Shamshad Akhtar: Pakistan - changing economic and social paradigm
Address by Dr Shamshad Akhtar, Governor of the State Bank of Pakistan, at the International
Conference of Young Presidents Organization, Lahore, 4 November 2006.
* * *
Pakistan's economic diversity and potential, its geography and strategic location and rich cultural
heritage together offer this country a unique positioning. A confluence of international and domestic
political events, however, has often been highly disruptive on a short term basis. Rather than dwell
upon history, I will focus on what lends us confidence today that Pakistan is set to reach new
economic heights and frontiers.
Pakistan has on all fronts achieved development paradigm shifts - impact of some of it is distinctly
visible and more is yet to unfold. On ideological front, leadership has been infusing high degree of
moderation, nationhood and tolerance. On economic front, aside from changes in numerology by way
of rise in GDP prompted by growth in industry and services sector supported by telecom growth,
promising are the significant qualitative changes in macroeconomic management and sector level
reforms. Political transformation is steadily emerging as democratic institutions and governance
structures are asserting themselves. Pakistan is now in the league of emerging markets moving from
low income to middle income state and on social side there is a growing awareness that we need to
leverage younger population more effectively through social and human resource investment.
Achievements and gains however cannot be a cause for complacency as Pakistan has a long road
ahead to achieve economic, social and political sustainability.
I firmly believe that the process of change and evolution does not end here as Benjamin Disraeli once
famously said:
"In a progressive country change is constant; change is inevitable"
Exploiting further Pakistan's economic potential promises to bring the remaining one fourth of
population out of poverty and raising living standards as growing economy generate more jobs.
Economic prospects depend crucially on Pakistan accelerating the pace and implementation across
the board of economic reforms, and positioning itself to face growing global and regional competition.
Infrastructure shortages which given domestic resource constraints can only be effectively addressed
if foreign investors come forward more aggressively. Pakistan has most liberal economic environment
and offers opportunities for exceptionally high returns be it banking, corporate, infrastructure or
agriculture sectors.
In my presentation, I propose to talk about what has finally triggered the development paradigm shifts
and discuss major initiatives undertaken to bring about the economic, social and governance
transformation in Pakistan.
A qualitative change in economic management has induced a degree of macroeconomic stability
providing opportunities for real structural changes. This has been recognized by the international
raters and is also reflected in growing investor confidence as evident from the growing remittances,
foreign investment and in the pricing of international sovereign bond issues. These issues were
oversubscribed in the US, Europe and Far East financial markets that now have an appetite to take
long term view and risks on Pakistan.
Confidence in the economy was restored as the Government succeeded in reducing substantially its
macroeconomic imbalances in FY2003-04 which had reached unsustainable levels in the late 1990s.
Fiscal prudence and external debt restructuring together helped Pakistan reduce its debt/GDP which is
currently down to 56% of GDP below the target of 60% to be reached in 2013 defined in the Fiscal
Responsibility Act, 2005.
Recent demand pressures stemming from a combination of factors (i) the hike in international oil
prices, (ii) unanticipated costs of reconstruction of earthquake hit region, (iii) real increase in
development spending of physical and social infrastructure that has been for years neglected and (iv)
import requirements of fast expanding industry. These factors together strained the external and fiscal
deficit that rose to 3.9% and 4% of GDP, respectively in FY06. While these deficits have been
financed properly as Government's realization of tax collection and external debt flows were
supplemented by significant growth in non debt foreign inflows following the sale of state assets and
FDI. Heightened business activity coupled with aggressive growth in financial industry prompted an
unprecedented rise in private credit, stimulated not only by corporate sector but also by growth in
agriculture, SME and consumer financing.
The demand pressures from both public and private sector manifested themselves in rising inflationary
pressures in the first half of 2005. Recognizing the lingering impact of past few years' easy monetary
policy and the emergent demand pressures, the central bank now for almost 18 months has adopted a
tight monetary policy stance. Combination of rise in policy discount rate twice, rise in reserve ratios
and proactive open market operations together have helped effective liquidity management.
Inflationary pressures have come down significantly. Most distinct is the decline in core inflation
though food prices have been volatile largely because of distributional disruptions. Maintenance of
price stability calls for retaining tight monetary policy. The Government plans to finance its domestic
and external current deficit from the non debt flows which have been buoyant given the strong
international interest in Pakistan from all parts including oil exporting Gulf countries. Pakistan is keen
to pursue its economic agenda while managing the attending challenges and risks. The Government is
keenly pursuing foreign investment to finance its requirements and has enhanced vigilance on
economy to ensure corrective actions are taken when warranted. Central Bank being independent has
played its role to smooth short-term fluctuations and pressure of the aggregate demand therefore
stabilizing the output close to its long-run path.
Openness and market orientation
Pakistan has for long nurtured openness and market orientation. Set of mutually reinforcing reforms
today have made Pakistan a liberal and deregulated economy. A large segment of public assets have
been privatized and incentive regime has been rationalized. Keeping aside ideological or philosophical
consideration and Government's fiscal compulsions, industrial, trade and price liberalization has
infused high degree of competition which is auguring well for efficient allocation and use of resources.
Private sector is allowed in all strategic sectors such as oil, gas, telecommunication and other services
sector on a competitive basis which are supported by sound sector policies. Deregulation of civil
aviation industry has given air travelers a choice and increased competition resulting in to better
customer service and drop in fares. Domestic prices of major crops have been aligned to international
prices, while eliminating distorting and untargeted subsidies. Sharp growth in private credit from
virtually under Rs20 billion to Rs400 billion in FY06 (that has involved raising SME financing, doubling
of agriculture credit, introducing consumer finance loans, etc.) has helped stimulate investments.
Success of market mechanism however does not exclusively depend on price signals but it also
requires right blend of host of non-price factors such as physical infrastructures (transport system,
communications, telecommunications, etc.); institutional and organizational factors (credit facilities,
marketing network and channels, training and educational facilities, information, R&D, technological
and innovative facilities, predictable and stable ownership institutions); and, the organizational
capacity of the government for administrative and fiscal purposes. Weaknesses in the non-price
factors are common in Pakistan as in any emerging market economy and have required Government
to play a coordinating role and lay down policies and procedures to address market failures.
Notwithstanding these measures, reliance on allocative and creative functions of the market may not
be optimal particularly with underdeveloped markets and institutions.
Keeping these caveats in mind, Pakistan's has launched wide ranging reforms which are yielding
visible results.
Liberal foreign investment regime
Foreigners and overseas Pakistanis have been allowed 100% equity in all sectors (with no prior
approval requirements) and foreign investment is treated at par with domestic investment. Foreign
investors can repatriate capital, profits, dividends and fees etc. Special Rupee Convertible Account
(SCRA) offers smooth avenue to bring in remittances and portfolio funds for purchase and trading of
shares and exit freely from Pakistan. FDI flows have grown from under half a billion in FY 2002 to
US$3.5 billion1 in 2006 and it is not inconceivable that in next year or so we could double these levels.
Trade liberalization
Moving from import substitution industrial strategy, Pakistan's has adopted a conducive trade policies
supported by tariff restructuring, rationalization and reduction; withdrawal of import quotas, import
surcharges and the regulatory duties; and foreign exchange liberalization. Maximum tariff rate was
reduced from 65% in FY97 to 45% and then again to 25% in FY03. Likewise, the tariff slabs were
reduced from 14 to 4 in FY02.2 Zero tariff slabs were replaced by 5% minimum tariff rate; and average
tariff on agriculture inputs has been also reduced. Pakistan's trade openness has steadily improved
from 25.8% in FY00 to 34% in FY06.3 Moreover other indices, such as the Overall Trade
Restrictiveness Index (OTRI) and IMF's computed trade restrictiveness index also indicate Pakistan's
improved trade openness - both reinforce that Pakistan has most competitive trade regime relative to
its South Asian counterparts except Sri Lanka.4
Privatization of state owned enterprises (SOEs)
Reversing the 1970s nationalization of industry and banking system (when the Government took over
31 major manufacturing enterprises and all banks), Pakistan since 1990 has structured 161 private
transactions which mobilized close to Rs378 billion ($6.2 billion @Rs60.5/dollar). Political
commitment, build up of public acceptance, well conceived Privatization Law and guidelines and a
fairly well equipped Privatization Commission of Pakistan (PC) (established on January 22, 1991)
have together contributed to implementation of privatization program in a fairly transparent manner.
Today most manufacturing sector and 80% of banking assets are in private hands. Strategic stakes
have been sold in the Karachi Electric Supply Corporation (KESC), the Pakistan Telecommunication
Company Limited (PTCL), Kot Adu Power Company, National Refinery, and has sold 5-15% shares in
power, petroleum and gas companies etc. In the next phase, close to 26 large transactions5 including
the remaining gas, power and petroleum companies and financial institutions are slated to be sold off.
These structural reforms have precipitated a steady economic transformation across the board.
First, scene in services sector is changing led by hype in financial services, telecommunication, trade
and wholesale all of which have been growing at a fast pace. In financial services, growth in banking
sector assets and profitability along with privatization together have attracted cumulative FDI flow of
$11 billion over past five years. The current wave of bank mergers is anticipated to and GDRs is
further going to attract additional $1-1.5 billion including Standard Chartered Bank's merger with the
largest mid-size bank i.e. Union Bank. Telecommunication sector alone has attracted $2.6 billion and
its expansion (with teledensity rate registering an increase from 3% to more than 10% in couple of
years) is triggering telecom revolution with six mobile service provider entering in market in less than
couple of years that have today about 40 million cellular phone subscriber. Exports of services sector
have grown from negligible levels to over $300 million. This could be an underestimate as a study has
pointed out that global IT exports from Pakistan could be $1 billion but a large chunk of export
proceeds were retained in escrow accounts by several software houses. The prospects for this sector
are bright and industry benefits from a combination of decade plus tax holidays, zero duties on
computer inputs, incentives for venture capital, liberalization of wireless local loop and landline sectors
etc.
Second, long time back Pakistan achieved self sufficiency in wheat and other strategic products; it is
the world's fourth largest producer of cotton which caters for local textile and clothing industry, while
feeding China and other regional competitors with cotton yarn and grey cloth. Rice production of
superior quality has boosted its exports that have crossed mark of $1 billion. Dedicated policies to
nurture non-crop sector to offer nonfarm employment is showing visible results as it now contributes
about 53% of agriculture value added relative to 43% in early 1990s. Pakistan is at present fifth largest
producer of milk. These developments have helped raise rural incomes where almost 66% of
population and agriculture offers employments to 45% of work force. Concrete efforts are underway to
enhance complementarity and synergies between the agriculture and industry by exploiting backward
and forward linkages.
Third, Pakistan's corporate sector has been quite vibrant and highly profitable which is driving slowly
contribution of industry to value added - risen by over 3% between FY99-06. The private sector has
been a key driver of this with the support of over 170 MNCs6 that have had a long standing presence
in Pakistan in financial services, chemicals, engineering and industrial products, pharmaceuticals and
more recently in energy, shipping, trading and other services. Barring few exception, most industry
sub-sectors have been operating at near or full capacity utilization which has triggered an interest in
additional capacity enhancement. Consequently, gross fixed capital formation in the manufacturing
sector has almost doubled in the past five years and 97% of this is private investment. Shifts in
industrial production structure though slow are now emerging. While textile remains the major forte of
industry, demand for consumer products catalyzed by rising income and accessibility to consumer
finance has helped double the production of automobiles, white goods and electronics and
construction demand has boosted cement production. Together, corporate sector profitability in 2005
reached record highs estimated to be ranging around 6%7 (Net profit margin).
Fourth, Pakistan's engagement in world trade reached $42 billion reflecting the Pakistani companies'
integration with the global standards of quality, productivity and efficiency. Prospects for export that
have reached $16.5 billion in FY06 (double the level of FY00) is to receive impetus as the Government
concludes free trade agreements with United States, China, Malaysia, and Sri Lanka and hub's like
planned special economic zones and if joint ventures that would integrate Pakistan in the international
production network become a reality. Pakistan has been able to somewhat diversify its exports: Share
of textile has fallen from 65 to 59% over last few years and within this sector there has been growth in
higher value addition products in particular in home textile where Pakistan has a leading edge.
Concurrently, the share of manufactured goods has increased from 62 percent in FY96 and 72 percent
in FY01 to 78 percent in FY06. Aggressive regional competition supported by subsidization is,
however, hurting textile export prospects even though Pakistan private sector has well positioned itself
by enhancing its capacities and upgrading its facilities and technology. To mitigate risks associated
with high vulnerability to textile sector both at industry and export level, Pakistan is launching further
efforts to encourage greater export diversification.
Broadening and deepening of financial markets
Pakistan banking industry is characterized as the most vibrant, healthy and well regulated. Dismantling
all financially repressive policies and regulations, SBP has managed to discourage segmentation of
credit markets, reduce high intermediation cost stemming from overstaffing, inefficiencies and
accumulation of non performing loans. Financial system has now geared itself to better serve private
sector and the populations credit requirements in particular of underprivileged sectors such as micro
finance, small and medium enterprises (SMEs) and agriculture. Sequentially, in the financial sector
following actions took place:
•
First, breakthrough in banking sector occurred when the Government amended SBP Act of
1956 in February 1994 and assigned SBP autonomy and providing powers to SBP Board of
Directors for monetary and banking sector policies;
• Second, the Government recapitalized banks (injecting close to Rs 46 billion in some of the
public sector banks), laid off close to 35,000 employees in two phases8 from public sector
banks and closed over 2000 unbanked branches and eliminated credit controls;
•
Third, privatized 4 major public sector banks9 and supported a program of restructuring and
improving asset quality which involved write off of loans (in the range of Rs 54 billion10) and
establishment of Committee for Revival of Sick Industrial Units (CRSIU), Corporate and
Industrial Restructuring Corporation (CIRC) to acquire the NPLs of the public sector banks
and creation of a National Accountability Bureau (NAB) Cell at SBP to expeditiously process
the cases of willful defaulters. Moreover a special law, the Financial Institutions (Recovery of
Finances) Ordinance, 2001 was enacted with a view to facilitate speedy recovery of loans;
and
• Fourth, introduced both financial innovation and diversification in banking sector by allowing
entry of Islamic and microfinance industry, women's banks and SME bank;
•
Fifth, SBP overhauled its prudential regulatory and supervisory framework setting in place
international standards and new regulations for specific sectors such as SMEs, agriculture,
and microfinance and steadily increased minimum capital requirements of the commercial
banks to at least Rs 6 billion by the year 2009. SBP further issued risk management
guidelines, e-banking and credit information system and has developed Institutional Risk
Assessment Framework (IRAF) to enhance collaboration among the supervisory
departments and efficient usage of all possible information available on banks and DFIs.
•
Finally, Pakistan launched fundamental reforms of stock market that have ranged from
automation of stock market and change in their governance structure to the establishment of
Securities Exchange Commission of Pakistan (SECP) to regulate the capital markets, NBFIs,
insurance and corporate sectors.
Impact of financial sector reforms has been far reaching. In general while real sector development is a
prerequisite for growth of financial sector, in Pakistan context, our experience has shown that to some
extent financial sector reforms have catalyzed and induced real sector development. Today, Pakistan
has a sizeable banking industry with close to 55 Financial Institutions and asset size of $69 billion,
deposit base of $52 billion and advances of $36.7 billion. Financial sector reforms have led to
improvement in the following areas:
•
Financial depth has increased as Bank Assets to GDP ratio has improved from 49.1% in
1997 to 55.6% in 2005 whereas money supply (M2) to GDP ratio has also improved from
36% in FY 00 to 44% in FY 06. Private credit to GDP which reveals the extent to which the
banking sector is efficiently allocating funds to the productive sector of the economy has
increased from 18% in FY 2000 to 27.4% in FY 2006. However despite improvements
Pakistan lags behind its regional peers.
•
Profitability as well as efficiency has increased in the banking sector. ROA has increased
from negative 0.2 in CY 2000 to 2.1 by June 2006 whereas ROE has increased from
negative 3.5% to 26.5% over the same period. Pakistan's performance in these indicators is
amongst the best in its regional peers. Intermediation cost and total expense/total income
ratio have come down from 3.43% to 2.96% and from 97.4% to 67.6% respectively over the
period CY 2000 to June 2006. However, the gains in institutional efficiency have not really
translated into gains in allocative efficiency as spreads have also risen over the same period.
•
NPLs to total loans and net NPLs to net loans ratios have improved to 8 percent and 2.1
percent respectively over the period CY 2000 to June 2006.
• All the capital adequacy ratios have shown improvement. Risk Weighted CAR has increased
from 9.7% to 11.9%, Tier 1 Capital to Risk Weighted Assets from 8.3% to 8.9% and Capital
to Total Assets from 4.5% to 8.1%. Presently 34 out of 40 banks are reporting above 10%
capital adequacy.
•
Diversification of credit has taken place and previously underserved segments have better
access to credit. The credit to agriculture sector has been mostly market driven and has
almost doubled from Rs. 73.6 billion during FY04 to Rs. 137.5 billion during FY06. The share
of commercial banks in credit to agriculture has risen from 49 percent to 61 percent mainly
reflecting the strength of agriculture sector fundamentals and the success of the financial
sector reforms. Moreover, SBP in its recent restructuring has created a new department for
agriculture and rural finance with a strong reorientation towards development finance.
Likewise, consumer credit has grown by more than 350% and SME financing by 66%. As on
June 30th 2006, out of total credit, the shares of agriculture, SME, consumer credit were
6.2%, 16.4% and 14% respectively.
•
Micro finance banking sector which was initiated in 2001, now constitutes of 6 banks (with
more than 110 branches) and an asset base of around Rs 9.7 billion as on 30th June 2006.
Micro finance banking has a lot of scope in Pakistan as according to some independent
estimates, it is potentially a Rs 300 billion size market which can generate revenues of
around Rs. 90 billion per annum.
•
Likewise Islamic Banking constitutes 2.3% of the total assets of the banking sector with a
branch network of more than 100 branches. In future according to estimates it will capture
10% of the total market in Pakistan by 2010. Moreover, growth in Islamic banking is also
expected to increase the financial depth as it will bring a lot of people into the deposit net.
•
Realizing the importance of these sectors, SBP has further restructured itself in September
2006 and has launched efforts to enhance access to finance in these areas.
•
Pakistan's financial sector after going through a process of privatization is already moving
towards consolidation and mergers. This process spurred by SBP's requirement of
increasing MCR of banks, will weed out weak banks and will make the banking sector well
capitalized and more resilient to shocks. Moreover, it will also ensure a smooth transition to
Basel 2.
• Due to stock market reforms and improvement in the stock market performance, equity
market capitalization to GDP ratio has also increased from merely 16.8% to 31.4% in 2005
and in fact went as high as 44% in April 2006. However, equity markets are yet to fulfill their
full potential as an alternative source of funds for the corporate sector. Moreover, bond
market in Pakistan is fairly underdeveloped and is merely 5.5% of GDP.
Strengthening of governance structure
Political stability and good governance are essential pre-requisites for improvement in investment
climate and sustainable growth. Following improvements have taken place in these areas:
Political governance
Pakistan despite all international and public perceptions, today is a functioning democracy and
gradually there is a change in complexion and composition of legislatures with more educated people
and women (27% of National Assembly and 17% of Senate) entering into politics as the law mandates
for elected representative to have a minimum of bachelor degree to contest in an election. Aside from
100 members Senate and 342 members National Assembly with functioning Committees
debating/approving budget, legislation and policies of the Government, Pakistan introduced a path
breaking devolution process with the passage of the Local Government Ordinance in 2001 that has
empowered locally elected representatives (more than one quarter of which are women councilors) to
manage local government affairs and empowered communities to enhance government accountability.
To enhance accountability and reduce corruption, the Government established in 1999 a National
Accountability Bureau (NAB) which has its head office at Islamabad and five other regional offices in
the provinces. Similarly, government has launched a major overhaul of civil/public services through
civil services reform committee.
Enhanced role and vigilance of regulators
With private sector leading bulk of economic activity, Pakistan has now a web of regulatory framework
for specialized businesses and products backed by strong regulators who operate on the basis of
modern and transparent set of economic regulations consistent with international standards. On one
hand, Pakistan's regulator for telecommunications (Pakistan Telecommunication Authority (PTA)),
Media (Pakistan Electronic Media Regulatory Authority (PEMRA)), Power Sector (National Electric
Power Regulatory Authority (NEPRA)), and Oil and Gas Sector (Oil and Gas Regulatory Authority
(OGRA)) etc. were established to unbundle Government's role as producer of strategic goods and
services and policy making from that of a body that licenses new entities, setting price mechanism and
standard setting, ironing out and providing guidance on the issues arising out of market imperfections
and checking compliance and monitoring etc. On the other hand, the financial regulatory authorities
both for banking and nonbank financial sector have now been made independent.
Social transformation
Recent high growth trends coupled with enhanced spending on social and poverty programs11 that
rose from 3.8% of GDP in 2001/2002 to 5.05% by 2005/2006 has together begun to pay some
dividends as evident from the reversal in poverty incidence trends and social indicators.
• Per capita income has grown from $526 in FY 2000 to $847 in FY 2006.
• The overall poverty has been reduced from 34.46% in 2001 to 23.90% in 2005. The
percentage of population living below the poverty line in rural areas has declined from 39.26
percent to 28.10 percent while those in urban areas, has declined from 22.69 percent 14.9
percent.
•
Literacy rates of population 10 years and older have increased to 53% as compared to 45%
in 2001/02. Both primary and secondary school enrolment have shown improvement in the
recent years. However, while elementary education gross enrollment has increased from
41% in 2001/02 to 46% in 2004/05, it remains far below the targets.
•
Overall access to sanitation12 has improved from 37% in 1990 to 59% in 2004 getting close
to the sanitation levels achieved by lower middle income countries in 2004.
• Improvements in immunization coverage of children and women from 53% in 2001/02 to
77% in 2004/05. Proportion of pregnant women attending antenatal care increased from
34% in 2001/02 to 50% in 2004/05.
Future paradigm shift
Given its recent track record, Pakistan economy is contemplated to grow at a rate of 7% per annum.
This should help raise further its per capita income from US$847 per annum to US$ 1557 by 2015
which in turn will facilitate reduction in poverty. Economic prospects to realize these goals are good as
ongoing structural reforms, monitoring of investment and pace of project implementation is being
enhanced. Demand is expected to get stronger as the incomes rise further and assuming current
population growth (1.8%) trends persist, Pakistan will be a market of 185 million - adding to this the
relatively more affluent Gulf population and the Central Asian States population base Pakistan offers a
large market. Connectivity and the modernization of existing two Ports and addition of Gawadar port
will ease pressure.
We do recognize that tackling the new challenges requires confidence from past achievements but not
complacency about the magnitude of the challenges to be faced.
"When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps."
-- Confucius
The key challenges going ahead are being addressed to sustain and build on the gains and
achievements realized in recent years. Let me conclude by highlighting that most of these challenges
require a further shift in development paradigm which will be pursued.
First, Pakistan has to address low productivity and high sector and industry concentration which
induce a degree of vulnerability. In agriculture, the Government is striving to develop mega water
resources projects and launch further efforts to enhance crop yields key to enhance agriculture
productivity of major crops stabilize performance. Concurrently, work is underway to mitigate
excessive dependence on crop sector by nurturing non crop sector. There is strong potential in
livestock and dairy sector - in case of dairy only 2.5-3.0 percent of the production gets processed.
Processing and packaging of these products and development of agro based industry would stimulate
export of these products to the neighboring Middle East markets.
Second, while export diversification is occurring, dependence on textile sector is critical to insulate
from international fluctuations in textile demand. To achieve diversification, Pakistan has to make
inroads into the medium and high-end technology spectrum of products which consists of products
such as electronic goods, automobiles, engineering goods etc. and to look for newer markets.
Third, while financial system's depth and breadth has increased, there is continued excessive reliance
on banking system; as such there is need for exploiting alternative sources of funds, particularly
sources for meeting long term financing needs are yet to be developed. In this regard, Pakistan needs
to develop long term bond market particularly corporate bond market and further strengthen its equity
markets. Diversification will facilitate availability of funding for infrastructure development and help in
structuring required risk mitigation approaches.
Fourth, the country needs to expedite infrastructure development. Estimates indicate that there total
infrastructure investment requirements exceed $40 billion over next five years. Mobilizing these
investments and it implementation requires special initiatives.
Fifth, the country needs to bring further improvement in governance and competitive investment
climate making it more business friendly. Improvement in governance should include among others a
strong commitment to rule of law, competent and efficient government sector, less cumbersome
regulations and control of corruption. The strengthening of the competitive investment climate would
require, further development of markets, efficient nonfinancial factor markets particularly labor markets
and availability of skilled labor, improve the infrastructure services, and the existence of strong legal,
regulatory and institutional framework.
Sixth, it is critical that Pakistan shares its gains equitably across regions and metropolitan cities to
satellite towns and to rural areas where there is need for further strengthening of incentive framework,
enhanced availability of credit, and rising non-farm employment opportunities.
Finally, the social transformation needs to occur side by side with the changes in the market place to
further strengthen the demand for exiting and new products. People are better informed and have
more choices in terms of goods and services.