Fiscal Policy of Pakistan
What is Fiscal Policy?
Fiscal policy of a government is its policy regarding revenue (or taxes) and expenditure (or spending). Thus, fiscal policy is an instrument through which a government can achieve the objectives of development very efficiently by striking a balance between resources (revenue or income) and expenditures (spending). It works by diverting existing resources from unproductive to the productive, profitable and socially attractive sectors of the society.
Fiscal Policy of Pakistan
The Three main drivers of economic growth are:
- Consumption
- Investment, and
- Savings
Pakistani society like other developing countries is a consumption oriented society, having high marginal propensity to consume. The private consumption expenditure in nominal terms reached to 80.1% of GDP, whereas public consumption expenditures are 11.8% of GDP.
Total investment recorded the growth of 5.78% and is increased to Rs.4502 billion in financial year 2015-16. Investment to GDP ratio has reached to 15.21% in FY 2016 (Financial Year 2015-16). Fix investment is registered at 13.61% of GDP. Private investment witnessed at 9.79% of GDP. Public investment recorded an impressive growth rate at 10.63% and as percentage of GDP it has increased to 3.82 percent in FY 2016.