for all educated youth are sadly mistaken as it only burdens the government budget with artificially inflated and unsustainable, wasteful expenditures and results in larger fiscal deficits. these deficits can only be financed through borrowing or printing currency. if the former route is taken then we are caught in a debt trap and if the latter route is adopted we are in any inflationary bind. both of these routes lead us to a path of disaster and instability for the economy. you must realize that the private sector employs 90 percent of the labor force in pakistan and public sector hardly 10 percent. private sector is thus not only the main engine of growth but also the main provider of economic opportunity and activity. 60 percent of the country ’ s labor force is employed in agriculture through tenancy, self - employment, owner - cultivated land or farm and non - farm labor. 80 percent of the non - agricultural labor force depends on small and medium enterprises including small shops, hawkers, thela wallas, hotels and restaurants, social and personal services, construction, transport services. only 20 percent of non - agricultural labor force is employed in organized sectors in government, manufacturing, electricity, gas and water, financial institutions and other services. thus private sector growth, particularly of smaller firms and farms, is vital to both employment generation as well as reduction of poverty in pakistan. how can the private sector, particularly small and medium enterprises and agriculture be encouraged to expand, invest and generate employment? first and foremost, good economic governance must prevail and be practiced. unless there is transparency, predictability, consistency, rule of law and uniform application of law, private sector would not be forthcoming as the uncertainties in economic governance do not allow them to make accurate calculations of their costs and benefits. bureaucratic harassment, corruption and extortion are all damaging to the investment climate as they impose barriers to entry, add to operating costs and create uncertainty once the firm is established. second, there should be sound economic policies in place – fiscal discipline, market determined exchange and interest rates, lower trade barriers and tariffs, reasonable taxation levels, openness to trade, and well functioning financial system. in absence of sound, clear and consistent economic policies the private entrepreneur will always be reluctant to part with his capital. unsustainable fiscal policies crowd out private sector and make it more difficult for them to access credit from financial system at reasonable price. third, changes in political regime should not create abrupt and radical shifts in the underlying

rules of game. contracts and projects approved by the preceding governments should be scrupulously honored by the subsequent governments without any interruption or hiatus. commercial disputes or allegations of corruption should be tackled according to the due process of law and arbitration procedures. whims and caprices of individuals should not be allowed to play havoc as they not only undermine the confidence of existing firms but also deter new investors from engaging in production. fourth, the government has to ensure that physical infrastructure and adequately trained and educated labor force are available in sufficient quantities so that the private firms derive benefits from reduced cost of production. if electricity or water charges are exorbitant, transportation costs are overbearing or the educational level of labor is quite low the returns to prospective investment are considerably reduced and the investor is unwilling to commit his funds. fifth, adequate credit availability from financial institutions to agriculture and sme sectors has been one of the major constraints for growth. the sbp has taken measures recently to accelerate credit delivery to these sectors by involving commercial banks on a large scale and giving them incentives. prudential regulations are also being revised to remove the hurdles in the way of credit delivery to small and medium enterprises. the multiplier effect on the economy through higher credit and enlarged access to the economic actors in these two fields is likely to be quite large and sustainable. as both these sectors are labor intensive they would generate a greater demand for labor absorption. china was able to reduce rural poverty from 250 million people in 1978 to about 34 million in 1999 by focusing on agriculture and town and village enterprises ( tves ). there is no reason as to why we cannot succeed in achieving the same results over the coming decade. but, in facilitating the private sector to play the role we have outlined above i come back to the need for investing in education and training at all levels – higher, secondary, vocational and primary. it is not only the quantity that matters but also the quality of education. at this point i must commend the faculty and students of bahauddin zakaria university for maintaining high standards of education. i am confident that the students graduating from this university will be highly competitive and earn the respect of employers. these days, the reputation of institutions matters a lot and this reputation can not be acquired overnight. it is also not the buildings and infrastructure which contribute to this reputation but the curriculum, instruction, assimilation of knowledge, and its application to day to day life, problem solving approach which distinguishes one institution from the