SUNDAY SEPTEMBER 25: Growth target may be scaled down to 3.5 percent

ISALAMABAD: The government may have to revise downward 2011-12 GDP growth projection from 4.2 per to 3.5 percent following an estimated loss of 2.5 million cotton bales in Sindh by recent floods, it is learnt. Sources told Business Recorder that an initial assessment suggests that the cotton crop has been badly damaged in the province and the projected target of cotton production may not be achieved.
They said the loss of 2 to 3 million cotton bales constitute an immense damage to economy as decrease of one million bales would have a negative impact of 0.5 to 0.7 percent on the GDP growth. They said forecast was that cotton production would be around 3.8 to 4 million bales from Sindh but 70 percent crop has been damaged by floods, which made 4.2 percent growth target for 2011-12 based on projected 3.8 percent agriculture growth almost impossible. An official said that growth in agriculture sector heavily depends on production of cotton crop.
The damage to cash crops especially cotton, chillies, onion and potato is going to have a negative impact on agricultural growth as well as on the country's trade balance. According to an official, 80 percent cash crops on 1.7 million acres have been ruined by the worst spell of rains that triggered floods in the province. It is feared that around 2.5 million cotton bales have been affected by floods which, in turn, would have a negative effect on exports of textiles and may force the industry to import cotton.
Sources revealed that the last meeting of the National Price Monitoring Committee was informed that sugar crop was also badly affected in Sindh and the government would have to import at least 0.4 million tons of sugar to avert any crisis in the last two quarters of the current fiscal year. The meeting was reportedly informed that sufficient sugar stocks were available till next crushing season and the government had to import sugar to meet the domestic demand from January 2012 onward by timely importing 0.4 million tons of sugar.
An official privy to the Cabinet meeting said the issue of availability of essential commodities and their prices was also discussed during the meeting. The officials of the finance ministry reportedly informed the Cabinet of the increasing trend in the price of essential commodities especially after the floods and damage to red chillies, onion and potato crops in Sindh.