has to be on improving the business environment, enhancing the ease of
doing business and taking advantage of the fiscal incentives offered in the CPEC Special Economic
Zones (SEZs) located in Punjab.

The sectoral distribution of private investment projected in the 7 percent growth path is given in
Figure 2.6.
Figure 2.6: Sectoral Distribution of Private Investment

2017-18 5% Scenario 7% Scenario

Industry Industry Industry

15% 15% 16%

Agriculture Agriculture Agriculture

Services 24% 24% 23%
Services Services
61% 61% 61%

Scenarios for 2022-23

Source: Punjab Growth Strategy Team
A summary is given in Figure 2.7 of the difference between the base line scenario and the high growth
scenario in terms of the growth rate of different sources of financing. The Government of Punjab will have
to make a truly exceptional effort to achieve the fastest growth among the sources in own revenues of
almost 18 percent annually. Also, the largest difference in the growth rate in the two scenarios is in
agricultural credit.
Figure 2.7: Growth Rate of Different Forms of Financing of the Development of Punjab (%)

Federal Transfers Own Revenues Private Investment

13 22 18
13 17.4
12.5 20
16
Growt h Rate
Growth Rate

Growth Rate

12 18 15.9
17.8
11.5 11.7 16 14
15.8
11 14
12
10.5 12
10 10 10
5 % Scenario 7% Scenario 5 % Scenario 7% Scenario 5 % Scenario 7% Scenario

20
growth rates of employment by gender are presented in Table 2.20.
Table 2.20: Employment Growth of Male and Female Workers (%)
Male Female Total
5% Scenario 2.2 2.5 2.3
7% Scenario 3.3 4.3 3.5
Source: Punjab Growth Strategy Team
The employment growth rate for female workers could be as high as 4.3 percent. This will not only
encourage higher rate of labor force participation but also reduce the rate of unemployment.

The sectoral distribution of employment is presented in Figure 2.8. As expected, in the high growth
scenario, there is significant reduction in the share of agriculture in employment from 40 percent to 35
percent. Bulk of the increase is in the industial sector. The share of services remains unchanged.
Figure 2.8: Sectoral Distribution of Employment
2017-18
5% Scenario 7% Scenario

Services Industry Industry Industry

35% 25% Service Services
, 28% , 30%
s, 36% , 35%
28%
35%

Agriculture Agriculture Agriculture

40%
, 38% , 35%
37%

Scenarios for 2022-23

Source: Punjab Growth Strategy Team

The faster growth of modern sectors like large scale manufacturing, banking and industry, public adminis-
tration and defence and economic and social services will provide ample opportunities for graduate work-
ers and for the educated labor force.

Table 2.21 has quantified the required rate of progress from 2017-18 to 2022-23 so as to facilitate the
achievement of the key SDG targets by 2030. The table below gives the performance with regard to these
SDGs in the high 7 percent growth path.
Table 2.21: Rate of Progress towards meeting the SDG targets
Indicators 2017-18 2022-23 Annual Extent of Achievement of
Change the Required Rate of
Progress (%)
Incidence of Poverty (%) 26.2 19.5 -1.3 130.0
Stun�ng & Was�ng of Childr en 31.0 17.3 -2.7 112.5
(%)
Child Mortality (per 1000 births) 69.0 30.5 -7.7 226.4
Net Enrollment Rates (%)
Boys, Primary 65.6 71.3 1.1 42.3
Girls, Primary 63.3 70.8 1.1 40.7
Boys, Secondary 36.3 41.8 1.1 22.4
Girls, Secondary 35.9 40.7 1.0 20.4
Index of Gender Inequality 0.521 0.611 3.2* 64.0
*Growth Rate
Source: Punjab Growth Strategy Team
Therefore, there is the prospect of subtantial progress in reducing poverty, stunting and wasting of
children and child mortality. However, there will be need for doing more in the areas of primary and
secondary education and for the reduction in gender inequality. Further, the rapid growth of agriculture
and the off- farm economy will be of special benefit to South Punjab. In addition, the share in ADP must

22
consistently be higher in South Punjab than its population share. This will ensure a faster rate of poverty
reduction in the more backward areas of the province.


The number of housing units that are likely to be constructed from 2018-19 to 2022-23 is cumulatively 3.2
million. However, this is based essentially on self-financing by households without large-scale access to
mortage finance from the banking system. Consequently, while the number is large the quality of hosuing
will remain low. Only 30 percent of the new units are likely to be pakka and 50 percent will have 2 rooms
or less. Therefore, achievement of the government's target will require upgradation of the housing units
being constructed through housing revolving funds plus substantially increased access to housing
finance after the promulgation of appropriate mortgage legal provisions.

The rapid expansion in employment will also induce greater participation of youth in the labor force. Con-
sequently, the proportion of youth who are ‘idle’ will decline from 10.3 percent of the population in 2017-18
to 8.8 percent in 2022-23. This could be further reduced by launching of a number of Special Youth
Programs.

Overall, the proposed Punjab Growth Strategy which aims to achieve 7 percent growth by
2022-23 promises inclusive and sustainable growth. There are prospects of high rates of employ-
ment generation, reduction in gender inequality, big reduction in the incidence of poverty and so
on.

However, implementation of the strategy will require a strong fiscal effort at mobilizing more reve-
nues,raising subtantially the size of the ADP along with shift in allocations towards human devel-
opment and away from over investment in physical infrastructure, improvement in the business
climate for the private sector leading to higher investment and sustained high growth in fiscal
transfers from the Federal Government.

23
 
The private sector in Punjab produces more than 90 percent of the goods and services in the province. It is,
therefore, the main driver of economic growth, employment and social outcomes in the province. The role
of private sector in current times has become even more important as the government is squeezed for fiscal
space. Thus, creating an enabling environment, in which private sector can flourish, is the most cost efficient
way of achieving development targets by the government. The provincial government is clear in its strategy:
that whether it is optimising returns from the China-Pakistan Economic Corridor (CPEC), achieving compli-
ance with SDGs or attaining the overall-inclusive growth and employment targets, the government can only
support, with the private sector taking the lead in investment and delivering towards targets. The public
resources and public policy will act as the driving catalysts to bring real change led by the private sector.

This strategy is not unique in labelling private sector as the engine of growth, as strategies of the previous
government identified a similar approach. However, if one is critical of Punjab’s performance, the regret is
for opportunities missed and for not performing to its potential, rather than for a failed outcome. The criticism
is that the province could have done much better. The PGS provides for a strong approach to address
issues restricting private sector activity.

The main drivers of private sector growth and productivity are the creation of capital assets (i.e. investment)
and the efficiency with which these assets are used. The incentive for investment and the achievement of
economic efficiency require several conditions.

successful development of the private sector requires a stable macroeconomic and policy environ-
ment. Inconsistency in either makes it exceedingly problematic for businesses to assess future costs and
returns, and, therefore, unable to take a firm view on expected future profits. Since investment depends to
a large extent on expectations of future profits, any uncertainty concerning them is likely to result in scaling
back of investments.
Figure 3.1: Private Investment in Punjab (2014-18)

Source: Punjab Growth Strategy Team

The responsibility for provision of overall macroeconomic environment conducive to investment and the
tools for managing it still rests primarily with the federal government. The management of fiscal matters and
taxation policy, interest rate, exchange rate, power pricing and duties, tariffs and overall investment policy
also resides with the federal government.

Nevertheless, Government of Punjab will take a more proactive role in managing the province’s economy.

26
It will get a greater control over the macroeconomic environment in the province. It shall do that by, at the
least, bringing consistency and robust implementation of policies under its domain, such as, the investment
policy, industrial policy, MSME policy, agriculture policy and policy for key services sectors such as Tour-
ism, ICT, Construction and Retail. It will also work on developing a provincial tax policy with dual focus on
increasing the revenues and creating growth in the services sector. Punjab will also advocate with the feder-
al government to finalise its 5-year economic plan at the earliest and ensure consistency of policies.

a major development of the private sector requires a transparent, effective and well-functioning
system of economic governance. Such a system would promote security about rights and assets, effective
compliance with contractual obligations, create an environment of open and fair competition that would
minimise costs, and establish an efficient mechanism for adjudicating and resolving commercial disputes.

It is clear that Punjab will have to do much more to set the system in place to increase the confidence of the
private sector and induce them to invest more. For example, statistics released by the Law & Justice Com-
mission of Pakistan in the first quarter of 2018 reported that 1.8 million cases were pending in courts, includ-
ing the apex court and lower courts. At the district judiciary level, Punjab was the worst performer with
1,168,782 pending cases. Over 150,000 cases were pending decisions in the Lahore High Court. A majority
of these relate to commercial disputes.

In terms of formal statistics, the Law & Justice Commission of Pakistan has not produced an annual statis-
tics report since 2014. Moreover, it is not just the pendency, but the time and cost to enforce contracts is also
a significant barrier. The World Bank Investment Climate studies show that when cases are taken up by the
courts, it took an average of 46 steps and almost one-third of the contract value to enforce it. Such slow and
costly judicial procedures can act as a severe disincentive to business investment, especially foreign invest-
ment, which has very wide options about where it can invest.

increasing the private sector’s productivity and profitability requires efficient factor markets, so that
factors of production can move easily and at low cost from areas of low productivity to where there is more
demand. Punjab’s factor markets still contain substantial degree of rigidity and uncertainty. Key elements
impacting the efficiency of markets include information and coordination failures and inadequate regulatory
governance.

Similarly, Punjab’s labour market has certain inflexibilities. For example, there are issues pertaining to
restrictive labour regulations, design of temporary contracts and retrenchment procedures, etc. The private
sector still complains of intrusive and extortion based uncoordinated inspections by as many as 27 agen-
cies/authorities that continually disrupt productive activities. Similarly, obtaining regulatory compliances and
approvals is still a cumbersome process and many complain about informal costs to be paid for getting the
work done. As a result of the several restrictive measures and a discretionary approach of different authori-
ties, many, if not most, firms circumvent regulations to some degree, whilst other prefer to stay small and
avoid the radar.

 the hardware issues are equally important. Successful private sector development requires an
adequate infrastructure, especially in the form of power supply, adequately priced suitable land, connectivity
and transport logistics. These factors help a firm minimise costs and remain competitive, and are important
especially for international competitiveness.

Power remains a critical factor, both from the perspective of availability and cost. Data on Punjab’s GPP
shows that 1 percent increase in the incidence of power load shedding in Punjab reduces large-scale man-
ufacturing value added by 1.23 percent. Similarly, 1 percent increase in energy price further reduces the
large-scale manufacturing value added by 0.5 percent. In terms of private investment, 1 percent increase in
power load shedding reduces agriculture sector private investment by 1 percent, manufacturing sector
private investment by 0.4 percent and the services sector investment by 0.7 percent. These are significant
numbers, showing that provision of reasonably priced and consistent supply of energy is the key factor
behind private sector investment and growth.

Similarly, availability of suitably and reasonably priced land is a key determinant of private sector invest-
ment, for SMEs. Land in Punjab is usually classified as agricultural or residential. Apart from the government
provided industrial states, no zoning of land has ever been done in Punjab. This has resulted in two issues.

27
One, it has resulted in a disorganised mushrooming of industries in residential areas, whereas a large
segment of SMEs is now crowded in residential localities. For example, if one walks through any small
residential street in Sialkot, the split of residential settings and small manufacturing units will be 50-50. This
is a clear problem, both for the industry as it cannot expand, and the residents as they are living in areas that
are not environmentally safe. Second, the unorganised conversion of land into industrial ventures has also
resulted in market price speculation. This has significantly increased the access price of land that is suitable
for industry.This high entry cost eliminates a large segment of small investors who are unable to gather
enough capital.

The road infrastructure in Punjab compares favourably to other provinces, however, more efforts are
required to strengthen the farm-to-market network. Similarly, the Internet penetration and quality of signal is
still an issue in remote areas that limits the use of modern business tools. Finally, in terms of logistics, espe-
cially in light of CPEC, the quality of trucks and cool chain services are still problematic that restrict the
performance of businesses.

 the cost of acquiring technology and research is a critical factor determining local investment and
expansion into value addition. Businesses in the Punjab continue to be stuck in the low-value added quad-
rant as there are limited avenues to acquire technology and research. A critical factor constraining this is the
quality of the human resource. Data on Punjab’s GPP show that 1 percent increase in schooling of worker
increases large-scale manufacturing by approximately 2 percent. This is captured with a strong focus on
formation of the capital.

 rapid private sector development cannot be sustained in the absence of secure law and order
conditions and an element of trust and respect in the institutions providing security. The law and order and
security situation in Pakistan and Punjab has now considerably improved as compared to that of a decade
ago. However, the private sector still complains about the culture and practices of the agencies providing
safety and security. For example, police is the first and most common interface of public sector with the
private sector. The private sector, due to the environment and behaviour of the front desk staff, often shies
away to report issues and crime, and quietly absorbs the loss.

 a more balanced development strategy is required for the province to grow quicker and attain equity.
Both in matters of hardware and software, Punjab’s development plan has been ‘Lahore-centric’. Figure 3.2
below shows the disparity between per capita spending between districts over the last four years. This clear-
ly shows that certain gains that could have been made were missed out. For example, spending a billion
rupees in Rajanpur would have a much significant impact as compared to the same amount being spent in
Lahore.

The province will follow an equalisation and a city diversification strategy. The government will make
conscious efforts to reduce the disparities in terms of development and support development of other urban
cities so that the pressure on Lahore decreases.
Figure 3.2: Average Annual Per-Capita Development Expenditure Per District
2014-18 (PKR)

Source: Finance Department, Government of Punjab

In short, Punjab’s strategy to enhance private sector development is based on addressing the policy

28
issues with the federal government, addressing the business and investment environment by reforming
the economic governance and bottleneck restricting the operation of factor markets, and provision of
necessary hardware and software, including a safe environment.



The key elements underpinning the development of the private sector are the ease and the cost of doing
business. The incentive to invest depends largely on profit; therefore, anything that impedes the invest-
ment process or increases the cost of doing business or reduces the ease will discourage entrepreneurs
from making desired investments. This also has a direct impact on employment creation. Figure 3.3
provides the correlation between growth in investment and growth in employment in Punjab. The figure
shows that apart from a few outliers, there is a clear positive relation between increased investment and
increased employment. To achieve the target of creating 6.1 million jobs, the government will have to
create an enviornment that increases investment.
Figure 3.3: Investment & Employment Relationship in Key Industries (%)

Source: Author’s calcula�ons using data from Directorate of Industries, Government of Punjab
A large number of surveys done by international institutions and the provincial government itself reveal that
private sector still faces a number of issues that raise the costs and diminish the attractiveness of invest-
ment.

A standard international comparative measure of costs associated with business is the World Bank’s Doing
Business rankings. Pakistan over the years has consistently fallen in the doing business rakings: in 2006, it
ranked at 60 out of 155 countries, slipping to 148 in 2016 and slightly recovering to 139 in 2018 out of 190
countries. These are national ratings. However, given Punjab is almost 60 percent of the economy, the
concerns about cost of doing business remain valid. In 2009, the World Bank conducted a sub-national Cost
of Doing Business Survey in Punjab that showed city-wise disparities of different indicators in Punjab and
other cities of the country. An interesting disparity identified was in the time taken and the costs of enforcing
contracts. For seven major cities in Punjab, it took an average of 1,116 days to enforce a contract at an aver-
age cost of 31.9 percent of the value of the claim. The costs included attorney fees, court fees, expert fees
and enforcement fees. The costs were the highest in Lahore, as high as 42.8 percent of the claim, with more
than half of it representing attorney fees.

Government of the Punjab is making a serious effort to improve the doing business ratings. The reform
agenda in Punjab is headed by the Chief Secretary, and is based on two key pillars: (i) continuous imple-
mentation of transparent, inclusive and effective policies, and (ii) improving regulatory practices using ICT.
Punjab has taken some key reforms in the last two years. The major ones include:

The Punjab Business Registration Portal has been completely integrated with the Securities
and Exchange Commission of Pakistan’s (SECP) portal Virtual One Stop Shop (VOSS) for

29
 registration of all types of businesses.

Dedicated helpline has been established to facilitate queries regarding business registration.

The building permit issuance system has been automated by the Lahore Development
Authority (LDA).

The LDA has set up the Punjab Land Records Authority (PLRA) counter at its one-window
facility for timely verification and issuance of ‘Fard’ (land ownership record).

The Traffic Engineering and Planning Agency (TEPA), the Water and Sanitation Agency
(WASA) and the Bank of Punjab counters have been established at the LDA.

The building by-laws of the LDA and the Metropolitan Corporation Lahore (MCL) have been
standardised, moving towards One City, One System.

The MCL has linked its system with the Geographic Information System (GIS) record of the
Punjab Land Records Authority (PLRA), so ‘Fards’ can be issued within minutes.

A significant achievement has been the elimination of the need to advertise transfer of proper-
ty due to land/plot records being digitalised.

Third-party based complaint management system has also been established to address com-
plaints regarding property registration process for immediate redressal.

Obtaining an NOC and clearances (one government principle) from the Excise & Taxation
Department online.


Employers can now pay monthly social contributions and pension payments over the counter
at the Bank of Punjab branches.

The PRA, in collaboration with 1-Link and the Finance Department, has introduced the facility
to pay General Sales Tax (GST) online through mobile and web applications.
As a result of the above critical reforms, the city performance of Lahore in the latest doing business report
has shown a better performance. The performance under the World Bank methodology is measured by
the distance towards the frontier defined at 100 – a score of 100 being the top performance. Lahore fares
better than Karachi in 5 indicators, does worse in 1 and is on a par in the remaining indicators. More
specifically,
In dealing with construction permits the score of Lahore is 58.16 versus 51.13 for Karachi.

In getting electricity connection, Lahore scores 46.86 versus 43.62 for Karachi. However,
India scores 89.15 on this indicator.

Registering property score of Lahore at 66.38 is better than both Karachi (33.47) and India
(43.55).

In resolving insolvency, Lahore is marginally better than Karachi with scores of 60.9 and
59.29, respectively.

In enforcing contracts, Karachi’s score is better at 44.36 versus the score of Lahore at 41.86.

The strategy going forward will be:

The provincial government will continue to enhance the agenda of reforms triggered to
improve the national doing business rating of the country. The Punjab government will take

30
 active steps to communicate and market these reforms to both local and international inves-
tors to demonstrate the strengths of Punjab as a business and investment hub.

The property registration and electronic verification of Fard will be gradually expanded to other
development authorities of the province.

The Punjab government will ensure publications in international investor magazines and web-
sites to tell the real change story of Punjab. It will work with international journalists to write
positively about the Punjab reform agenda.

Punjab will work with the World Bank under the Jobs and Competiveness Programme to redo
a ‘Sub-National’ Doing Business Survey to identify the disparities within key cities of Punjab
and that of other provinces. The findings will then be used to develop a more Punjab-specific
Doing Business Reforms agenda, where it can replicate good practices of other provinces,
and focus on specific weak areas.

However, it must also be realised that the Doing Business Reforms agenda only captures one segment
of the overall regulatory and compliance regime that retard private sector investment. For example, the
World Economic Forum Executive Opinion Survey collects data from 14,000 business executives across
148 countries who are asked to identify the risks of highest concern for doing business in their respective
countries. The survey covers various aspects of the business environment, such as appetite for entrepre-
neurship, the extent of the skills gap and the incidence of corruption, and acts as a complement to the
traditional sources of statistics (see Figure 3.4).
Figure 3.4: Problematic Factors for Doing Business in Pakistan, 2017 (% of Firms)

Source: Execu�ve Opinion Survey 2017, World Economic Forum

Similarly, the OICCI Perception and Investment Survey 2017 collected data form 141 members who are
leading foreign investors in Pakistan involved in 14 key sectors. The results show that timely settlement
of issues, tax refunds, labour market regulations and contract enforcements are the most problematic
areas. The labour market regulations, especially pertaining to labour inspection and EOBI and social
security payments, are a significant challenge for firms. These recent survey results suggest that gover-
nance and corruption are two major impediments that need to be addressed to increase investment.
Based on the above general findings and more specific data collected on Punjab in a report done by the
Business Environment Reform Facility (BERF), the following section highlights the critical issues and the
provincial strategy to address these.

 in the business licensing and registration procedures. The

first issue identified was the several steps involved in registering a business, which should have been
circumvented to some extent by the Punjab Business Registration Portal. The registration for sales tax is
still problematic, and requires a significant role of tax lawyers. This increases the time and cost of obtain-
ing a sales tax number. Also, the set of information required by firms to register is complicated and most

31
new firms struggle with the documentation. Various other clearances are required, such as those from the
Town Municipal Authority, Lahore Development Authority/relevant development authorities, Intellectual
Property Organisation, Environment Protection Agency, Civil Defence, Traffic Police and others. These
delay the processes and often require informal payments.
Figure 3.5: Perception of Investors About Investment & Operating Conditions
in Pakistan, 2017 (% of firms)

Source: OICCI Percep�on and Investment Survey 2017

The strategy to address this will be:

The provincial government will advocate with the SECP to create an online search function of
the already registered names. This will allow self-screening of names at the time of entering
the first set of data. Names that have already been registered will not be accepted, and the
user will be prompted to choose a different business name.

The Punjab Business Registration Portal will be further strengthened and expanded with the
idea that all new business registrations in Punjab will be through the portal and the time of
registration will be brought down to 1 day.

The Punjab government will establish the Punjab Investment Portal to support both domestic
and foreign investors, not just to start the business but to offer a continued post-investment
support.

 has also been identified as a major deterrent to both existing and
new businesses. The country and the province suffer at the hands of lack of tax policy and resulting
non-harmonised taxation regimes, focused just on extortion rather than facilitation of business or expan-
sion of tax base. The tax policy, both at the federal and provincial levels, is subject to sudden changes,
particularly customs or regulatory duties. This can seriously impact the financial feasibility of investments.
Tax administration is generally considered hostile, less trained and without any accountability. The tax
inspector has no penalty on issuing a wrong notice. Businesses face a duplication of taxes, particularly

32
value added tax, by the Federal Board of Revenue (FBR) and the Punjab Revenue Authority (PRA).

The strategy to address this will be:

The provincial government will a develop tax policy aligned with that of the federal government
and will create channels of continuous two-way communication to harmonise the taxation
structure and design, and implement policies to increase the tax base rather than to increase
the tax rates.

The Punjab government will consider the proposal to give new firms an incubation period
where they are exempted from non-revenue based taxes.

The Punjab government will consider establishing a unified taxation agency for the province
so that the information on collection, payees and tax potential is all located under one roof.
This will assist in eliminating redundant, overlapping and distortionary taxes.

The Punjab government will seek greater coordination with the FBR and synchronise the tax
policy with wider policy objectives of the government. It will make recommendations to look at
the evaluation criteria of tax inspectors and introduce the element of accountability, especially
in cases of issuing incorrect tax notices too often.

are most often quoted as extremely distortionary to doing busi-

ness in Punjab. The key mandate of the Labour Department in Punjab is to work for labour welfare, and
is not required to promote growth or employment creation. This very mandate makes them a core regula-
tory department with archaic laws and having too much discretion to take any form of penal action against
businesses. The vaguely defined laws and extortionary nature of inspectors make the department a real
issue for businesses. There is a strong need to have a detailed look at the labour regulations and make
them more precise and easy to follow and monitor.

The strategy to address this will be:

The Punjab government will consider moving towards an inspection-friendly regime for labour
for example, social security payment.

In the immediate term, the Labour Department will develop a short labour code compliance
checklist based on all applicable laws and regulations. The Labour Policy will ensure that it not
only protects the workers but also supports businesses to grow. Labour Department will
consolidate all labour laws according to topics.


    The overarching performance of the regulatory governance affects all
aspects of doing business in the province. Businesses have to deal with junior officers from a multitude of
government departments, with large amount of discretion. Businesses suffer from obtaining NOCs from
EPA, Traffic Police and Civil Defence, besides several others documents like dengue inspections and
structure safety certificates.

The strategy to address this will be:

The government will undergo a formal ‘Regulatory Guillotine’ to reduce the overall burden of
regulations on the businesses1. To implement the guillotine, the following broad steps have
been identified:

1
The Modern Regulatory Guillotine Approach is a trademark approach engineered by Jacobs and Associates and has been successfully tested
in several Organisation for Economic Co-operation and Development [OECD] countries. To date, the approach has simplified over 25,000 laws
and regulations in more than a dozen countries and has reduced the business costs by $8 billion per year, with a return on the cost of the
guillotine of more than 3,000 to 1. The upcoming SME Policy 2019 of the federal government supported by SMEA project of the USAID also
makes a strong case for this approach both at the federal and provincial levels.

33
 Set up a small reforms committee under the Minister for Finance/Planning. The com-
mittee will send a formal proposal to the cabinet and take its approval for running the
process.

All departments will be required to count and document all regulations, taxes, fees or
formalities affecting businesses.

Each regulation will then be reviewed by three bodies; (i) the public departments themselves;
(ii) the private sector; (iiI) by independent regulatory/legal experts.

The review will look at each regulation to answer the following:

Is it legal?
Is it needed?
Is it business friendly?
Are the fees/taxes necessary and reasonable
After the review, each regulation will be classified in one of the three categories; (i)
keep as it is; (ii) simplify; (iii) eliminate.

The committee will then take the final proposals to the cabinet for approval and imme-
diate implementation.

The overall process will take up to 18 months.


have been identified as critical barriers for investment and business expansion. Figure
3.6 below shows that 95 percent of the commercial disputes take more than 3 years to resolve. The cost
associated is in addition to the wastage of time. This is a key reason why firms prefer to stay small and
these statistics are a big put-off for foreign investors, as they are unaware of local conditions and thus
develop stronger apprehensions.
Figure 3.6: Average Time to Resolve a Commercial Dispute
Through the Courts

Source: OICCI Percep�on and Investment Survey 2017

34
The strategy to address this will be:

Fully implement the Case & Court Management Strategy developed under the Lahore High
Court in 2017.

The ADR centres that have been established in all district courts will be strengthened and
offered legal backing to ensure that a larger number of commercial disputes are settled prior
to being forwarded to the courts.

Complete establishment of the specialised courts, as per the nature/category of cases, in

district judiciary as ordered by the Lahore High Court.

In order to improve the case management system, the Punjab government will strengthen the
administrative control and collection of statistical information on the performance of the courts.
This will better equip the judges and court staff to address backlogs and delays.

The Punjab government will consider introducing mandatory time limits on hearing and other
procedures for cases relating commercial disputes – this has massively supported other coun-
tries, including most of Central Asia, Russian Federation, Algeria, Norway and Portugal.

 restricts relevant input of the private sector in

policymaking and key decisions made by the public sector. The P&D Board has established a Public
Private Dialogue Council. However, it has bigger business bias and fails to incorporate the voice of small
firms operating in Punjab. There is a need to expand the PPD to become inclusive.

The strategy to address this will be:

The P&D Board will design and implement an Online Feedback Mechanism (OFM) that will
include all relevant stakeholders across the province, and will deliver on pre-identified specific
business environment or investment climate areas. The stakeholders will be able to submit
specific recommendations and concerns, and data will then be collected and analysed by the
ICRU. The outcomes will be shared for final comments and implementation progress will be
shared transparently. This is a business version of the Citizen Complaints Portal, but is much
controlled to restrict feedback on specific issues. The operational and technology design has
already been provided by the Business Environment Reform Facility, and the P&D Board will
adapt and refine it for quick implementation.


The access to quality market information can be expensive and most small firms may not be able to find
the space to ever explore new markets and products as well as pricing structures. Similarly, a large
number of people may have capital but lack ideas to start a business and shy away from spending
resources on acquiring market information. To some extent, provision of information is a public good, as
a large number of new small firms can benefit from this.

The strategy to address this will be:

Industries, Commerce & Investment Department will establish an Industrial Intelligence Unit
in collaboration with the PSIC, TDAP and SMEDA. The primary purpose of the unit will be to
establish pools of relevant and reliable market information that can help businesses target
their export markets and also diversify into new businesses.


Inadequacy of appropriately trained manpower and human capital also restricts private investment
in the province. The supply of human capital in the province at all levels is in sharp contrast with the
demand. A majority of the TVET graduates in Punjab are enrolled in courses like electrical/electronics,
plumbing, masonary, textile/garments, basic computers, mechanical and Auto CAD. The demand for
these skills is limited, as most of these contribute to self-employed services. There is a need to increase

35
the industry-relevant courses in partnerships. Moreover, in case of higher education, there are serious
concerns over the quality of graduates, especially those graduating in engineering and ICT fields. More-
over, the trained and educated youth suffer from lack of employability and soft skills. The attitude of work-
ers is not apt, and is a big deterrent for firms, as it majorly impacts productivity. Moreover, the skills
market suffers from information gaps, and employers and trained workers have little or no avenues to
exchange information.

Limited support exists for entrepreneurship, enterprise development and business development services.
The start-up culture in Punjab has picked up in recent times. However, due to lack of proper guidance and
management, it is having a more distortionary impact than productive. The vide around the ICT-based
start-ups of the Silicon Valley attracting market valuations in billions of dollars is seriously distorting the
decisions of youth graduating from IT universities in Punjab. Most of them in quest of developing a tech-
nology solution without realising the commercial problem and market invest time and resources, which
they are unable to recoup or benefit from. This issue needs to be addressed before it becomes a serious
problem add more to the idle youth figure in the country. Secondly, limited opportunities are available for
individuals to become self-employed entrepreneurs. The key constraint restricting their transition are
capital and entrepreneurial skills. Thirdly, small businesses are unable to find financial freedom to inno-
vate and climb the technology and productivity ladder. Finally, business development services, such as
support with taxation, registration, product development, technology acquisition, design and marketing,
are expensive and difficult to obtain.

The strategy to address this will be:

The Higher Education Department will ensure that university programmes, especially those
relating to IT, must include courses and guidance on entrepreneurship. These courses will be
taught from a practical angle so that the students are able to better understand the risks and
the characteristics of stepping into entrepreneurship.

For creating small scale entrepreneurs, the government will initiate a programme to provide
nano-entrepreneur loan. The entrepreneur loan will be an interest-free personal loan with
following terms:

0% interest with 5-year repayment plan.

1-year grace period.

No personal guarantee.

The loan amount can be anywhere between PKR 50,000 and PKR 1.5 million.

The loan will be open to all skills graduates enrolled via TEVTA, PVTC or PSDF
programmes. The preferred trades include electricians, machine mechanics, masons,
plumbers, drivers, tailors, cleaners, chefs, carpenters, IT technicians, welders, other
construction trades and beauticians.

The applicants, however, to become eligible for applying for the loan, will have to enrol
and graduate from the ‘Entrepreneurship Bootcamp (EB)’ to be offered by the PSDF in
collaboration with PSIC. The “EB” will help these individuals train in basic merits of
running a business, develop a business and expansion plan and also to test out the
aptitude for business. The recommendation from the ‘EB’ is a must for the candidate
to apply for the loan.

The loan portfolio will be managed by the PSIC, which may outsource fund manage-
ment.

36

The business & start-up loan will be a Punjab government-backed loan available to individuals/business-
es looking to start or grow their business. The government will be the guarantor and the loan portfolio will
be managed by commercial banks. Under the State Bank 2017 SME Credit Policy, the State Bank can
assist the government in developing the working model for this risk-sharing scheme2.

The government will set up an innovation fund that will call competitive applications from existing busi-
nesses to apply for a grant to bring about a technology or a business process or a productivity innovation
that will enhance growth and employment. The fund can be segregated in terms of priority sectors, includ-
ing all three main sectors – agriculture, manufacturing and services.

PSIC will expand its scope to offer business development and cluster formation services.
These may include simple services of managing taxation to product development and design
support. The existing cluster development initiative will be expanded to other key sectors.

The government will develop access points in second-tier universities across the province to
identify, support and link youth with strong entrepreneurial ideas to business incubation facili-
ties available in the province.

The government will look for the adoption of Limited Liability Partnership Act 2017 promulgat-
ed by SECP, for partnerships registered at the provincial level. It will also advocate with SECP
for suitable regulations to attractive high powered investments through VC and crowd funding.


Most firms across the sectors complain about availability of suitably priced credit. However, for the SMEs,
credit becomes a binding constraint. The employment trends of Punjab indicate that of the total employ-
ment, 55 percent are employed in non-agriculture-based activities, a majority of which are part of the
small and informal sectors. These translate into over 14.5 million people working in small and cottage
enterprises. With a large part of the labour force employed in small units, the SME and informal sector is
a valuable source of income, and a major focus area for the province to increase employment. More
importantly, the data on Punjab shows that a 1% increase in SME credit increases SME employment by
around 1%.

However, the SMEs’ access to affordable finance is plagued by certain issues. The key issues include a
major reluctance by banks to forward small loans due to higher risk. The banks usually ask for secures,
high-value assets as collateral, given these are hardly available with the SMEs, the loan applications are
usually rejected. Secondly, the cost of processing a small loan or a large loan by banks is the same.
Therefore, there is a natural tendency to process a smaller number of larger loans. This is more profitable
for the banks. The current State Bank regulations only recommend general quotas on credit for SMEs
based on a generous definition, where a medium firm is any firm with a turnover of less than PKR 800
million. Therefore, the banks get away with servicing loans to clients in the higher spectrum, completely
ignoring the small firms. Moreover, the process and procedures for firms to even open accounts are cum-
bersome. In this case, there is a first order problem – since firms are unable to bank, the banks have no
information about the business, and hence have little or no information to process the loan application.
Small businesses usually have informal records of accounts and business, which makes it difficult for
banks to accept most of their documents as they are not formal. The State Bank has approved a new
policy to support financing to SMEs. However, the implementation of the policy is still in early days.

The strategy to address this will be:

The provincial government will advocate with the federal government to keep pushing the
State Bank to attain the target of increasing SME lending from PKR 400 billion to PKR 1.8
trillion over the five years.

2
In Malaysia Credit Guarantee Corporation provided 445,217 guarantees against loans totalling USD 14.8 billion.

37
 The provincial government will advocate with the State Bank to ensure greater utilisation of
existing credit guarantee schemes.

The Punjab government will park its own resources through the BOP and other banks to
initiate provincial credit guarantee scheme.

The Punjab government will obtain the viability of developing a fund in order to reduce the
mark-up cost for targeted SMEs.

The Punjab government will advocate with the State Bank for a speedy operationalisation of
the movable asset registry, enabling movable assets to be used as collateral for working capi-
tal, and also advocate expanding the scheme to the manufacturing sector in addition to
agriculture sector.

The Punjab government, through PSIC, will provide support to small businesses to develop
credible documents for account opening and other papers and evidences required by banks
for assessing loans.


As discussed above, the hardware issues are equally important for providing an environment where
investors feel confident enough to invest. To address this:
The government will extensively use spatial planning in its development and infrastructure
planning. The Punjab government has completed its work in mapping out its assets and
infrastructure spatially. It is also in the process of developing its spatial strategy to map out
projected changes over the next 30 years. This will be the central tool for developing and
taking all infrastructure decisions in the future.

The LDA is working on zoning of industrial land, and the government, based on areas of
high concentration of industry, will declare such areas as industrial corridors and ensure
that relevant support in terms of power, gas, road network, environment facility, etc., are
provided.

’
The Punjab Food Authority is often quoted as a good example that has ensured upgradation in the quality
of food products available locally. The produce of Punjab suffers from lack of credibility by international
buyers. The overseas buyers are increasingly becoming more conscious about the quality and compli-
ances in terms of product specification, environment, labour treatment, working conditions, product
performance and even fair pricing. For example, in the leather sector, Punjab’s leather sector now has to
get certification from the ‘Leather Working Group’. This is creating a problem for a large number of manu-
facturers of leather products to attain certification. In garments, there is a green apparel initiative and
increasingly more buyers are subscribing to this standard. The provincial garment manufacturers will
soon find it difficult to export if they fail to have relevant certifications.

The strategy to address this will be:

The Punjab government will work with the private sector to develop a set of regulations to
initiate a phased implementation to start improving quality and standards compliance in the
local markets. This will help in building capacity of the firms to meet international standards. In
the interim the government will initiate cost sharing mechanism to support firms intending to
get international certifications for export markets.


The government intends to make Punjab a hub of investment and business. Under its Developmet Strate-
gy, the government will unleash a massive reforms agenda to improve the basics of private sector devel-

38
opment and enhance investment opportunities in the province. These will have to extensively publicised
and communicated to international investors and local investors. This is where the PBIT will have to step
in.
The strategy to address this will be:

The PBIT will establish and operationalise the Punjab Investor Platform as one-window pre-
and post-investor support.

The PBIT will develop a network of domestic and international PR/media in which every initia-
tive in Punjab will be extensively publicised and also explained in local languages of the target-
ed markets.

The PBIT will develop a common logo to brand Punjab as a hub of business and investment,
and this will be used in all communications across the government.

The PBIT will develop impactful documentaries, sectoral opportunities, Public Private Partner-
ship (PPP) opportunities and general information about positive business environment in
Punjab. These will be displayed at all government events, locally and internationally.

The PBIT will develop an interactive website to communicate with investors and provide imme-
diate replies to key questions.

The PBIT will continue to host national and international investor forums. However, it will make
these more result-oriented.

The PBIT will develop linkages with alumni of local universities based in foreign markets, and
also connect more strongly with the Pakistani Diaspora to invest in Punjab.


The government is a large buyer of goods and services. However, the current procurement rules of the
PPRA discourage SMEs to become suppliers to the government. Public procurement through SMEs can
provide significant stimulus to small businesses and can help them grow, resulting in increased employ-
ment.

The government will review PPRA Rules to make it more balanced for SMEs to successfully
compete and obtain work from the government. Moreover, the government will also lobby with
bank, especially the BOP, so that the government work order may be used as collateral to
advance credit to small firms.



Successful PPPs play an important role in economies to deliver development objectives by leveraging
private capital and building private sector capabilities to deliver mega projects by lowering their risk.
Punjab developed its PPP Act almost a decade ago and has been managing its PPP transactions through
a well-defined process under the PPP Cell. The set of existing operation projects include:
DHQ Hospital Pakpattan contracted out under a management contract.
Construction and management of 32 vehicle inspection centres (BOT basis).
Flyover railway crossing at Kahna Kachha (BOT basis).
Lahore Ring Road Southern Loop (BOT).
A few other projects on BOT basis have been awarded, but are yet to be initiated. The PPP activity in
Punjab has been on-going for a long period. However, the results to date are not optimal. The PPP financ-
ing for development is negligible, whereas neighbouring India has had a substantial increase in invest-
ments under the PPP projects. Around 50 percent of India’s 12th plan was funded by the PPPs. Some
recent projects initiated under the PPP include airports, medical colleges, TVET institutions, sea port,
power transmission lines and systems, metros and road projects.

39
Punjab will have to work on its PPPs and enhance both the size and the variety of projects. There is a
need to diversify away from standard road projects and move into more innovative projects, especially
those targeted towards SDGs. To this, Punjab will have to be more aggressive and build PPP toolkits that
lay down the processes in a transparent manner. The PPP Cell has been working on the PPP Policy and
the policy must address the issues and slow up-take of PPPs. The strategy for enhancing PPPs include:

Complete, approve and initiate implementation of the PPP Policy in the province. The govern-
ment’s target is to increase PPPs to 10 percent of the ADP by 2023.

The PPP Cell will operationalise the viability gap fund and develop complete SOPs and other
procedures and access protocols.

The PPP Cell will develop guidance papers and PPP toolkit to support project preparation and
decision-making process.

The PPP Cell will identify sectors for investment in Punjab. Based on Punjab’s needs, Table
3.1 below provides a list of sectors in which investment by the private sector has to be made,
and highlights the sectors that are most suited for the PPPs.

The Punjab government will increase the size of PPP investments to reach 10 percent of the
ADP by terminal year 2023.

Table 3.1: Key Investment Sectors in Punjab

Key Investment Sectors in Punjab ELECTRICITY

AGRICULTURE  Transmission*
 Genera�on*
 Milk Produc�on and Marke�ng o Renewable Energy (Small Hydel, Solar, Biomass, Bagasse)
 Fruits and Vegetables Produc�on o LNG based plants
 Distribu�on Networks (both Provincial and Local)
 Pulses Produc�on
TRANSPORT AND COMMUNICATIONS
 Drip Irriga�on*
4G / 5G Telecommunica�ons
 Storage Facili�es*  Public Transport Systems* (Mass Transit)
 Gene�cally Modified Co�on and Improved Seed Varie�es REAL ESTATE
 Marke�ng Centers*  Housing Colonies*
 Commercial Construc�on (Offices, Shopping Plazas)
 Service Centers / Rental Facili�es* of Agricultural Machinery
BANKING AND INSURANCE
MINERALS  Islamic Banking
 Health Insurance*
 Iron
 Crop Insurance*
 Copper  Rural Banking
 Microfinance*
 Limestone
 SME finance*
MANUFACTURING PERSONAL AND COMMUNITY SERVICES
 Agro-base Industries  IT So�ware
 Security Services*
 Value Added Tex�les  Business Services
 Cement  Private College Educa�on
 Voca�onal and Technical Training*
 Chemicals  Specialised Private Health Facili�es
 Leather Products  Entertainment Sports
 Media
 Industrial Parks*
INFRASTRUCTURE
*Sectors with poten�al for Public-Private Partnerships (PPP)  Secondary and Ter�ary Roads*
*Sectors with poten�al for Public-Private Partnerships (PPP)


The exports from Punjab consist of approximately 51 percent of the national exports. Punjab is house to
dynamic clusters in which Pakistan has significant international presence, such as surgical, sporting
goods, rice, garments, leather and now rapid growth in export of ICT services. Moreover, the export
growth has strong multiplier impact on SME growth, especially in terms of employment. A 1 percent
increase in export quantum increases SME employment by more than 2 percent in Punjab in the long run.

40
With the exchange rate adjusted, the exporting sectors now feel more competitive and the government
should support these key sectors to improve the price points at which they supply in the global market.

Figure 3.7 maps Pakistan’s exports in terms of volume, growth in Pakistan’s exports, and world demand
for the products. Surgical goods, knitted garments and bed/table linen are the three most attractive
sectors in the segment, with Bovine meat suggesting growth opportunities.
Figure 3.7: Competitive Sector for Pakistan*, (2013-17) (%)

*The size of the bubble represents the export volume: the five-year average growth in global demand for the product is
represented on the ver�cal axis and the five-year average growth in Pakistan’s share of global exports in represented on
the horizontal axis.
Source: OICCI Percep�on and Investment Survey 2017
Figure 3.8 suggests that woven garments (all categories) show opportunity, as it is a sector that is grow-
ing significantly and is sufficiently diversified. This growth is likely to spur more investments in the sector
to further diversify the product base by adding value and, hence, can offer a significant amount of future
employment opportunities. Sports goods manufacturing is also a sector where Pakistan has developed a
niche, and it has seen positive growth through positive branding, becoming the official supplier of the
Football World Cup (FIFA World Cup 2018).
Figure 3.8: Pakistan’s Growing Sectors with Constant World Demand, 2013-17 (%)

Source: OICCI Percep�on and Investment Survey 2017

41
Figure 3.9 shows sectors where Pakistan still has large share and is growing, but internationally these
sectors are declining. Except rice, most of these sectors belong to low value added exports such as
cotton yarn, wheat flour, base leather, sugar, woven fabric and ethyl alcohol. Punjab will have to diversify
away from these low value added products if it has to obtain higher value growth from the export markets.
Figure 3.9: Pakistan’s Non-Competitive Exports, 2013-17 (%)

Source: UN Comtrade
The above statistics suggest that a large number of exports from Pakistan and Punjab lie in non-competi-
tive segments, and are products that are losing share in world markets. If Punjab continues to ignore
these trends, the export growth will continue to become difficult. Export decisions are made by private
individuals. However, it is the responsibility of the government to ensure a competitive environment in
which firms can grow. In order to address this:

The provincial government will engage in a continuous dialogue with the federal government
to ensure consistency of trade policy and management of exchange rate to support the export-
ing sectors. Industries and Agriculture Departments, with the help of the PBIT, will develop
export enhancement proposals on a regular basis to share with the federal government.

For small manufacturing sectors, the PSIC will enhance the cluster development initiatives
and support sectors on cost share basis in activities such as design studios, technology
reengineering, product development services and networking to work for joint orders.

The Agriculture Department will work on improving farm practices, both in crop sector and
horticulture, to ensure greater compliance and higher exports.

The government will fully operationalise the Quaid-e-Azam Apparel Park and colonise it with
modern textile and garments value chains to enhance exports and develop products that
obtain higher price points in global value chains. The government will also advocate with the
Ministry of Commerce to allow import of those manmade fibres and intelligent materials that
are not being manufactured in Pakistan but are required for high value-added garments.

The PITB will revisit the Punjab IT Policy to create a bigger space for private sector-led growth
and develop a roadmap for IT exports from the province.

42
 

The manufacturing and industrial sector has substantial links with several key sectors across the econo-
my. Industrial activity stimulates economic activity and acts as a propellant for the economy. As industrial
activity grows, it requires more inputs from mining, agriculture, infrastructure, utilities and downstream
suppliers. It creates jobs and enhances investment opportunities in other sectors that use its outputs,
such as transportation, construction and retail. It also spurs growth in services, such as finance, e-com-
merce and insurance. In short, industrial sector growth results in significant multipliers for the economy.
For example, 1 percent increase in manufacturing value added increases the wholesale and retail trade
value added by almost 1 percent in Punjab. The Government of Punjab, therefore, sees industrialisation
as a key pillar of its Growth Strategy and the main instrument that will generate a large number of produc-
tive jobs for its youth and earn a substantial amount of foreign exchange through value added exports.



The industrial sector holds a significant position in Punjab’s economy, and an even greater potential. The
industrial sector of Punjab in 2017-18 contributed 17.5 percent to the total value of goods and services
produced in the economy. It employed almost 9.3 million people, of which 4.58 million were engaged in
the SME sector of Punjab. Punjab’s share in national exports was close to 51 percent, with industrial
sector being the major contributor. Lahore (19 percent), Multan (11 percent), Faisalabad (10.5 percent)
and Sialkot (8 percent) are the major exporting hubs in Punjab, and also house the majority of SMEs in
the country. The industrial sector in Punjab has experienced variable performance over the last 10 years.
2008-09 saw weak performance due to high prevalence of extremism and power shortage. The perfor-
mance during 2009-11 improved majorly due to growth in the automobile and textile sectors. Perfor-
mance during 2011-15 dipped again due to severe energy shortage. However, the provincial and national
governments made significant investments in the energy sector to improve the power outages, especially
in key industrial areas. The improved availability of power and an uptake in garment exports provided
stimulus to industrial growth in 2017-18.

Owing to the historic performance and events, the industrial structure of Punjab has turned out to be
different than that at the national level. Punjab’s share of large scale manufacturing (8.9 percent) in the
GDP is less than the 10.8 percent share of the entire country. Large scale manufacturing is only 51
percent of the industrial value added in Punjab, whereas it is 80 percent at the national level. However,
the share of SMEs in the GDP of Punjab is 3.4 percent as compared to 1.9 percent share in the national
GDP.

Figure 3.10: Performance of the Industrial Sector in the Punjab, 2009-18 (%)

Source: Punjab Growth Strategy Team

43
 Figure 3.11: Spatial Mapping of Large Scale Industry and SMEs in
Punjab (%)

Source: Urban Unit, Government of Punjab

Moreover, large scale manufacturing in Punjab remains limited to only few central districts of the prov-
ince. The SME sector is better diversified, but the western districts such as, Mianwali, Khushab, Bhakkar,
DG Khan and Rajanpur are relatively deprived. Consequently, there are more economic opportunities in
Faisalabad, Lahore and Kasur, which together employ 43% of Punjab’s industrial labour. On the other
end of the spectrum, Rajanpur, Jhelum, Lodhran, Narowal, Bhakkar and Layyah each continue to provide
less than 0.5 percent of industrial employment in Punjab3.


Industrialisation is a complex phenomenon and the growth of this sector depends on a number of factors.
Stable macro economy, well-functioning factor markets, enabling business environment, friendly invest-
ment climate, policy consistency, productive human capital and supportive infrastructure are some of the
key determinants of industrial success. Some of the key macroeconomic policy levers lie with the federal
government, and there is not much the provincial government in Punjab can do apart from playing a
strong advocacy role. The overall growth model for Punjab estimates some key elasticities to identify
levels of impact on its industrial progress. The main determinants are listed below:

A one percent increase in capital stock (private investment) increases large-scale value added
by 1.1 percent in Punjab.

A one percent increase in the average years of schooling of the employed increases
large-scale manufacturing value added by almost 3 percent in Punjab.

A one percent increase in agriculture value added increases the large-scale manufacturing
value added by almost one percent in Punjab.

Punjab Economic Report, 2017

3

44
 A one percent increase in the incidence of power load shedding reduces large-scale manufac-
turing value added by 1.2 percent in Punjab.

A one percent increase in the energy price index reduces the large-scale manufacturing value
added by 0.75 percent in Punjab.

A one percent improvement in the hard infrastructure increases the large scale manufacturing
value added by 0.3 percent in Punjab.

A one percent increase in nominal interest rate reduces manufacturing sector private invest-
ment by almost 0.2 percent in Punjab.

A one percent increase in public investment increases manufacturing sector private invest-
ment by almost 0.25 percent in Punjab.

A one percent increase in credit to SMEs increases SME employment by almost one percent
in Punjab.

A one percent increase in quantum of export increases SME employment by more than 2
percent in Punjab.

A one percent increase in growth of cotton production increases export of goods and services
by almost one percent in Punjab over the long run.

The evidence above clearly shows the importance of strong human capital for industrial development in
Punjab. The human capital not only includes quantity and quality of general education but also technical
and vocational skills and a better educated and healthier workforce. The strategy places a strong empha-
sis on developing the human capital in Punjab. The technical and vocational skills area comes under the
overall spectrum of the Industries, Commerce and Investment Department.

The skills space in Punjab on the supply side consists of more than 350 technical institutes run by TEVTA,
institutes under the PVTC and private sector training institutes. On the assessment and certification side,
Punjab has well-established Trade Testing Board (TTB) and the Punjab Board of Technical Education
(PBTE). To manage skills delivery, engage in innovative partnerships and address public sector TVET
failings, the Punjab government has established the Punjab Skills Development Fund (PSDF). Under the
previous Growth Strategy, a target of producing 2 million skilled graduates over four years was set. The
target was met by the Punjab government. However, certain issues were identified during the implemen-
tation of this target. The main issue highlighted was lack of specificity on trades that were to be covered.

Moreover, TEVTA and the PVTC, in order to produce a larger number of trained individuals, relied on
offering courses of shorter duration. The trainings offered by departments also included short courses
with some being just a week-long.

However, the structural issues in the provision of the skills sector still remain. The supply of skills is
predominantly skewed in favour of skills more suited for self-employment rather than for employment in
growing sectors. For example, Punjab produces a large number of electricians, welders, masons, dress
makers, beauticians and general machinists. These skills are more relevant for self-employment rather
than industrial or sectoral employment. However, ironically, the training content pays no attention to
teaching entrepreneurship.

A second key determinant impacting the industrial and manufacturing performance is the availability and
the price of energy. Uncertainty in the availability of electricity and gas, coupled with energy tariffs, strong-

45
ly impact the value added by the manufacturing sector. The NEPRA estimates that cumulative load shed-
ding last year in Punjab amounted to . To enhance industrial activity, there is
a strong need to manage the access, availability and the cost of energy.


The third key determinant is the availability of suitable and reasonably priced industrial infrastructure,
especially industrial land. Punjab historically has invested in industrial estates, and two new institutions
PIEDMC and FIEDMC were set up as a result of the Punjab Industrial Policy 2003. The PSIC has also
made significant investments in industrial estates for small and cottage industries. Sunder Industrial
Estate under the PIEDMC has been a good model of success, and similarly, the Multan Industrial Estate
II produced good dividends that created resources for investing in more industrial estates. However,
generally, there is a colonisation issue in most government industrial estates, an issue that needs to be
addressed. Secondly, a number of small and cottage industries in Punjab, after rapid urban expansion,
have been engulfed in dense residential areas. This is becoming a serious problem for cities in and
around the golden triangle and Lahore. Moreover, no zoning laws or rules are in place. There is a need
to address these growing problems as it is not only hindering growth of industries but also impacting
liveability of residents and exposing them to environmental and health hazards.

The evidence on Punjab suggests that the manufacturing performance in the province is strongly correlat-
ed with the agriculture sector performance. The output of the agriculture is used by industrial sector for
value addition. As mentioned already, the growth of cotton has a strong multiplier effect on exports from
Punjab. However, the agriculture sector performance has suffered in Punjab due to input issues and
obsolete agricultural practices. The chapter on agriculture sector provides a more detailed analysis of
agricultural and related issues and the strategy of the government going forward.


As highlighted in the chapter on Private Sector Development, credit to SMEs is seen as a major constraint
for small and medium enterprises. However, as stated previously, it acts as a strong employment multipli-
er.

The most fundamental elements impacting the performance of the manufacturing sector are the cost and
burden of regulations. The two elements need to be reduced in order to create an environment in which
new businesses feel comfortable to invest and grow. The regulatory burden in Punjab and Pakistan has
been high, and several international studies have reported key problematic areas.

The Industries, Commerce and Investment Department recently developed the Punjab Industrial Policy
2018, which has been approved by the provincial cabinet. The policy has made some overarching targets
for the sector over the next five years. These overarching targets have been further segregated over the
five-year period and are presented below:

The Industrial Policy and Industrial Strategy seeks to:

Attain a terminal year growth of 10 percent for the industrial sector in Punjab. The Growth
Strategy 2023 predicts a more conservative trajectory, which is provided below:

2018-19 2019-20 2020-21 2021-22 2022-23

2% 6.5% 8.4% 8.5% 9.7%

46
  Increase the share of industrial value added in the GPP to 18.2 percent. The trajectory is
provided below:

2018 -19 2019 -20 2020 -21 2021 -22 2022 -23
17.6% 17.7% 18.0% 18.2% 18.2%

 Creation of 2.89 million jobs over the five year period in the industrial sector. The trajectory is
provided below:

2018-19 2019-20 2020-21 2021-22 2022-23

120,000 510,000 660,000 700,000 900,000

Train a total of 2.5 million skilled graduates over the five year period with an increased number
of industry-relevant and industry-partnered training courses. The trajectory is provided below:

2018-19 2019-20 2020-21 2021-22 2022-23

450,000 450,000 500,000 550,000 550,000

Ensure close to 100 percent colonisation of the existing industrial estates by 2023.

 Ensure an average 10 percent annual increase in exports over the five-year period.



As mentioned above, the government has recently approved the Punjab Industrial Policy 2018. The policy
is based on the fundamental approach of creating an enabling environment conducive for industrialisa-
tion. The policy does not take the subsidy provision or disproportioned incentive route, and instead tries
to address the key provincial policy levers to deepen industrial activity, encourage diversification by
attracting new industry and enhance the value-added mix of exporting sectors. The policy addresses the
factor markets issues for market failures and provides support to address information failures that
constrain industrial performance. The key directions taken by the policy include:

 Build on the existing

special economic zones and industrial zones, and leveraging investments through the CPEC.
These zones will offer attractive incentives, be optimally located along the industrial corridors
in line with the provincial spatial strategy, and feature dedicated infrastructure and a busi-
ness-friendly regulatory regime. To enable this, the system of governance for zones will be
revamped.

Increase productivity of the man-

ufacturing sector in Pakistan by instituting reforms to the vocational training system in order to
allow it to better serve the industry needs in terms of number and skills of graduates, and by
facilitating firms in increasing their productivity through greater adoption of advanced manage-
ment and operational practices.

      Increase access to finance for businesses
throughout their lifecycle, particularly focusing on supporting the SMEs by offering credit guar-
antees, establishing a credit bureau and creating an ‘investment matching’ programme for
Venture Capital and Private Equity firms seeking to invest in SMEs.

 Improve the business environment in Punjab

through provision of one-window service and facilitation centres, and by ensuring private
sector consultation before introduction of any new regulation. A “grace period” will be given to
allow the private sector to adapt to regulatory changes.

47
  Facilitate growth of industrial clusters that benefit from
economies of co-location e.g. shared infrastructure, skilled workforce, technology transfer,
some of which can attract and support globally leading large-scale manufacturers as anchor
investors. The government will improve the investor attraction process and work closely with
the industrial sector to unlock productivity gains through specific initiatives.

’ Punjab has a rich mines and mineral

sector. The sector has great potential to develop as an industry on its own and also to contrib-
ute significantly to other value added industries. The government will improve the function of
the sector and increase value added. This will be done by better cataloguing of our natural
assets, developing governance systems of partnerships and addressing the issues in pricing
policies. The reforms will focus on brining transparency and ease of process to ensure a stron-
ger interest by the private sector.

Punjab is house to
over two million SMEs and some very dynamic exporting clusters such as surgical, garments,
sporting goods, footwear, auto parts, furniture, fans, agricultural implements, pumps,
processed food and frozen meat. The government will ensure an increased contribution from
these sectors to exports and value added by providing activity-based support, such as busi-
ness development services, product development, market information, credit and marketing
and networking locally as well as internationally.

The defining of and compliance with

quality standards for industrial products has been weak in Punjab. The lack of local standards
makes it difficult and costly for producers to meet compliance requirements set by international
buyers and countries. The example of the garments sector shows the large investment now
being required to move towards environmental compliance. The government will support the
regulatory regime to set local standards and support by cost sharing measures for small firms
striving to meet international standards and trying to attain certification.

To implement the policy, the industrialisation strategy developed under the development framework
includes the following pillars:
The government will:



Speed up sale of vacant PIEDMC/FIEDMC industrial estate plots and increase colonisation.

Ensure provision of quality infrastructure in industrial estates, including power, waste disposal,
effluent treatment, vocational training and one-window facilitation.

Colonisation of PSIC Industrial Estates, exit from non-viable estates and development of a land
lease policy to reduce access cost for SMEs.

Operationalise one-stop shops at all industrial estates of Punjab.



Launch credit guarantee scheme and mark-up support scheme for SMEs with growth potential.

Support to SMEs by the PSIC in registering them and helping in preparing documents required
for loan processing. The PSIC will collaborate with banks to lobby for SME credit by providing
information on registered SMEs.

Initiate enterprise development and entrepreneurship fund.

48
 Launch credit guarantee scheme and mark-up support scheme for SMEs with growth potential.

Support to SMEs by the PSIC in registering them and helping in preparing documents required
for loan processing. The PSIC will collaborate with banks to lobby for SME credit by providing
information on registered SMEs.

Initiate enterprise development and entrepreneurship fund.



Improve the use of ICT for job market information and connecting trainees with potential
employers. Enhance the focus on skills pathway rather than just training.

Expand the outreach of the PSDF and moving it towards a self-sustaining organisation acting
as the market brand for provision of quality and relevant employable skilled graduates.

Work towards consolidation of training institutes to create excellence centres, with larger num-
bers trained at one point.

Ensure a stronger inclusion of soft skills training and personality development in all TVET
courses.

Enhance linkages with Diaspora job recruiters in the UAE and the Middle East to enhance the
export of human capital and develop suitable workforce for these markets. PSDF has conduct-
ed a detailed study and they will be encouraged to launch a programme on this aspect.






Provide cluster development support in partnerships to key industrial clusters of Punjab;

(i) garment, (ii) footwear, (iii) surgical, (iv) sports goods, (v) cutlery, (vi) furniture, (vii) auto parts,
(viii) value added livestock, (ix) light engineering.

Creation of design institutes and R&D centres for technology and product development on clus-
ter basis, especially focused on increasing exports.



PSIC will provide/coordinate/facilitate key services such as taxation, compliance, certification,

testing, marketing and branding support.



Reduce the regulatory burden in the province with regard to doing business.

Develop a consistent long-term investment policy and market Punjab for investment4.

Provide quality pre- and post-investment facilities

4
SMEA Project of USAID has developed a draft of the Investment Policy for Punjab.

49



This will be done by setting up an inclusive and broad-based decision-making process
and strengthening capabilities of all institutions involved. A clear and fair mining legis-
lation will be developed to facilitate private sector-led growth, and rules will be drafted
regarding coordinated land use.

Development of a coal pricing policy framework.


Identification and categorisation of mineral assets and developing function markets for
private sector to invest.

Developing an equitable and fair revenue generation regime.

Strategic management of mineral resource development and value addition.

Supporting small and medium scale industries in the sector by creating fair and
enabling environment.

Developing requisite hard and soft governance infrastructure.

Investing more in developing quality human resource for the sector.

Initiating online application process for tendering to attract foreign investment.


Developing health and safety standards to protect and safeguard workers and the
environment.

Moving the sector towards mining for sustainable development.

Strengthening exploration and recourse estimation on mineral resources of Punjab.







An industrial site selection tool will be developed, which will enable investors to select poten-
tial site locations through evidence-based policy.

The site selection tool will rank site locations on the basis of 40 indicators: various
industry-related indicators (such as physical infrastructure, technical and socioeco-
nomic aspects, markets, connectivity, raw material, institutions, geographical and
environmental aspect, etc.) to assess site suitability.

The tool will also provide a detailed assessment of corridors and potential sites within
key economic regions across Punjab. It will also help to identify optimal locations for
industrial development where necessary infrastructure is already present, and
involves least cost for external infrastructure development.

50
 Three industrial corridors will be formally
demarcated by 2023 by providing a 2km buffer
along the already existing corridors. The
government will further enhance the competi-
tiveness of these industries by providing an
enabling environment, like basic infrastructure,
one-window operations, gas and electricity
permits, etc. The corridors identified for initial
intervention include:

The Lahore-to-Shiekhupura corridor – a

24km corridor starting from Kot Abdul
Malik to Sheikhupura bypass. As many as
1,062 industries are situated within this
corridor.

The Manga-Raiwind Industrial Corridor,

which hosts about 70 industries along the
14km corridor length.

Sialkot-Daska Industrial Corridor, an 18km

road that hosts 560 industries.
Source: Urban Unit, Government of Punjab
Industrial development in these corridors is to be supported through proper master planning.
Apart from these three high-priority corridors, more than 15 other corridors have been identified
in the Punjab Spatial Strategy to be developed until 2047. The respective and local authorities
should set a vision for each corridor with a spatial layout for focused development.



To implement the strategic pillars, the provincial industries and mines departments have identified the
following set of actions and activities. These will continue to be developed further as the government
implements and monitors the progress on the Growth Strategy.



Develop and approve the MSME Policy of Punjab to address the focused concerns of small
businesses, especially relating to the ease of doing business, credit, skills and business devel-
opment services.

Restructure and strengthen PSIC to become the lead provincial agency supporting the SMEs
located in the province.

Initiate a loan mark-up scheme for critical value position SME industries to ensure affordable
access to finance.

Work under the State Bank umbrella to fund a provincial credit guarantee scheme.

Establish an enterprise development fund and encourage entrepreneurship at all levels; the
fund will share costs for technology upgradation and innovation.

Establishment and colonisation of small industrial estates in Gujranwala and Wazirabad.

51


Implement the plan to reduce the interface between public sector inspectors and industries.

All fees and taxes to be paid via issuance of challans and, over time, integrated as one
online payment. The inspectors will not visit the industry premises for collection of
fees.

The inspections for weight or measure of products will be done at the retail outlets,
eliminating factory visits.

Boiler and civil defence inspections will be transferred to a third party. The government
will only enforce compliance.

PESSI declarations will be on self-assessment with 5 percent random audit.

Labour inspections will be against a well-defined simple code book, while the discre-
tionary powers of labour inspectors to place a fine or lock the premises will be
removed. These powers will be with directors who, in case of a compliant, will examine
the case. Over the medium term, all laws containing labour welfare will be assessed
and a new single labour law will be approved.

Payment of all local government fees will be made online over time.


100 percent colonisation and speedy development of industrial estates in Vehari, Bhalwal,
Bahawalpur and Rahim Yar Khan will be done.

Speedy colonisation of the Quaid-e-Azam Apparel Park will be done in order to attract foreign
investment.

Establishment and initiating colonisation of Allama Iqbal Industrial City SEZ in Faisalabad will be
done.

Work will be done on the feasibility of the Land Lease Policy for industrial estates.

Land Use Policy for industrial estates will be developed and approved.



The Punjab Investment Policy will be approved and implemented


Operationalisation of one-window shops at all industrial estates.

Launch of the ‘Invest Punjab’ portal.

Establishment of the Punjab Business Council.

Development of a system to ensure compliance under an inspection-free or minimum inspection

regime.

Move towards self-regulation with random audits.

52





The strategic interventions presented above are designed to reverse the trend of deindustrialisation in
Punjab and the country as a whole. The government will increase the efforts to boost the existing industri-
al activity, but also plans to create an enabling environment in Punjab to provide opportunities for local
investors and foreign collaborators to leapfrog into the 4th and 5th generation industrial activity. The Singa-
pore model provides enough lessons that really build the room in Punjab to provide available stimulus to
trigger investment in high-growth and catalytic sectors. Punjab’s industry today mostly consists of low
cost labour manufacturing and our declining exports and increasing imports show that we are continuous-
ly losing out from other emerging economies and rapidly changing technologies. The key factors that
threaten Punjab’s global positioning include:

Global value chains (GVCs) and spatial locations of production are continuing to shift, especially
as China’s industry is relocating to Pakistan. This, under CPEC, opens up new opportunities for
Punjab. However, policies and positioning are required to benefit from this and become part of
global value chains.

The measure of labour quality is now in terms of higher productivity per dollar and not the cost.
Unfortunately, Punjab has not been able to upgrade its human capital and the technical skill and
productivity. This alone is the biggest detractor restricting Punjab to enter the next generation
industrial activity. The productivity levels and skills of Punjabi workers are not in line with to the
demands of portions of GVCs that are looking to relocate.

The rapidly changing technologies and innovative changes across the region and globe are both
disrupting and fostering the technology based production model. The rapidly changing technolo-
gies make it difficult and costly to keep pace, especially when the technology development is not
happening locally. Punjab is nowhere on the global map of patent registrations. One recent exam-
ple from Punjab sports goods industry exists of a patent registered in the US for football hybrid
technology. This has reshaped the growth of the football industry once again, which was losing
market share to China.

Moreover, the GVC approach takes specialisation to the next level. However, this puts an extreme pres-
sure on the performance and the capability of the SME sector. As stated previously, the Punjab SME
sector has the quantum; however, they suffer from large inefficiencies, low productivity and redundant
technology. The futuristic strategy for Punjab to lift its industrial structure to the next generation will
require dedicated efforts. The government intends to adopt the following strategic measures:

The government will support the SMEs extraordinarily to help them become the real fuel of growth
and support the larger value chains to rely on Pakistani SMEs. The government under its MSME
policy will detail out the steps required for the purpose. The main focus will be on helping the
SMEs with adoption and diffusion of technology, and support in creating production networks
between themselves and also to link up in the value chains of MNCs and large firms.

Human capital is the key to our Growth Strategy and the government realises that this is the factor
that will make the difference. The overall education system and the TVET and skills system need
an overhaul to move from low cost workers to producing productive workers with strong employ-
ability skills. The Skills chapter details out the skills strategy over the next 5 years.

More specifically, for attracting high talent industry, the government will explore the opportunities
for creating technology parks and ensure a strong linkage with local universities and local indus-
try. The model will be a PPP-based intervention driven by the industry itself.

53
 
The agriculture sector features large in Punjab’s economy, in 2017-18 it accounted for about 20 percent
of the GPP and provided jobs to 40 percent of the labour force. Moreover, the bulk of province’s marginal-
ised segments living in the rural areas depend to a large extent on agriculture and livestock for their
incomes and sustenance. The efficient development of the agriculture sector is therefore of prime impor-
tance and takes a central part in the government’s Growth Strategy for increasing incomes, increasing
value-added exports, creating employment and reducing poverty.


The performance of the agriculture sector has been lacklustre in the province. The coefficient of variation
in the agriculture sector is close to 90 percent, suggesting a variable pattern of growth in the sector. In
terms of its contribution to Punjab’s GPP, the share of agriculture has dropped from 25 percent in 2008-09
to 20 percent in 2017-18. This decline in share has mostly been absorbed by the services sector. Howev-
er, the sector’s share in agriculture has not dropped anywhere close to this number, suggesting that per
capita incomes have declined in the sector over the years.
Figure 3.12: Performance of the Agriculture Sector, 2009-18 (%)

6.0
5.6

5.0

4.0
4.0
3.3

3.0
2.4 2.5
2.1 2.2
2.0

1.0
0.4

0.0

-0.4 -0.4
-1.0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Source: Punjab Growth Strategy Team

As compared to other sectors, agriculture’s contribution to the economy is more equitable, as the produc-
tion of key crops is spread across several districts (See Figure 3.13). In comparison, industry and
services are more concentrated in bigger cities only. Therefore, government investments to upgrade the
performance of the agriculture sector not only has favourable growth consequences, it also contributes
significantly to the government’s regional equalisation strategy, as it improves the incomes of the
deprived regions.

Moreover, the regions in south have high yields of cotton that supports a large number of female work-
force. Most of these females work in the informal sector and depend for their livelihood on cotton farming
and home livestock. Therefore, improving productivity and growth in the sector is criticle for social and
economic empowerment of women. This makes the strategy of the government strongly pitched in favour
of gender empowerment.

54
 Figure 3.13: Heat Maps Showing Production of Key Crops across Punjab

Source: Punjab Economic Report, 2017

In addition to the above three main crops, Punjab produces over 40,000 tonnes of sugarcane and almost
5,000 tonnes of maize annually. Within agriculture sector, in addition to the crops sector, livestock and
dairy consists of 56.7 percent of the total agriculture sector value added. Punjab houses more than 191
million livestock heads and produces over 17.7 billion litres of milk. The cattle and buffalo population is in
excess of 80 million, whereas there are over 100 million sheep and goats in the province. In addition,
around 80 percent of national exports originate from the agriculture sector and Punjab enjoys 60 percent
share in the national exports. Therefore, the sector not only impacts the lives of deprived segments but
also has a strong growth linkage through enhanced value added exports.


The Punjab Growth Strategy highlight the following critical determinants and multipliers for the agriculture
sector.

A one percent increase in the capital to labour stock will increase crop sector value added by
0.4 percent.

A one percent increase in irrigation stock (water availability) increases crop sector value added

55
 by 0.5 percent.

A one percent increase in road investment increases crop sector value added by 0.06 precent
and a one percent increase in price of input reduces crop sector value added by 0.05 percent.

A one percent increase in the capital to labour stock will increase livestock sector value added
by 0.94 percent.

A one percent increase in road investment increases livestock value added by 0.34 percent.

A one percent increase in credit to agriculture sector increases private investment in the agricul-
ture sector by almost 0.1 percent in Punjab.

A single point increase in incidence of power load shedding decreases private investment in the
agriculture sector by more than 0.5 percent in Punjab.

A one percent increase in cotton production increases export of goods and services by almost
0.3 percent in Punjab.

A single point increase in agriculture terms-of-trade increases crop sector value added by more
than 0.1 percent in Punjab.

A single point increase in ratio of livestock prices index to overall price index increases livestock
sector value added by almost 0.2 percent in Punjab.

A one percent increase in agriculture sector value added increases large scale manufacturing
value added by almost 0.7 percent in Punjab.

A one percent increase in agriculture sector value added increase wholesale and retail trade
value by more than 0.2 percent in Punjab.


 and perhaps the most important issue is that possibilities of input-driven growth are becoming
exhausted (the constraints on water and land have become much tighter) and thus the approach for the
future will have to be different from that of the past. The Punjab Economic Report 2017 shows that total
factor productivity (TFP) has dropped from 3 percent in 1980s to just 0.6 percent. This implies that a
majority of the productivity is driven by the application of higher capital and labour.

 water is a key determinant of value added in the agriculture sector. However, the productivity
of water used in the agriculture sector has declined over the last three decades. Moreover, it will take time
and significant investments to increase supply of water through physical means. The farmers of the prov-
ince will have to use the available water more productively – ‘more crop per drop’ will have to be the strate-
gy going forward.

 the cropping pattern in the province does not conform fully to its comparative advantage or to the
realities of the international market. Five major crops (wheat, rice, cotton, maize and sugarcane) account
for 50 percent of the cultivated land and around 40 percent of the value added in agriculture. There is a
need to optimise the use of province’s resources and bring adjustments to the area where these crops are
sown. For example, sugarcane’s growing period occupies a full year and, therefore, displaces other
crops, particularly cotton (Pakistan has a clear competitive advantage in international markets and multi-
pliers suggest a strong impact on exports). The sugarcane sector also requires subsidy to support farmer
prices and has lower sugar content than the cane crops produced in tropical areas.

Moreover, the climate change has also resulted in an enhanced need for addressing the cropping
patterns in the province. The current agro-climatic zones of Punjab are presented below:

56
 Table 3.2: Agro-climatic zones of Punjab
Agro-clima�c Districts
Zones
Rice/Wheat Punjab Sialkot, Gujrat, Gujranwala, Sheikhupura, Lahore, Kasur, Narowal, Mandi Bahauddin,
Hafizabad
Mixed Punjab Sargodha, Khushab, Jhang, Faisalabad, Toba Tek Singh, Okara
Co�on/Wheat Sahiwal, Bahawalnagar, Bahawalpur, Rahim Yar Khan, Multan, Vehari, Lodhran,
Punjab Khanewal, Pakpa�an
Low Intensity DG Khan, Rajanpur, Muzaffargarh, Layyah, Mianwali, Bhakkar
Punjab
Barani Punjab A�ock, Jhelum, Rawalpindi, Islamabad, Chakwal
Co�on/Wheat Sukkur, Khairpur, Nawabshah, Hyderabad, Tharparkar, Naushahro Feroze, Ghotki,
Sindh Umerkot, Mirpur Khas, Sanghar
Source: Agriculture Department, Government of Punjab
These agro-climatic areas will be redefined due to rainfall volatility, increased drought and rising tempera-
tures due to climate changes. This is seriously impacting crop yields. To fight climate change and
increase productivity on the basis of competitive advantage, the redesigning of agro-climatic zones is
imperative so that per acre yield can be increased. Also, agro-ecological zones redesigning will recom-
mend farmers to grow the crops that are suitable and comparatively productive in their areas.

 Punjab suffers from considerable yield gaps. There is a considerable difference between the
productivity of the most efficient farmers and the average. The gap between the average and progressive
farmer on average is around 50 percent5. This shows that the province can increase its yield by merely
improving the performance of the average farmer in the direction of what the progressive farmers are
achieving. Further, analysis of efficiency suggests that the efficiency levels have not improved over the
years, with cotton being the least efficient at 62 percent and maize being the most efficient at 80 percent.
These gaps show that farmers were not able to use full potential of the inputs made available to them6.

One key reason for these efficiency gaps is the input mix distortions resulting from changes to input
prices. For example, low prices of nitrogen-based fertilizers discourage farmers from using phosphate
and potassium based fertilizers that have higher yields and are more efficient. However, the efficiency
enhancements will majorly come through increasing the total factor productivity, which will increase with
interventions such as improving seed quality, bringing better varieties and modernising agriculture.

over the last 50 years, the distribution of the size of landholdings has changed in a direction that
is coming back to hurt efficiency of the crop sector. There has been a substantial increase in the number
of small landholdings, primarily at the expense of medium holdings. The total reported area for agriculture
in Punjab is spread over 17.5 million hectares, of which 12.5 million hectares is cultivated area7. Of the
total 5,249,800 farms in Punjab, about 14 percent are less than one acre, 77 percent are between 1 and
12.5, and the remaining 9 percent are above 12.5 acres. The 9 percent farms above 12.5 acres constitute
about 41 percent of the total farm area8. Small land holding makes it difficult and costly to upgrade farm-
ing practices and use modernising techniques that will enhance productivity.

the government’s pricing policy on wheat acts as a disincentive for private sector investment in
storage. The government usually sets prices pre-harvest and these price controls work as disincentive for
private storage firms. The government will rework its wheat pricing strategy and move to a model where
the private sector forms the market equilibrium.

The livestock sector over the years has focused on improving the milk yield and little work has been done
on maintaining the quality. This has resulted in a huge loss of milk, inability to convert milk into high
value-added items and increased incidence of health issues. Similarly, focus on raising animals for meat
has been far less. Consequently, the average yield of beef is much lower than international standards.

5
Punjab Economic Report, 2017
6
Punjab Economic Report, 2017
7
Punjab Development Statistics 2018.
8
Agriculture Census (2010)

57
Finally, little emphasis has been placed on ensuring disease-free animals. This is the biggest constraint
in terms of Punjab’s ability to enter into the export market.


The Punjab Growth Strategy 2023 targets to reach a growth rate of 5.5 percent in the agriculture sector
by 2023 and create 1.26 million jobs in the sector.

Years 2018-19 2019-20 2020-21 2021-22 2022-23

Agriculture Sector Growth 1.7% 3.6% 4.8% 4.9% 5.0%

Years 2018-19 2019-20 2020-21 2021-22 2022-23

Employment Crea�on 130,000 130,000 300,000 300,000 400,000

The government will bring structural reforms, modernise farm management and increase availabil-
ity of water and fertilizer to increase total factor productivity by 3 times.

The government over the 5 years will make Punjab disease-free for livestock.

The government over the 5 years will eliminate the use of adulterated milk from the market.

Increase the average animal productivity in Punjab by 25 precent by 2023.

Enhance the household income of small livestock holders by 10 precent per annum.


In order to attain the targets set above, the government will take the following set of strategic interven-
tions:

The government will ensure efficient usage of water, invest in irrigation to increase the availabili-
ty of water, reduce price volatility of inputs, especially fertilizers and develop mechanism to
ensure farm upgradation solutions at small farm holdings. The government will work on the pric-
ing policy of water for agriculture to reap resources that will be invested in ensuring sustainabili-
ty.

The government will substantially increase public and private investment in the agriculture
sector. The private sector investment will be supported by enhancing the agri-credit to the farm-
ers and making these loans more targeted. The investments will be focused on upgrading facili-
ties, especially improving the efficiency of the irrigation system. To increase investments in the
sector, the government will utilise all possible methods of mobilising additional financial resourc-
es. The government will examine carefully what aspects of its activities constitute public goods
and continue to perform these, while transferring to the private sector those aspects that are of
a commercial nature. These may be done via PPPs. The government will take measures to
improve cost recovery for the provision of public services such as improving the cost recovery of
canal maintenance.

The government will work towards driving value by strengthening commercial agriculture and by
providing greater incentives for production of high value added items. The wholesale markets in
Punjab are governed by the Agriculture Produce Markets Act of 1939. The government will
review and revise the Act and also further enhance the quality and economic viability of whole-
sale markets. The government has invested significantly in farm-to-market roads. However, it
will use spatial mapping to identify further connecting roads that are required to integrate these
markets with farms.

58
The government will double the investment in agriculture research and development to 0.4
percent of the GPP. The agriculture research will be made more in line with the demands of the
farmers. The Punjab Agriculture Research Board (PARB) will be strengthened to provide signifi-
cant coordination of research work by the government and other private institutes.

The government is focusing on enhancing the specialisation and knowledge of devolution

agents, introducing greater use of ICT, and is involved with private partners and civil society. To
extend the efficiency of the extension services, the government will focus on developing its
human resource and will implement speedily the projects such as ‘Extension Services 2.0’ and
‘Agri-SMART’, which will enable ICT-based interaction and information transfer to the farmers.

The government will support the growth challenges of small commercial farmers, especially
women and youth, to bring about inclusive growth and increase in productivity in the agriculture
sector, particularly in areas such as HVA farming and cottage level processing. The government
will address disparities in productivity and prices along the agro-climatic zones, thus empower-
ing the SCFs and women to induce agriculture productivity growth and poverty reduction at the
same time. On the other hand, steps will be taken to ensure female education and awareness
through female extension agents who can provide educational opportunities to the rural women.

The government will revamp its cropping patterns, agri-cropping zones will be moved towards
more value added and high yielding crops given Punjab’s climate change, water availability and
soil suitability. The government will bring the focus on diversifying horticulture.

Substandard sanitation coupled with scant market infrastructure accounts for 30 percent to 40
percent post-harvest losses. Furthermore, it is the middleman who benefits the most in the long
supply chain by grabbing 60 percent to 70 percent of the value of the produce at the expense of
growers. The development of agriculture products’ value chain is crucial for agriculture sector’s
sustainable growth. Well-functioning agriculture value chain ensures a fair price to farmers and
adds value to production for local and export markets. Moreover, well-established value chains
develop market infrastructure; promote research, improvement in management techniques and
shelf life of the produce; and ultimately facilitate the connection between producers and final
consumers. Market committees, private sector investment, ad-valorem fee, farmer credit,
enhanced competition among brokers, direct farming and storing facilities are the key areas of
the proposed market reforms by the Punjab government.

In terms of the development of agriculture value chains, the government will focus on enhancing
the connectivity of farms to the markets by developing the required infrastructure. The intention
is to shift the central markets to a modern, private sector and profit-oriented infrastructure. In this
regard, the government will design systems to monitor the quality of daily price and quantity
reports, increase the efficiency of traditional assemblers and wholesalers, improve the credit
services to the farmers, and connect farms and markets cohesively by employing ICT based
reforms. In addition to this, the Food Outlook programme will be further developed to provide
information to the farmers. Furthermore, the Agriculture Department is moving towards strategic
crop cultivation and SMEs for technology and value addition. The Agriculture Department has
recently started a horticulture value chain development programme with component of matching
grants for SME processors. Several other programmes are also being planned for 2018-19 to
assist processing sector SMEs in technology transfer, capacity development and provision of
technical and marketing support. Value added sectors, including pack houses, diced frozen
fruits and vegetables; jams, pickles and other preserves; edible and essential oil extraction;
drying and dehydration; and pulp and concentrate extraction units, will be supported to increase
demand for farm produce and enable export of horticulture.

The government will invest in research for the development of weather resistant varieties of
seeds and crops. In this regard, the Climate Smart Agriculture (CSA) techniques will be further
developed and implemented. The main thrust of the policy to tackle climate change will be to

59
 establish an Institute for Climate Smart Agriculture (ICSA). Adaption and building resilience in
events of extreme weather, reducing the effects of underlying cross-cutting issues, mitigation of
emissions of greenhouse gases (GHG) and the formation of an enabling policy along with the
suitable institutional and legal framework for implementation of CSA are the four broad areas of
focus for the CSA. Similarly, research and extension will be further improved for the manage-
ment of high delta crops such as sugarcane, rice and maize. Along with this, water resource
conservation and precise irrigation techniques will be encouraged as part of on-farm water man-
agement along with the expansion of small-scale water storage capacity and rainwater harvest-
ing at the farm level. Moreover, the quality of soil needs will be kept under check by focusing on
improving application of fertilizer and by developing an evidence-based analytical structure to
help the farmers.

The Strengthening Markets for Agriculture and Rural Transformation (SMART) program aims to
make the sector resilient to climate change. To protect the small farmers from yield losses due
to natural calamities, the Crop Yield Insurance Index (CYII) stands as a safety net scheme that
connects the insurance with the average yield at the tehsil level.

The government will consider effective use of e-voucher subsidy, in which the vouchers are
placed in packets of certified seeds and bags of fertilizers, etc. This will aid the farmers, as it
allows a direct transfer of cash to the mobile banking account of farmer within 6 seconds of him
sending the scratch code to a digitalised system. The Kissan Cards will serve as a useful tool in
the implementation of e-voucher subsidy, as the subsidy money transferred in the digital bank is
linked with Kissan Cards, which operate like an ATM or debit card at the point of purchase.


The halal market consists of 1.90 billion consumers across 112 countries around the globe, with an
estimated worth of USD 2.3 trillion annually. Punjab has advantage of using pork-free feed for
poultry production and use of hand slaughtering rather than stunning for meat processing. Going
forward, this is going to be an important area for earning foreign exchange and ameliorating the
conditions of breeder. The government will:

Develop strategies to promote livestock experts, as outlined in the Punjab Livestock Policy
2016.

Focus on capacity building of livestock production and processing industry to generate

requisite quantity of exportable surplus.

Introduce premium price for the value gain in the process of Livestock Development.

Focus on development of ostrich, camel and equine meat and hides for exports.

Development of HR capacity building in the International Trade Protocols in the context of

WTO regime and phytosanitary and sanitary products. The requisite exposure will be
obtained as a result of special training and education regarding trade of livestock products.

Use ICT based innovative interventions to ensure 100 percent animal vaccination coverage
for a disease-free Punjab.

Punjab will develop a model to ensure that all milk sold in the market is packaged and will
also ensure zero adulteration in milk.

The Punjab Spatial Strategy has identified the following strategies:

60
 Punjab’s spatial landscape is divided into 25 cropping zones. Using spatial counts, 5
high value cropping zones have been identified. These zones will be focused.

Use spatial planning to increase the area of production of high value export oriented
crops from 6 precent (at present) to 12 precent by 2023.

Information, research and export centres that provide updated information on

demand, prices, trends and quality standards in the international market, will be set
up in 9 divisional headquarters. Spatial transformation proposed in Spatial Strategy is
provided below.

Table 3.3: Proposed Agricultural Transformation Plan for Punjab

Proposed Zone Districts in Zone Total Cul�vated % age Area Proposed Area by
(Based on Crops) Area of Districts under these 2023 (%)
(hectares) Crops
Olive and Grapes Rawalpindi, A�ock, Chakwal 994,000 9 15
valley, Pulses and and Jhelum
Groundnut
Citrus and Sargodha, 1,194,000 9 15
Vegetable Zone MB Din and Khushab
Vegetable, Guava Gujranwala, Gujrat, 2,157,000 52 60
and Rice Zone Hafizabad, Narowal, Sialkot,
Lahore, Kasur, Nankana
Sahib and Sheikhupura
Maize, Potato, Sahiwal, Okara, Pakpa�an, 2,276,000 32 38
Guava, Fodder and Faisalabad, Chiniot, Jhang,
Vegetable Zone Toba Tek Singh
Mango, Date and Multan, Khanewal and 1,087,000 7 14
Vegetable Zone Muzaffargarh
Co�on, Banana and Bahawalpur, Bahawalnagar, 2,754,000 46 55
Oilseed crops zone Rahim Yar Khan, Rajanpur,
Lodhran and Vehari
Pulses, Barley and DG Khan, Layyah, Bhakkar 2,097,000 29 35
Date zone and Mianwali
Source: Punjab Spa�al Strategy, Government of Punjab
Figure 3.14: Potential Agricultural Crops Zone

Source: Punjab Spa�al Strategy, Government of Punjab

61
 For livestock, spatial analysis shows that three zones for meat production, processing and
value addition can be developed. (i) Zone one consists of districts Rawalpindi, Mainwali,
Chakwal and Sargodha (ii) Zone two consists of districts Sargodha, Jhang, TT Singh and
Faisalabad (iii) Zone three consists of districts Lahore, Sheikhupura, Gujranwala, Gujrat,
Sialkot and Kasur.

Similarly, for milk production and processing, three zones can be developed on a priority basis
in the first phase. (i) Zone one consists of districts Sahiwal, Pakpattan and TT Singh (ii) Zone
two consists of Mandi Bahauddin, Gujrat and Gujranwala (iii) Zone three consists of Bahawal-
pur and Cholistan. These results can be further strengthened by study of nutritional values of
soil as well as environmental and ecological conditions of each area before officially notifying
these zones.


The current long-term plan for cooperation in agriculture includes the following focused areas that are
relevant for the agriculture sector of Punjab:

   Agricultural modernisation along the corridor, guiding agricultural
mechanisation and scale production, demonstration projects in Punjab of improved varieties to
improve productivity.

   Introducing modern agricultural product processing

equipment and facilities, an agricultural industry cluster could be built around Islamabad and
Lahore to create a processing base, which satisfies international standards.

Warehousing and logistics facilities

in Islamabad and Lahore to form a warehousing and logistics network system connecting cities
and covering the area along the corridor.

  An agricultural mechanisation demonstration and leasing

centre in Punjab to promote drip irrigation under plastic film and other water saving agricultural
techniques, and protected cultivation for the development of facility agriculture.

     A plant and animal disease prevention and
control system should be established in Faisalabad and Lahore to reinforce R&D in view of the
current cotton leaf roll virus and other viral diseases in plants.

The government will ensure efficient and effective implementation of these initiatives. Additionally,

The government will advocate with the federal government for negotiating existing tariff struc-
tures with China, and ensuring that they are at least on par with those faced by other countries
and trade associations such as ASEAN.

The government will evaluate non-tariff barriers, including Sanitary and Phytosanitary (SPS)
requirements, imposed on goods sourced in Pakistan.

The government will address existing market distortions that adversely affect both the volume
and direction of trade, and encourage market based reforms in the agriculture sector.

Using CPEC cooperation and technical expertise, the government will improve infrastructure
networks, particularly those focusing on irrigation, water supply and post-harvest storage and
marketing.

The government will explore public private partnerships, especially in the area of post harvest
storage, handling and marketing.

62
The government will actively advocate with the federal government to negotiate better access
with China for export of citrus, mango and rice to China. These products have competitive
advantage in Punjab and are strong part of Chinese import baskets. Moreover, the government
will further support development of agriculture products that are part of Chinese import basket.

Livestock has great export potential for meat and meat by-products to China. In the last four
years, livestock has ensured massive vaccination against all prevalent diseases, and efficient
surveillance mechanism is laid down all over Punjab. The epidemiological approach of the
department to eradicate FMD and other notifiable transboundary diseases is duly acknowl-
edged and being monitored by the FAO. Reviewing all these activities, the federal government
is going to sign an MoU on FMD free zone with China for the start of trade regarding livestock
& livestock products. There is a need to strengthen the FMD free zones that may be extended
from Bahawalpur Division to other divisions. Moreover, it is also required to establish process-
ing units, modern abattoir, value addition techniques and feed and animal by-product industry
in these zones.

63
 
As economies grow and develop, they experience a gradual structural shift out of agriculture and manu-
facturing into the services sector. The growth in the fundamental sectors of agriculture and industry
increases demand for services, such as retail, hospitality, banking, insurance, ICT and tourism. The econ-
omy of Punjab is no exception to this, and over the last two decades it has seen an increase in the value
added contribution by the services sector. However, Punjab has not experienced the growth and
increased share of industrial activity, and therefore, to some extent, represents a premature shift (process
of early deindustrialisation) into the services sector. Nevertheless, the services sector contributes 62.4
percent of the total value added to the provincial economy. The quality growth of the services sector also
has large multiplier effects on other productive sectors, as it creates a more enabling environment for
growth and expansion. 
               
            



The services sector has been strongest performing sector in the provincial economy. The growth in the
last three years has been close to 6 percent and growth has never been negative in the last decade (Fig-
ure 3.15). It is due to the consistent performance that the share of services has increased 4.1 percentage
points in the last decade.
Figure 3.15: Growth of the Services Sector, 2009-18 (%)
7.0
6.1 6.3
6.0
6.0 5.6

5.0 5.1 5.2

5.0
4.3
3.9 3.9
4.0

3.0

2.0

1.0

0.0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Source: Punjab Growth Strategy Team

Figure 3.16: Share of Services in Provincial GDP, 2009-18 (%)
63.0
62.4
62.2
61.8
62.0
61.2
61.0 60.6

60.0 59.8

59.1
59.0 58.6 58.6
58.3
58.0

57.0

56.0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Source: Punjab Growth Strategy Team

64
 In terms of total employment in the province, the
province currently absorbs approximately 11.57
million people, or 31.2 percent of the total employed.
However, this is considerably less than the employ-
ment share of agriculture. In terms of trade, Pakistan
exported services worth USD 5.7 billion and import-
ed services worth USD 10.4 billion in 2017. In terms
of sub-sectors, after the public administration &
defence, the wholesale & retail (32 percent) adds
the most value to the services sector. Transport &
communication adds 23.4 percent, finance & insur-
ance adds 5.0 percent and construction adds 4.64
percent. All these sub-sectors have significant
potential to fuel growth, especially under the CPEC.
The wholesale & retail industry is spread across the
province, but more urbanised districts have denser
prevalence (see in text map). There is a clear
correlation between urbanisation and growth of the
wholesale and retail. Therefore, the diversification of
investments to create more dynamic cities will fuel
more growth.


Services sector growth has a causal relationship with industrial and agriculture sectors. The growth in
industrial and agricultural sector stimulates demand for service. However, innovations in services
expand the growth potential of productive sectors by providing better access to markets, easing the
burden of doing business and enhancing competitiveness. The growth dynamics of the services sector
of Punjab present some key drivers as presented below.


A one percent increase in power load shedding reduces private investment in the services sector
by 0.7 percent.

A one percent increase in the value of capital imports reduces private investment in the services
sector by 0.7 percent.


A one percent increase in agriculture value added increases the wholesale and retail value added
by 0.9 percent, and a one percent increase in manufacturing value added increases the wholesale
and retail value added by 0.21 percent.

A one percent increase in average years of schooling increases the wholesale & retail trade value
added by 4.7 percent.

A one percent increase in public sector capital investment in roads & transport and education
increases value added by wholesale & retail trade by 0.12 percent.



A one percent increase in the public sector capital investment in urban development increases
value added by the transport sector by 0.1 percent.

A one percent increase in the public sector capital investment in roads increases value added by
the transport sector by 0.2 percent.

65
 A one percent increase in average years of schooling increases the value added by the transport
sector by 2.7 percent.



A one percent increase in the average years of schooling increases value added by the construc-
tion sector by 5.1 percent.

A one percent increase in private investment increases the value added by the construction sector
by 1 percent, whereas a similar increase in public investment increases it by 0.2 percent.

A one percent increase in the price of building material reduces construction sector value added
by 1.1 percent.

A one percent increase in public sector capital investment in urban development increases the
construction sector value added by 0.3 percent.


A one percent growth in Punjab’s income (GDP plus remittances) increases the growth in housing
units by 3 percent.

A one percent growth in the price of building material reduces the housing unit growth by 1.1
percent.

The evidence presented above clearly suggests that quality human capital adds the most value to the
services sector in Punjab. However, there are two major issues relating to the provincial services sector
that need immediate attention under the Growth Strategy. The services sector as shown above contrib-
utes over 60 percent to the economy, but it is the least documented sector. No reliable statistics are
available regarding the types of firms, their services and scale, given that a majority of the firms operate
fully or partially in the informal sector. Moreover, the employment share just at 30 percent also high-
lights a potential concern in data. One of the reasons for having less documented data on services in
Punjab as compared to industry and agriculture is that no administrative department has been named
responsible for the sector.

A second major issue facing the services sector is the current services tax regime in the province. The
PRA in Punjab was established in 2012, and has now established itself as a strong base for revenue
collection. However, the province still does not have a provincial tax policy and the sector complains
about inconsistencies in the taxation regime in the province. It is important to realise that services taxa-
tion affect multiple sectors, such as manufacturing and agriculture, owing to an increase in the cost of
doing business. As all provinces have now established PRAs, the current tax regimes indicate a lack of
harmonisation of taxes between provinces and the FBR. The key issues highlighted by the private
sector include: (i) inconsistent tax rates between jurisdictions; (ii) different classification of taxable
services; (iii) confusion on whether the tax liability calculation is based on origin or consumption and;
(iv) issues with withholding of sales tax.

Moreover, each province has a different rate of services sales tax. Sindh taxes services related to busi-
nesses at 13 percent, Punjab charges 16 percent and the federal territory charges one percent. This
puts Punjab at a disadvantage, and businesses may decide to move out of Punjab and shift to federal
territory or other provinces. The problem is further aggravated as provinces use different definitions and
descriptions for the same services. It is important that all services categories be consistently defined for
taxation purposes.

66
Another critical issue is the considerable overlap in the definition and scope of taxable services. At times,
disputes arise due to confusion regarding the appropriate classification of services as companies try to
avail exemptions on a service that appears to fall under two or more categories simultaneously. There-
fore, classification rules are important as they allow the tax authority to apply taxes knowledgeably, iden-
tify a service that needs not to be taxed, or allow a business to avail tax exemptions specific for it. It also
enables a service to determine date from which a tax may be due in cases where one category attracts
taxes from an earlier date than that of the other. Punjab, therefore, needs to bring all PRAs together to
address the issue of classification of taxable services.

A third issue is that all PRAs state that a service provided by an individual from their registered office or
place of business in a province is taxable in the same province. At the same time, it is provided that if a
service is rendered by a resident of one province and consumed by the resident of another province, the
person residing in the province where consumption is made is required to pay tax in that province. But
as sales tax is a value-added tax, it should be properly paid to the province where consumption is made.
At the moment, since there is a lack of clarity on this issue, the businesses in most cases are facing the
brunt by receiving duplicate notices from different PRAs. This is impacting the cost of doing business by
the services sector. Coordination and harmonisation among provinces is not the only issue; there is also
an ongoing problem of classification and value addition with the FBR imposing an additional sales tax on
goods.

The existing rate of sales tax at 16 percent in Punjab is one of the highest in the region, with an average
of around 12 percent in Asia (15 percent in Bangladesh, 10 percent in Indonesia and just 6 percent in
Malaysia).

The evidence presented above suggests that improving human capital has the greatest impact on the
growth of the sector. However, at present, the skills effort in the sector is disjointed and hardly any
programme exists that is developed and run in partnership with businesses in the services sector.


The key targets for the Services Sector under the Growth Strategy include:

 Attain a growth of 7.5 percent in the terminal year of the Strategy 2023. The growth trajectory
targeted is:

2018-19 2019-20 2020-21 2021-22 2022-23

4.6% 5.8% 6.1% 6.8% 7.5%

 The sectoral share of the services sector will be maintained at 62.5 percent.

 The employment target for the services sector totals 1.96 million jobs over the five-year period
to 2023. The trajectory is expected as follows:

2018-19 2019-20 2020-21 2021-22 2022-23

160,000 400,000 500,000 4000,000 500,000


To support the sector and realise the growth potential, the following strategic steps will be taken.
The government will eval-
uate the options of mandating the Industries Commerce & Investment Department as the apex
body mandated for supporting the services sector or creating a new department for services. The
first option is more cost effective and immediate. However, the second option allows more flexibil-
ity of design. In the interim period, until a final decision is reached, the Industries and Commerce
Department will be made responsible for facilitating the services sector.

67
  The government will commission a census of establish-
ments covering the services industry in Punjab along the line done by the Directorate of Indus-
tries for industrial establishments. The survey will provide a strong evidence base to capture
the spatial disparities and gaps in the sector.

      The government will develop and approve the
provincial policy on services sector. The policy will bring out the formal institutional role to be
played by the Industries & Commerce Department to facilitate the services sector.

       The government will develop and
approve the provincial taxation policy. The policy will consider harmonisation of taxes to the
extent possible. The policy will explore the options to at least merge all the provincial tax
bodies into one unified PRA. The policy will also look at the option of withdrawing all provincial
taxes that contribute less than 1 percent to the provincial revenue.

An enabling
environment is essential for the services sector to grow and contribute. The government will
work on improving the business environment on a war footing. The details of the strategy to
improve the business environment are discussed in the chapter on Private Sector Develop-
ment.

The government will support public private part-

nerships to support HR development and skills training programmes relevant to the services
sector. For example, the e-commerce in retail industry is rapidly expanding, which requires
staff with skills to manage backend stocks, logistics and online sales. These are specific skills
and require dedicated training courses. The government will conduct services sector training
and skills need assessment, and identify private sector partners to impart the trainings.

The government will create opportunities for new

entrepreneurs in the services sector by providing opportunities to train, incubate and also
secure seed funding. The government will implement incubation models in partnerships with
the private sector to develop workable models of providing incubation space and training,
besides the common working space.

The government will simplify its procurement

process and fully move to e-procurement for the services sector. The procurement rules will
also be modified to make them more conducive for small businesses to win public sector
works.

The broader strategy sets the overarching frame under which the provincial government will
work to enhance value in the services sector. However, sub-sectors-specific actions will be
implemented to address constraints, capitalise on opportunities and enhance growth. The
section below presents the government’s strategy for each of these specific sub-sectors.


The wholesale and the retail sector is regulated under the Punjab Shops and Establishment Ordinance,
1969. The latest amendments to the Ordinance were made in 2013; however, there are still a large
number of redundant clauses in the act.

The government will review the Punjab Shops & Establishment Ordinance, 1969 and make relevant
changes to allow a more conducive environment for businesses to grow.

The government will use spatial mapping and, under the zoning of land and land use policy, identify the
most suited pockets for retail and wholesale parks. The government will use th

68
as equity in relatively less deprived area to enhance available space for
trade. The spatial approach will also identify population densities in proposing areas of retail activity. The
global shape of retail and wholesale is fast changing due to advances in technology brought forth by the
4th industrial revolution and increasing use of artificial intelligence (AI) in decision making and designing
products that are far more competitive. Digital platforms such as e-commerce, online payment gateways
and Internet of things have redefined efficiency levels. The retail internationally has moved mostly in
digital space. The phenomenon is somewhat true in Punjab as well. Several retailers have opened up
large marketing outlets; however, they are generating the real sales online. However, cost of and access
to the Internet and smart phones is still an issue in the province, with smart phone access for females
being exceedingly low. Moreover, the digital marketplace evolves very quickly and the public sector finds
it difficult to keep up with the pace of regulatory side, thus curtailing growth.

The government sees significant potential for Punjab in establishing the digital marketplace. The govern-
ment will work with the federal government and the other stakeholders to ensure that a dynamic regulato-
ry structure is put in place and digital access, as well as the establishment of pathways of digital
payments, is made available.



The transport sector presents a significant opportunity for Punjab, especially under the CPEC and the
improving logistic infrastructure and road connectivity in the province. The government in previous years
has invested significantly in the passenger transport services. This has eased the life of some commut-
ers, but has not triggered the full potential of the transport sector. The CPEC now presents an immense
opportunity for logistics, transport and transport services businesses to flourish.

The government will formulate transport policy and include ‘trucking’ and ‘logistic’ to provide a competitive
platform for the private sector to invest. The demand for trucks and logistics is likely to increase under the
CPEC; however, this will have to maintain a certain level of quality standard. The trucking policy will iden-
tify opportunities for the private sector to invest in the logistics industry and benefit from the demand
under the CPEC.

The government has also developed a provincial spatial strategy that identified key routes and linkages
that offer strong opportunity for growth by improving connectivity. Most of these routes provide for the
east-west connectivity so that the province is able to gain from the CPEC. The key corridors that the
government will develop by 2023 include:

Corridor C1 provides link between Rahim Yar Khan and CPEC central alignment via Rajanpur,
which would reduce the travel time between the two cities by 3.4 hours through eliminating a big
detour.

Corridor C3 majorly involves widening of existing road. It runs from Karachi-Lahore Motorway
(KLM). Combined with K3 corridor, it traverses the province from east to west in the central zone
and connects emerging city of Bhakkar to the eastern parts of Punjab via Jhang.

Corridor C4 runs parallel to corridor C3 on already frequented corridor of Mianwali-Sargodha-Fais-

alabad. The corridor already has high traffic load, as it connects primary and intermediate cities,
and is also an important logistic link transporting cement and other raw material from western
Punjab to other parts of the province.

Corridor K1 is a short corridor between Vehari and proposed corridor C2. Once connected with C2,
Vehari will be linked to the major high-speed road network.

Corridor K2 connects eastern border city of Bahawalnagar to the KLM.

Corridor K3 runs parallel to K2 and connects Deepalpur and Okara to the KLM.

69
 Corridor C1 provides link between Rahim Yar Khan and CPEC central alignment via Rajanpur,
which would reduce the travel time between the two cities by 3.4 hours through eliminating a big
detour.

Corridor C3 majorly involves widening of existing road. It runs from Karachi-Lahore Motorway
(KLM). Combined with K3 corridor, it traverses the province from east to west in the central zone
and connects emerging city of Bhakkar to the eastern parts of Punjab via Jhang.

Corridor C4 runs parallel to corridor C3 on already frequented corridor of Mianwali-Sargodha-Fais-

alabad. The corridor already has high traffic load, as it connects primary and intermediate cities,
and is also an important logistic link transporting cement and other raw material from western
Punjab to other parts of the province.

Corridor K1 is a short corridor between Vehari and proposed corridor C2. Once connected with C2,
Vehari will be linked to the major high-speed road network.

Corridor K2 connects eastern border city of Bahawalnagar to the KLM.

Corridor K3 runs parallel to K2 and connects Deepalpur and Okara to the KLM.

Corridor N1 runs parallel to the National Highway N5 (GT Road) along the settlements of Arifwala,
Burewala, Pakpattan, Deepalpur and Vehari. Completion of the corridor N1 will provide a direct
north-south connection. It will also help ease traffic load on N5, which is already observing conges-
tion. Corridor R3 connects Gujranwala to the national motorway network via Hafizabad. This 94km
link provides connectivity to Gujranwala city with the CPEC.


Construction and housing sector is a integral part of the growth objectives of the Punjab government. The
government has promised an increase in housing stock by 6 million nationally (around 3.5 million for
Punjab) by 2023, and the construction and housing sector generate significant multipliers. The total multi-
plier for output and employment in the construction industry is estimated to be 2.866. So, for every $1
million increase in construction output, $2.9 million worth of output is created elsewhere in the economy.
The construction sector attracts significant FDI, as the country has experienced under the CPEC.

The experience in Punjab and Pakistan is not any different. There are over 50 industries indirectly associ-
ated with the real estate construction sector, so the overall economic impact is much higher. A study by
Karandaz estimates that the incremental contribution to economic growth as well as employment of hous-
ing construction is significant. For instance, if 100,000 houses measuring 5 marlas (1,125 square foot)
were constructed in Lahore, it would contribute an additional 1.2 percent to the GDP and generate
employment for 200,000 people. For 10-marla (2,250 square foot) houses, the GDP contribution would
be 1.9 percent, with employment generation for nearly 400,000 people9. Therefore, the Growth Strategy
puts a significant emphasis on the construction and housing sector.

The performance of the housing and construction sector depends largely on the overall growth of the
economy, regulatory environment, suitably located and priced land, availability and pricing of inputs and
availability of financing/mortgage. However, Punjab has not performed to its full potential due to gaps in
all of these factors. The growth of the economy in the past has been variable, thus resulting in income
variability hampering demand for housing and construction. The export of manpower also saw a dip at the
national level, suggesting declining levels of worker remittances, also impacting the demand for housing
as suggested above. The difficulty and cost in obtaining construction permits and NOCs from the relevant
authorities and public sector offices also delays the construction process and adds to the cost.

The lack of land use policy, unclear titles of land, difficulty in transferring and lack of policy to control land
9
Karandaz 2018, Enhancing Builder Financing in Pakistan

70
price speculation has also slowed the growth of housing and construction. The land price, due to specula-
tion, has increased significantly and acts as a natural constraint on the construction and the housing
market. Land is bought and resold many times over before any construction begins, which persistently
pushes the prices upward. In the absence of mortgage financing, a lot of investment in the real estate
sector is investor-driven with the incidences of genuine property buyers low and limited to middle-to-high
income groups.

Financing to builders and mortgage financing for housing is fairly limited in Punjab and Pakistan. Builders,
developers and house owners usually fund projects out of their own equity, investor advances and
customer instalments. Bank lending is relationship based and often limited to those builders who have
other formal and established businesses, with an asset base that can be used as collateral. Owing to a
range of limitations – from land administration and titling issues leading to insecure collateral, to the lack
of capacity of SME builders — commercial banks are wary of lending to new or small builders with no histo-
ry with the financial institution (Karandaz 2018).

The total construction finance in Pakistan is only 3.8 percent of the total credit forwarded to private sector
businesses. The size of mortgage finance is negligible. On top of that, the banks that do offer mortgage
products have an extremely small repayment period, usually within 5 years. This makes the mortgage
expensive, as instalments come out to be too high.

Additionally, the regulatory environment is not favourable. Whereas part of Punjab has digitised land
records, there are a number of legal and administrative issues relating to land that add to the cost and
delivery. Poor master planning of cities, governance issues at the provincial and local government levels,
involvement of multiple institutions in administrative procedures, problematic zoning restrictions, restric-
tive building codes and unreliable public utility create issues. To address the multiple issues faced by the
construction and housing sector, the government has developed the following strategy.

The government will develop and enforce the land use policy, and by using spatial mapping identi-
fy the most suitable land for housing and other related developments.

The government will expand the land registration process to ensure all titles are clear and in the
name of real owners.

The government, through the Board of Revenue, will explore options to discourage land specula-
tion for capital gains in the province. Although the FBR has introduced measures to curtail this, the
provincial government will ensure further extraction of land from speculators. An ‘idle land policy’
may be introduced.

The Punjab government will work towards providing credit guarantee schemes for SMEs, the
housing market will be introduced after the successful launch of the initiative.

The federal government has established the Pakistan Mortgage Refinancing Company (PMRC). It
has secured a funding line from the World Bank to disburse funds for low-cost as well as
normal-price housing. The Punjab government will work with other donors, such as DFID, to get a
dedicated mortgage finance window for Punjab.

The government will advocate with the SECP to ease out the issues in Real Estate Investment
Trust law so that market funding is more easily obtainable for mega construction and housing
projects.

A critical factor restricting the mortgage financing was the lack of foreclosure laws. The federal
government has now developed the laws, and rules have been formulated. The provincial govern-
ment will advocate for implementation of the same on a war footing.

71


Like construction, growth in the tourism and hospitality industry results in large multipliers. The tourism
and hospitality industry attract investments in hotels, restaurants and resorts and also generates local
economic activity with spending generated by tourists. The Punjab Economic Report 2017 provides some
rough multipliers of the tourism industry for Punjab. More specifically, it estimates that Punjab can gener-
ate close to USD 2 billion worth of income by tourism. The domestic tourism potential in Punjab is close
to USD 1 billion/year and it will create 243,000 jobs. The Sikh tourism is around USD 0.35 billion with
82,000 jobs and Buddhist tourism can generate around USD 0.15 billion with around 30,000 jobs. Howev-
er, Pakistan ranks low in the World Travel & Tourism Index, especially in areas like enabling environment,
safety and security, environmental sustainability and tourism infrastructure.

However, the current government has a strong focus on exploring the potential of tourism in the country,
and the CPEC also offers cross-border visitors into the country. However, to gain, the provincial govern-
ment will have to take some immediate steps

The government will develop and approve the Punjab Tourism Policy, which will provide the policy
stance for all stakeholders, especially investors looking for public private partnerships. The policy
will also look at all relevant laws that need to be amended.

The government will take a stock of all its tourism opportunities and develop plans to invite private
investors on a PPP basis, where the government provides regulation on safety and security and
adherence to safety standards.

The step by the federal government to open the route for Sikh pilgrims is likely to increase the
inflow of religious tourists. Without compromising on security measures, the provincial govern-
ment, again with private sector investment, will look to create opportunities of economic activity in
regions where the pilgrims will visit.

The provincial governments will increase its investments in basic tourism infrastructure and ensure
provision of access roads and suitable facilities to all tourist destinations.

The provincial government, through PPPs, will explore opportunities to work with big hotels to train
hospitality and tourism industry staff to support the growth of the sector and to create employment
opportunities.

The PBIT will work with the Punjab Tourism Department and the Pakistan Tourism Development
Corporation to develop a list of viable investment projects and resort cites across the province.

The government will provide spatial tools to initially focus on developing three tourism zones to
capitalise on existing urbanisation, connectivity, infrastructure and proximity to major assets with
tourism potential. The following zones will be developed by 2023:

The first zone would develop tourist locations in Lahore division. More specifically, in sites identi-
fied in Lahore, Sheikhupura, Gujranwala, Nankana and Kasur. This zone would cater to promoting
urban, religious (Sikh) and historic (Mughal) aspect of tourism.

The second zone would develop tourist locations in the Rawalpindi division. More specifically, in
sites identified in Rawalpindi, Islamabad, Attock, Jhelum and Chakwal. This zone would cater to
promoting religious (Sikh and Buddhist), historic (Ghandhara) and the adventurous aspects of
tourism.

The third zone would develop tourist locations in the southern part of the province. More specifical-
ly, in sites identified in Multan, Bhawulpur and Lodhran. These sites would cater to the historic,
cultural, religious (Sufi) and adventurous aspects of tourism.

72
Another sector closely linked to tourism is the hospitality industry. The food and restaurant business in
Punjab provides a great stimulus to the economy and creates a large number of jobs. The Punjab Food
Authority has emerged as a strong enforcement agency and has started a crackdown to check food quali-
ty issues. While it ensures that the quality of food is not compromised, the role of the authority should not
be just to close down businesses but to help and support them in becoming compliant.

The government, through the PFA, will refine the standards and requirements as per local context
and initiate training programmes where the businesses for a reasonable fee can get trained in all
regulations and requirements.

The government will also explore the establishment of a School of Hospitality Management as a
centre of excellence, teaching good practices and culinary skills as a PPP venture.

73
 
The National Water Policy highlights the looming water crisis and emphasizes the fact that if the water
level continues to drop at the current rate, the economy will transition from a water stressed country to a
water scarce country by 2025. Apart from the economy being water stressed, another major constraint
faced by the water sector is the lack of financial sustainability of water infrastructure. Abiana (water
charges) rates are low to begin with and abiana recovery is only 60 precent of the assessed amount at
the national level. If Pakistan is to make progress on the Sustainable Development Goals (SDGs) related
to water, it must address the institutional and implementation challenges within its water sector.

The Irrigation Department is working on Punjab Master Plan related to water. This is a step in the right
direction. The plan highlights the need for adoption of Integrated Water Resource Management (IWRM).
It clearly mentions the short, medium and long-term steps that are needed to increase availability of water
through building of small dams, improving flood control measures through repair of barrages, improving
financial sustainability through increase in abiana and agriculture income tax rates, etc. This Strategy will
provide the direction needed to solve the problems of the water sector in Punjab.

The irrigation conveyance network is serving 21 million acres (8.4 million hectare) of cultivable command
area with cropping intensities generally exceeding 120 percent. The share of Punjab in the Water Accord
is 55.94 million acre feet (MAF). This includes 18.87 MAF for Rabi and 37.07 MAF for Kharif. However, in
Punjab, there has been a yearly shortage of water during the past five years (2013-2018) (Table 4.1).
Table 4.1: Seasonal Water Shortage
Year Rabi (MAF) Rabi Kharif (MAF) Kharif Total (MAF) Yearly
(%) (%) (%)

2013-14 17.44 -12 33.83 -2 51.27 -6

2014-15 17.08 -14 35.15 -1 52.23 -4
2015-16 16.87 -15 32.53 -6 49.4 -9
2016-17 15.93 -20 35.51 2 51.44 -6
2017-18 12.76 -36 29.19 -16 41.95 -23
Average 16.02 -19 33.242 -4 49.26 -10
Source: Irrigation Department, Government of Punjab

The growth of irrigation sector is directly linked to the availability of water. Currently, the country is facing
a serious water crisis due to a lack of storage facilities. The storage capacity of major dams is depleting
at an alarming rate, and no new storage facilities have been initiated or completed during the last 40
years. The current situation of water storage is given in Table 4.2.
Table 4.2: Capacity of Dams
Reservoir Designed capacity Exis�ng capacity Capacity lost
(MAF) (MAF) (percent)
Tarbela Dam 9.68 6.05 38
Mangla Dam 5.34 4.49 16
Chashma Barrage 0.72 0.23 68
Source: Ministry of Water Resources, Government of Pakistan
Despite water shortage, the Punjab Irrigation Department has successfully launched various projects for
canal rehabilitation, canal lining, rehabilitation of barrages, construction of small dams and flood protec-
tion works during the last five years in order to efficiently utilise and protect precious water resources.

The vast irrigation system in the province faces major irrigation and drainage challenges with profound
economic, environmental and social implications. Hydraulic infrastructure has deteriorated and large
deficits in Operation & Maintenance (O&M) have led to sub-optimal service delivery levels characterised
by low water conveyance efficiencies. The challenges may be summarised as under:

75
The often quoted Falkenmark water stress index with a threshold value of 1,000 m3/capi-
ta/year hangs over Pakistan, as this index is going to fall below the threshold by the year 2025 due to
population increase. For Punjab, it is still worse at 770 m3/capita/year, with total water availability (sur-
face water plus groundwater) of just 75 MAF.

 Pakistan’s water infrastructure consisting of dams, barrages, canals and other
works amounts to USD 60 billion, of which Punjab’s share is USD 20 billion for its irrigation infrastructure.
Assuming a 4 percent maintenance cost, the financial requirement works out to $800 million a year. The
abysmally low water charges at Rs 135 per acre annually, and even at 100 percent recovery rate, is only
$120 million a year, which is grossly insufficient and results in deferred maintenance.

  Pakistan has been declared as a high risk country under various climate change
scenarios. The increased variability of rainfall is also likely to increase flood and drought conditions which
may affect our supply and demand management system.

 Pakistan’s crop yields are much below the world average and also lag behind
those of neighbouring India. The main reasons for low yields among other things include inefficiently
irrigated agriculture, which includes tenant based farming (as against corporate farming), unreliable
supply of canal water, especially for tail-end farmers, inefficient irrigation application, lack of adoption of
modern irrigation technologies and practices, etc.

Over exploitation is depleting groundwater at an alarming rate. The number

of private wells in Punjab has grown to 1.2 million, pumping in excess of balanced recharge of 43 MAF.

 The falling water tables and deposition of excessive

salts has now put Pakistan’s agriculture at tremendous risk. The problem is further aggravated by exten-
sive use of fertilisers and pesticides, improper sewage disposal and negligible treatment of industrial
effluents.

 Despite heavy investments in flood protection structures since independence,

flood damages continue to rise. The 2010 flood alone caused damages worth $10 billion, more than the
cumulative flood damages in the period 1947-2009. The uncontrolled development in the floodplains due
to increasing demographic pressure is the principal cause of rising flood damages even when flood peaks
have not exceeded their historic highs. Early Flood Warning Systems and the enactment of the River Act
to regulate activities in floodplain is essential.

 Impact of India's hydropower development on River Chenab, the unre-

solved issue of Kalabagh Dam, complaints of Sindh on canal releases in Chashma-Jhelum Canal and
Greater Thal Canal and its emerging complaints on disposal of drainage surplus from Punjab into Sindh
require greater attention.

 The issue of governance and trust relates to equitable distribution of water
between provinces, within provinces, upper-lower riparian zones and head-tail farmers, and participation
of all stakeholders in decision making. A transition in water governance is required from building to man-
aging, from development to conservation and from supply to demand, for which institutional reforms,
strengthening and capacity building are now required in line departments, while also a new approach
towards implementation of the Integrated Water Resources Management (IWRM) methodology is also
required.

Punjab currently lacks an integrated database for water

and environment, water balance and real-time simulation models, the use of which could tremendously
help in resolving water allocation and equity issues.

76

The overall objectives of Punjab Growth Strategy 2023 are in line with the objectives stated in the
Punjab Water Policy, which talks about providing clear policy directions to the Punjab government on
the sustainable management and development of water from multiple sources, for all sub-sectors of
water use (domestic, stock water, agriculture, industry, commercial and environment) and for all
regions (Indus basin canal commands and outside the canal commands) at the basin level through
equitable water allocations, management and development. The specific objectives of the Growth
Strategy are:

Increase Water Availability through advocacy of construction of large dams at the federal level
and construction of small and medium dams in Punjab. Steps will be taken for beneficial use
of floodwaters and reuse of wastewater. This will result in adequate, equitable and reliable
irrigation supplies to mitigate water stress and enhance productivity of irrigated agriculture.

Punjab will ensure financial sustainability through adequate and regular maintenance of water
infrastructure, and proper water pricing through revision of Abiana rates.

The Integrated Water Resources Management through IWRM Framework. This framework
will result in improved water governance. The government will initiate institutional reforms
needed to adopt this framework. The government will promote sustainable management of
water resource (surface water and groundwater) and drainage network.

Steps will be taken to adapt to climate change, floods and drought through a combination of
structural and non-structural measures under short, medium and long-term scenarios.

Address transboundary issues with other provinces and internally through structured negotia-
tion and dispute resolution methodologies.

Develop knowledge database and water informatics through basin/sub-basin wide develop-
ment of GIS databases for water and environment, water balance and simulation models,
hydro-meteorological network, real-time data acquisition and operational models.


The Irrigation Department will conduct following set of actions and activities to achieve its objectives:



39 canal rehabilitation and 20 canal lining schemes will be completed.

1,528 miles of canal network will be rehabilitated and 1,662 miles of canal network will be lined.



4 new canals will be constructed.

563 miles of new canals will be constructed.

Jalalpur Canal Project costing Rs 32,721 million will be completed with new canal length of 156
miles, bringing 160,000 acres under Culturable Command Area (CCA).

Greater Thal Canal Phase-II costing Rs 6,261 million will be completed with new canal length of
278 miles, bringing 294,110 acres under CCA.

77
 Permanent Headworks and rehabilitated system for Kas Umar Khan Canal costing Rs 9,998
million will be completed with new canal length of 30 miles and bringing assured irrigation supply
to 112,000 acres.

Greater Cholistan Project costing Rs 14,966 million will be completed with new canal length of 98
miles, bringing 153,612 acres under CCA.

Suleimanki, Trimmu, Panjnad and Islam Barrages will be rehabilitated.



1 drainage schemes will be completed.

486 miles of drains to be rehabilitated.

Rs 11,858 million required during the next five years.

39 canal rehabilitation schemes will be completed.

1,528 miles of canal network will be rehabilitated

20 small dams will be completed. These dams include Ghabir, Papin, Dadocah & Cherah Dams.

440,944 acre feet of water storage will be the capacity added.

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 
Punjab, having a population share of 53 percent and 55 percent contribution in the country’s Gross
Domestic Product (GDP), demands around 68 percent of total electricity.The existence of more than
50,000 medium and large-scale enterprises and an electrification ratio of 95 precent are the primary
reasons for the high demand of electricity in the province. The Government of Punjab established the
Energy Department to play an active role in the energy sector to develop power projects, demand side
management, energy conservation measures and the exploration of gas & oil. The purpose is to achieve
the national power sector goals jointly set by the federal and provincial governments.

Energy is an important component of the investment climate in the economy because of its role as an
important input in the production process. Affordable and sustainable energy supplies not only bring pros-
perity for the population at large but also help eradicate poverty through various direct and indirect chan-
nels. Self-reliance in energy reduces the economy’s vulnerability. Various efforts have been put in place
by the Government of Punjab to meet the growing electricity demand, and it played a vital role in complet-
ing mega power projects, contributing 5,350 megawatts (MW) to the national grid. This shows the com-
mitment of the Government of Punjab to contribute towards bridging the power supply gap and ensuring
the availability of electrical power to all its citizens as well as industrial and commercial institutions. the
Government of Punjab aims to adopt a multipronged approach to ensure reliability of electricity supply
instead of focusing only on increasing the power generation capacity.

An important component of the economy is the power sector, which serves as an essential input for the
production sector and households. The Punjab Power Generation Policy (2006, revised in 2009) is
framed by the Punjab government to attract investors to set up power projects. The Punjab Power Devel-
opment Board (PPDB) is responsible for liaising with the Private Power Infrastructure Board (PPIB) on
related matters, with the NTDC and DISCOs operating in the province regarding sale and purchase of
power, and with NEPRA on regulation issues. The power supply of the country is dominated by thermal
power, as it constitutes over 60 percent of the total installed capacity. On the other hand, renewable
energy (including hydroelectricity) constitutes 34 percent of the entire power generation mix of the coun-
try. The gigantic challenge faced by the energy economy of Pakistan has directed all stakeholders to
focus on exploring indigenous solutions that will benefit the national economy by providing sustainable
solutions in the long run. In this perspective, renewable energy technologies, especially solar energy,
have been exploited to be integrated in the national energy mix. Without the inclusion of hydroelectricity,
the share of renewables is 5.59 percent (of which solar is 27 percent, wind 54 percent and biomass +
bagasse 19 percent) to date, as it has only been a couple of years since investment by private and public
sectors has opened up in the renewable energy market of Pakistan. In addition, Government-to-Govern-
ment (G2G) mechanisms, such as the China-Pakistan Economic Corridors (CPEC), serve as an example
for investments in the infrastructure and energy sectors of Pakistan.

The Government of Punjab played a vital role in mitigating the energy crisis in the country, and largely
contributed to the increase in the renewable energy share through solar power projects. In performing its
obligations under the Punjab Power Generation Policy 2006, revised 2009, The Government of Punjab
successfully completed mega power projects, contributing substantial power to the national grid. Tech-
nology-wise electricity generation in Pakistan and efforts and contribution made by the Government of
Punjab to mitigate electricity demand are depicted in Table 4.3.
Table 4.3: Technology-wise Electricity Generation in Pakistan and Punjab
Technology Genera�on Genera�on Punjab's Contribu�on through
Capacity in Capacity in Punjab Public & Private Investment
Pakistan (MW) (MW)
(MW)
Hydel 7,116 1,794 -
Oil, Gas & RLNG 20,236 11,533 3,630
Coal 1,470 1,320 1,320
Nuclear 1,142 1,005 -

79
 Solar 400 400 400
Bagasse 280 280 -
Wind 785 - -
Total 31,429 16,332 5,350
Source: State of Industry Report 2017 and PPIB


The Government of Punjab will strive to achieve Sustainable Development Goal 7 “Ensure access to
affordable, reliable, sustainable and modern energy for all” within the provincial domain. The key determi-
nants of the strategy revolve around public private partnership, cost of development and energy
produced, financial space, comparative advantage of the cites in Punjab over others, indigenisation and
sustainability, integration with the existing systems, capacity of public and private sector, local regulatory
regime.

After the 18th Constitutional Amendment, it was required to bring changes to the Punjab Power Genera-
tion Policy 2006. The draft bill of Punjab Power Generation Policy 2018 has been prepared and is await-
ing approval from the Cabinet. An energy sector policy will be formulated for Punjab to ascertain the
energy potential of the province and develop an action plan accordingly.

Solar Energy: Punjab is endowed with vast potential of solar energy, estimated at annual mean value
1900–2100 kWh/m2 of solar irradiance levels, as determined by the World Bank ESMAP programme. The
province has considerable sunshine available for more than 300 days (approximately) in a year with good
insolation levels. Punjab solar insolation ranges from 2.30 to 5.5 kWh per sqm/day18 which can be a
source of energy generation for households and micro-grid systems. This energy can be utilised for
generation of power during the daytime, and during night-time by power storage systems
An estimated portfolio of USD 4.5 billion of private sector investment is being facilitated by the Govern-
ment of Punjab for development of renewable power projects in the province. This includes development
of 1,775MW Solar Power Projects, including the remaining 600MW at Quaid-e-Azam Solar Park.

Availability of large potential to produce electricity from solar radiations calls for on-grid and off-grid elec-
trification at the community and household levels. Power generation through solar radiations is the one
option which has a lot of potential that will be explored through the installation of small solar power
projects at public sector buildings. Industries will also be encouraged to install solar panels for self-con-
sumption. Furthermore, electrification of villages using solar panels is also an option that requires atten-
tion from the authorities. Moreover, the Government of Punjab will be using solar resources to produce
off-grid electricity to increase access of electricity to un-electrified villages and public sector buildings. To
fulfil the demand of households and industry through exploring potential of solar resources, the govern-
ment will make efforts to develop a mechanism for public private partnership, especially communi-
ty-based shared loans and microfinance models.

Wind potential in Rojhan has been determined for the development of
1,000MW wind power projects with the support of renowned wind turbine
manufacturer VESTAS. The Grid Interconnection Study (GIS) was
approved by the NTDC. M/s Vestas is in the process of filing tariff applica-
tion before NEPRA on a cost plus basis, as currently no upfront tariff is
available for wind power projects.

Punjab also has abundance of distributed resources in the kind of
bagasse, biomass, cow dung and municipal waste, which can also be
tapped for development of power generation projects that may reduce bill
of imported energy. Development of a 20MW biomass power plant at

80
Chak Jhumra is in process. The Government of Punjab will provide support to the private sector to devel-
op in-house power generation plants (by promoting small sized biogas digesters as per China or Nepal
model) to meet their internal needs wherein the surplus would be sold out to the nearby localities, industri-
al units or the grid stations.

Municipal Solid Waste (MSW) is also a reliable source of producing energy. The Waste to Energy (WtE)
is an efficient way of safe waste disposal. The Government of Punjab has established waste manage-
ment companies in all major cities of Punjab, which include Lahore, Gujranwala, Faisalabad, Rawalpindi,
Multan, Sialkot and Bahawalpur, for collection of MSW and carrying it to the dumping sites. The Lahore
Waste Management Company (LWMC) has assured supply of 2,000 tonnes/day of MSW for the develop-
ment of approximately 40MW WtE power plant in Lahore. This WtE power project was awarded to M/s
Lahore Xingzhong Renewable Energy Co Pvt Ltd and is at an advanced stage of development as an IPP.
The urban waste collected at the landfill sites in Punjab will be utilised for WtE initiatives.

The provincial area is of relatively flat terrain along the major rivers. However, the irrigation canals and
barrages within its territory provide an opportunity for low-head hydro projects. The PPDB is currently
facilitating development of small hydropower projects with an aggregative capacity of 264MW.

The Asian Development Bank has offered Result Based Loan (RBL) to the tune of USD 83.690 million
through which 15,000 schools and 2,400 BHUs will be solarised. In addition to that, a 2.5MW solar power
plant will be installed at Islamia University Bahawalpur, and the Energy Resource Centre will be
constructed. Moreover, the Management & Professional Development Department (MPDD) Lahore build-
ing will be solarised, mini hydropower sites in Khushab & Nandipur and solar/biogas system in Vehari and
Faisalabad will be developed by the Punjab government for catering to the energy needs of communities.

As many as 6,000 AMR meters will be installed in series with DISCOs’ billing meters as “check meters”
against the Punjab government’s electricity connections across the province, which will help reconcile
electricity billing disputes with DISCOs through accurate consumption.
Energy Efficiency & Conservation.

To meet the growing energy demand and to achieve sustainable economic growth, it is essential to move
away from relying on supply side options and to invest in demand side management. Therefore,
increased energy efficiency measures can be one of the easiest and comparatively cheaper pathways for
the province to reduce the demand-supply gap. To achieve the said goal, detailed policies and regula-
tions will be implemented to create an environment that is conducive for the transformation of our society
from an “energy wasting” to an “energy efficient and conserving” one. In addition, testing labs for air
conditioners, LEDs, microwave ovens, refrigerators and pumps will be set up and manufacturers and
importers will be encouraged to become part of the standardisation and labelling regime for this electrical
equipment. All new buildings, as well as buildings undergoing renovation, will be covered by Energy Con-
servation Building Codes (ECBC) through the ECBC legislation. As many as 50 public institutes will be
retrofitted by replacing their lights and fans that will save 73GWh of energy, yielding financial savings of
Rs 1,238 million. Top 10 energy consumers among all the public sector universities across Punjab will be
solarised through the Energy Servicing Companies (ESCOs). The ESCOs will be contracted to design,
install, monitor and maintain the solar system in each of these institutes, and will in return get payment for
the energy generated, for a given number of years as specified in the contract.

Villages in Punjab have immense indigenous resources that can help cater to their energy needs. These
resources are biogas, biomass, solar, wind and small hydro power plants. Due to the high diversity of
resources and difficulty in collection for large scale projects, it is decided that each village is to be provid-
ed its own power house, to be run by the community. This would reduce the burden on the national grid
& dependency on imported fuels.

81

Article 172(3) of the Constitution provided for provinces’ equal (50 percent) ownership in mineral oil and
natural gas resources found within a province. The Energy Department established the Punjab Energy
Holding Company Ltd in 2015 to participate in the Oil & Gas Exploration Blocks in Punjab, by exercising
provincial constitutional right of 2.5 percent and to facilitate exploration & production companies working
in Punjab. The Cabinet Committee on Finance approved Rs 1.7 billion in February 2018 to participate in
the exploration of four blocks in Punjab for investment.


Updating and developing provincial policies and regulations, which may ensure energy securi-
ty in the province. These include Punjab Power Generation, Transmission, Distribution Stan-
dards and Safety Rules; Plan for Institutional Development of Energy Department and Affili-
ates; Equipment Manufacturing and Establishment Standards Regulation and Rules for
various technologies to promote local engineering industry, and Energy Efficiency Codes for
Buildings and Equipment.

The Government of Punjab will make efforts to attract private investments to increase the
share of renewable energy wherever the grid is more suitable.

Reducing dependency on the national grid by promoting off-grid electricity solutions through
the introduction of financing models for households, firms and communities, in close coordina-
tion with banks and relevant federal institutes.

Development of electricity projects based on the indigenous energy resources available in the
province. Financial sustainability and availability of financial resources are the two basic
principles to follow for investment in power generation projects. The government will develop
power projects that will be privatised after they have started generating power. The funds will
be revolved for further investment in power generation projects.

Prepare and implement a framework for the energy audit of the public sector buildings and
encourage the private sector to make energy audits a permanent feature of their policies. The
private sector will also be encouraged to utilise energy efficient electric equipment to reduce
the cost of production and improve competitiveness, which will improve the level of exports
and employment in the province.

Effective planning at the Punjab level is difficult without an insight into the overall power sector
plan. Coordinated efforts will be made on Load Projections and Generation Plan (short-,
medium- & long-term), including fuel and technology preferences, for achieving power sector
goals.

Energy efficiency will be based on a comprehensive policy environment covering building

codes, appliance and fixture standards, adoption of energy efficiency equipment and technolo-
gies, and promotion of supportive industry.

82
 Skilling Punjab’s Labour Force
The Punjab Growth Strategy and future growth expectations are heavily reliant on improving the human
capital of the province. Regardless of the sector, industrial, agriculture or services, the gains to skills are
significant both in terms of economic growth and employment. Skilling the youth of Punjab was a main
pillar of the previous Growth Strategy, and the government had itself set a target of training 2 million
skilled graduates over the strategy period. The government, extended significant investments in the
sector and was able to meet the target by training 2.02 million skilled graduates. The training capacity in
the province was increased at an average of 16 percent per annum of the period, reaching almost
600,000 in the terminal year (see Figure 5.1).

In terms of institutional delivery, 1.55 million trainings were delivered by the TVET sector institutions and
470,148 trainings were delivered by the sectoral departments. Figure 5.2 shows that the P-TEVTA and
the PVTC were the main contributors; training close to 1.1 million skilled graduates over the period. The
PSDF funded 222,166 trainings and private sector institutes contributed 135,406. In terms of sectoral

Figure 5.1: Number of Skills Trainings per Year, 2015-18 (numbers)

700,000
599,517
600,000 565,824

500,000 470,716

383,801
400,000

300,000

200,000

100,000

-
2014-15 2015-16 2016-17 2017-18

Source: Punjab Skills Development Programme, Government of Punjab

department contributions, Social Welfare, Health, Local Government, Agriculture and Higher Education
Departments imparted a majority of the trainings. The trainings provided by the sectoral departments
were added to ensure that the targeted trainings were delivered. However, it must be noted that a majority
of these trainings by departments cannot be classified as skills trainings, as they included some very
short trainings that are very specific to the staff of the sector. Moreover, the strategy was not very clear
on the re-skilling of the already skilled/employed. These trainings are an essential part of human capital
development, as they upgrade the existing human resource to become more productive and allows the
sift to more efficient positions.

85
 Figure 5.2: Training Count by TVET Sector Institutions, 2015-18

700,000
590,433
600,000
505,872
500,000

400,000

300,000
222,166
200,000
135,406
95,833
100,000

-
P-TEVTA PVTC PSDF Private Capacity
Enhancements

Source: Punjab Skills Development Programme, Government of Punjab

Figures 5.3 and 5.4 provide the spread of skills that were delivered over the period of the previous Growth
Strategy. While the strategy provided targets to individual institutions, the action plan developed for the
strategy’s implementation did not provide the focus area of these trainings. The strategy lacked in linking
the demand side factors, and was a strong supply push to jack up the numbers trained. Consequently, the
training institutes reverted to deploying shorter duration and easier trainings rather than moving into more
complex, high value or demand oriented trainings.
Figure 5.3: Spread of Trainings Provided by P-TEVTA (2014-18) (%)

Tex�les (S�tching,
6.5 Dress Making, etc)
Electrical &
1 2
22 electronics
5 Informa�on &
Communica�ons
5 Mechanical

Healthcare

10 Construc�on

Agri & Automobile

16
Chemical

16 Trace & Commerce

16 Hospitality

Source: Punjab Skills Development Programme, Government of Punjab

Data shows a large number of beauticians, basic computer operators, dress makers and tailoring and
basic electronic repairing skills being provided. While these are part of an affirmative action – as it builds
the capacity of youth to become self-employed – these skills are hardly going to yield strong economic
growth dividends. However, the operations in skills sector of Punjab show that there is significant delivery
capacity and it is just that the interventions need to be more targeted.    
’



86
 Figure 5.4: Spread of Trainings Provided by PVTC (2015-18) (%)

0.5 Tex�le & Garments

13.3
21 Pumps
0.6
3.6 Autoparts

Beau�cian
1.5
3 Basic Compu�ng

Construc�on
11.6
Food Processing

Light Engineering
44.9
Agriculture

Source: Punjab Skills Development Programme, Government of Punjab


The issue highlighted above in terms of trades selected for the delivery of trainings reflects a large supply
side constraint. The TVET sector design in Punjab and Pakistan has evolved over time with a strong
sense of affirmative action. The TVET has always operated as a way to empower the deprived with skills
that can generate incomes for sustenance. The skills dimension has never incorporated high value added
growth skills, and this has resulted in the lack of private sector ownership and realization of the value of
public sector investments. The current provision of skills trains the youth in areas that are more relevant
for self-employment as service providers. However, ironically, these trainings do not prepare the trainees
to become self-employed; instead graduate them with a mind-set of finding employment. Consequently,
a large number of those trained end up disoriented with skills that do not offer ready employment, and
have no understanding on using the skill for self-employment.

Punjab’s Workforce Value Chain lacks in delivery as there are gaps at all nodes. The section below sum-
marises the key issues.

Post 18th Amendment, the federal government is responsible for the setting of standards and regulations
for technical and vocational education, whereas the provinces are required to deliver training and skills
education. Institutionally, at the federal level, the Ministry of Education and Professional Training, and the
Ministry of Overseas Pakistanis and Human Resource are two main institutions overlooking the develop-
ment of skills and human capital. The National Vocational & Technical Training Commission (NAVTTC)
under the ministry has the overall mandate to set the policy framework and develop and implement
national standards on training.

In Punjab, delivery of skills is managed though the Punjab Technical Education & Vocational Training
Authority (P-TEVTA), the Punjab Vocational Training Council (PVTC) and the Punjab Skills Development
Fund (PSDF). Punjab in its existing setup also has two testing boards; the Punjab Board of Technical
Education (PBTE) and the Trade Testing Board (TTB). At the moment, private sector institutes are
required to be registered both with the PBTE and the TEVTA.

The current model suffers due to overlaps and coordination failures between the NAVTCC and the
P-TEVTA, as both offer trainings that override on each other. However, there have been more serious
issues within the province. The existing system has a large cost and disincentive for private sector-led
growth in TVET provision. Private sector institutions are required to be registered with the P-TEVTA and

87
the PBTE. The P-TEVTA regulates the registration process and also competes for the market with TVET
institutions. Moreover, the private sector training institutes can only get certification for courses approved
by the PBTE and developed by the P-TEVTA. This fairly limits the growth of private sector TVET institu-
tions in Punjab.

As discussed above, the supply of TVET in Punjab is skewed towards providing skills relevant for self-em-
ployed service providers. While affirmative action is the responsibility of the government, the quality of
and relevance of skills produced by TVET sector are questioned by the private sector. The lack of
relevance to industry, agriculture and value added services, including ICT, has been highlighted a
number of times and the response from the public sector TVET has been slow.

Moreover, the private sector raises concerns over the quality of training, and there is little value in the
certifications being provided by the sector. The private sector also raises strong concerns about the lack
of missing soft and employability skills in the workers. The workers coming out of the TVET training lack
in basic, yet essential, employability skills such as workplace hygiene, workplace safety, punctuality,
ethics, ability to work in a co-environment and general behaviour impacting productivity. The lack of
employability skills and soft skills has been identified as one of the key detractors for export of human
resource from Punjab.

Moreover, even with enhanced efforts, the TVET training capacity in Punjab reached 600,000 in 2018.
However, the number of youths in Punjab is close to 30 million. Therefore, the supply is still fairly limited
to the total coverage. The institutes are scattered all over and as a result no concentration of skills produc-
tion has happened in the province and no major centres of excellence have emerged. Finally, the supply
of skills at the moment consists of a large number of trades, but fails to demonstrate sequential skills path-
way to the trainees and there are limited opportunities for proper career guidance.

The demand side is more complex than the supply of skills, as demand for skills is a derived demand
based on firm performance and growth opportunities. The sectors that are growing require a large
number of new intakes; however, in sectors where the business is declining, a limited demand for skills
exists. Therefore, demand for skills is more dynamic and the supply capacity needs to have the flexibility
to meet the changing demand for it to remain relevant. However, lack of supply in some cases also
restricts businesses to grow or move up the value chain. Interviews with the private sector in Punjab
reveal that in many sectors, firms shy away from making investments in new technologies, as they fear
they will not be able to find appropriately trained manpower to work on the technology. In short, one
dimension of demand side constraint results from low growth, where skills is not a binding constraint and
the private sector is not willing to pay for it, and the second, where lack of faith in finding suitable skills
results in limited investment in growth and new technologies.

Institutions in Punjab, like P-TEVTA, PVTC and PSDF, all have institutional mechanisms to systematical-
ly include the private sector in determining the skills provision; however, the success to date is not so
strong.


A key mechanism to address the supply and demand side constraints identified above is the innovative
use of public private partnerships. Experience shows that the government has struggled to attract the
private sector for managing public sector TVET institutes in Punjab. However, direct industry partnerships
have shown more promising results. The P-TEVTA has developed a Partnership Framework for Skills,
which takes an extremely flexible approach to defining industry partnerships. The primary purpose of this
arrangement is to create a role for industry in delivering skills and, therefore, addressing issues of quality
and relevance. The PSDF has also engaged in a large number of industry partnerships and delivered a
large number of trainings with co-funding from the industry. However, these industry partnerships are still
at initial stages and need to be strengthened further.

87

The Growth Strategy has set itself the following targets for the skills sector over the period of five
years.
1. Train a total of 2.5 million skilled graduates over the 5-year period to 2023. The trajectory is
provided below:

2018-19 2019-20 2020-21 2021-22 2022-23

450,000 450,000 500,000 550,000 550,000

2. 10 percent of the skills trainings will be provided through industry partnerships by expanding
both the PSDF interventions and enlarging the scope of the P-TEVTA industry partnership
framework. The terms of these partnerships will be similar, and both efforts will be coordinat-
ed.

3. 30 percent of the skills trainings will be in industry-relevant trades for sectors that are growing,
with a focus on export growth sectors. 10 percent of these trainings will be futuristic and will
incorporate expected demand under the CPEC and resulting technological growth.

4. 35 percent of the target will be delivered by the P-TEVTA, 30 percent by the PVTC, 20 percent
by the PSDF and 15 percent will be delivered by the private sector. The target for skills does
not include department level trainings and these will be tracked separately.

5. 10 percent of skills trainings will be geared for overseas markets, especially the UAE, given
the upcoming events like world-expo and Football World Cup in Qatar.


The above targets set an ambitious agenda for the provincial government and will require a strong institu-
tional structure, improved governance and efficient use of resources and partnerships to deliver. The
strategy of the government is presented below.


The government will develop and approve the TVET policy in line with the federal govern-
ment’s policy approved in 2018. The policy will focus on all pillars of improving supply by shift-
ing to more demand-oriented and competency-based courses and strengthen the institutional
capacity for certification and accreditation.

The government will address the coordination and governance failures in the TVET sector by:

Creation of the Punjab Skills Development Authority (PSDA) as the regulator of skills
sector in Punjab. These powers will be withdrawn from TEVTA. The bill for the creation
of the PSDA has been developed and awaiting approval by the Punjab Assembly.

To strengthen the testing and certification regime in Punjab, the Punjab Skills Testing
Agency (PSTA) will be established. A draft bill has already been developed and the
agency will become operational in July 2019.

The P-TEVTA’s institutional structure will be rationalised and will now be made
responsible for provision of trainings only.

The PVTC will be moved under the Industries, Commerce and Investment Department
to streamline coordination issues.

89
 The PSDF will be strengthened to move up the ladder by providing high value and growth skills
with high market price. This approach will ensure the sustainability of the PSDF as it establish-
es its brand for providing key value added skills.


The government will establish two TVET universities in DG Khan and Rawalpindi. The univer-
sities will be geared towards producing the workforce of tomorrow that is more productive and
can work on enhanced value activities and can integrate better into the global knowledge
economy.

The P-TEVTA and the PVTC will review their entire range of courses and develop transition
plans to upgrade courses to new relevant curriculums. The offerings will clearly demarcate the
trades that are relevant for self-employment and those that are relevant for industrial employ-
ment.

The P-TEVTA and the PVTC will work with the PSDF to start developing modular-based train-
ing programmes and curriculums. The modular approach will break down a trade into basic
level 0 module and follow-on specialisation modules. Module 0 will cover the most common
skills, and the follow-on modules will cover the more advanced industry-specific skills. For
example, the skill of stitching is required by industries such as garments, football, sporting
goods, footwear, leather gloves, motorbike gear and sportswear. The module 0 for stitching
will cover only the very basics/common skills that are required. The trainee will also be provid-
ed soft skills at module 0 and a career path counselling on the type of industrial sectors he/she
can grow into and the types of trainings that will be required. The modular approach will ensure
consolidation at starting point and a larger intake reducing the cost of providing training. This
will also help screen individuals to follow different skill pathways. The PSDF has already
conducted a study that has identified 13 different skill trades covering 9 exporting sectors. The
PSDF will work for the implementation of this new approach towards delivering industry-rele-
vant skills10.

The government will work towards developing next generation skills courses in partnerships
with large industrial players in Punjab. For example, Saphhire Group has recently started
working with Hunar Foundation to develop a training programme on use of robotics on industri-
al floors. The group is financing the set of the facility and the equipment. The need is based on
the industry realising that in order to stay competitive they will have to shift to newer technolo-
gies, and without appropriate skills the shift will not be possible. The government institutes and
the PSDF will work to identify more such opportunities and invest to reduce the risk capital for
private sector, besides developing capacities for skills of tomorrow. Moreover, CPEC-related
skills will be factored in the programme.

The government will increase the number and types of courses that are relevant for females.
The agriculture sector provides a large variety of opportunities to train women in modern prac-
tices and the use of technology in farming and livestock practices.

The government will facilitate private sector investment in the TVET sector by reducing the
cost and entry barriers, and providing more freedom to offer higher value added courses that
are more relevant to the needs of the industry. The government will look to establish
state-of-the-art TVET centres in all of its large industrial estates under the PPP mode by
providing land as equity.

A strong component of soft skills and employability skills will be added at all levels of training.

The P-TEVTA and the PVTC will review their training institutes and explore the options on
consolidating the trades that are offered to move towards institutes specialising in certain
trades and emerging as centres of excellence.
10
Usman Khan, Turab Hussain, Nazish Afraz & Nadia Mukhtar; Common Skill Pathways in Key Exporting Sectors, PSDF 2019.

90
 trades and emerging as centres of excellence.

The P-TEVTA and the PVTC will develop courses for re-skilling the existing employed work-
force with a focus on increasing productivity skills. These can be run in partnership with the
private sector.



The government will increase demand-targeted and sector-specific courses that are offered in
partnership with the industries. The government will initiate this programme by focusing initial-
ly on key export sectors. A recent study by the PSDF has identified the immediate demand by
following sectors11:

1,000 grinders and polishers required by the surgical industry, resulting in a growth of
20 percent every year.

500 grinders and polishers required by cutlery sector in Wazirabad.

15,000 workers required by the sporting goods industry of Sialkot, with a majority of
these needed in football stitching and football hybrid technology.

Auto parts industry has identified a demand of over 50,000 workers over the next
three years in tools and dies, sheet metal, metal casting, electronics and assembly
departments.

The fan industry has identified a need of 500 workers in assembly line training.

The garments and made-up sector needs over 130,000 workers in the next five years.
This demand is likely to triple as the government speeds up work on the colonisation
of Quaid-e-Azam Apparel Park.

Footwear sector has identified a demand for shoe lasting.

The P-TEVTA will refine its partnership framework and initiate an industry partnership drive
more aggressively. The PVTC will also use the same framework to develop and increase
industry-partnered training courses.

The PSDF will seek partnership opportunities with MNCs and larger national players to identify
their future demand and establish a mechanism to become a provider of these new skills in the
market. The PSDF will explore the possibility of privately funded skills fund to next generation
leverage private investment in the sector.



The government will invest to strengthen the career counselling capacities and the optimal use
of ICT for supporting job placements and linking employers with trainees of the TVET system.
It will explore the opportunity of either strengthening the national portal developed by the
NAVTCC or to set up a new one at the provincial level and start registering employers and
feeding in data on trained graduates.

The Job Asan portal will be scaled up across the province so that women can better integrate
into the job market.


The government will enable the private sector to set up institutes and training facilities for next
11
Usman Khan, Turab Hussain, Nazish Afraz & Nadia Mukhtar; Common Skill Pathways in Key Exporting Sectors, PSDF 2019.

91
 skills, especially in the ICT sector. Courses on app development, use of AI, robotics, electron-
ics, gaming applications, e-commerce, fin-tech and online entrepreneurship management will
be designed. The government will provide cost-sharing opportunities for specialised courses
that will upgrade the human capital of Punjab for next generation jobs.


The government through the PSDF, P-TEVTA and the PVTC will develop linkages with the
large diaspora community in the UAE and the Middle East for determining the key demands/-
future for skills in those regions and develop specific targeted programmes designed for export
of human capital. The PSDF will lead this initiative.



The government will establish a self-employment fund that will target the skills graduates in
trades that have a natural path into becoming service providers. These graduates will be
trained in entrepreneurship and offered small loans to start up their business. This will encour-
age more women to participate. A full design has been provided in the Private Sector Develop-
ment Chapter.


The government will pilot the dual education and skills training programme through its public
schools with the intent of scaling up the system to increase human capital productivity of its
future labour force.

92
 ’

The Punjab’s growth model shows huge dividends to human capital regardless of the economic sector in
which it is employed. Accumulation of knowledge adds significantly to the productivity and quality of
human capital. As the global economy becomes strongly integrated under the digital and AI revolution, it
is no longer a choice for economies to stay isolated. Similarly, Punjab cannot afford to not become part of
the rapidly expanding knowledge economy and digital market space. Punjab’s economy will have to
create, disseminate and use knowledge to enhance its growth and development. Punjab will have to
create strong links between science and technology, place a greater importance on innovation for
economic growth and competitiveness, and increase significance of education in all its interventions. It
will have to create greater opportunities for lifelong learning and make greater investments in intangibles,
such as R&D, software and education.

The Government of Punjab, under its Growth Strategy, will focus on all key pillars of knowledge economy,
including entrepreneurship, innovation, research & development, education and skill levels. The govern-
ment in its strategy will not only focus on technology, information and communication technology (ICT)
but will make Punjab use appropriate knowledge to improve its productivity and increase welfare.


As presented earlier in the strategy, Punjab can earn the greatest returns on its investment by building a
more knowledgeable human resource. More specifically,

Increasing ADP allocation to education by 10 percent from its current value will 
 over the 5-year period in Punjab and will 
over the same period.

As increase in allocation alone can bring such a significant impact, governance and quality improvement
will magnify these returns significantly.


Knowledge economy-led growth requires certain enabling conditions that are necessary for achieving
development and growth. Firstly, there is a need to create an enabling business environment. This
requires an economic and institutional regime that creates appropriate incentives for effective creation,
dissemination and use of existing and new knowledge. The areas of tariff and non-tariff barriers on flow
technology, regulatory burden, safety and protection of property rights and rule of law are some key areas
that enable the useful flow of knowledge for growth in the economy.

The World Bank Knowledge Economy Index scores countries on different measures of knowledge econo-
my. One of the indictors informing the overall KE Index is Economic Incentive Regime score. Pakistan’s
score was 2.43 (Figure 5.5) out of a maximum of 10. India and Sri Lanka were doing better than Pakistan.

93
 Figure 5.5: Comparative Ranking of Pakistan in Economic Incentives Regime

5
4.44 4.4
4.5
4 3.67 3.57
3.5
3
2.43
2.5
1.93
2
1.5
1
0.5
0
Pakistan India Sri Lanka

2008 2012

Source: World Bank Knowledge Economy Index

Secondly, there is a need for dynamic infrastructure that can facilitate effective communication, dissemi-
nation and processing of knowledge and information. This covers the communication and ICT networks,
strength, access, cost and penetration. A higher level of access to smart phones at affordable prices is
the key to triggering KE-driven growth. Moreover, this access should be universal and not segmented in
terms of geography or gender.
Figure 5.6: Comparative Ranking of Pakistan in ICT

4
3.6
3.5

3 2.85 2.8
2.72
2.59
2.5
1.9
2

1.5

0.5

0
Pakistan India Sri Lanka

2008 2012

Source: World Bank Knowledge Economy Index

The World Bank Knowledge Economy Index captures this through the indicator on information infrastruc-
ture, which includes telephones per 1,000 persons, computers per 1,000 persons and Internet users per
10,000 persons. The performance of Pakistan in this indicator has improved and is better than India and
Sri Lanka; however, still the performance has significant gaps (See Figure 5.6). The smart phone and
Internet penetration is still low and the digital divide is a serious issue, where women are systematically
more deprived of access to smart phones and the Internet.

Thirdly, human capital lies at the heart of a knowledge economy. An educated and skilled population is
necessary for an economy to effectively produce and use knowledge. The World Bank KE Index uses an
education sub-index to determine the country’s positioning and relative advantage. Pakistan ranks

94
extremely low on the education index with a score of less than 2 (See Figure 5.7 below).
Figure 5.7: Comparative Ranking of Pakistan in Human Capital

4.91
5 4.61

3
2.26 2.26
2
1.44
1.07
1

0
Pakistan India Sri Lanka

2008 2012

Source: World Bank Knowledge Economy Index

Although Punjab has made significant investments in the education and skills sectors over the last 5
years, it still lags in some key indicators (see chapter on Education). Moreover, the quality and quantity of
scientific education is very weak in the province, and local environment is not conducive enough to attract
such human resource from outside the country. There is a strong need to effectively invest in education
and skills so that there is a general uplift of the human capital in the province.

Fourthly, a knowledge economy thrives on growth from innovation. The economy should provide an
efficient innovation ecosystem for firms, research houses, universities and solution providers to be able
to tap into the growing stock of global knowledge and successfully adapt it in local context. Pakistan
scores low in the innovation sub-index and is ranked much lower than India and Sri Lanka (See Figure
5.8).
Figure 5.8: Comparative Ranking of Pakistan in Innovation

5
4.5 4.44
4.5
3.97
4
3.5 3.06
3 2.71 2.8

2.5
2
1.5
1
0.5
0
Pakistan India Sri Lanka

2008 2012

Source: World Bank Knowledge Economy Index

The R&D capacity, capability of firms to register patents and trademarks, and production of quality scien-
tific research is non-existent in Punjab. There is a lot that needs to be done to improve the innovation
space in the province. However, Punjab can also learn the lessons from the knowledge-driven growth

95
success of Singapore. A key feature of the Singaporean policy and reform history was its ability to sepa-
rate the government’s autonomy from important interest groups, which enabled it to act in the national
interest and implementation of policies that focused on growth rather than rent-seeking. Therefore,
improving governance and separating out the rent-seeking lobby groups should lie at the heart of Pun-
jab’s Growth Strategy. Moreover, instead of focusing on regulations, Singapore managed to get access
to foreign knowledge and technology through an incentive-based approach to attract foreign capital. For
example, Singapore used economic incentives such as tax exemptions for training of workers and local
suppliers by foreign firms. Similar incentives have been provided to build own innovations and technology
rather than on import of readymade technologies. In short, Singapore achieved a lot through strong
human capital development, infrastructure and investment ecosystem, and supportive economic
policies12.

’
The above discussion suggests that whereas it makes ample case for Punjab’s leverage knowledge
economy for growth, the necessary conditions and environment need a lot of rework and change. Never-
theless, the government sees value in changing the ways the government conducts business to improve
the overall ecosystem that more effectively uses knowledge and creates new knowledge. The strategy is
presented below:

The government will create an enabling environment, in which there is an ease for the flow and
security of knowledge. However, additional measures will be required to set the tone for knowl-
edge economy. The government will work with the federal government for developing easy
terms for technological transfer and transfer of knowledge through partnerships. The govern-
ment will work towards strengthening the commercial courts and improving the rule of law and
protection of property situation in the province.

The government will increase its focus on education and skills. The government will not only
focus on improving the access and quality of basic education but enhance the quality of
outputs from technical and higher education. The government will have to provide an environ-
ment where it can produce a larger numbers of quality science graduates and build capabilities
at local universities to produce scientific research. The province cannot jump the knowl-
edge-driven growth model unless it begins to produce and house more PhDs in science and
technology. The government will explore initiating foreign scholarships for PhDs in scientific
education with conditionalities to bring all the trained and qualified human recourse back to the
province. This will be done through setting consistent policies and setting appropriate incen-
tives system.

The government will use its investment policy as a key tool to attract knowledge transfer and
localisation of knowledge generation and development. The government will provide incen-
tives in the shape of land, provincial tax exemptions and cost-sharing activities to encourage
indigenous technology development and innovation. The entrepreneurship section under the
private sector development provides the government’s strategy to support the start-up culture,
especially for innovative ideas.

The ICT capacity, as mentioned above, is also a key pillar of the knowledge economy. Punjab’s ICT land-
scape has improved significantly in the recent past. However, some critical issues still persist. The
section below provides the government’s strategy to further expand its ICT sector and growth.


The ICT in Pakistan in general and Punjab in particular has been rapidly expanding and industry experts
predict that the revenues from the sector are likely to double by 2020. The reported ICT exports exceeded
USD 1 billion in 2017-18, while SECP data shows that the number of registered IT companies in the coun-
try increased to 5,753, growing by 19 percent in 2017-18. In Punjab, more than 800 new IT firms have
registered over the last five years. “Ignite”, a federal government-sponsored centre, estimates that the
Growth & Innovation Policies for a Knowledge Economy: Experiences from Finland, Sweden & Singapore. Magnus Blomstrom, Ari Kokko and
12

Fredrik Sjoholm, Working Paper 156, Stockholm School of Economics, 2002.

96
actual ICT exports are much higher than the reported number, as the reported number fails to take
account of the USD 1.2 billion freelance earnings.

The expansion of ICT and digital marketplace in the country has also been facilitated by a rapid expan-
sion of mobile telecommunication. The Pakistan Telecommunication Authority (PTA) reported that as of
June 2018, there were 151 million mobile subscribers in the country, with 57 million of these having
3G/4G connectivity. Out of the total mobile subscribers, almost 83 percent of the users reside in Punjab.
However, the MICS 2018 data shows a significant gender divide in mobile ownership. Around 87 percent
of the mobile ownership in Punjab is with men, while 30 percent of the men use the Internet. The percent-
age of women Internet users is only 12.2 percent. These statistics present an important opportunity, as
the GSMA estimates that a 10 percent increase in Internet penetration in a market, could result in
a GDP growth of between 0.25 and 1.38 percentage points13.

Moreover, the ICT sector also acts as a catalytic sector to spur growth in other key sectors of the econo-
my. The drive towards knowledge economy is not limited to innovations and expansions in ICT, but more
so on how ICT can transform and enable the regular business sectors to expand and become more com-
petitive. The digital market space and e-commerce offer significant opportunities for Punjab and Pakistan.
In the recent past, the country has seen a mushrooming of digital marketplaces. Even some of the bigger
retail brands have shifted to online sales, which has increased their market access significantly and at a
much lower overhead cost. This, however, is largely an unregulated sector in the country. However, going
forward will present significant growth opportunities.

Finally, the federal government’s 5-year national digital transformation initiative looks to establish Paki-
stan as a knowledge-based economy, reaching value added of $10 billion per year by 2023. 
           



The ICT industry of Pakistan is diverse and is growing at a rapid pace. The Ministry of Information Tech-
nology conducted a survey of over 300 IT firms located in 10 cities of Pakistan (Ministry of Information
Technology 2014). The diversity of the industry can be seen by almost 14 different growth areas identified
in the survey (see Figure 5.9).
Figure 5.9: Areas of Future Growth in Pakistan’s IT Industry (%)

35

30

25

20

15

10

Source: Pakistan IT & ITES Industry Survey 2014, Ignite

In terms of issues, the survey identified power load shedding and lack of government support systems as
key issues faced by the sector (see Figure 5.10). The industry states that power outage is a big problem,
as it results in loss of productive time, increases the cost and also increases the probability of faults devel-
13
GSMA Connected Women – The Mobile Gender Gap Report 2018

97
oping in the equipment. In terms of government support and direction, the private sector generally feels
that the government has no agreed policy on the ICT sector, and there is an uneven structure of duties
and tariffs. For example, the devices that are needed for digital security are available at low prices; how-
ever, due to unclear duty structures, it is almost impossible to get these devices cleared from the Customs
Department.

The IT survey also identified lack of quality human resources and lack of education and training as major
issues faced by the sector. Firms stated that the root cause for this was the general weakness of educa-
tion and training within the country. The IT & ITES industry is technical in nature and requires strong
educational qualifications and skills. Compared to Bangalore only, which houses over 16 universities, 133
medical schools, 134 engineering colleges and 712 general colleges, Pakistan has a total of 160 universi-
ties that are recognised by the Higher Education Commission, and the share of Punjab is less than half
of that. Only a handful of these institutions offer degrees in IT, computer science, computer engineering
and other related disciplines. The top-tier universities offering qualifications in these disciplines include
NUST, LUMS, COMSATS Institute of Information Technology and ITU in Punjab. However, all these
universities are still far from holding a place on the international university rankings. The top-tier universi-
ties do not produce a sufficient number of graduates to meet the industry’s demand; hence there exists a
demand-supply gap for a higher calibre of human resource.
Figure 5.10: Key Constraints Faced by the IT Industry (% of respondents)

35

30

25

20

15

10

0
Load Shedding Absence/lack Lack of Poor law & Poor Lack of Quality High Servivces Lack of Quality Lack of
of awareness Order infrastructure of Human Tax Educa�on & Investment
government and Resource Training
support knowledge

Source: Pakistan IT & ITES Industry Survey 2014, Ignite

To allow ICT to grow smoothly, the government will have to employ the following five enabling condi-
tions14:
A labour pool with appropriate ICT skills as well as awareness
and employability skills that give competitive advantage in the labour market.
 Universal connectivity to ICT; access to electricity and transport;
infrastructure to support innovation and adoption of technology by SMEs.

 Networks of trust and recognition for workers and employers, social safety
nets and measures to minimise possible negative outcomes of ICT-enabled employment. The
digital policy should focus on this, and should strongly advocate for data safety policies.

  Efficient and accountable systems to ensure timely payments and
access to finance to support innovation and entrepreneurship. The banking sector will have to
keep up pace in Pakistan to understand the new dimensions of cash flows and credit require-
ments. The fintech industry is growing; however, more innovative products will have to be devel-
oped.
The conditions are based on: World Bank 2013. Connecting to Work: How Information and Communication Technologies Could Help Expand
14

Employment Opportunities. Washington DC. World Bank

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 An enabling environment that eases the burden of doing business.

’
The Punjab Information Technology Board (PITB) developed the first IT Policy of Punjab in 2016. The
policy covers a broad range of areas to develop the ICT sector in the province. In summary, the current
policy covers:

The policy identifies the need towards ensuring security of

business, data and intellectual property. This is an important part, as it provides the confidence
and trust to investors to start their innovative ventures.

    The policy identifies the need for suitable infrastructure,
incentives and a regulatory framework for the growth of businesses. It also recognises the
value in fostering innovation and entrepreneurship, reducing urban and rural divide, creating
diversity in employment opportunities and creating information systems and data analytics.

 The IT policy looks to bring efficacy and

effectiveness in governance management in the province, and to facilitate the process of
service delivery across the province.

      The policy also looks at providing a
stable and reliable IT infrastructure to support private sector growth.

The Punjab IT policy identifies key pillars that will be supported to develop the IT sector. However, the
government will take the following strategic measures to improve the growth potential of the sector.



The Punjab government will review the IT policy for its coverage and practicality of implemen-
tation. The revised policy will be set in line with the federal government’s 5-year national digital
transformation initiative. Moreover, the policy should emphasise more strongly on data protec-
tion and security of digital data. The Punjab government will ensure that data security systems
are fool-proof and the legislation and penalties around data breach are strict.

The government will create more space for the private sector to grow in the IT market. The
government itself is a big spender on ICT solutions that are geared towards improving the lives
of the citizens of the province. Historically, most of these investments have been made inter-
nally by the PITB. However, going forward, the Punjab government will be more open and
source solutions from the market and will also engage in strategic PPPs to facilitate growth of
the IT sector.

The government will work on the feasibility of setting up IT parks as PPP ventures to attract
foreign investment and technology to fuel growth via knowledge economy. The government
will review the use of existing PITB building and work out the possibility of converting it into a
technology park.

The provincial government will launch innovation fund to provide grants to innovative and com-
mercially scalable ideas, and the target will be second-tier universities in Punjab. The govern-
ment will also develop a mechanism to provide quality business incubation and mentorship
support to these start-ups.

The government will review the performance of Plan IX and Plan X to identify the sustainable
start-ups that have emerged from the facility and review the design as required, based on
lessons learnt.

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PITB will jointly work with the private sector to ensure growth in high value areas.

The government will work with the Higher Education Commission to ensure that a uniform
quality IT education is imparted at all approved universities.

The government will develop new vocational and technical courses for IT graduates to prepare
them strongly for the rapidly changing IT industry.

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 ’

Education is fundamental to economic growth and development. The global economy is going through an
extraordinary change, which requires economies to focus more on enhancing human capital to stay com-
petitive. Global technological advances and the rapidly changing digital economy has completely altered
the requirements raised by the new job markets. Large number of unemployed youth in developing econ-
omies such as Punjab, are therefore, more a result of a non-performing and a non-responsive education
system, than a slow growing economy. For example, the evidence from the Punjab Growth Model shows
that a 1 percent increase in education investment increases growth of large-scale manufacturing by
almost 0.9 percent. 





Punjab houses an extensive school education network that supports 28 million students with more than
12 million studying in public schools. The public sector school education infrastructure in Punjab compris-
es more than 52,000 schools and employ over 400,000 teachers. The private sector is an equal if not a
larger contributor towards both soft and hard school education infrastructures in the province (over
60,000 schools with more than 565,000 teachers). Additionally, non-profit sector in institutions such as
Care Foundation and The Citizens Foundation have over time increased their foot print in provision of
basic school education in the province. In terms of public sector focus, over the last five-year period
investments were focused on building school infrastructure, increasing enrolments in primary and
increasing the number of teachers and reducing absenteeism.

A critical area of deficiency in school education has been the funnelling of the available infrastructure post
primary education. The net primary attendance rate of boys was 65.6 percent and for girls was 65.3
percent in 2017-18. The transition rate to secondary school is above 90 percent, however the net second-
ary attendance rate for boys is just 36.3 percent and that of girls is just 35.9 percent (MICS 2017-18).
Moreover, Out of School Children continue to be a key problem, with 35.4 percent primary, 21.1 percent
secondary and 53.5 percent upper secondary students being out of school. As a result of these defaulting
indicators, the mean years of schooling in Punjab is still 5.5 years as compared to a value close to 7 years
in India.

Moreover, due to the lack of a consistent policy the ‘quality’ aspect in education was not fully addressed
over the last decade. The new government, as a first measure to address the education challenge has
announced the first School Education Policy for Punjab, ‘’The strategic recom-
mendations made in the growth strategy are fully aligned with the sector policy.

The higher education sector in Punjab includes 741 public colleges with an enrolment of more than
823,000 pupils. In addition, there are 26 public universities and 7 degree awarding institutions in Punjab
(Higher Education Department). However, the unemployment rate of youth in Punjab with a degree or a
higher qualification is as high as 18.9 percent. This is a clear indicator of the inadequate quality of higher
education offered in the province, an area that needs urgent attention of the government to ensure
creation of a productive human capital base for growth.

The Punjab Government supports special education and has a literacy and nonformal basic education
department. In addition, there exists a large number of deni madaras in the province providing semi-for-
mal to non-formal education. These are all important aspects and the government will continue to focus
on these as part of its affirmative action and for attaining compliance with SDGs. However, in the interest

101
of brevity and relevance these topics are not discussed in detail in the strategy. Similarly, the area of
technical and vocational skills has been captured in a separate chapter.


The data on Punjab suggest the following growth and development outcomes from increasing investment
in education sector.

A 1 percent increase in the mean years of schooling in Punjab will reduce multi-dimensional
poverty by almost 5 percent

A 1 percent increase of public investment in education increases years of schooling by almost

0.2 percent; the impact of operation expenditure is also the same

A 1 percent increase in public investment in education increases large-scale manufacturing

growth by 0.9 percent, growth in construction by 1.1 percent and that in Finance and Insurance
by 1.3 percent

Therefore, the focus of the current growth strategy for the education sector is to improve the mean years
of education in Punjab and this will be achieved through greatly improving quality by not only investing
more but by spending effectively.


The school education policy identifies key challenges that the sector faces at the moment. The main
issues faced by the school education sector include:

The quality of learning is a significant issue. The teachers lack effective teaching and
delivery capabilities and are still tuned to outdated pedagogical techniques. The
efforts to increase the use of ICT tools do not still justify the investments that have
been made. Only 50 percent of the 5-16 year olds are able to read in English and Urdu
or perform basic arithmetic15.

The out of school children number is still very high and is estimated at close to 5
million. More than 50 percent of the 3-4 year olds in rural Punjab are not enrolled in
any form of early childhood education. The speed on school infrastructure develop-
ment has been exceptionally slow and retention of students is low.

A significant amount of investment has gone in data capturing school education

through the PMIU. However, the governance in the sector and HR capabilities are
inadequate and this rich data is not being translated into effective policy making and
designing initiatives.

For higher education, the focus has just been on building huge infrastructure with limit-
ed emphasis on quality. The quality of scientific and relevant research quality is inade-
quate. The Higher Education Commission has recently lowered the bar for registration
of foreign degree programmes externally taught in Pakistan. This has increased the
number of low tier universities launching their programmes in Pakistan. This is a
critical issue as these universities are charging fees in foreign currency, thus impact-
ing the external account and are also not providing education that ensures productive
training and knowledge building of youth.

Significant regional disparities exist in the provision of education outputs in the prov-
ince. The provinces in the South are particularly more deprived in all forms of educa-
tion outputs as compared to central and northern Punjab. Detailed assessment is
provided in the chapter on regional development.

15
Punjab School Education Policy

102
 The ineffective devolution has left the issue of creating ownership of education assets
unaddressed. The school quality and education provision is significantly compromised
as the head teachers or the school councils or local authorities fail to take ownership
and are not held accountable.

Finally, for the private sector willing to invest in schooling the availability of appropriate
and affordable land is a key concern. The private sector investors interested in school
education state that both the cost of land, commercialization charges and suitability in
terms of location are significant barriers to invest. Moreover, the general quality of
higher education is poor and thus generate teachers with inadequate skills especially
in subjects such as English and Mathematics.

The strategy to address this will be

The government will significantly increase the total education expenditure in the province.
More importantly it will increase the ADP allocation to more than 20 percent over the next five
years.

Quality of teaching and teachers is fundamental to addressing the learning challenge. The
main reason why students drop out is not the poverty trap in fact they feel nothing of value is
gained at school. The government over the next five years will focus significantly on the
improving the quality of teachers and the teachings aids, materials and pedagogy. More
specifically the government will

Improve pre-service teacher training in the province. The QAED will be supported to
scale-up successful experiments done on teacher training involving ICT solutions,
remote classroom training, better material, and training spread across the ‘taleemi
calender’ rather than concentrated in large segments.

A teacher certification regime will be introduced under the Punjab Education Profes-
sional Standards Council. The Council itself will target attaining some international
accreditation. The council will ensure that teaching quality and teaching material is
benchmarked against credible international standards.

The number and types of in-service teacher training programmes and ICT enabled
environment will be supported for continuous professional development and learning
of new skills.

The government will invest where required in school infrastructure and will effectively use
PPPs to expand the capacity. The focus will be to increase the secondary and higher second-
ary schools in the province. Low cost land may be provided in underserved parts of the prov-
ince to improve the provision of school infrastructure and quality teachers. The government
will ensure that schools are gender sensitive and encourage female enrolment and retention
by offering an conducive environment.

The government will focus on reducing the OOSC in the Punjab. A major step towards this will
be improving quality and thus improving the returns on education. The government will amend
the Free & Compulsory Education Act 2014 to include legal obligations on parents to ensure
their children go to school. The subsidy schemes of the government will be reformed and will
focus more on learning gains and building interest of students to stay in school.

The government will focus on building suitable capabilities in the public sector school educa-
tion management. The HR capabilities at the moment are extremely weak and inadequate.
This weak capacity translates in poor planning and budgeting and limited impact on public

103
sector investments. The government under its new policy will devise mechanisms that will
ensure that ownership of public schools is created. This will either come through the new local
government system or incentivising head teachers to increase their interest and stake in good
school performance. The issues of non-performing school councils will also be addressed.
The government will develop transparent mechanisms that more operational budget is allocat-
ed directly at school level and spent well and effectively.

The government’s experience of contracting out low performing public schools to the private
sector through the PEF has yielded good results. The programme will be further strengthened
and more innovative partnership models will be tested by the department. The government will
develop a comprehensive PPP strategy and implementation framework for the sector to
ensure private sector investment and deployment of expertise.

The government will also initiate programmes to include technical knowledge and skills in
parallel with main stream education. The concept of STEAM in middle school will be piloted
and scaled up based on the results obtained.

The government will establish the Punjab Private Educational Institutions Regulatory Authority
with the primary purpose to ensure quality of education, teachers’ quality, teachers’ welfare
and cost of education. However, the authority will also advocate with relevant bodies to reduce
the cost of education provision by the private sector. For example, the school fee bills attract a
5 percent tax, this increases the cost of provision of schooling – this may be reduced or elimi-
nated. Similarly, the private sector is constrained in terms of finding suitable and affordable
land for schools. The government will use its spatial mapping to identify appropriate lands that
can be used for developing schools and to encourage investment through land use and zoning
policies, pre-classify these areas for educational institutes and apply zero commercialization
charges. The price of the land may be incentivised to encourage schools to move out of
congested residential areas and move to these pre-allocated areas. This will reduce traffic
congestion in big cities and will also result in better school infrastructure provided by the
private sector.

The government will work on its own and with private sector to address the mobility issues of
girls. The government will scale-up innovative experiments for example girls bicycle
programme or similar initiatives that can support safe and quick commuting options to girls.
This is likely to increase retention of girls significantly post primary education.

The government over the next five years will focus on improving the quality of higher educa-
tion. The key initiatives will include the expansion of the bachelor programme to 4 years,
establishment of model colleges and consolidation of subjects to develop centres specializing
in certain subject areas. The strategy also includes increasing the focus on scientific education
and entrepreneurship (this is covered in more detail in the knowledge economy chapter). The
provincial government will advocate with HEC to raise the bar for universities so that gradu-
ates of employable qualities are produced. The government will target to at least halve the
unemployment of 18.9 percent of degree holders in the Punjab.

The government will further strengthen its scholarship programmes linked to top rated foreign
universities and will work towards bringing back all the trained talent to positively contribute
towards the development of the provincial economy.

104
 
Ensuring a good healthcare delivery system can serve as a central input to bring about socioeconomic
development and reduce poverty. A robust and thriving health sector can lead to the creation of human
capital development and accelerate the growth of the economy. Therefore, being two sides of the same
coin, the health sector and economic growth supplement the progress and development of each other.

The P&SHD is the key department entrusted with the fundamental responsibility of the health of commu-
nities and the entire population. Free of cost consultation, diagnostic facilities and medicines are provided
to the patients, particularly focusing on the poor and marginalised segments of society.

The SH&ME delivers tertiary-level healthcare services, and includes tertiary care hospitals, medical
universities, medical institutes, nursing schools, and affiliated organisations such as the Punjab Pharma-
cy Council and the Institute of Blood Transfusion Services (IBTS).



A 1 precent increase in thereduces under-5 mortality

rate by almost 1.5 percent in Punjab.

A 1 precent increase in the per capita GPP reduces under-5 mortality by almost 0.6 percent in
Punjab.

A 1 precent increase in the ADP capital stock of health sector increases social and community
sector’s value added by almost 0.3 percent in Punjab.

Health reforms were introduced in the recent past to improve the health status and achieve the targeted
health outcomes. But despite efforts, high infant, child and maternal mortality and the double burden of
disease remain the major challenges. The Infant Mortality Rate (IMR) has decreased from 76 per 1000
live births in 2014 to 60 per 1000 live births in 2018 but is still very high as compared to the WHO-estimat-
ed global average of 32 and the SDGs target of 12 per 1000 live births. The under-5 mortality rate in
Punjab has decreased from 93 per 1000 children to 69 per 1000 children while the WHO-estimated global
average is 46 and the SDGs target is 25 per 1000 children. Currently, the antenatal care and skilled birth
attendant coverage in Punjab is 87.3 percent and 76.8 percent, respectively which has been improved
from 78.8 and 64.7 percent in 2014, respectively. Punjab has performed better in maternal health indica-
tors, but maternal mortality is still one of the leading causes of death among women of reproductive age
across the province. The maternal mortality rate is still very high in Punjab, as it stands at 180 per 100,000
live births16.

The right of the new-born to survive and thrive appears to be violated during the intrapartum period,
resulting in premature births and low birth weight in the first hour, the first 28 days of life, and into the first
1000 days of life. New-born girls and boys are dying of conditions that could be managed within house-
holds (low birth weight, hypothermia, sepsis) as well as other conditions that require interventions in
health facilities (birth asphyxia, prematurity). Neonatal survival is further complicated by other poorly
performing cross-sectoral family care practices and interventions, including sub-optimal breastfeeding,
hygiene and sanitation. This has serious implications for overall Early Childhood Development (ECD) for
affected children and could undermine the aspiration to develop a knowledge-based economy in line with
the vision of the new government.

16
MICS, 2014, 2018

105


Healthcare Financing: Investing in primary and preventive healthcare is not a priority. There is
a need for optimised healthcare financing through fiscal responses.

Poor governance, accountability mechanisms and ineffective monitoring and evaluation.

Lack of comprehensive, timely, accurate and functional information system which is usually
not segregated by sex, age and disabilities.

Non-regulated private sector even though it is a significant health services provider.



Inadequate number of health staff at facility and community levels, especially female staff, to
fulfil population health needs. There is also poor distribution and inappropriate deployment of
health workforce. In addition, there is an apparent competition for limited human resources
among different priorities – polio eradication, routine immunisation and dengue control. Skills
gap among the available workforce is another challenge.

Inadequacies in health infrastructure and inconsistent package of services resulting in inequi-

ties at all levels, especially related to new-born and child health.

Limited and inconsistent logistic capacity for service delivery. There is inadequate/inconsistent
supply of quality essential drugs/commodities for healthcare facilities and outreach workers.
Poor storage capacities and logistics management for vaccines and other essential medicines
is another big issue. This issue particularly affects the immunisation and family planning
programmes.

Inadequacies in the healthcare services provision due to a weak institutionalised referral

system.

Verticality of different programmes/projects and a weak integration/coordination.

Lack of gender-responsive service delivery in health facilities and communities.

High transportation costs and out-of-pocket expenditures as well as fee for services in the
private sector.

Rapid urbanization with haphazard and humongous growth of big cities leading to inadequate
and inequitable quality services for the urban populations.



Limited government capacity and structures in the province and districts for social mobilisa-
tion, behaviour change communication (BCC) and demand generation for early and timely
initiation of and continuity of health services. Lack of awareness among caregivers and low
literacy rates add to the challenge. Preventive services, especially child immunisation and
MNCH services, are not a priority for many of the segments of populations.



Absence of standard operating procedures and minimum service delivery standards for all
types/levels of healthcare.

Poor implementation of available standard operating procedures and minimum service deliv-
ery standards, especially maternal, new-born care and immunisation.

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 Inadequate attention to environmental health including hospital waste management.

The Punjab Growth Strategy 2023 aims at the provision of comprehensive healthcare to the
population of the province, especially the most vulnerable and deprived segments of the soci-
ety, through addressing the above-mentioned issues.

Annexure-A enlists the baseline targets to be achieved by 2023.


Primary healthcare will be focused with special attention to immunisation, new-born and child
healthcare.

Optimising decentralisation and institutional autonomy.

Strengthen the Punjab Healthcare Commission.

Research on communicable and non-communicable diseases’ trends and associated risk

factors.

An integrated health information system providing easy access to reliable data for
evidence-based policy making and resource allocation.

Standardised information system for public and private sector health facilities, having linkages
with community-based information systems.

Enhancement and acceleration of Civil Registration and Vital Statistics (CRVS), besides prior-
itising timely and accurate generation of vital statistics for evidence-based policy, planning,
monitoring and evaluation.

Regularisation of the private sector through the healthcare commission.

A well-structured human resource planning and management policy for provision of quality
services at all levels.

Establishment of a human resource planning and development unit to ensure provision of

adequate, skilled and gender-balanced human resource at all levels of healthcare delivery.

Increase in number of LHWs/CHWs to have 100 precent coverage.

Strengthen in-service capacity development structures/institutions for health care providers at

all levels for continuous refreshers/trainings.

Revise medical curriculum with a focus on preventive and promotive care.

Provision of adequate health infrastructure.

Upgradation of Basic Health Units to function as BHU plus and/or 24/7.

Upgradation of RHCs.

Upgradation of THQ level hospitals.

Construction of specialised MNCH hospitals/

Vehicles for providing health services to remote/difficult to reach areas.

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 Strengthening of tertiary health care infrastructure.

Improved supply chain management for quality medicines, vaccines and other logistics at all
levels

Strengthening procurement, storage and distribution of vaccines, medicines and com-

modities through restructuring of warehouses/medical store depots and automation of
system for quantification, procurement and distribution. (LMIS).

Institutionalise regular reviews of Essential Drugs List.

Strengthen and enforce quality regulation for drugs.

Ensuring uninterrupted supply of family planning commodities to all the primary and
secondary level health facilities.

Strengthening of referral systems between various levels of health facilities and community.

Development and implementation of Urban Health Strategy and urban sector plans. Special
and innovative measures to reach marginalised and deprived urban populations, including
provision of mobile health services.

Integrated Communication Unit to be strengthened.

Development and implementation of standard operating procedures and minimum

service delivery standards for all types/levels of healthcare.

Address the issues of environmental health, including quality hospital waste manage-
ment.


The following measures will be taken for ensuring improvement in the healthcare system at all levels:


Strengthening of the vertical programmes initiated by the primary healthcare department to
improve mother and child health, while simultaneously upgrading programmes at the BHU
level.

The number of lady health workers will be increased to improve the basic healthcare indica-
tors. A plan of action will be developed regarding food and nutrition intervention. Food safety
and availability of micro-nutrients to the poor segment will be ensured.


The HR planning and career management of healthcare practitioners will be improved to

increase efficiency of the system.

The DHQ Hospitals will be attached and affiliated with medical colleges as training centres for
both public and private sectors.

More nursing schools will be established to improve patient-nurses ratio.

Tibb or homoeopathy councils will be made independent administratively and financially with

108
 their separate set-up for smooth functioning.



Each district will have at least one hospital with complete diagnostic facilities and specialist of
the required fields. The Coronary Care Units (CCUs) will be established in each DHQ/THQ
hospital. Effective hospital hygiene and waste disposal programmes will be introduced.

More cancer hospitals will be established. Prevention and control of non-communicable

diseases will be incorporated clearly in the strategies at all levels. The establishment of the
Non-Communicable Diseases and Health Promotion Unit at the provincial and district levels
will be ensured. Aggressive educational campaigns will be launched to control diabetes, hepa-
titis, HIV and cardiac disorders, etc.

Accreditation standards will be strengthened through the Pakistan Medical and Dental Council
(PMDC).

Healthcare Commission, which is the regulatory authority for all public and private sector
healthcare delivery facilities, will be strengthened to avoid quacks in the healthcare system.

In order to drive down mortality by non-communicable diseases (NCDs), development of the

NCDs and cancer registry system, and awareness campaign based on standard Behaviour
Change Communication (BCC) regarding modifiable risk factors will remain under focus.

Medical colleges and teaching hospitals will also become fully autonomous bodies, managed
by their respective Boards of Governors (BoGs) for professional and administrative autonomy.
The government will be encouraged to provide an efficient medico-legal service. For this
purpose, facilities for legal and forensic studies will be expanded to medical colleges.

Tobacco use and tobacco-prevention interventions will be monitored at all levels in order to
protect people from tobacco smoke in public places and workplaces, and help people stop
using tobacco, while advising and warning them against its use.



Private sector engagements will be enhanced for maximising health benefits for the popula-
tion, specifically highly specialised care; and optimising their service delivery through the
provision of a appropriate regulatory framework. Private practicing GPs or specialists are not
engaged in case of emergencies in the public sector, especially in rural areas where patients
have to travel a long distance in such a situation.



Setting up of trauma and burn centres with communication links to paramedic services, securi-
ty agencies and all major hospitals for better macro-management and appropriate distribution
of casualties.

Accreditation of trauma centres and the CCUs.



Healthcare financing will be improved during the strategy period through the following mea-
sures. The Provincial Health Service System will be financed with relatively high percentage
to GPP to cover the whole population, particularly the poor.

109
Sehat Insaf Cards will be introduced in all districts.

There will be not-for-profit prepayment plans for healthcare, financed through private voluntary
contributions with community control and voluntary membership.

Social entrepreneurship and Public-Private Partnership will be promoted.

110
 
The overall vision of the Government of Punjab is to provide safe drinking water and sanitation facilities
to the entire rural and urban communities in an equitable, efficient and sustainable manner. Housing,
Urban Development and Public Health Engineering Department (HUD&PHED) along with the Local Gov-
ernment and Community Development Department (LGCDD) in Punjab are the lead departments for
planning, funding, service delivery, regulating and monitoring for water and sanitation sector in the prov-
ince. For five major cities of Punjab, autonomous Water and Sanitation Agencies (WASAs) have been
created that lead the development and management of WASH services. These WASAs have been dele-
gated with optimum levels of administrative, financial and operational autonomy along with mechanisms
for public scrutiny and accountability. In small and medium-sized towns and cities, responsibilities rest
with municipal committees or local development authorities for the provision and maintenance of WASH
services, mainly under the direction of the PHED and the LGCDD.

The previous government established Solid Waste Management Companies in seven cities, and these
were expanded to the division level in 2016. However, the services of these companies were largely limit-
ed to urban areas. On the other side, WASAs and the Public Health Engineering Department, in collabo-
ration with the local government, continued the provision of drinking water and liquid waste management,
including improved sanitation with varied levels.

The Government of Punjab took a clean water initiative in 2014-2015, with a focus on establishing filtra-
tion plants in rural areas for the provision of safe drinking water. A key achievement was the development
of the Water, Sanitation and Hygiene (WASH) Sector Development Plan 2014-2024 that proposed short,
medium and long-term strategic objectives, and overall investments required to achieve these objectives.


As per the Punjab Multiple Indicator Cluster Survey (MICS) 201817, about 98 percent of the population
uses an improved source of drinking water, 98.2 precent in urban areas and 97.9 percent in rural areas.
Furthermore, 18.7 percent of the population of Punjab has access to tap water, followed by 37.5 percent
motorised pump and 25.3 percent hand pumps. Table 5.1 shows the overall distribution of improved
water source to households (HHs) in the province.
Table 5.1: Access to drinking water supply by source in Punjab
All source of drinking water Urban % Rural % Total %
Piped into dwelling 15.1 3.8 7.9
Piped into compound, yard or plot 4.0 3.9 4.0
Piped to neighbour 1.9 1.7 1.8
Public tap /Standpipe 7.8 3.5 5.1
Tube well 0.9 1.1 1.0
Hand pump (Mechanical) 7.2 35.7 25.3
Motorized pump (donkey/Turbine) 34.1 39.5 37.5
Tanker-truck 0.6 0.2 0.3
Cart with small tank/drum 24.9 7.2 13.6
Protected well 0.5 1.0 0.8
Protected spring 0.1 0.2 0.2
Bo�led water (mineral) 1.1 0.1 0.5
Improved Water 98.2 97.9 98.0
Unprotected well 0.1 0.5 0.3
Unprotected spring 0.1 0.2 0.1
Surface water (river, stream, dam, lake, pond) 0.4 0.9 0.7
Water Kiosk 0.8 0.1 0.4
Other 0.4 0.4 0.4
Unimproved Water 1.8 2.1 2
Source: MICS 2018, Bureau of Sta�s�cs, Government of Punjab
17
Punjab Multiple Indicators Cluster Survey (MICS) 2018

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
Drinking water quality tests carried out in twelve districts of Punjab showed that microbes and heavy
metals (arsenic) were major contaminants in almost 40 percent water sources in these districts18. The
government has been addressing water quality issues through the installation of water filtration plants.
Spatial representation of water quality of vulnerable areas in Punjab is presented in Figure 5.11.
Figure 5.11: Water Quality Vulnerable Areas in Punjab

Source: PCRWR, Government of Pakistan

18
Daud, M. K., et al. 2017. Drinking Water Quality Status and Contamination in Pakistan. BioMed Research International. pp. 6

112
 Figure 5.12: Distribution of different contaminants in groundwater sources across Punjab
Total dissolved solids (TDS) Arsenic

Fluoride Nitrate

Source: PCRWR, Government of Pakistan


As per the MICS 2018, 91.4% of the population has drinking water available in sufficient quantity when
needed, 74.2% has water accessible on premises and 63.8% is without E. coli contamination in drinking
water. Overall, 43.7% of household members with an improved drinking water source located on premis-
es, free of E. coli, and available when needed access to improved water.
Table 5.2: Safely Managed Drinking Water
Punjab Improved sources Percentage of household
Without E. coli With drinking Drinking members with an improved
in drinking water available in water drinking water source
water source sufficient accessible on located on premises, free of
quan��es premises E. coli and available when
needed
Overall 63.8 91.4 74.2 43.7
Rural 65.6 92.3 78.5 48.1
Urban 60.8 89.8 66.8 36.0
Source: MICS 2014, Bureau of Sta�s�cs, Government of Punjab

113

As per the MICS 2018, a total of 80.1 precent of the population of Punjab is living in households that use
improved sanitation facilities, which is higher in urban (92.8 precent) as compared to rural areas (72.8
precent). Of this, 70.4 precent have improved sanitation that is not shared. This is 61.8 precent in rural
areas and 85.5 precent in urban areas. Around 13 precent of the population of the province (predominant-
ly living in rural areas) is practicing open defecation as compared to 23 precent in 2011. Below is the
break-up of the sanitation services in the province with urban and rural break-ups. Around 40.7 precent
of households reported on-site safe disposal of human excreta, which is 50.5 precent in rural areas and
Table 5.3: Access to sanitation in Punjab
All source of Sanita�on Urban % Rural % Total %
Flush to piped sewer system 56.9 4.9 23.8
Flush to sep�c tank 32.0 50.0 43.5
Flush to pit (latrine) 2.8 15.4 10.8
Flush to unknown place / not sure 0.6 0.7 0.7
Ven�lated improved pit latrine (VIP) 0.2 1.0 0.7
Pit latrine with slab 0.2 0.7 0.5
Improved Sanita�on 92.8 72.8 80.1
Flush to Open Drain 5.5 6.6 6.2
Pit latrine without slab / open pit 0.0 0.3 0.2
Bucket 0.0 0.0 0.0
No facility, Bush, Field 1.4 19.7 13.0
Other 0.3 0.5 0.4
Missing 0.0 0.0 0.0
Unimproved Sanita�on 7.2 27.2 19.9
Source: MICS 2018, Bureau of Sta�s�cs, Government of Punjab


As per the MICS 2018, it was observed that about 98.3 precent of the households had a specific place for
hand washing, while only 1.7 precent households could not indicate a specific place where household
members usually washed their hands. Among households where a place for hand washing was
observed, almost 92.1 precent had both water and soap (or another cleansing agent) present at the
specific place, and this was higher in urban (96.7 precent) as compared to rural areas (89.4 precent).

Under the Sustainable Development Goals (SDGs), Safely Managed Sanitation services are defined as:
population using an improved sanitation facility (including a hand washing facility with water and soap)
that is not shared with other households and where the excreta are safely disposed or transported and
treated off-site. Around 70.4 precent of the population in Punjab has improved sanitation, which is not
shared with others, and around 92.1 precent population indicated hand washing with soap and water.
Around 40.7 precent of households reported on-site safe disposal of human excreta, which is 50.5
precent in rural areas and 23.4 precent in urban areas. However, there are issues on understanding and
reporting the effective faecal sludge management either on-site or off-site with the construction of septic
tanks or sewer lanes.

The main objective of the strategy for the water and sanitation sector is to propose adequate policy, legal
and institutional reforms in this space, and prioritise actions and development aspects to promote and
increase access to safe water and improved sanitation services for the citizens of this country in the next
five years to improve the quality of life and reduce waterborne disease burden.

The new draft Drinking Policy 2017 envisions that safe drinking water is accessible at premises, available
when needed, and free from contamination on a sustainable basis to the whole population of Punjab, in
addition to acquiring and adopting improved knowledge in their daily life. The policy underpins to create
universal coverage and access to safely managed drinking water services by 2030.

The Punjab Municipal Water Act 2014 aims to recognise, regulate and manage present and future munic-

114
ipal water in Punjab, and define municipal water, cover water appropriation, water treatment, bulk supply
and water services. The Punjab Sanitation Policy 2017 envisions developing a safely managed sanitation
environment for all citizens of the province, contributing towards high quality life in Punjab. New revised
policies are currently in the approval process, and are part of the water roadmap of the Punjab govern-
ment. The policy for Water and Sanitation under the Punjab Growth Strategy will be to approve and notify
the above-mentioned provincial policies and act that must be aligned with the National Water Policy 2018
and also prepare their implementation plan.



 Recognise (implicit under Article 9 of

the Constitution of Pakistan) through the provision of safely managed sanitation services.

 Assure  in terms of equitable distribution of resources and capacities to over-

come geographical and gender disparities, vulnerability and income inequities.

 Warrant for safely managed water and sanitation services,

with delegation of responsibilities and accountabilities to local bodies and institutes.

 Implement a  involving different government departments and other

stakeholders.

in planning, imple-

mentation, monitoring, operation and maintenance of water and sanitation services.

 with key emphasis on SDG 6, along

with contributing other goals: No Poverty; Good Health and Wellbeing; Gender Equality; Reduced
inequalities; Sustainable Cities and Communities; Responsible Consumption and Production;
Climate Action; and Life on Land.



 60 precent of population in the province has safely managed water services.

 70 precent of urban population and 35 precent of rural population has access to piped water
supply.

 At least 40 precent of water supply schemes converted to solar energy.

 100 precent water metering in mega cities, 50 precent in intermediate cities and 30 precent in
small towns – bulk flow meters and pressure gauges installed at 40 precent of tube wells of water
supply.

 At least 60 precent coverage of water quality testing for tube-wells and distribution system by
every quarter.

 Installation of chlorinators in 60 precent of reservoirs (or tube-wells where storage capacity
does not exist).

 Extend sewerage system lines to provide 70 precent coverage in cities and towns and 40
precent coverage in rural area.

 De-silting and cleaning of 60 precent drains and sewers with safe sludge disposal per quarter
in TMAs and zones in cities.

 Achieve Open Defecation Free status by 100 precent population/area.

115
  At least 50 precent of new schemes have in-built wastewater treatment facility. Each mega
and intermediate city has at least one wastewater treatment plant functional.

 At least 80 precent of solid waste generated is collected and disposed of per day.

 At least 40 precent TMAs provide door-to-door collection service.

 Village based solid waste management scaled up to 30 precent villages in Punjab.

 Recycle at least 15 precent of solid waste by systematic separation.

 At least 100 precent of first level health facilities have usable water and sanitation services,
along with soap and hand sanitisers.


By 2020, Punjab will introduce legislative measures and regulations to
create an enabling framework for safely managed drinking water services.

 By 2020, develop standardised service delivery models for urban and rural areas;
and by 2023, create 60 precent coverage and access to safely managed drinking services and 30 precent
for safely managed sanitation services.

By 2020, develop regular drinking water

quality and effluent monitoring and surveillance mechanisms; and by 2023, develop and implement
mechanisms for reuse, recycle and recharge of wastewater

116
 –

Gender inequality is one of the biggest detriments for realising the true economic potential of any country.
Ensuring gender equality, providing equal opportunities and ensuring dignity of work and life for women
are the key factors for sustainable economic growth and social development. In Punjab, women consti-
tute . Despite constitutional safeguards that guarantee equality to all, wom-
en’s role in social, political and economic spheres of life and their relative status remains marginalised,
and the opportunities offered to them remain limited, when compared to men.

Several "Punjab Women Empowerment Initiatives (PWEI)” have been approved in the past, leading to
affirmative actions to ensure women empowerment and their socioeconomic development. These initia-
tives included interventions to address issues relating to violence and harassment, provision of women
specific facilities and removing inequities. However, there is a need for a more specific approach to
gender-based interventions, which is aligned with the goal of improving human capital and working
towards the Sustainable Development Goal 5 related to gender equality. Moreover, women being half of
the population constitute a major proportion of human capital, which has the most significant impact on
economic growth of Punjab. 



The Punjab growth model suggests that a        
The gender parity index includes 4 dimen-
sions of exclusion: education (4 indicators); labor force (3 indicators), heath (3 indicators) and employ-
ment (2 indicators). The critical message from the above statistic is that economically empowering
women should be the main strategy of the government to attain sustainable gender parity in the province.

Pakistan is ranked 133rd out of 160 countries on the Gender Inequality Index (GII) in 2017 and at a dismal
148th out of 149 countries in the world on the World Economic Forum’s The Global Gender Gap Report.
The weak performance of Pakistan on GII can be linked with underperformance on human development, as
the index reflects three major indicators of gender inequality, which are empowerment, economic activity
and reproductive health. Only 20 percent of the parliamentary seats are held by females, 27 percent have
secondary education and 24.9 percent females participate in the labour force, as compared to 82.7 percent
of men. For every 100,000 live births, 178 women die from pregnancy-related complications, and the
adolescent birth rate is 36.9. Gender discrimination in the three GII dimensions is inferred as the loss in
human development and the average loss due to inequality is 31.0 percent for Pakistan19.
Table 5.4: Pakistan’s GII for 2017 relative to selected countries
GII GII Maternal Adole Female Popula�on with Labour force
value Rank mortality scent seats in at least some par�cipa�on rate
ra�o* birth parliament secondary (%)
rate* educa�on (%)
Female Male Female Male
(%)
Pakistan 0.541 133 178 36.9 20.0 27.0 47.3 24.9 82.7
Bangladesh 0.542 134 176 83.5 20.3 44.0 48.2 33.0 79.8
India 0.524 127 174 23.1 11.6 39.0 63.5 27.2 78.8
South Asia 0.515 - 176 32.1 17.5 39.8 60.6 27.9 79.1
Medium 0.489 - 176 41.3 21.8 42.9 59.4 36.8 78.9
HDI
*Maternal mortality ratio is expressed in number of deaths per 100,000 live births and adolescent birth rate is expressed in number
of births per 1,000 women aged 15-19.
Source: UNDP, Pakistan

Human Development Indices and Indicators: 2018 Statistical Update by UNDP

19

117
The Gender Development Index (2017), which measures gender parity on the basis of life expectancy at
birth and disparity in years of schooling, shows strong dimensions of inequity. The disparity of the gross
national income per capita is Rs 1,642 for women while Rs 8,786 for men. This indicates little or no control
of women over economic resources, leading to little or no role in life choices and economic activity.

Similarly, the  shows little or no financial inclusion for women in Pakistan.
For example, “account ownership has doubled since 2011, though it started from a low base of 10
percent. But while it surged among men, it stagnated among women. In Bangladesh, Pakistan and
Turkey, for example, the gender gap is nearly 30 percentage points20.
Figure 5.13: Economies with half or more of adults unbanked

Source: Global Findex database, 2017

’
The prevalence of gender inequality in Punjab is similar to the national level, as the female Labour Force
Participation Rate21 (LFPR) in Punjab is 26.5 percent as compared to 70 percent for males. Similarly, in
the case of employment status, the share of women in non-agriculture employment is only
7.7 percent as compared to 47.7 percent of men. The female literacy rate in Punjab is 57 percent as com-
pared to the male literacy rate of 72 percent (LFS 2018). From 2013 to 2018, the Punjab Assembly had
20 percent representation of women, while only 4 (12 percent) women were nominated as ministers in
Punjab.

Gender disparities in land ownership also remain significant. There is considerable variation between the
number of male (68.7 percent) and female (31.3 percent) agricultural landowners in Punjab where women
are restricted in their control of their landholdings22. Furthermore, protection of women at homes and at
public spaces is also a major hindrance in women development. For example, 7,678 cases of violence
against women were reported in 2017, which included cases of rape, acid attacks, beatings & sexual
violence, etc.
Table 5.5: Women’s Socioeconomic Status in Punjab
Male (%) Female (%)
Literacy rate 72.2 57.4
Labour Force Par�cipa�on Rate 69 28.3
Employment status 71.7 28.3
Land ownership 68.7 31.3
Registered voters 31.3 million 24.5 million
Loan beneficiaries 87.5 12.5
Social security benefits 96.09 3.91
Ownership of inherited property 59 41
Source: UNDP, Pakistan

20
World Bank, Global Findex Database, 2017
21
Labour force survey 2018
22
Land Record Management & Information System (LRMIS), 2017

118
On the government side, work needs to be done on reviewing legislation, strengthening of institutional
systems and regular monitoring of existing interventions.

The government will do a comprehensive review of existing policies

and laws to address areas needing revision. The Protection against Harassment of Women at Workplace
Act 2012 might need amendments owing to the increase in the harassment complaints on social media.

Another legislation that needs to be revisited after a thorough consultation process is disallowing women
to work after nightfall. Hindering their participation in key areas (wholesale markets, trading) of employ-
ability leading to lower economic participation is a blow to the efforts of women’s economic empower-
ment. Other laws of the Government of Punjab can also be studied for any discriminatory legislation that
can be revisited.

    The government will make efforts to move
towards gender-sensitive budgeting. Improving on the human capital development, unless it incorporates
almost half of the population, would not be possible. For Punjab to move towards the true model of human
capital development, women development and its related interventions need to be identified and brought
up at the time when projects, especially in health, education, employment and skills are being planned
and financed. Programmes for Women Empowerment and Women Development – that would eventually
become part of the Annual Development Programmes of the province – should include gender-based
observations. A two or three member strategic unit, either at the P&D Board or WDD, can help support
these interventions until they become the norm for future planning and financing of projects and schemes.

The government will take key

measures to make workplaces safe for women. This is important in order to move towards truly empower-
ing women and their socioeconomic development, for which key strategic interventions need to be made.
Awareness regarding code of ethics and harassment laws, and follow-ups on reported cases, will encour-
age more women to step out of their homes. The Punjab Ombudsperson’s office will be further strength-
ened, as its role in resolving harassment-related cases is encouraging and provides the right kind of confi-
dentiality that victims of harassment require. The duplication of efforts also needs to be addressed and
the multiple helplines and interventions whereby women can report harassment should be clubbed under
the ombudsperson’s office. An efficient harassment reporting and redressal mechanism will encourage
women to work and contribute to the economy.

          
A major constraint for developing gender programme interventions is the lack
of gender disaggregated data in many areas. In areas that such data is available, the programmatic inter-
ventions are easier. For example, the gender disaggregated data in the labour survey gives useful indica-
tions for areas where female employability is low and action is required. The government will make a
consolidated effort for collection and utilisation of gender desegregated data to support data-driven policy
making, which is essential for justifying provision of public money to specific areas and programs.

       Quality

education at the primary, secondary and higher level for girls and women can pay dividends. Getting
elementary education increases women wages by 31.3 precent as compared to completing a degree,
which increases earnings by 123.6 precent23. There is a clear tendency in the labour market that higher
education is rewarded by higher marginal returns. However, for most education levels except degree, the
returns have decreased between 2007-08 and 2014-15. This implies that low qualified women are work-
ing in the informal sectors and are earning less in real terms. Therefore, there is a need to push for
increasing education levels and economic empowerment.

The government will support and encourage well-thought-out interventions in trying to retain girls in the
education stream after secondary level and supporting them to attain higher levels of education with
professional degrees.

23
The Punjab Commission on The Status of Women, 2018. Government of Punjab

119
’ Closely
linked to the point on education, the incorporation of Science, Technology, Engineering and Mathematics
in to curriculum and special higher education packages for women to be able to get higher education in
these fields needs to be encouraged. The government will ensure that these subjects are incorporated at
all levels of education to increase chances of better employment, hence better economic opportunities.

 The government will encour-

age women to be part of the entrepreneurial landscape through incubation centres, where they will be
able to learn business development, financing and management skills. Ideally, these incubation centres
will be housed at the Women Chambers in different parts of Punjab, and can provide women better
access to potential opportunities and partnerships. Closely linked to this is encouraging women and
providing them credit facilities for SMEs.

 Punjab will consider bringing in

labour laws for ensuring welfare of a large number of women working in the agriculture sector, whose
work, till now, is largely undocumented.

 Data on skills provision in the province shows that a majority of women train as
beauticians or in basic computing skills. Whereas, provision of these skills support women to enter into
self-employment, they fail to bring women into mainstream sectors. Moreover, these courses do not cover
entrepreneurship, which results in lowering the economic impact. Furthermore, the type and amount of
training courses in the agriculture sector are scarce, a sector that employs a majority of women. In order
to address this issue, the government will introduce new courses in agriculture, especially catering for
modern farming practices. The government, through its skills strategy, will expand the number of courses
offered for women and develop in targeted programmes in partnership with industries. The women can
contribute significantly to the services sector; therefore, the government will launch specific courses on
soft skills, entrepreneurship, sales and marketing and e-sales only for women to increase opportunities
and employment. The courses under the soft skills component will include training of men to work in
co-environments so that workplaces in Punjab become more gender sensitive.

’The long-term plan of the China-Paki-

stan Economic Corridor has identified specific interventions that include a large number of activities
focused on modernising agriculture, productivity enhancement techniques, improvement in seed quality
and induction of technology. The government will ensure that all these programmes are implemented with
inclusion of gender requirements and that the women of Punjab fully benefit from CPEC development.

Key sectors like construction, the

services sector and especially the tourism and hospitality sector has very little women representation.
The government will ensure skills training in these areas and initiate advocacy with key private sector
players for employing women in these sectors, which can lead to economic empowerment and economic
growth as a whole.

 The government will support financial inclu-

sion programmes for women to make them active members of the communities they live and work in, and
provide them economic opportunities. This will support women to be included formally in the financial
sector. This can also be clubbed with a programme on introduction of micro-credit schemes for rural
women, which has led to substantial results in women economic empowerment in rural India and other
countries.

 The gender digital divide is one of the key challenges that keep women
away from the opportunities that technology offer. The government will put a two-pronged strategy in
place: one, to ensure laws and regulations that protect women in digital spaces from harassment and
cyber bullying, including protection of their personal data; two, to have programmes and trainings that
make the uptake of technology easy and accessible for women. The incubation centres for women entre-
preneurs will also provide assistance in technology-based entrepreneurial projects. The government will

120
act as a facilitator by connecting women to technology-based start-ups and relevant private sector part-
ners or organisations like the PASHA for skills upgradation.

 Key steps will be taken to economically empower women, which will also
help in removing the vulnerability that women face that leads to gender-based violence against them. The
launch of behavioural change communication campaigns by the government will ensure spreading
awareness about preventing violence against women, while rehabilitating women survivors of violence by
rebuilding their lives to make them productive citizens. Programmes that protect women against any sort
of violence will pay dividends when it comes to women’s participation in the workforce and contributing to
economic activity.

Punjab will be right on target vis-à-vis women development if these legislatations, programs and other
interventions are implemented with a strong monitoring and evaluation strategy. If executed accordingly,
evidence-based policy making and implementation plans will result in making Punjab a province where
women’s socioeconomic empowerment is a norm and not an exception.

121
 
The impact of high population growth on economic growth is generally negative because large propor-
tions of funds are directed towards meeting the basic needs of the growing population. The high growth
reduces the effectiveness of government programmes aimed at improving human capital, as government
expenditures are spread out over a larger population.

However, there is an opportunity for economic growth in Punjab if a demographic dividend is created
through a reduction in fertility and infant mortality, which will free up the economy’s resources to acceler-
ate development. Nevertheless, it is to be understood that the potential benefits of experiencing the
dividend will likely only occur through investments in education, health, skills development and employ-
ment generation.

The Government of Punjab recognises the cross-cutting effects of population factor on the overall devel-
opment. With the adoption of a focused population policy, the government aims to strike a balance
between population and resources, which is consistent with its development goals.

Pakistan currently has the sixth largest population in the world at 207 million, with an average annual
growth rate of 2.4 percent. Likewise, Punjab’s population has grown from around 73.62 million in 1998 to
110.012 million in 2017, with a growth rate of 2.13 percent during this time period. However, Khyber
Pakhtunkhwa and Balochistan, which are relatively less developed provinces, have had considerably
high growth rates in their population.
Table 5.6: Population Count and Growth Rate, 1981-2017
Province Popula�on 1981 Popula�on 1998 Popula�on 2017 Annual Annual
(million) (million) (million) Growth Rate Growth Rate
(1981-1998) (1998-2017)

Punjab 47.3 73.6 110 2.64% 2.13%

Sindh 19 30 48 2.80% 2.41%
KPK 11.1 17.7 31 2.82% 2.89%
Balochistan 4.3 6.6 12 2.48% 3.37%
FATA 2.2 3.2 5 2.19% 2.41%
ICT 0.3 0.8 2 5.19% 4.91%
Pakistan 84 132 208 2.69% 2.40%
Source: Popula�on Census, Pakistan Bureau of Sta�s�cs, Government of Pakistan
The urban share of Punjab has increased from 31.27 percent in 1998 to 36.38 percent in 2017. However,
it is still the second most urbanised province after Sindh. Over all, the sex ratio is around 103, which
indicates 103 men against 100 women. This ratio is slightly higher in urban areas at around 105 and
slightly lower in rural areas where it is around 102. The overall household size is 6.432, which is slightly
high in rural areas. The population density has increased from 358.525 in 1998 to 535.744 persons per
square kilometre in 2017.
Table 5.7: Key Facts Regarding Population of Punjab, 2017

Total Male Female Transgender Average Sex No of House

Popula�on (million) (million) (thousand) Annual Ra�o House- hold
(million) Growth holds size
Rate (million)

Punjab 110.012 55.96 54.04 6.709 2.13 103.54 17.1 6.432

Rural 69.625 35.2 34.42 2.124 1.81 102.25 10.71 6.498

Urban 40.387 20.76 19.62 4.585 2.74 105.81 6.39 6.321

Source: Popula�on Census, Pakistan Bureau of Sta�s�cs, Government of Pakistan

122
In terms of population growth rate, the top 10 districts in Punjab with the highest growth rates include 7
from the western and southern regions of the province, which are relatively underdeveloped. The 10
districts with the lowest population growth rates belong mostly to the central, eastern and northern
regions of Punjab, which are relatively well-developed. This pronounced difference is expected as higher
fertility levels are associated with lower levels of income. This circular phenomenon of lower income
levels leading to higher fertility levels, which in turn leads to lower income per capita levels, requires a
comprehensive strategy on the part of the government to overcome.
Figure 5.14: Tehsil-Wise Population of Punjab, 1998 & 2017

Source: Pakistan Bureau of Sta�s�cs, Government of Pakistan

From 1991, impressive gains have been made: the province’s total fertility rate fell from 5.4 births per
woman to 3.5, accompanied by a documented rise in contraceptive use from 13 percent to around 40
percent, but currently the pace of fertility decline in Punjab appears to have slowed down. Since Punjab
has a relatively young population, with 20 percent consisting of people aged between 15 and 24 years24,
the number of women of reproductive age has also risen, which could lead to an increase in population
growth rate.
Figure 5.8: Key indicators related to reproductive Health

Indicators 2006-07 2012-13 2017-18

Total fer�lity rate (TFR) 3.9 3.8 3.4

Contracep�ve prevalence rate (CPR) (%) 33.2 40.7 38.3

Modern contracep�ve prevalence rate (MCPR)

23.1 29.0 27.2
(%)

Propor�on of women who want no more births

54.0 54.0 -
(%)

Unmet need for contracep�on (%) 23.0 17.7 15.8

Percentage with teenage births (≤18) 7.0 7.4 -

Infant mortality rate 81 88 62



24
Population Councils revised projections of 2015

123
In view of the substantial levels of unmet need for family planning in Punjab, and the limited resources
available, a strong focus on improving access to quality family planning services is likely to be an effective
and practical short-term strategy for increasing contraceptive prevalence. The ability of family planning to
reduce maternal mortality can only be realised if the poorest individuals and those with unmet need are
reached on a wider scale.


The Punjab Population Policy of 2017 provides a framework for advancing goals and prioritising strate-
gies to meet the reproductive and child health needs of the people. The policy adheres to four basic
principles to achieve its goals: equity, efficiency, volunteerism, and sustainability. The policy focus is to
broaden the sphere of services to target the population with unmet need for contraception, with a special
focus on the socially and economically deprived segments, new users (especially first-time mothers), low
parity women, and to promote continuous users by reaching out to women and men with accurate motiva-
tional information, and extensive training of service providers in counselling and management of contra-
ceptive services with care and understanding.

The policy warrants that contraceptive services are provided with comprehensive information, voluntary
access and choice of the widest possible range of safe, effective, high-quality, affordable and acceptable
modern methods of contraception.

To achieve the targets and objectives of Population Policy 2017 and international commitments, the Gov-

ernment of Punjab planned a comprehensive programme based on a multi-sectoral approach of strength-

ening the existing infrastructure, building human capital capacity, expanding service delivery spread by
working in coordination with other related sectors, raising awareness, reducing unmet need for family
planning, improving coverage of family planning services particularly in under-served rural areas, peri-ur-
ban settings and urban slums during the period 2018-2021. The approach would include a special focus
on improving the monitoring and evaluation of programmes through improved demographic research.

The government aims to improve its service delivery using a multipronged approach to accomplish the
following targets:
Raise Contraceptive Prevalence Rate (CPR) from 38.3 percent in 2017-18 to 55 percent by
2020 in Punjab.

To reduce unmet need for family planning from 15.8 percent in 2017-18 to 10 percent by
202025.

To decrease Total Fertility Rate (TFR) from 3.4 in 2017-18 to 3.3 births per woman by 2020.

This multipronged approach will include the following:


Under this project, the government will engage more meaningfully with the public health system to deliver
effective, safe and high-quality FP services to those most in need in a way that is acceptable to the individ-
uals and communities through the involvement of tertiary care providers, improvement in coordination
between gynaecologists and FHC staff, expansion of contraceptive choices, the introduction of trained
healthcare providers at all PHC and SHC facilities and client centred services.

Men will be approached with information and advice through mid-level providers, pharmacists, family
physicians, religious leaders and through educational institutes and social mobilisers. The government
will introduce Men Advisory Centres (MACs) which will provide services – to married youth and adult
males – including vasectomy services, consultation and counselling regarding reproductive health prob-
lems and infertility.

Projections based on CPR reported in PDHS 2012-13 and CPR target set in Punjab Population Policy 2017 & FP 2020 commitments
25

124



Expanding public private partnership through franchising and increasing coordination between NGOs
and private sector entities to present clients with a range of options in service delivery.



The focus of this strategy will be on training all healthcare providers, through behavioural change training,
which will increase information exchange between providers and clients to offer choices and information
on potential methods, including their use, side effects and their management, and follow up requirements.



To introduce a multi-sectoral approach, focal persons will be identified in the related departments that
include health, social welfare, education, auqaf, labour and manpower. A multi-sectoral implementation
committee will be formed, which will suggest and seek to deliver interventions that can contribute to meet
the RH needs of Punjab’s women and men.



During the proposed plan period, the provision of contraceptives for existing service delivery outlets and
proposed new interventions shall be ensured. Various initiatives will be undertaken to ensure commodity
security/efficient supply chain management of contraceptives.




The aim of the BCC campaign is to sensitise the target audience in particular and public in general about
the link between population and development in society, and the benefits of birth spacing to mother and
child, the family, and society at large. The proposed BCC campaign will supplement and strengthen the
on-going communication efforts, especially those introduced by the Public Awareness Campaign
2016-17.



Adolescence issues regarding hormonal changes and reproductive health deserve a special attention
which remains a great challenge. A holistic approach toward this service is needed. Youth involvement
will be enhanced through Adolescent Education Cells established in 17 Family Health Clinics in Punjab.

PWD would also work with the Punjab Textbook Board for inclusion of population issues and Life Skill
Based Education in the curriculums.


High level Provincial Task Force notified as per the decisions of CCI will steer, provide oversight and take
critical decisions to reduce population growth rate, lower fertility rate and increase contraceptive preva-
lence rate (CPR) through a planned Provincial Action Plan.

              


Operational research will provide evidence for decision making in programme implementation, along with
improved and robust routine monitoring and periodic independent evaluation mechanisms, to ensure that
services remain responsive to the needs/objectives.

The government will also seek to improve the performance of Lady Health Worker (LHW) programme by
improving their incentives, monitoring their activities and providing them with adequate supply of inputs.

125
To meet the growing need for family planning and for tackling inequality within the province, engagement
of population welfare mobile units, community volunteers and subcontractors will also be considered.

Further strenghten the Population Innovation Fund, the government will bring innovation and scale up
new technologies to improve the key indicators. The Population Welfare Department estimates that it will
require approximately Rs 6.4 billion in development funds to implement the above-mentioned strategic
plan.
 
Rapid urbanisation brings both growth opportunities and risks to critical infrastructure, provision of health
and education services and clean drinking water. As Pakistan has become the most urbanised country in
South Asia, affordable housing, education services and clean drinking water have become emerging
issues, particularly in large cities. According to the Population Census 2017, the share of urban popula-
tion in total population is 36.4 percent. The urban population in other South Asian countries ranges from
18.4 percent in Sri Lanka to 19 percent in Nepal, 33.1 percent in India and 35.1 percent in Bangladesh26.
Out of Pakistan’s total urban population of 75.6 million, Punjab alone has a population of 40.4 million,
which has increased from 23 million in 1998. Presently, five major cities of Punjab house half of the urban
population of the province. This growing urbanisation is putting constraint on the government’s efforts to
provide basic public services of safe drinking water, public transport, affordable housing and sanitation.


Rapid urbanisation in Punjab, with the lack of spatial planning, has led to a deterioration in quality of life
and derelict cities – ranging from urban sprawl, housing shortage, deprived quality of infrastructure and
public services, and inefficient urban land markets. An urban planning and housing strategy with strong
tools, and capacity of local and provincial institutions alike, must be developed to resolve issues regard-
ing the landscape of Punjab’s cities.

The urban governance systems in cities of Punjab remain fractured because of multiple actors that
administer the city without any clear mandates, spatial ambits and binding responsibilities. As per the
Punjab Cities Growth Atlas, the urban extents of city limits for many district headquarters have spilled
beyond the administrative boundaries, risking proper planning and the provision of effective urban
services to all homes.

In larger cities, functions of the city administration are sliced between the local governments, cantonment
boards, development authorities and private or cooperative housing societies. These jurisdictions have a
significant footprint within the city boundary and have grown significantly in the absence of long-term
housing policies or a unified master plan. This has resulted in deformed cities, segregated by income
groups and plagued by traffic congestion and poor quality of environment at high costs.

Estimates based on the intercensal growth rate of housing units demonstrate a supply of 15.6 million
housing units in Punjab. However, this housing stock is inadequate, as there is a shortage of 2.3 million
units, which include an additional requirement (1.5 million houses) as well as replacement of dilapidated
housing (accounted at 5 precent of existing stock). Based on these estimates, 14 precent of Punjab’s
population is affected. If the current trends of housing stock and demand continue, the housing shortage
will increase to 4.05 million housing units by 2023.

Punjab’s housing shortage does not point towards homelessness. In fact it identifies overcrowding as the
main underlying issue. A house is said to be overcrowded if it occupies more than 3 persons per room or
more than 2 adult persons per room27. Therefore, an objective of the housing policy should be to aim for
2 adult persons per room. Based on these findings, 56 precent of Punjab’s housing units have more than
3 persons per room used for sleeping purposes28.

The urban land and housing market’s efficiency is pegged to a number of factors. Prime land in the city
centres is locked by public land ownership. Weak property rights, high cost of acquisition and taxation,
negligible tax on land and higher property tax on rented units contribute to the distortions in the land and
housing market. Existing land use and zoning regulations may also limit, restrict and distort the supply of
property units.

26
See Pasha, A. Hafiz (2018). Growth and Inequality in Pakistan. Friedrich Ebert Stiftung Pakistan. Available at http://library.fes.de/pdf-files/bue-
ros/pakistan/14113.pdf
27
World Health Organization’s definition of overcrowding
28
Source: Urban Unit analysis

128

Policy and legal reforms to leverage urbanisation and reap optimal benefits from planned cities’
growth, agglomeration of economies and balanced regulation of land and housing market.

Punjab Regional & Spatial Planning Act

Pakistan in general and Punjab in particular lack any holistic urban planning laws or policies. A law is
necessary to set clear mandates and responsibilities for each level of government and institution, and to
set a clear trajectory for cities and urban growth. The law will necessitate the proper creation and imple-
mentation of comprehensive spatial regional and sectoral plans for integrated economic, urban, and
infrastructure development of regions.

Currently, no legal framework exists to confer a conclusive title on the owners and maintain a comprehen-
sive central database of land titles.

The law must mandate a modernised system of cadastral maps.

Computerise and centralise urban land titles and records.

Aim for an efficient system for purchasing, transferring and selling land using the centralised
database.



The act will safeguard ownership rights of each individual owning/occupying units in multi-storey build-
ings and ensure the efficient maintenance of these buildings. It allows for multiple ownership of units on
a singular parcel of land i.e. an apartment building will have multiple owners, each with a secured title of
their respective unit. Common spaces are shared, and the builder is responsible for their regulation and
maintenance.

This act needs to be implemented on a priority basis in mega and large cities, particularly within dense
urban areas. This will encourage apartment culture in large cities of Punjab, which is lacking and one of
the reasons for urban sprawl, limited supply and high cost of property. It will result in medium and
high-rise residential and commercial developments, and in turn the construction industry will also flourish.
The law will facilitate the housing rental market and the supply of housing stock for lower- and middle-in-
come groups.


The act will streamline, centralise and enforce the building control function at the divisional level. This will
eliminate overlapping spatial ambits of responsibility, confusion, corruption and inefficiencies.

This can be enforced by creating divisional building control authorities

This can either be via divisional level building control authorities or a single building control
authority with divisional directorates

Land Use, Zoning and Building Regulations

Punjab requires a unified and adaptable set of regulations for all cities instead of fragmented by-laws
specific for different locations.

The regulations must be a combined framework for guiding land uses and the urban morphology of each
building by land use categories.

129
Institutional reforms to empower and build urban planning capacity of the governments, includ-
ing local tiers and cities.

Establish Divisional Urban Planning Authorities.

Establish Divisional Building Control Authorities.

Establishment of Regional Land Records Authority and Tribunals.

Establish a Computerised Urban Land Record System & Land Market Information Sys
-tem and facilitation centres.

Streamline and align realistic city limits with functional and operational boundaries of
various institutions to improve city management and governance.

Policy reforms to guide spatial development and investments, and achieve a higher contribution
of urban economic growth to GDP

Develop and implement master plans for all cities of Punjab to define boundaries, regulate
density, integrate land use, and direct city investments.

Follow an integrated approach for strategic and comprehensive development planning of

cities, applying a system of cities where both regional and local lens are used, and includes
the creation of new economic cities and focus on both the south and north of Punjab.

Improve land utilisation and use unproductive land for other uses in city centre.

Allow mixed land use classification and high-density multimodal transportation nodes via
revised land use and zoning regulations.

Promote high density and vertical growth of cities (medium and high-rise buildings) instead
of horizontal growth for efficiency gains to existing settlements/villages falling within the
boundaries of private development.

Capacity building for better governance and management of urban centres

Provision of strategic land subsidies from the government in urban centres for low cost and
affordable housing.

Draft policy framework to discourage land hoarding and speculation, and tax vacant plots
after a specific period of time.

Invite PPP interventions for housing construction and finance

130
 
Punjab today faces a critical challenge of imbalanced development. A key determinant of development is
public investment, which improves the basic infrastructure and creates provision of necessary services,
such as education, healthcare and water & sanitation. This then attracts private sector investment, which
results in generation of productive jobs and income leading to growth. It is, of course, not possible that all
regions are equal, as international economies have successfully gained growth on the model of dynamic
cities. However, the provision of basic services for citizens has been on par. Punjab, unfortunately, due
to past investment trends, currently faces stark regional disparities. In overall numbers, Southern Punjab
can be seen as more deprived relative to Central and Northern Punjab. However, if patterns of deprivation
are explored at sectoral levels, one finds that deprivation is more varied across the province. Punjab is
committed to meeting the SDGs by 2030, and these stark disparities are a real cause of concern for the
government. Moreover, large equity reduces opportunities for economic growth and results in urbanisa-
tion issues, as people tend to migrate towards developed regions for better services and economic oppor-
tunities.


Impact of Reducing Inequity

Data of Punjab’s growth and poverty patterns shows that
 This is a strong result and the government’s
strategy will explore different options to reduce the previous inequities among districts.

The multidimensional poverty index is a common tool to assess severity and patterns of poverty in a
region. At the overall poverty level, the patterns of Punjab show that there has not been a change in
Punjab and the poorer districts in 2014 remain poor in 2018. Figure 7.1 shows that in terms of overall
poverty, southern Punjab has remained poor over the last 5 years. Breaking poverty further by districts
and regions, over 42 percent of the households are poor in the south as compared to 19 percent for the
rest of Punjab.
Table 7.1: Division/Region wise incidence of Poverty, 2017-18 (%)
Division Incidence of Poverty Region Incidence of Poverty
DG Khan Division 52.25
Bahawalpur Division 42.66 Southern Punjab 42.03
Multan Division 32.27
Sargodha Division 30.36
Sahiwal Division 32.62 Rest of Punjab 18.98
Faisalabad Division 23.96
Gujranwala Division 11.55
Lahore Division 16.21 Punjab 26.12
Rawalpindi Division 9.91
Source: Author’s calcula�ons based on MICS 2018

132
 Figure 7.1: Patterns of Poverty in Punjab

Source: MICS, Bureau of Sta�s�cs, Government of Punjab

This pattern of poverty is a direct result of previous public investment decisions in Punjab. A quick analy-
sis of the disparities suggest that over the last four years (2014-18), if the government spent Rs 100 per
capita per annum in Lahore on development, the second highest spending was only Rs 26 per capita per
annum in Multan. Moreover, very quickly, the expenditure per capita falls down to under Rs 10 for at least
15 out of the 36 districts of Punjab, with regions such as Bahawalnagar, Layyah and Pakpattan just
getting Rs 5 per capita per annum for development. The government will, therefore, increase its invest-
ment in these deprived districts over the next five years.

The multidimensional poverty is based on four main development indicators: education, health, living
standards and water and sanitation. The analysis below provides the deprivation in terms of these individ-
ual sectors.

Table 7.2 shows that districts in southern Punjab lag in all key education indicators as compared to the
rest of Punjab. There are some alarming statistics, such as almost 64 percent of higher secondary
children being out of school in southern Punjab and female youth literacy of 43.6 percent in southern
Punjab as compared to 63.4 percent for rest of Punjab. The overall adult literacy is much lower in the
region.
Table 7.2: Education Indicators
Indicator Rest of Punjab Southern Punjab

Adult literacy rate (%) 61.9 48.5

Youth literacy (%) Male 74.6 62
Female 63.4 43.6
Student teacher ra�o 23.9 26.4
Teachers per school (No.) 8.64 6.88
Enrolment per school (No.) 201.25 181.7
Primary 28.9 44.4
0ut of School Children Lower secondary 16.1 31
(%)
Upper secondary 48.7 63.8

Source: Author’s calcula�on based on MICS 18 and PMIU, 2017

133
 Figure 7.2: District-Wise Deprivation Figure 7.3: District-Wise Deprivation
Rankings in Education Rankings in Health

Source: 2018 Ranking tabulated using MICS 2018 Source: MICS 2018, Bureau of Sta�s�cs, Government of Punjab
Figure 7.2 above confirms the value of indicators, with the six most deprived districts in terms of educa-
tion all being in southern Punjab.

The health numbers depict the same story. The south considerably poorly as compared to the rest of
Punjab. However, the district pattern of health deprivation is more spread than education. Hafizabad, a
central district, is one of the six most deprived districts.
Table 7.3: Health Indicators
Indicator Rest of Punjab Southern Punjab
Infant Mortality per 1000 live births 57 65
Under five Mortality per 1000 live births 65 75
Skilled Birth a�endant (%) 82 63
Popula�on per ter�ary hospital 273,245 340,104
Popula�on per bed in ter�ary hospital 2,085 33,14
Popula�on per health prac��oner 2,555 2,835
Source: Author’s calcula�on based on MICS 2018 and PDHS, 2018
Tables 7.4a and 7.4b show the expenditure differences between the south and the rest of Punjab. The
deprivation patterns follow the pattern of previous spending in the province.
Table 7.4a: Percentage of Health and Education Expenditures (South vs Rest of Punjab)
Sector Region Type 2014-15 2015-16 2016-17 2017-18 2014-18
of Expenditure
Southern Punjab Current 24.4 24.0 22.7 17.3 21.9
Rest of Punjab 75.6 76.0 77.3 82.7 78.1
Educa�on

Southern Punjab Development 13.0 8.5 6.6 2.7 6.7

Rest of Punjab 87.0 91.5 93.4 97.3 93.3
Southern Punjab Both 21.9 20.1 17.9 13.0 17.7
Rest of Punjab 78.1 79.9 82.1 87.0 82.3
Southern Punjab Current 29.9 29.2 29.4 19.7 28.6
Rest of Punjab 70.1 70.8 70.6 80.3 71.4
Southern Punjab Development 9.6 4.4 6.7 3.3 5.8
Health

Rest of Punjab 90.4 95.6 93.3 96.7 94.2

Southern Punjab Both 27.7 26.7 25.4 13.7 25.0
Rest of Punjab 72.3 73.3 74.6 86.3 75.0
Source: Author’s calcula�on based on data provided by the Finance Department, Government of Punjab

134
 Table 7.4b: Health and Education Expenditures per million population (South vs Rest of the Punjab) (PKR)
Sector Region Type of Expenditure 2014-15 2015-16 2016-17 2017-18 2014-18
Southern
52344.7 65730.0 69727.5 52952.7 240754.9
Punjab
Current
Rest of
74791.6 96226.2 109396.9 116773.3 397188.1
Punjab
Southern
Educa�on

80.1 77.8 86.3 35.5 279.8

Punjab
Development
Rest of
24797.8 38670.3 56498.8 58461.7 178428.6
Punjab
Southern
603.5 735.1 783.6 565.1 2687.3
Punjab
Both
Rest of
995.9 1349.0 1659.0 1752.4 5756.2
Punjab
Southern
1559.5 1847.2 1467.3 336.2 5210.2
Punjab
Current
Rest of
1685.3 2062.8 1627.1 630.7 6006.0
Punjab
Southern
62.4 31.4 70.6 31.7 196.1
Health

Punjab
Development
Rest of
271.7 313.0 455.5 435.4 1475.6
Punjab
Southern
1621.9 1878.6 1537.9 367.9 5406.3
Punjab
Both
Rest of
1957.0 2375.7 2082.6 1066.2 7481.6
Punjab
Source: Author’s calcula�on based on data provided by Finance Department, Government of Punjab


Figure 7.4 shows pattern of water deprivation. The deprivation in water is much more dispersed as com-
pared to education and health. Khushab, Faisalabad, Jhelum, Rawalpindi and Attock are the districts
struggling most with clean drinking water.
Figure 7.5: District Disparities in Living
Figure 7.4: District Disparity in Water
Standard

Source: MICS 2018, Bureau of Sta�s�cs, Government of Punjab Source: 2018 Ranking tabulated using MICS 2018


Lack of provision of basic services and public investments has impacted the living standards and
economic empowerment of households. Figure 7.5 shows the deprivation in terms of living standards.
Again, the map shows a similar position with central and northern Punjab being better than the remaining
districts.

135

The Growth Strategy sets the following targets for achieving regional equalisation in the province.
 The government will reduce variance in development expenditures across the districts by at
least 5 percent every year.

 Reduce multidimensional poverty of deprived districts at 10 percentage points over the 5-year
period.

 Improve parity in education, health and water indicators by at least 50 percent over the 5-year
period.


The government will make conscientious efforts to address the development disparities across the differ-
ent regions of Punjab through increased funding, improvements in the governance structure, and capaci-
ty building measures. The strategy includes the following:

The Government of Punjab, through the Planning & Development Board, will establish a
District Development Fund. The fund will aim at designing need-specific development inter-
ventions which will be implemented to address the key dimensions of deprivation in the
less-developed districts of the Province. The fund, initially to be launched for the ten most
deprived districts, will target key SDG indicators in the health, education, and WASH sectors.
Successful pilot interventions will also be scaled-up for multiplied impact. A targeted approach
coupled with enhanced development funding will help bridge the development gap across
Punjab.

Separate Administrative Secretariat will be established for South Punjab which will augment
the efforts to reduce development imbalances. Decentralized service delivery and develop-
ment planning through dedicated Government departments for South Punjab will enhance the
capacity of government machinery for optimum utilization of allocated development funds in
the region. In addition, policy interventions will be made to ensure maximum public value
generation for South Punjab through development funding. The government will also impose
ban on re-appropriation of funds allocated for South Punjab to other districts.

The government will adopt a scientific approach towards the sustainable development of the
less-developed regions. Spatial mapping will be used to identify key infrastructure gaps, espe-
cially farm to market roads, education/TEVT institutions, and hospitals. The spatial planning
strategy will also be used to integrate the southern districts with the rest of Punjab, with Multan
as the hub for southern Punjab. It is expected that long term spatial planning will help achieve
balanced development in the deprived districts of Punjab.

Industrial estates have already been established in Vehari, Rahim Yar Khan and Bahawalpur.
The government will enhance its efforts to develop the industrial sector in South Punjab.
PEIDMC will be tasked to attain 100% colonization in the next five years, by developing techni-
cal institutes in the industrial estates and creating employment opportunities for the locals.
Efforts will also be made to attract foreign investment through declaring parts of the industrial
estates as SEZs. The government will also invest in connecting routes to the Lahore-Sukkur
motorway under the CPEC to increase regional connectivity.

136
 
After adoption of Sustainable Development Goals (SDGs) agenda on 25th September 2015, the world
environmental dimensions. The agenda is an expansion of Millennium Development Goals (MDGs),
which interconnects 17 SDGs and 169 targets in a way that not a single goal or target can be achieved in
isolation. The indivisible nature of targets makes it crucial for national and sub-national governments to
focus on interlinkages and trades off and to ensure effective coordination mechanism within and across
various sectors and departments to achieve SDGs by 2030.

In February 2016, the Government of Pakistan through the National Assembly, unanimously passed a
resolution and declared Sustainable Development Goals (SDGs) as national goals. The Ministry of Plan-
ning Development and Reforms in collaboration with United Nations Development Programme (UNDP)
launched “National Initiative” on SDGs. The National Initiative on the 2030 Agenda on SDGs supports the
federal and provincial governments in their efforts to ensure early institutionalization of SDGs and adjust-
ing this global framework by taking the local context into consideration.


Institutional apparatus for SDGs Implementation in Punjab is the key driver for effective imple-
mentation of 2030 Agenda on SDGs. SDGs Support Unit is mandated to support Government
of Punjab in mainstreaming SDGs into existing planning and budgeting processes by aligning
provincial priorities with SDGs.

With the institutional arrangement, the Government of the Punjab has undertaken the stock of
existing development policies, plans, strategies and investments across social, economic and
environmental dimensions of sustainable development. The process helped the Government
of the Punjab in formulation of provincial SDGs framework which offers a unique opportunity
to the government to determine its short term, medium term and long-term development priori-
ties and translating those priorities into policies and actionable plans and strategies. The
provincial SDGs framework also provides a mechanism to the government of Punjab for moni-
toring and performance management of SDGs and formulating evidence based public policies
in future.

The Government of the Punjab has taken specific actions to integrate SDGs in the provincial
policy, planning and budgeting processes. These include: i) alignment of Annual Development
Programme (ADP) with SDGs by aligning development schemes with specific SDG targets
and goals; ii) review of existing budgetary instruments including PFC to examine the mecha-
nism, timeliness and effectiveness of the transfers and the reporting systems for assessing the
performance of local bodies; and, the allocation of PKR 66,576 million, under PM SDGs
Programme, more than 30,000 development schemes in the areas of health, education,
energy and water and sanitation for FY 2017-18.

Good quality data is vital for governments, international organizations, civil society and private
sector to make informed decisions and to ensure accountability for the implementation of the
2030 Agenda. Tracking progress on the SDGs requires the collection, processing, analysis
and dissemination of an unprecedented amount of data and statistics at the national and
provincial levels, including those derived from official statistical systems and from new and
innovative data sources.


Government of the Punjab’s intends to further augment its existing approaches towards mainstreaming,
acceleration and policy support for Agenda 2030. Based on Provincial SDG Framework, measures will be
taken to develop a competitive environment in the province where all stakeholders should work together
for achievement of SDGs in true spirit. Following are the key points of Government of the Punjab’s

138
approach to keep SDGs aligned with the Punjab Growth Strategy 2023:

Strengthening the legislative patronage of SDGs in province will be a priority area for creating
a momentum. Close liaison between Parliamentary Task Forces / Committees and SDGs
Support institutions will be developed. This will help promote integrated policy making, devel-
op enabling culture and collective commitment to the cause, and above all will help replace the
traditional development approach with integrated sustainable development approach envi-
sioned in Agenda 2030.

Government of the Punjab is committed to invest on SDGs, however financing needs of imple-
mentation of SDGs is the biggest challenge worldwide. According to some estimates approxi-
mately $2-3 trillion of additional investments are required annually to make this ambitious
agenda into reality. Therefore, firstly provincial government will collaborate with federal
government for assessment of real estimated requirement of fund, particularly for the immedi-
ate SDGs priorities, and secondly private sector will be vigorously engaged in development of
different sectors under Public-Private Partnership mode. In addition, innovative the successful
practices of other developing countries to fund the SDGs will be tested.

Proactive role of institutions and civil service is vital for realization of SDGs. Therefore, efforts
will be made to bring institutional innovation capable to buy-in from all the stakeholders of
SDGs. Capacity of institutions at provincial government and local government tiers will also
be strengthened in order to enable them for policy coherence and mainstreaming SDGs. Simi-
larly, measures will be taken to development understanding of SDGs among civil service for
effective implementation of SDGs.

Importance of local governments for SDG implementation is universally acknowledged.

Therefore, government will take the SDGs to local governments as per new Local Government
system. The strategy will range from outreach campaigns intended for local governments to
the legislative and institutional frame work. This will help enshrine commitments to SDGs in
environment of local governments. In beginning, district level SDGs strategies and plans will
be finalized on common references that will provide a clear vision for SDGs attainment and will
also develop competitiveness among districts.

Comprehensive monitoring of the progress towards SDGs will be adopted as an active man-
agement tool to prevent veering off course. Monitoring, evaluation, and review of progress
towards the SDGs will be strengthened mainly through institutions’ capacity building for statis-
tical analyses and collection of relevant and accurate data against each SDGs indicator.

Stakeholder engagement is vital for achieving SDGs. The government will adopt bottom-up
participatory approaches across level of administrative and financial decision making in order
to address specific development needs of masses.

Capacity of SDGs Support Unit will also be enhanced enabling it to manage demands of multi-
ple stakeholders, to create awareness, strengthen institutional coordination mechanisms,
address barriers, and create capacity for strengthening integration.

Technological innovations, particularly potential of ICTs will be harnessed for mainstreaming

and acceleration of SDGs. In this regard partnership will be developed with academia and tech
companies.

139
 
The strategic partnership between Peoples Republic of China and Islamic Republic of Pakistan was
initiated in July 2013 in the form of the China Pakistan Economic Corridor (CPEC) which comprises a
fusion of multiple developments in the regional context, aiming to foster peace, prosperity and wellbeing
of the two countries. The global economic landscape has changed dramatically due to a technological
advancement, trade liberalization, free capital movements, modern communication and transportation
infrastructure, and creation of cross border supply chains. Regional cooperation agreements have prolif-
erated in recent times to capture this change especially in the global economic context. In order to
prepare a clear roadmap to implement projects under CPEC, various joint working groups under CPEC
have already been established. Eight Joint Cooperation Committee meetings have been held so far for
mutual coordination and swift decision-making regarding CPEC between the two countries.

The initial phase of CPEC, ending in 2020, is focused on cooperation in energy, transport infrastructure
(road, railways, and airports), Gwadar port projects and industrial parks; along with focus on addressing
the major bottlenecks to Pakistan’s economic and social development. The Long Term Plan for CPEC
2030 includes other priority areas of cooperation i.e. agriculture, industries, tourism, people’s livelihood
and financial cooperation. By 2030, an endogenous mechanism of sustainable development and the
impact of CPEC in stimulating economic growth is expected to come into effect. The Punjab government
is complementing the Federal Government’s efforts towards fast paced implement of CPEC project.

Currently, CPEC projects under implementation in Punjab include the following

M-3 Allama Iqbal Industrial City, Faisalabad
Orange Line Metro Train Project
The 2x660 MW Sahiwal Coal Fired Power Project and the 3x100 MW Solar Power Project
have been completed and have started contributing to the National Grid

Industrialization and establishment of Special Economic Zones (SEZ) is the second phase of CPEC. The
approved SEZ project of Punjab, M-3 Allama Iqbal Industrial City will spur growth investment opportuni-
ties in various sectors. The SEZ will bring an estimated investment of Rs. 357 billion and will generate
estimated 242 thousand jobs. It will provide opportunity for local firms to operate side-by-side with
Chinese and other international firms in textiles, pharmaceuticals, automobiles, light engineering and
food processing. Since the priority sectors for the SEZ are Punjab’s key sectors, the technology transfer
and skill development within SEZ will give boost linked industrial clusters across Punjab.

Moving on from energy and infrastructure development, CPEC has entered a new phase of Socio-Eco-
nomic Cooperation. In the recently constituted Joint Working Group on Socio-Economic Cooperation,
both nations have agreed to implement socio-economic development projects in Pakistan supported by
Chinese government with grants and interest-free loans under CPEC, covering major cooperation areas
of education and vocational training, healthcare, poverty alleviation, agriculture and drinkable water
supply sectors. Government of the Punjab has proposed different projects under CPEC socio-economic
cooperation that will contribute to reducing regional disparity, poverty, social inequality and improve quali-
ty of life. About half of the Chinese support expected on these projects will be in South Punjab. The small
projects with one-year implementation period, mid and long-term self-sustained projects with implemen-
tation period of two and three years respectively will be executed simultaneously.

The Punjab Growth Strategy 2023 is in line with the Long Term Plan (2030) of China Pakistan Economic
Corridor. The key cooperation areas agreed in the LTP 2030 have been adopted and prioritized in the
PGS 2023. To compliment the development plans under CPEC, Government of the Punjab will:

 through IT Legislations, use of IT for public

service delivery, leveraging IT for private sector development, development of e-government
and e-commerce solutions.

140
       to leverage investments
through CPEC. The PGS 2023 has also prioritized the speedy establishment and initial coloni-
zation of M-3 Allama Iqbal Industrial City. The government also aims to encourage various
forms of Chinese enterprises to enter Punjab’s market.

 chemical & pharmaceuti-

cal, engineering goods, agro, iron & steel, light manufacturing & home appliances and
construction materials, and use efficient, energy-saving and environmental friendly processes
and equipment. The PGS 2023 identifies key interventions to increase exports, manufacturing
productivity, expand access to finance for industry, address specific governance challenges,
optimize the use of Punjab’s natural resources for attracting Chinese investments under
Industrial Cooperation.

       through strengthening

production of agriculture inputs, upgradation of agricultural infrastructure, promotion of water
efficiency in irrigation systems and strengthening cooperation in the fields such as crop farm-
ing, livestock breeding, forestry and food growing, and aquatic and fishery in the regions along
the CPEC, with the highlight on technical exchange and cooperation in the fields of develop-
ment of comprehensive agricultural production capacity, construction of farmland water
conservancy facility and agricultural products circulation facility.

      within the CPEC coverage;
make efforts to carry out skills development and vocational training to build Punjab’s workforce
and employment opportunities for CPEC , relying on higher education resources in Punjab to
carry out design and R&D activities, strengthen exchanges and cooperation among education-
al and research institutions in technology transfer, providing medical assistance services and
upgrade existing medical facilities based on actual needs.

141
 
The monitoring and timely intervention of the vast agenda provided in the Growth Strategy is essential for
Punjab to meet its projected targets. The government will develop a multi-tier implementation and moni-
toring structure to ensure effective implementation, tracking of results and bringing about refinements to
the strategy by incorporating results. The strategy has set some overall broader targets for the province,
as well as key sector-specific targets. The prime responsibility of implementing the initiatives rests with
the relevant line departments, with strategic guidance provided by the Planning & Development Board
and the Finance Department. The responsibility for recording of results is split among PERI, BoS,
DGM&E and line departments. The overall steering of the strategy will be provided by the Planning &
Development Board, which will ensure that projects proposed by the department under the ADP are in
line with the objectives of the Growth Strategy. The reporting of progress on the Growth Strategy to the
Chief Minister will be done by the Planning & Development Board. This will be done through the creation
of an electronic dashboard reporting on key indicators, key initiatives and significant results. To ensure
robust monitoring and implementation of the strategy, the following steps will be taken:

The government will strengthen the capacity of PERI and BoS to continue to tabulate provincial
GPP numbers using the methodology developed under the Growth Strategy. The PERI will
produce an annual table of GPP numbers, performance and sector allocations. It will also
estimate, using the growth model, the predicted values of other outcome variables not directly
observable.

BoS will develop a comprehensive plan to expand the scope of MICS to include SDG-relevant
indicators and also conduct short sector-specific survey to report progress on key indicators.

PERI and BoS will produce district-wise poverty estimates after each MICS survey is available.

Each line department will develop the sector strategies presented in the PGS into a well-defined
set of projects for the ADP, and develop an action plan and timeline for implementing reforms for
the reform areas. The departments will be supported by the Planning & Development Board to
develop these projects. The reform agenda should include a comprehensive plan on implement-
ing the reforms.

The Planning & Development Board will work with the Urban Unit to transform the entire ADP
portfolio on a spatial map using the GIS. This tool will be made available to the PDWP with
support from the Urban Unit to take more informed investment decisions and identify spatial
overlap and gaps to increase efficiency of expenditures.

The DGM&E and the PITB will support in developing a high-level reporting dashboard, including
link to GIS mapping, to report progress on key initiatives and results. The dashboard will be made
available to the Planning & Development Board chairman with an automatic update system
developed. This dashboard will be used to apprise the Chief Minister of progress made on the
PGS and the performance of the province.

The section below provides a matrix of key targets set under the PGS and their monitoring
responsibilities. It also provides a list of key inputs and initiatives required to achieve the targets.

The DGM&E and the PITB will support in developing a high-level reporting dashboard, including
link to GIS mapping, to report progress on key initiatives and results. The dashboard will be made
available to the Planning & Development Board with an automatic update system developed.

The section below provides a matrix of key targets set under the PGS and their monitoring
responsibilities. It also provides a list of key inputs and initiatives required to achieve the
targets.

144
 4.9 5.9 6.3

CM

MY

CY

CMY

433 563 690 865

297 355 427 518 630

4.8% 6.0%
4.0% 6.5%
8.2% 11.0%
26.9% 16.1%
2.1% 1.8%
2.1% 1.8%
13.8% 23.8%
13.9% 17.1%
8.6% 10.6%
Others- 15.6% 5.3%
Total- 100.0 100.0

The overall target is to achieve an average annual growth in private sector investment by 5.7 percent per

Table 8.3: Key Milestones & Targets for Private Sector Development
Monitoring Monitoring
Indicator Timeline Responsibility
Frequency Responsibility
Develop and get approved The PGS sets to approve the following policies by 30 June 2019 with a strong All Policies to be Economic Wing Overall
relevant policies from the private sector development focus: developed and P&D Board Steering
provincial cabinet • Agriculture Sector Policy placed in Provided by
• Punjab MSME Policy approval process Chairman
• Punjab Tourism Policy by 30 June 2019 P&D Board
• Punjab Investment Policy
• Tax & Revenue Mobiliza�on Strategy Responsibilit
• Land Lease Policy for Industrial Land in Estates y with
Relevant
Secretaries
Improving the Business & Ac�vity with �meline Resource Requirement Monitoring/Indica Responsibility
Investment Environment tors
in Punjab 1. Implement the Regulatory Guillo�ne by Yes / Possible Donor Economic Wing Steering Provided by Chairman
December 2019. Commitment P&D Board P&D Board.

Number of Implementa�on by PBIT and

regula�ons Industries Department
reduced.
2. Expand Punjab Business Registra�on Portal Yes / Possible Donor Economic Wing Steering Provided by Chairman
to all major business ci�es including Commitment by World P&D Board P&D Board.
Faisalabad, Sialkot, Gujranwala, Multan, Bank J&C programme
Rawalpindi by December 2019. Number of firms Implementa�on by J&C PIU under
3. Develop a plan to expand the portal to all registered per P&D
districts. city.
4. Conduct Sub-Na�onal Cost of Doing Yes / Possible Donor Economic Wing Steering Provided by Chairman
Business Survey Commitment P&D Board P&D Board.

Implementa�on by J&C PIU under

P&D
5. Opera�onalise Online Feedback Mechanism Yes/ Possible Donor Economic Wing Steering Provided by Chairman
(OFM) by 30 September 2019 for Commitment P&D Board P&D Board.
strengthening Public Private Dialogue.
6. Policy/regulatory issues discussed and Number of topics
streamlined through OFM covered and
reforms ini�ated

7. Implement the Case & Court Management Yes / Donor + Law Department Law Department / follow up with
Strategy 2017 for aiding resolu�on of Government Lahore High Court
commercial disputes Number of
reforms
implemented

Size of backlog of
cases
8. Support for entrepreneurship, enterprise Yes / Government + EA Industries PSIC with support from
development and innova�on Donor Department Industries, Commerce &
- Loans for entrepreneurship Investment Department
- Grants for start-ups, enterprise
innova�on and technology
9. Marke�ng Punjab Interna�onally and Yes / Government + EA Industries PBIT
establishment of Punjab Investor Pla�orm Donor Department



The Punjab Growth Strategy projects industrial growth to reach close to 10 percent by 2023. The other
targets include:
Table 8.4a: Indicators for Productive Sectors
Indicator 2018-19 2019-20 2020-21 2021-22 2022-23 Monitoring Monitoring Ownership
Frequency Responsibility
Contribu�on to Secretary
17.6 17.7 18.0 18.2 18.2 Annual PERI & BOS
Provincial GPP (%) Industries
2.89 million jobs Secretary
0.12 0.51 0.66 0.7 0.9 Annual PERI & BOS
created by 2023 Industries
Exis�ng Industrial Close to 100 percent coloniza�on of established PEIDMC, Secretary
Annual
Estates industrial estates FEIDMC, PSIC Industries
Exports from Punjab An average increase of 5% per annum over the period PERI & BOS Secretary
Annual
Industries

146
Table 8.4b: Key Initiatives for Productive Sectors
Key Ini�a�ves Resource Monitoring/indicators Responsibility
Requirement
Complete development and accelerate Yes 6 Monthly, Status Stocktake on PSIC, PEIDMC Secretary
colonisa�on of planned industrial estates and PEIDMC Industries
- Number of estates developed
and sales ini�ated
- Coloniza�on rate per estate
- Investment and employment
es�mates
- QAAP colonized by 2023,
component of Foreign
Investment
Enhancing affordable credit to SMEs Yes (Donor + Number of schemes launched Secretary
Government) Amount of loans forwarded at SMEs Industries
Number of SMEs benefi�ng PSIC to
implement
Strengthening key export clusters Yes (Donor + Number of clusters covered Secretary
Government) Number of ini�a�ves Industries
Increase in exports from the clusters PSIC to
implement
3 Industrial Corridors to be demarcated by Yes 3 corridors; Lahore to Sheikhupura, Manga- Urban Unit
2023 Raiwind and Sialkot-Daska no�fied
Implement inspec�on free regime for No Number of inspec�ons and fees reduced and Secretary
Industries by June 2019 streamlined Industries
Consolidated mapping of mineral and coal Yes Number of PPPs and Investment in the sector Secretary Mines
reserves of Punjab with guaranteed PPPs & Minerals

The Industries Department and Mines & Mineral Department will produce their annual plan
with quarterly targets by June 2019.

The Punjab Growth Strategy projects that the agricultural growth will reach close to 10 percent by 2023.
The other targets include:
Table 8.5a: Indicators for Agriculture Sector
Indicator 2018-19 2019-20 2020-21 2021-22 2022-23 Monitoring Monitoring Ownership
Frequency Responsibility
Contribu�on to Secretary
20.0 19.9 19.7 18.2 18.2 Annual PERI & BOS
Provincial GPP (%) Agriculture
1.26 million jobs Secretary
0.13 0.13 0.3 0.3 0.4 Annual PERI & BOS
created by 2023 Agriculture

Table 8.5b: Key Initiatives for Agriculture Sector

Key Ini�a�ves Resource
Monitoring/indicators Responsibility
Requirement
Increase total factor produc�vity by Number of programmes ini�ated for Secretary
efficient use of water and op�mal use of implemen�ng modern farm prac�ces Agriculture
Yes
fer�lisers and other inputs with improved
quality and variety of seeds
Improve the quality of extension research Number of extension programmes ini�ated Secretary
and create stronger linkage of extension in collabora�on with the universi�es Agriculture
Yes
research and training with core agriculture
universi�es
Strengthening key export clusters Yes (Donor + Increase in exports Secretary
Government) Exports of key fruits and rice to China Agriculture
Spa�al transforma�on of cropping zones Change in cropping pa�erns based on Urban Unit /
and cropping pa�erns Yes climate and spa�al advantages Secretary
Impact on yields and quality Agriculture
Disease-free zones for livestock and 100% Number of programmes ini�ated Secretary
limi�ng of adultera�on of Milk by 2023 Yes Number of disease free zones Livestock
Quality of milk improved
Increasing export of halal meat Yes / private Expor�ng units and export value of halal Secretary
sector meat Livestock

147
 The Agriculture Department and Livestock Department will produce the annual plan with quar-
terly targets by June 2019.


The Punjab Growth Strategy projects services sector growth to reach close to 5 percent by 2023. The
other targets include:
Table 8.6a: Indicators for Services Sector
Indicator 2018-19 2019-20 2020-21 2021-22 2022-23 Monitoring Monitoring Ownership
Frequency Responsibility
Contribu�on to Secretary
62.4 62.4 62.4 62.4 62.5 Annual PERI & BOS
Provincial GPP (%) Industries
1.96 million jobs Secretary
0.16 0.4 0.5 0.4 0.5 Annual PERI & BOS
created by 2023 Industries

Table 8.6b: Key Initiatives for Services Sector

Resource
Key Ini�a�ves Monitoring/indicators Responsibility
Requirement
Crea�ng and Apex Body/Focal Department Chief Secretary/
for enabling the services sector by 30 June Yes Department no�fied Secretary
2019 Industries
Complete census of service establishments Secretary
Yes Census completed
by December 2019 Industries
Harmonisa�on of provincial sales tax Tax / revenue mobiliza�on strategy PRA / Finance
No Tax policy Department
regime and ra�onalisa�on of the rate
Number of Reforms
Urban Unit /
Development of tourist zones Yes 3 zones by 2023 Secretary
Industries and
Secretary Tourism

The government will establish an apex department for the services sector, which will develop
the services sector plan in partnership with relevant institutions and agencies.


The Punjab Growth Strategy has set the following target for the skills sector:
Table 8.7a: Indicators for Skills Development
Monitoring Monitoring Ownership
Indicator 2018-19 2019-20 2020-21 2021-22 2022-23
Frequency Responsibility
Secretary
Train 2.5 million Industries, P-
youth by 2023 0.45 0.45 0.5 0.55 0.55 Six Monthly PSDP
TEVTA, PVTC,
PSDF
- 10% trained through industry partnerships, with total 20% trained in industry relevant skills
Structure of
- 10% trained in futuris�c skills especially in light of CPEC by se�ng up training ins�tutes in SEZs
trainings
- 70% trained in standard trades, including those relevant for overseas employment

Table 8.7b: Key Initiatives for Skills Development

Resource
Key Ini�a�ves Monitoring/indicators Responsibility
Requirement
Comprehensive ins�tu�onal restructuring
Crea�on and opera�onalisa�on of PSDA Secretary
Yes
Crea�on and opera�onalisa�on of PSTA Industries
Implementa�on of Modular Approach by
Yes Number of courses offered PSDF
PSDF
Establishment and opera�onalisa�on of Universi�es established PSDP / Secretary
two technical universi�es Yes Enrolments Industries
Number of Courses
Increase in export of human capital Yes – exis�ng Data from Overseas Employment Agency, PSDF, P-TEVTA,
and Donor collected by PSDP PSDP

PSDP will coordinate with P-TEVTA, PSDF and PVTC for their annual training plans and
selection of trades and courses to be established.

148

The Punjab Growth Strategy identified strong and productive human capital as the key driver of growth
in the province. The strategy makes a large number of strategic recommendations to improve the perfor-
mance of the health, education and the WASH sectors. These sectors contribute significantly towards the
growth of human capital. The strategy uses SDGs as the basis to track progress in these critical sectors.
The key targets are provided below:
Table 8.8: Goals for Health
Goals 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Infant Mortality Rate (per 1000) 60.0 57.7 55.5 53.7 51.9 49.9

Child Mortality Rate (per 1000) 69.0 64.4 60 56 52.1 47.9

Immunisa�on coverage (%) 75.8 78.2 79.8 81.4 83.0 85.0

Stun�ng prevalence (%) 31.5 29.3 28.6 27.8 27 25.9

Was�ng prevalence (%) 7.5 6.3 5.2 4.3 3.9 3.5

Percentage of Antenatal Care Coverage 87.3 89.4 91.1 93.3 95.3 97.3
(at least once by Skilled personnel) (%)
Percentage of women of reproduc�ve 27.0 23.2 22.4 21.6 19.9 17.9
age suffering from iron deficiency
anaemia (%)
Maternal Mortality Ra�o (per 100,000) 180.0 176.0 173.0 167.0 162.0 154.0

Prevalence of Hepa��s B&C (%) 0.40 0.21 0.16 0.13 0.10 0.08
Prevalence of TB cases (%) 0.30 0.27 0.25 0.23 0.21 0.19

Table 8.9: Goals for Education

Educa�on Indicators 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Literacy rate 10+ years 61.9 63.1 63.8 64.6 65.5 66.6
Adult literacy rate 15+ years 71.0 73.1 74.2 75.4 76.6 78.3
Adult literacy rate 15–24 years 76.2 78.1 78.8 79.7 80.6 81.6
Net primary a�endance rate Boys (5–9 years) 65.6 66.4 66.4 67.3 68.4 70.3
Net primary a�endance rate Girls (5–9 years) 65.3 66.3 66.1 67.0 68.1 69.7
Net secondary a�endance rate Boys (10-14 years) 36.3 38.6 38.7 38.9 39.0 40.6
Net secondary a�endance rate Girls (10-14 years) 35.9 37.2 37.5 37.7 37.7 39.4


60 percent of the population in the province has safe/managed water services
70 precent of urban and 35 precent of rural population have access to piped water
100 precent water metering in cities, 50 precent in intermediate cites and 30 precent in small
towns
Sewerage system covers 70 precent in cities and 40 precent in rural areas
Achieve open defecation free status by 100 precent population/area
80 precent solid waste is collected and disposed per day
More than 90 precent schools have usable drinking water

The sectoral departments will work with BoS and PERI to track these indicators.

149