Comparison of Ayub’s era and today’s upto 2015 in regard to Cottage Industry

Pakistan Economy

Comparison of Ayub’s era and today’s upto 2015 in regard to Cottage Industry

Submitted to  :Mam Asma                             Submitted By : Mannan Saeed

4/27/2015

Szabist Islamabad               BBA – 7

Table of Contents

 

1.    What  is cottage industry ………

                2.    Ayub’s   era ………………………..

                3.    Today’s era  …………………………

1.     What is Cottage industry

  A creation where products  and services are made home based .These products include a unique characteristics such as home made fresh  soup , handcrafts such as artisan jewelry ,  Fish keeping , Poultry farming , Carpet knitting  ,Sports goods , Hand looms etc. This provides a living for people from self employment.

2.     Ayub’s Era

During independence Pakistan inherited only 14 out of 349 cotton mills which shows a glance of the problems Pakistan faced. During Ayub’s era Pakistan output increased to 61%.There was no conflict between the Cabinet and the Economic institutions related to industrial development, unlike the first phase. As everyone was working together for the betterment of the Pakistan. Private sector on encouragement of government invested in new and major industries with more complex technology. Such industries included paper, cement, chemicals and engineering industries. Intermediate and capital goods industries also flourished. One negative element of this development was its dependence on import goods because Pakistan at that time didn’t had enough resources for the raw materials for example to make the perfumed tissues Pakistan didn’t had the ability to make the chemicals to make the perfumed tissues so Pakistan had to import other than that shortage of machineries and technology shortage led to increased dependence on imports.

The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology which was the high yield variety seeds which were imported from USA for example before the usage of HYV seeds only few grains were grown on a stem now with the usage of HYV seeds more grains could be grown on a single stem, which gave power to many small farmers to benefit from it and now they were able to grow more crops and were able to sale it in the market . With improved governance, government supported tiny merchants and people who lost their investment in India after independence by offering them various credit loan schemes such as the import list in which govt allowed people to import a number to items which was expanded to 44 items free of import duties which allowed many small industries to establish such as handicrafts which was expanded when people purchased more handicrafts tools to develop products which was good enough to export . There was some alliance formed by  some traders and Muslim League people which allowed the building up of new companies such as Habib Bank and Mohammamdi steamship etc. Differentiated tariff regime of 65% for consumer goods, 40% intermediate goods and 39% for capital goods promoted industrialization in consumer goods sector.. Centralized allocation of credit  through publicly owned financial institutions. State developed enterprises and sold it to individuals. Incentives played a major role.  By 1969, Pakistan's manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined which was the result of free import list and other govt policies which encouraged the development of the  cottage industries , not only this the farmers with the usage HYV seeds and govt soft credit policies went on to the front hand of the agriculture so well that Pakistan was able to export the agricultural products during Korean war .With land distribution scheme in 1959  Ayub’s divided the land amongst the poor people so that they can have the ownership and but there were some negative outcomes too such as the fact eh land which was given by the rich was highly uncultivated and they were provided with heavy finance not only that the potowari’s were corrupt they showed less land in the documents which led to the big landlords to keep the those lands even though in reality there land was more then the given requirements.

As a consequence of these developments and the investments made in infrastructure during the 1950s, the growth rate of the country's economy more than doubled from 2.5% per annum in 1950s to 5.6% in the 60s, the growth rate in GDP in West Pakistan rose to 6.7% from 3.1% and in East Pakistan 4% from 1.7.

Ayub’s regime took three main measures towards industrial development. Primary emphasis was given to industries connected to agriculture and raw materials of the country. Secondly, development of medium, small and cottage industry was encouraged to increase skill labor and thirdly to establish large-scale, heavy industries essential for rapid development. In fact the third objective was made a constitutional obligation in 1962. To build up foreign exchange reserve, the government liberalized the imports of industrial raw materials and other essentials and led to the development of the cottage industry and further on leading to mega industries in terms of exports and expanding target markets.

Investment Promotion Bureau was set up to attract foreign investors as well as High Powered Facility Boards to assist industrialists in establishing factories. The export bonus scheme was introduced to stimulate imports of raw material and machinery. During 1967 bonus earnings amounted to Rs 37.3 crore.

Govt controlled nearly all infrastructures like power generation, transport and communication.  Political stability, liberalization of investment controls and ample availability of foreign exchange through aids and loans were key factors influencing a pronounced acceleration in the pace of private investment. The policies were made less strict for private investment. The increase in investment contributed to an increase in economic growth naturally.. Ayub's policies resulted in significant increase in the rate of growth to 6.3 percent between 1965-70.

3.     Today’s era  …

The rural areas in Pakistan are famous for the Cottage and household industries. Majority of the villages in Pakistan are self-supporting or self-sustaining in fulfilling the fundamental needs and necessities of life. The people in rural areas rely on the household industries for their livelihood. Businesses that usually thrive include pottery, cotton weaving, carpentry, metalsmithing. The consumers in Pakistan have an everlasting demand of handmade traditional clothing, mats, bangles, mud made handicrafts e.t.c. The President of ICCI claimed that Cottage industry has provided employment to almost 80% of industrial workers. The reason for setting-up a cottage or small scale industry includes closeness to market, closeness to raw materials, environmental and climatic factors, and availability of transport. Presently following types of small-scale industries are present in Pakistan’s rural areas:

Surgical manufacturers:   Hand made surgical instruments made in lahore and sialkot.

Metalworking. Done in Peshawar famous for using copper and brass in cuilding tins , cans and other items.

Ceramics. Gallas pots ,mugs are famous products produce from ceramics cottage industry..

Jewelers: Hand made jewelery made in special designs especially in gilgit , sindh is a great art.

Textiles. Presents 68% of Paksitan exports  and more then 40% are hand made like Sindhi Ajrak .

Carpets & Rugs. Quetta is best known for making of carpets and rugs which also include persian carpets .Not only in rural areas, but cottage industries have gained immense importance in cities andtowns as well. There is great demand for hand-woven carpets, embroidered work, brassware, rugs andtraditional bangles. Not only at national level but export quality items are being produced. There is ademand for rugs, carpets, brassware, handicrafts and embroidered work in the International market.These goods provide 30 percent of the export receipts 6 of the manufacturing sector.

Cottage and small scale industries provide employment to more than 80 percent of the industrial labor force. At the same time, however, the share of cottage industries in country GDP is only 5 percent. Cottage industries will continue to be Pakistan economy part.

1-There is little capital for large scale industries and, although they are expanding they are not yet in position to meet all the demands of the industrial goods market.

2-Because of increasing automation in large scale industries and the continuing labor problem, many workers will continue set up their own cottage industries.

3-In areas where the infrastructure is not adequate to support large scale industries, the setting up of cottage industries would provide income for the local populace and provide jobs for those who are affected by seasonal unemployment.

With the economy firmly under 4% growth and a consistently dropping Global Competitiveness Ranking (118^th currently).Small industries has given out loans worth 1122 Million Rupees to over 62,000 beneficiaries. Through the SME lending program targeted loans at 0% interest were given to 1000 Hand Loom workers to start their own businesses while 400 Furniture workers were provided the capital top launch their own businesses. In addition to this the government of Punjab is conducting a first of its kind survey in Pakistan that will map out the small and cottage industries within Pakistan. This is crucial for Punjab as all future interventions and program design would be better tuned to support the end beneficiaries based on the survey results.

References :

: 

·         http://www.ukessays.com/essays/economics/the-political-scene-behind-the-birth-of-pakistan-economics-essay.php#ixzz3Y7Y3NEp5

·         http://www.wisegeek.com/what-types-of-products-are-made-in-a-cottage-industry.htm

·         http://businessmag.org/cottage-industries-in-pakistan/

·         http://www.pakpakistan.org/cottage-industry-in-pakistan/

·         http://photooface.blogspot.com/2011/01/cottage-and-small-scale-industries.html