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Background
Pakistan has a robust and progressive economy, incorporating essential features of a typical modern formal economy; at the same time it has deep rooted fault lines as well. In line with public sentiment it has also incorporated numerous instruments of Islamic economy. In addition, there are informal and philanthropic components of the economy. Volume of Gross Domestic Product at the time of independence was Rs 57973 million that has grown to Rs 5932.5 billion, likewise per capita income has grown from US$ 164 to US$ 1641. Pakistan has often faced tumultuous conditions, yet it maintained an average growth rate of 6 percent. Though the start was predominantly agrarian, Pakistan's economy now comprises of Industrial Sector (20.91 percent of GDP), Agriculture Sector (18.86 percent of GDP) and a sparkling Services Sector (60.23 percent of GDP. The silver lining is that the projected poverty rate continues to decline. Poverty at the $1.90 international poverty line is estimated at 4.9 percent in FY18, down from 6.1 in FY13, the year when latest actual figures were made public. Over the same period, a 12 percent reduction in poverty is also projected for the $3.2 poverty line, while a lower improvement (4 percent) is projected at the $5.5 poverty line.
Pakistan did not inherit any major industrial or communication infrastructure at time of independence and most of the resources that formed Pakistan's share were held back by India on one pretext or the other. Mahatma Ghandi had to threaten to go into a 'fasting till death' to have only a part of it released by Indian government. So, Pakistan's journey towards economic and infrastructure development has been akin to a proverbial "starting from a scratch".
The journey of Pakistan's economic growth is quite interesting, besides the usual country level successes (and failures), it is also a telltale of enduring strategic partnership with the Kingdom of Saudi Arabia (KSA). Saudi Arabia has always been a fall back of last resort during Pakistan's economic difficulties.
Challenges
Pakistan's economy faces arduous challenges which are almost perpetual, such as: sustained high population growth rate (over 2 percent); mainly thermal fuel based high cost electricity; shortage of water and electricity; narrow tax base leading to low tax to GDP ratio (12.4 percent); inefficient revenue...