good, which includes the wage bill, cost of raw - material, acquiring and installing machines, and all other expenses. to remain in the business and earn profits, the producer would like to sell it at rs10 plus “ x ”. the rs “ x ” is generally termed as a mark up and depends on the degree of competition in the industry, nature of the product, overall administrative efficiency of producers and government authorities, adequate supply - chain infrastructure etc. what is over - looked in this simplistic example is the role of productivity of the factors of production, be it workers or machines. if the productivity is low and declining, then the final price tends to be higher even if the cost of acquiring the factors of production remains the same. put differently, the price can be kept stable or even reduced by increasing the productivity of workers and better and efficient use of technology. the monetary policy stance geared towards containment of overall inflation and thus stability of prices eases the pressures on the cost of production but cannot increase the productivity. factors positively influencing productivity include stable law and order conditions, a healthy and skilled labor force, effective governance, and uninterrupted availability of energy. a micro - level understanding of the price determination process is helpful, but a discussion on the behavior of prices or inflation at the aggregate level is also important. three broad parameters are worth mentioning in this regard : i ) - expectations about the continuation of inflationary trends ; ii ) - the output gap or the difference between aggregate domestic demand and the ability and capacity of the economy to meet that demand ; and, iii ) - cost push or supply shocks. expectations of likely inflation path have strong feedback effects on actual inflation. such expectations could be based on past inflationary trends or may be formed by the expected impact of government policies, or lack thereof, on inflation. for example, if an economy experiences high and rising inflation for some time then people tend to expect that this trend would continue and seek higher wages to at least maintain their purchasing power. typically, adjustment in wages tends to be slower than increases in the prices of goods and services that people consume. this leads to discontent and pressure on government authorities to control inflation and keep it stable. thus, managing the expectations of inflation by devising and implementing consistent and predictable economic policies is a critical task which is normally performed by central banks around the globe. however, the supporting role of other policies, such as fiscal policy, in assuring the public that the government is pursuing

by icil – a representative firm of dun and bradstreet. this scheme is anticipated to deliver over 5 years period about rs105 billion ( us $ 1. 74 billion ). since its launch this year, the scheme has delivered rs2 billion to about 22, 136 borrowers 4. recognizing pakistan ’ s context, and drawing from other country experiences, it has to be acknowledged upfront that financial exclusion can only be tackled effectively : ( i ) if it is well conceptualized, well grounded and well integrated in the overall financial sector policy framework ; ( ii ) if it is backed by absolute political commitment and cooperative stance of the federal, provincial and local government and relevant sector agencies to create a healthy and conducive environment for financial intermediation at the lower end of population where risks are of different nature ; ( iii ) if financial institution recognize their corporate social responsibility and work towards financial deepening and credit diversification that is key to financial inclusion as well as to managing banks ’ health and its systemic risks ; ( iv ) if there is focus on provision of holistic financial services, whereby savings mobilization is perceived critical and integral to establishing the client on a sound footing and clients have collateral free access to financing with adequate provision for risks mitigated through credit enhancement mechanism and insurance ; and ( v ) facilitating reliable and secure payment between different parties. major elements of financial inclusion strategy. drawing from considerations highlighted above, pakistan ’ s financial inclusion strategy is broad based and flexible that aims to encourage partnership and social cohesion and mobilization with the objective of empowering and nurturing clients and their businesses. it engulfs all segments of population by offering them holistic and multiple services and products. anchoring and weaving these objectives, goals and principles, the sbp and the pakistan microfinance network ( pmn ) have developed a far reaching microfinance strategy that is one of the principal driver ’ s of financial inclusion strategy 5. in april 2007, the government has approved this microfinance strategy and a time bound action plan has been prepared to launch its implementation. presently, the institutional framework of mf industry includes a set of ( i ) retail providers such as six mfbs ( licensed only recently by central bank ), ( ii ) the national and provincial rural support programs and charitable or specialized ngos, ( iii ) the wholesale apex institution, the principal being the ppaf which relies on donor and government financing support to refinance community organization whose number has reached 60