rate below 4 percent, the rise in aggregate demand arising from rising per capita incomes, the monetary expansion policy pursued since 2001, the oil price spike and the food shortages have all combined to intensify inflationary expectations in this fiscal year. the state bank is already tightening the monetary policy and raising interest rates. a bumper wheat crop is expected this year and oil prices are beginning to slide downward. these factors should be able to dampen inflationary expectations in the coming months.

political leadership. india, which started its reform process under the congress in 1991, was finally accepted as a credible reformer only after the bjp government forcefully and vigorously moved on the same path since 1996. ( b ) the external environment remains favorable. the present oil price hike has created serious pressures on the current account balances and it is essential for an oil - importing country such as ours to see some moderation in the prices of oil. the other burning issue is the increased market access to pakistan ’ s textile exports to the u. s. and the eu. the tariff discrimination and anti - dumping duties against pakistan ’ s exports have tilted the playing field against us. the developed countries can assist pakistan not by increasing the burden on their taxpayers in the form of aid but by reducing the prices of apparels and textiles for their own consumers in the form of enlarged market access. ( c ) pakistan has been a laggard in human resource development for quite some time. the “ all hands on the - deck ” approach in which the government, private sector, non - governmental organizations, charities, communities and philanthropists combine their efforts to effectively deliver education, health, drinking water to the poor towns and villages at affordable prices will work. the government has an obligation to finance the education of the lower income groups but it is not necessary that they should be the providers also. only those who are efficient and effective and can reach out to the poor communities should be encouraged to provide these services financed partly or wholly by the government. technical and vocational education should be given priority to produce the skills that are required by the economy while minimizing the unemployment among the educated youth. ( d ) higher growth rates for an extended period of time in the range of 7 to 8 percent annually are possible only if energy, water resources and infrastructure needs are fully met. otherwise, shortages, congestions, and bottlenecks will slow down the growth process. government ’ s budget can absorb only one half of these requirements in a non - inflationary environment. the other half has to be raised through public - private partnerships with recourse to capital markets. innovative ways of financing have to be explored for this partnership to take off and produce results. ( e ) one of the most interesting experiments initiated in pakistan in 2000 was devolution of administrative and financial powers to the local governments. this experiment has run into some snags since the elections and a stable equilibrium between the provincial and local governments has not been found as