THE government`s GDP growth target of 4.4 per cent for the incoming fiscal year is based on a 3.8 per cent increase in contribution from agriculture, 4.8 per cent from industry and 4.6 per cent from services.

However, these targets are linked with a better investment climate, availability of credit to the private sector and much improved energy supplies.

The growth in the agriculture sector for 2013-14 has been derived on the basis of expected contribution of important crops (3.9 per cent), other crops (4.5 per cent), cotton ginning (6.1 per cent), livestock (3.9 per cent), fishery (two per cent) and forestry (two per cent). The three crops wheat, rice and cotton influence the overall growth trend.

The performance of the livestock sector has been relatively better over the past decade, yet there is a huge potential for growth, both in dairy development and meat production. However, the revision in the sales tax regime on the dairy sector in the budget might adversely affect this.

Meanwhile, the agriculture sector suffers from low productivity, heavy post-harvest losses, poor infrastructure, including poor farm-to market roads, shortage of storage facilities and cold storages (for perishable items), and a skewed market manipulated by middlemen, among others.

But the sector is also goingthrough a structural transformation.

The farmers` community is switching over from water-intensive crops like rice and sugarcane to other crops that consume less water. Both rice and sugarcane witnessed a decline in production over the past few years.Sugarcane production showed a growth of 6.98 per cent in 2012-13, as yields reached 62.47 million tonnes from 58.39 million tonnes a year before. The increase in cane yield was propelled by a substantial increase in prices, as well as an increase in sugar consumption. The highest pro-duction of sugarcane, at 63.92 million tones, was achieved in 2007-08.

The government has set the target for the crop in the next year at 65 million tones.

Meanwhile, rice production has been estimated at 6.2 million tones for the next year. However, the area under cultivation for the crop has been on decline for the past few years, especially because of lack of availability of water, particularly in Sindh. More than 10 per cent reduction was witnessed in the area under cultivation of the staple crop.

Wheat production increased to 24.23 million tonnes in 2012-13 from 23.47 million tonnes a year before, showing an increase of 3.23 per cent. But even as production has increased slightly, the area under cultivation for the crop did not see any change during the period.

No attention has been paid to the fall in the wheat cultivation area, despite the manifold increase in the crop`s consumption over the past few years.

The highest production of wheat, at 25.21 million tones, was noted in 2010-11. For 2013-14, the government has projected that wheat production will be 25.5 million tones.

Meanwhile, output of minor crops has remained below target over the past few years. Growth in minor crops largely depends on the revival of output of chillies, oilseeds and pulses. But the withdrawal of farm input subsidies has increased the cost of production of these crops, driven by a surge in diesel and fertiliser prices. An increase incultivation of oilseed can lessen their imports, helping the country save some valuable foreign exchange.

On the other hand, much of the benefit of the rise in support or market price for farm produce is siphoned off by middle men, transporters, and suppliers of farm inputs, among others.

Meanwhile, the growth projection for the manufacturing sector is optimistic. It is expected to grow by 4.5 per cent, based on the growth rate of large-scale manufacturing sector at four per cent, small and household manufacturing at 8.2 per cent and slaughtering at 3.6 per cent. This is based on the assumption of a relatively better energy supply, coupled with some increase in demand.

Improvement in the construction sector is believed to drive growth in allied industries like cement, steel, glass, paints and varnishes, particularly as the PML-N government has wowed to spend more money on infrastructure.

The revival of the commodity producing sector will support the services sector, through growth in transport and finance sub-sectors.

Meanwhile, officials are optimistic that national savings are also likely to improve from 14 per cent of GDP in 2012-13 to 15.1 per cent in 2013-14. Both public and private investment is likely to contribute in this improvement. Fixed investment is expected to inch up from its current level of 12.6 per cent of GDP to 13.5 per cent.Mubarak Zeb Khan