Modelling the prospects of economic growth and social development: results of circular flow planning models applied to Pakistan 1980-1993.

Cohen, S.I.

1. INTRODUCTION

This paper presents for Pakistan an analysis of the country's recent economic growth and social development, and medium-term prospects covering the period of the Seventh Plan. The meaning of economic growth is self-evident. In contrast, by social development we shall mean the pace of progress as regards the distribution of income, the satisfaction of essential needs, balanced development and employment of human resources.

The paper has two purposes (i) to provide valuable information for policy making in the area of growth and development, and (ii) to demonstrate the attractiveness and usefulness of working with the models we have developed. We shall rely exclusively on the results obtained from the planning models which were developed in collaboration with the Pakistan Institute of Development Economics, Islamabad and Erasmus University, Rotterdam Netherlands.

Most of the past models which were developed for Pakistan served analytical purposes, were demonstrative in nature or were not updated. As a result, they are practically irrelevant for today's appraisal of future prospects. More recently, since 1980, a few models which have been updated regularly may turn out to have a future. In particular, among the macro models, PIDE's econometric model is the most widely publicised, cf. Naqvi et al. (1983). In the category of activity models one simple but handy model is available in Cohen, Havinga and Saleem (1985). In the category of activity/factor models a regularly updated and used manpower planning model which elaborates on the labour force matrix of Pakistan, is in Cohen (1985). Finally, two recently completed reports at the PIDE have been treating the circular flow models, these are of the social accounting type SAM (PIDE 1985), and of the consistency type COM (PIDE 1986).

The presentation in this paper will be based on the latter two circular flow models: partly on a simplified analysis of SAM multipliers (Section 2) and partly on the consistency model COM (Section 3) and its extension to the planning of manpower balances, i.e. extended COM (Section 4).

2. SAM

One of the first lessons in a textbook of economics is on the circular flow (Figure 1). In the lower bound, households supply labour and capital to firms who are organizers of production activities (i.e. sectors), and the latter paying back for the use of factors. In the upper bound, households spend their incomes on products which are delivered by the firms/activities. In the centre is a government which is involved in transfers to and from households and firms/activities. Furthermore, there are the economic relations between the country and the rest of the world.

The first published application of a social accounting matrix, SAM, to developing countries dates from 1977. (1) In fact, the SAM is nothing more or less than the transformation of the circular flow of Figure 1 into a matrix of transactions between the various agents, as in Table 1. In the rows of such a matrix we find the products, the factors, the institutions consisting of households, firms and government as well as the institutions capital account, the activities and the rest of the world. The columns are ordered similarly. Transactions between these actors take place at the filled cells and in correspondence with the circular flow. A particular row gives receipts of the actor while columnwise we read the expenditure of the actor. Various data from national accounts, household surveys etc. are utilised to estimate the filled cells. Table 1 gives, for instance, the aggregate SAM for Pakistan in 1979-80. This SAM has been disaggregated further into 8 products, 12 activities and 10 household groups, resulting into a matrix of 37 rows by 37 columns, as reported in PIDE (1985).

[FIGURE 1 OMITTED]

The required data for a SAM are not readily available for a later year than 1979-80, so that it is difficult to state with reliance the kind of growth and distributional changes which have taken place in the last 5 or 6 years. However, with appropriate handling, the SAM can be turned into an instantaneous circular flow model whose impact multipliers are able to reflect on the inner mechanisms of Pakistan's economy in the medium run, i.e. for years which are directly before and after 1980. (2) As such the SAM can be employed to tell us what has most probably been happening in the past few years, and how. In particular, the impact multipliers give an insight on two issues:

(a) What is the effect of additional demand for sectoral activities, on growth and distribution;

(b) What is the effect of institutional transfers, i.e. public transfers, private transfers and foreign remittances, on growth and distribution.

For purposes of presentation, Table 2 gives the impact multipliers of the SAM for 13 selected exogenous impulses. The impact of exogenous additions to sectoral activities on the functioning of the whole economy are found in Columns S10 to S13, while the impact of exogenous additions to institutional transfers are found in Columns I3 to I9.

Let us first consider growth effects. Column S10 would imply that an additional million rupees of purchases of wheat and rice (through government purchases and/or exports) ultimately leads to an additional 1.574 million rupees of production of wheat and rice, 1.8 of other agriculture, 5.9 of non-agriculture, and .5 of services, giving a total of 9.7. The contribution of an expansion in wheat and rice to the overall growth of output is highest, followed by other crops, industry and services. Note that while the narrower input-output framework, laying emphasis on interactivity relationships, gives higher values of multipliers for industry than for agriculture, and in fact has had the effect of encouraging investment in industry at the cost of agriculture; we have here different results from the broader SAM framework which considers the whole circular flow including interactivity relationships. The SAM would recommend expansion of agriculture at the cost of industry. Of course, both the input-output and the SAM frameworks consider the demand side only. Realistic planning requires considering both demand and supply sides.

Secondly, we consider the income distributionary effect. Wheat and rice lead with an income impact multiplier of 4.4. The rural small/no holdings group gains, collecting 1.6 out of the 4.4, or 36 percent. This is a higher share than the actual share of the income of this group in 1979-80 which amounted to 31 percent. As a result, it can be concluded that additional demand for wheat and rice is progressive in its income redistribution effect. The same applies to other agriculture. These progressive effects are partly due to (1) the persistence of a strong link between the agricultural factors of production and factor income for rural households at the lower end of the income scale, and (2) the ability of these households to plough back their consumption expenditures and those of other households to their benefit. In several countries where such an analysis has been made it was found that the consumption pattern of poorer households is inefficient in the sense that it leads to an income leakage to richer households. In this respect, Pakistan is better off.

The same mechanisms assure that an addition of one million rupees of transfers (through direct government subsidies, price policy or foreign remittances) to any household group results in a growth of output of between. 7.3 and 8.5, and a growth of income of between 4.2 and 4.8 million rupees (Columns 13 to 18). Here too, the highest growth and income effects are in the case of transfers to the rural small/no holdings group: total output would grow by 8.5 million rupees while total income would increase by 4.8 million rupees. The rural small/no holdings group retains 46 percent (i.e. 2.2/4.8) of the income increase which is much higher than their actual income share (31 percent as quoted above), testifying to significant progressive redistribution effects due to the transfer. The income increases calculated above are spent in favour of higher food consumption of about 2.1, higher non-food consumption of about another 2.1, and the rest goes into savings of about 0.6.

3. COM

The SAM can be used as a baseline data system for a more flexible consistency model, COM, capable of forecasting future development and analyzing alternative policy options. Such a flexible model has been implemented for Pakistan giving yearly solutions for the period from 1980 to 1993, which is the final year of the Seventh Plan. A full description and discussion of estimation of the model as well as the results of various simulations is found in a preliminary report of the PIDE (1986).

The model consists of 30 types of equations resulting in a total of 201 equations comprising a disaggregation in 8 products, 12 sectors, and 10 household groups. The COM is a circular flow model with binding constraints on the supply side. Meant as a planning model the revenue and expenditure of the government sector are fully modelled in relation to domestic institutions as well as foreign sources.

The estimates of the coefficients of the model are derived in one of four ways: (1) proportions directly derived from the SAM such as the input-output coefficients; (2) consumption propensities and intercepts estimated by regressions from cross-sections of the Household Income and Expenditure Survey; (3) averages of several years, (4) being a simulative model a number of calibration parameters are incorporated especially in the consumption functions to permit a correspondence between the simulated results of the model in the period of 1978-81 to 1984-85 and the observed values for the same period.

The exogenous variables in the model include, besides population POP, those of exports EXP, imports IMP, factor income from rest of world to households ROW, firms [OFR.sub.f] and government [OFR.sub.g], and other budgetary variables such as government consumption [CON.sub.g], government investment [INV.sub.g], and indirect taxes less subsidies [ITX.sub.g], (direct taxes are the result of tax rates applied to tax-payer incomes). Table 3 sums up the trends of the exogenous variables.

Once tested and well-calibrated this model can be used effectively for planning purposes. A simple but meaningful evaluation of the ability of the model to reflect the actual course of the ex post period is by comparing model predictions with actual observations for 1979-80 to 1984-85. The relative differences between predicted and actual values for variables of consumption, investment and the GDP are not significant, they do not exceed 8 percent up and 2 percent down. Besides, the predicted changes in capital utilization are within permissible limits. As a result, the model forms a reasonable basis for following up and analyzing development in the rest of the decade.

Table 4 gives the performance of the economy in the periods of the Sixth Plan and the Seventh Plan. The annual growth rate of consumption increases from 5.1 percent in the Sixth Plan to 5.7 percent in the Seventh Plan. Contrarywise the growth of investment is reduced from 7.5 percent to 6.4 percent. This is due to a generally very low rate of investment at the start of the Sixth Plan (1982-83)which was still associated with the depressed investment climate in the world at large in the wake of the past oil price increases. The annual growth rate of investment in the Seventh Plan (6.4 percent) is a respectable one and exceeds that of consumption (5.7 percent) by about 0.7 percent. The balance of trade gap is assumed to show a significant improvement, while at the end of the Sixth Plan the trade gap as a proportion of the GDP will form 2.9 percent (i.e. 11.9/413.3), it is predicted to fall down at the end of the Seventh Plan to 1.3 percent (i.e. 7.1/557.2). As a result of these developments GDP which may grow at an average of 5.7 percent in the Sixth Plan is predicted to grow at a higher rate in the Seventh Plan, i.e. 6.2 percent.

The second part of Table 4 gives the breakdown of the value added by twelve sectors. All sectors show higher growth in the Seventh Plan period as compared to the Sixth Plan period except construction. The growth rates by sector vary within a very small range. As a result of the above trends the percentage distributions of the value added on the sectors do not undergo basic changes. This tendency for converging growth rates is typical of demand-oriented input-output models. Inclusion of supply constraints for agriculture would have probably resulted in a more realistic agricultural growth of about 4.7 percent as compared to the 5.7 percent generated by COM. Work to adapt the model accordingly is under progress. Even if agriculture would grow at the lower rate, the GDP growth would be lowered marginally, so that a rounded target of 6 percent annual growth in the GDP is well within reach for the Seventh Plan.

The third part of Table 4 deals with the breakdown of the disposable income by twelve institutions: 10 household groups, firms and government. In the first place, total disposable income grows at about one-half percent less than the value added, i.e. at 5.2 percent and 5.8 percent annually during the Sixth and Seventh Plans, respectively. The highest growth is among the group of urban employers, and firms, but each institution is getting more income. It is important to note that the shares for rural groups remain stable over the ten years of the Sixth and Seventh Plan periods. Among the urban groups there are important shifts. The employers move over the two periods from a share of 0.35 percent to 0.49 percent, manual workers move slightly from 7.0 percent to 7.1 percent. These gains are at the cost of, on the one hand, the urban professional jobs and urban non-manual jobs who together fall from about 8.0 percent to 7.7 percent, and on the other hand the urban self-employed who fall from a share of 14.8 percent to 14.0 percent.

More meaningful trends from the welfare point of view are in the fourth part which shows the levels and growth rates for disposable income per capita. Per capita disposable income of rural landless is projected in 1992-93 at 1.58 '000s rupees followed by rural nonfarm 2.43 '000s rupees rural small 3.13 '000 rupees and rural medium 3.92 '000s rupees. Among the urban groups, there is hardly a difference between nonmanual, manual and self employed, they all earned about 4.8 '000 rupees per capita, followed with a distance by the urban professionals at 7.5 '000 rupees and the urban employers at 17.6 '000 rupees.

Average annual growth of disposable income for the Sixth Plan is 1.8 percent. Groups which fell significantly below this rate are the urban self-employed who, due to population pressure, have gained hardly anything, plus 0.189 percent. However, the situation for the Seventh Plan shows a closing of ranks. Total disposable income per capita is forecasted to grow at 2.7 percent per annum, while that of the rural self-employed is closer at 1.8 percent per annum. Although the signs of dualities are very striking when one analyses absolute gaps between rural and urban incomes, a comparison between relative growth rates of disposable income per capita of the various household groups shows that the discrepancies will be somewhat less in the Seventh than in the Sixth Plan, with the one striking exception of the group of urban employers.

The fifth part of the Table 4 treats past and future performance regarding essential needs. The three poorest groups which form the bulk in rural areas are bundled together to give their food expenditure per capita. In 1992-93 this is projected at 1.46 '000 rupees per capita. By comparison, the food consumption of the self-employed in urban areas, which form 70 percent of urban dwellers, is projected at 1.99 '000 rupees per capita, the latter being well above the national average of 1.68 '000 rupees per capita. In terms of other essential needs, such as rent, fuel, health and education, the expenditure per capita is .31, .66 and .43 for rural poor, urban self-employed and the national average, respectively. The position of the rural poor regarding non-food items is only half of that of urban dwellers. These happen also to be the areas in which policy-makers have emphasised for the Seventh Plan.

The sixth and seventh parts of Table 4 deal with the labour market. Part VII of Table 4 gives the employment trends. They do not vary between the two plan periods. Rural employment would grow at the national average of 2.8 percent, urban self-employed to grow at a higher rate of 3.0 percent and the other urban labour types at rates between 2.3 percent and 2.7 percent. In absolute terms, there is a striking increase in the remuneration gap between, on the one hand, the employers' income, and on the other hand, the professionals, non-manual and manual workers. The income gap between wage and non-wage employment is less pronounced. Of course, the very low levels of remuneration in rural areas compared to urban areas are self-evident.

A final part of Table 4 concerns the variable on the change in utilization, UTL, which varies within an acceptable range, and the budget deficit share as percentage of the GDP which is projected to increase significantly from 5.0 percent to 8.2 percent. This increase seems high by present international standards and may require taking corrective measures to reduce it. It goes without saying that the growth and development prospects discussed in this paper may be affected by the type of corrective measures taken in reducing the budget deficit.

4. EXTENDED COM

This section reports on linking the consistency model of the previous section with a manpower planning model which has been updated and used regularly in the past seven years to give rolling forecasts of manpower imbalances. The manpower planning model was used in 1980-81 for elaborating implications of the Fifth Plan and formed later in 1982-83 one of the basis for the preparation of manpower policy in connection with the Sixth Plan. It was used again in 1985 as an aid in judging the magnitudes of educated unemployment.

Wage employment is forecasted from applying GDP growth and wage employment output elasticities to wage employment levels. Non-wage employment is obtained in several steps. First, tentative non-wage employment is obtained from applying GDP growth and non-wage employment output elasticities to non-wage employment levels. Definite non-wage employment is obtained by adjusting the tentative figures proportionately upwards or downwards so that the following holds:

total supply = open unemployment + wage employment + non-wage employment

whereby total supply and open unemployment are given exogenously. The implicit adjustment factor is an indication of the increment in underemployment. A positive factor means an increase in underemployment.

Reflecting on results of the model, for instance, due to the low growth in production and the low absorption in productive employment, 1983-84 was a year in which the additions to underemployment amounted to about 1.05 million, they fell back to 0.64 in 1984-85 and are predicted to fall down further; there may even be a favourable decrease in underemployment of .04 million in 1987-88 and of .28 million in 1992-93 (Table 5).

So there seems to be little ground for worrying about an increase in underemployment. More significant is the stalemate which is taking place between wage and non-wage employment. Wage employment which in 1982-83 amounted to 31.5 percent of total employment is predicted to fall down to 28.7 percent in 1987-88 and to stabilize at 28.5 percent in 1992-93, meaning that non-wage employment will retain the major share of about 71.0 percent. This tendency towards relatively less of wage employment and more of non-wage employment in Pakistan is also typical of India, Bangladesh and Indonesia, all of them populous countries. These tendencies emphasize that the employment/development pattern in these countries will have to be necessarily different than what has historically taken place in western countries and many small countries of the third world.

The demand forecast by mode of employment and sector are extendable to give forecasts by 7 broad occupational groups and 7 educational levels, as in Table 6. These are confronted with supply forecasts from the educational system, and their appropriate conversions into occupational groups. The supply forecasts are based on a prolongation of policies of the Sixth Plan and would be revised as soon as policy directions become known. Note that the balances are not corrected for the return of migrants.

Future imbalances direct attention to relative shortages for the more educated by 1992-93. These forecasts point to a direction which is the opposite of that depicted in the preparation of the Fifth and Sixth Plans. There, higher education formed a relative surplus while the lower educational levels showed relative shortages.

The reversal is due to the more modern structure of the economy in 1992-93, a higher economic growth from now to 1992-93 and the materialization of previously taken policy measures to expand at the lower end of education and restrain at the upper end of education.

The occupational imbalances are more significant. They point to the necessity of reorienting the training of graduates from the more favoured higher and middle level occupations i.e. professional, administrative, clerical and related jobs to the less favoured lower level occupations such as farm and production workers. There appears a relative shortage for the latter workers. The general tendency of a shortage for agriculturally and industrially trained workers in Pakistan has been a feature of previous forecasts for the Fifth and Sixth Plans, as well.

The magnitudes of the occupational imbalances can imply tensions in the labour market in the form of unnecessarily prolonged search for desirable jobs, and a voluntary surge in unemployment.

5. CGE

Until some years back, the factor and product markets were modelled in terms of constant or variable exogenous prices. This meant that the clearance of the market happened exclusively via quantities. The main feature of the more recent computable general equilibrium (CGE) models is the generation of endogenous prices within competitive factor and product markets. Demonstrative models of CGE are easily derived from a SAM. The necessary software exists to convert a SAM into a CGE, cf. World Bank (1985). Yet, the calibration of such a model to a real situation which involves complex combinations of quantity and price clearance rules in different products and factor markets is a different story.

The empirical knowledge on substitution elasticities in the product market and in the factor markets (production functions) in Pakistan is not yet sufficient to allow the construction, testing and use of a CGE model for planning purposes in Pakistan. Tested CGE models should rank high on the research agenda. (3)

REFERENCES

Cohen, S. I. (1985). "The Labour Force Matrix of Pakistan, Selected Applications". Pakistan Development Review. Vol. XXIV, Nos. 3&4. pp. 565-584.

Cohen, S. I. (1975). Production, Manpower and Social Planning. Saxon House.

Cohen, S. I. (1986). "Social Accounting and Multiplier Analysis for Pakistan". Paper presented at Technical Workshop on Socio-economic Accounting and Modelling. Islamabad: Pakistan Institute of Development Economics.

Cohen, S. I., I. Havinga and M. Saleem (1985). "A Simple Inter-industry Model of Pakistan". Pakistan Development Review. Vol. XXIV, Nos. 3&4. pp. 531-545.

Naqvi, Syed Nawab Haider, et al. (1983). The P.I.D.E. Macro-econometric Model of Pakistan's Economy. Islamabad: Pakistan Institute of Development Economics.

Pakistan Institute of Development Economics (1985). "A Social Accounting Matrix of Pakistan, 1979-80". Volumes I & II. Preliminary report prepared in the framework of collaborative research between PIDE and Erasmus University Rotterdam, Netherlands.

Pakistan Institute of Development Economics (1986). "Socio-economic Development Simulations, A SAM-corresponding Model of Pakistan". Volumes I & II. Preliminary report prepared in the framework of collaborative research between PIDE and Erasmus University Rotterdam, Netherlands.

Pyatt, G., and A. Roe (1977). Social Accounting for Development Planning. Cambridge: Cambridge University Press.

World Bank (1985). "Hercules, A System for Large Economywide Models". Draft prepared by A. Drud and D. Kendrik, Development Research Department, World Bank. Washington D.C.

(1) The first applications to countries of the Third World are in Pyatt and Roe (1977). There are presently SAMs of different shapes for more than 30 countries. 'Of course, several models in the Seventies had the shape of a SAM and appropriate SAMs were often constructed in the process of estimation of these models, see for instance, Cohen (1975).

(2) The appropriate handling of the SAM referred to above consists of three steps which can be summarized as follows:

(1) A separation between independent variables, also called exogenous variables, (These are public or foreign demands for goods and services, and public or foreign transfers to institutions, together these are found in columns and rows 5, 6 and 8 of the SAM in Table 1; and dependent variables, also called endogenous variables, (these are the remaining columns and rows in the SAM).

(2) A calculation of s coefficient matrix for the endogenous variables.

(3) The inversion of the coefficient matrix to give the so-called impact multipliers of a million rupees addition in the exogenous on endogenous variables. The procedure is explained at length in a paper presented in a recent PIDE seminar, c.f. Cohen (1986).

(3) Centre for Applied Economic Research in Karachi is known to be working on a calibration of a CGE to Pakistan.

S. I. COHEN, The author is Professor of Economics, at Centre for Development Planning, Erasmus University, Rotterdam, the Netherlands. The author acknowledges the programming assistance at various phases of Mr M. de Zeeuw and B. Kuijpers at Erasmus University and the collaborative effort with Prof. Syed Nawab Haider Naqvi, Dr M. Irfan, Dr S. Malik, Mr I. Havinga, Mr M. Rafiq and Masood Ishfaq Ahmad at PIDE. The models presented here were literally constructed and updated in pieces over the last eight years. In this regard we recall with great sorrow the loss of Dr Jawaid Azfar who consistently supported our collaborative effort and was a source of encouragement for introducing social development in the planning process. The collaborative effort was made possible by Finances provided from the Dutch-Pakistan Technical Assistance Programme.

Table 1
Aggregate SAM, Pakistan 1979-80

 (billion rupees)

 1. 2. 3. 4. 5. 6.
 Prod. Fact. Househ. Firms Govt. Funds

1. Products 199
2. Factors
3. Households 214 1
4. Firms 16 1
5. Government 2 2 4
6. Funds 14 10 5
7. Activities 199 22 41
8. Rest of World
 Total 199 232 215 14 29 41

 7. 8.
 Activ. Rest of Total
 World
1. Products 199
2. Factors 213 18 231
3. Households 215
4. Firms -3 14
5. Government 24 -2 30
6. Funds 11 40
7. Activities 213 -25 450
8. Rest of World 0
 Total 450 -1 1179

Table 2
Aggregate Multipliers, Pakistan 1979-1980

 13 14 15 16 17
 URBAN URBAN RURAL RURAL RURAL
 WAGE SELF LARGE MEDIUM SMALL

Products
 1. Food and Drinks 1.760 1.775 1.668 1.975 2.094
 2. Non-food 1.912 1.944 1.980 2.043 2.141
 Total 3.672 3.719 3.647 4.018 4.236

Factors (Households, Firms)
 3. Urban Wage Employment 1.492 0.499 0.495 0.534 0.562
 4. Urban Self-employment 0.563 1.571 0.563 0.615 0.648
 5. Rural Large Holdings 0.396 0.401 1.394 0.432 0.455
 6. Rural Medium Holdings 0.416 0.422 0.413 1.456 0.481
 7. Rural Small/No Hldgs 1.037 1.049 1.019 1.142 2.205
 8. Rural Non-farm 0.130 0.132 0.127 0.143 0.152
 9. Firms 0.231 0.234 0.230 0.253 0.266
 Total 4.265 4.307 4.241 4.575 4.769

Sectoral Activities
10. Wheat and Rice 0.468 0.474 0.458 0.516 0.545
11. Other Agriculture 1.423 1.438 1.372 1.583 1.675
12. Non-agriculture 4.953 5.019 4.945 5.405 5.693
13. Govment & OTR Service 0.487 0.495 0.504 0.521 0.546
 Total 7.331 7.426 7.279 8.026 8.460

 18 19 S10 S11 S12
 RURAL FIRMS WHEAT OTHER NON-AG
 NONFEM RICE AGRIC

Products
 1. Food and Drinks 2.085 0.000 1.869 1.786 1.483
 2. Non-food 2.076 0.000 1.956 1.865 1.587
 Total 4.161 0.000 3.825 3.650 3.070

Factors (Households, Firms)
 3. Urban Wage Employment 0.550 0.000 0.570 0.535 0.544
 4. Urban Self-employment 0.635 0.000 0.688 0.646 0.649
 5. Rural Large Holdings 0.447 0.000 0.504 0.477 0.444
 6. Rural Medium Holdings 0.473 0.000 0.569 0.543 0.457
 7. Rural Small/No Hldgs 1.188 0.000 1.571 1.518 1.094
 8. Rural Non-farm 1.149 0.000 0.203 0.198 0.135
 9. Firms 0.261 1.000 0.300 0.284 0.260
 Total 4.703 1.000 4.406 4.200 3.583

Sectoral Activities
10. Wheat and Rice 0.538 0.000 1.574 0.532 0.498
11. Other Agriculture 1.660 0.000 1.800 2.757 1.356
12. Non-agriculture 5.585 0.000 5.858 5.449 5.952
13. Govment & OTR Service 0.529 0.000 0.501 0.477 0.409
 Total 8.312 0.000 9.733 9.216 8.214

 S13
 GOVME
 OTHER

Products
 1. Food and Drinks 1.631
 2. Non-food 1.754
 Total 3.385

Factors (Households, Firms)
 3. Urban Wage Employment 0.751
 4. Urban Self-employment 0.669
 5. Rural Large Holdings 0.484
 6. Rural Medium Holdings 0.490
 7. Rural Small/No Hldgs 1.143
 8. Rural Non-farm 0.141
 9. Firms 0.273
 Total 3.950

Sectoral Activities
10. Wheat and Rice 0.462
11. Other Agriculture 1.386
12. Non-agriculture 5.065
13. Govment & OTR Service 1.485
 Total 8.390

Table 3
Trends of Exogenous Variables, POP in Millions, others in Billion
Rupees of 1979-80

Exogenous 1985-86 1985-86-1992-93 1992-93
Variables Actual

1. POP 96.0 2.8 Percent Growth per Annum 116.5
2. EXP 47.0 6.6 Percent Growth per Annum 73.6
3. IMP 60.0 4.3 Percent Growth per Annum 80.6
4. ROW 26.2 -3.0 Percent Decline per Annum 21.3
 Stabilizing in 1990 21.4
5. [OFR.sub.f] -6.9 5.4 Percent Growth per Annum -10.0
6. [OFR.sub.g] -5.5 5.4 Percent Growth per Annum -8.0
7. [CON.sub.g] 35.7 7.5 Percent Growth per Annum 59.3
8. [INV.sub.g] 34.2 8.6 Percent Growth per Annum 60.9
9. [ITX.sub.g] 54.6 2.9 Percent Growth per Annum 66.6

Table 4
All Values in Billions of Rupees and in Prices of 1979-80
Populations in 1000s Values per capita in 1000 Rupees per cap

I. Expenditure Values in Prices of 1979-80

 1982-83 1987-88 1992-93
 Total Consumption 275.13 352.23 464.95
 Total Investment INV 50.76 72.91 99.31
 Exports-imports x-M -13.46 -11.38 -7.06
 Gross Domestic Product GDP 312.45 413.25 557.19

II.
 Value Added per Sector

 1982-83 1987-88 1992-93

 Wheat 15.99 20.77 27.47
 OAgri 55.69 72.08 95.54
 Mining 3.60 5.08 7.58
 LManf 35.04 113.45 154.60
 SManf 13.34 17.24 22.69
 Const 12.08 17.27 23.49
 Owner 8.91 11.13 14.49
 Elect 7.71 10.14 13.63
 Whole 42.86 56.14 75.32
 Trans 19.60 25.49 34.10
 Bankg 7.23 9.50 12.74
 Govns 40.41 54.97 75.56
 GDP 312.45 413.25 557.19

III.

 Disposable Income

 1982-83 1987-88 1992-93

 Household Group
 Rlarge 36.33 46.74 62.11
 Rmediu 37.30 47.78 63.28
 Rsmall 88.09 111.97 147.38
 RLLess 0.98 1.22 1.59
 Rnfarm 11.52 14.84 19.82
 Uprof 7.42 9.07 11.49
 Ucler 2035 24.85 31.69
 Umanl 23.00 29.69 39.83
 Uemolr 0.84 1.49 2.75
 Uselfe 53.31 62.42 78.46
 Firms 2.48 12.09 27.69
 Govmt 46.24 60.88 74.38
 Total 327.86 423.04 560.47

IV.
 Disposable Income per capita

 1982-83 1987-88 1992-93

 Household Group
 RLarge 4.13 4.63 5.36
 Rmediu 3.05 3.40 3.92
 Rsmall 2.46 2.73 3.13
 Rlandl 1.28 1.39 1.53
 Rnfarm 1.36 2.09 2.43
 Uprof 6.16 6.71 7.54
 Ucler 3.36 4.17 4.65
 Umanl 3.67 4.14 4.33
 Uemolr 6.98 10.89 17.55
 Uselfe 4.52 4.57 4.98
 Avrg 3.16 3.45 3.93
 GDP/cap 3.54 4.07 4.73

V. Essential Needs
 Consumption in 1000 Rs per capita
 Values in Prices of 1979-80

 1982-83 1987-88 1992-93

 1. Food per Household Group
 a. Rsmall/lless/nfarm 1.16 1.29 1.46
 b. Uselfe 1.74 1.80 1.99
 c. Nation 1.35 1.48 1.63

 2. Rent, Fuel, Health, Education per Household Group

 a. Rsmall/lless/nfarm 0.25 0.28 0.31
 b. Uselfe 0.58 0.60 0.66
 c. Nation 0.35 0.38 0.43

VI. Labour Market
 Remuneration (wage) Rate in 1000
 Rs per capita
 Values in Prices of 1979-80

 1982-83 1987-88 1992-93

 Household Group
 11. Rural Large Holdings 14.51 16.79 19.76

 12. Rural Medium Holdings 12.86 14.81 1738
 13. Rural Small Holdings 6.83 7.81 9.12
 14. Rural Landless 2.12 238 2.76
 15. Rural Non-Farm 3.55 4.07 4.77
 21. Urban Professional 20.83 23.93 27.66
 22. Urban Non-Manual 12.74 14.50 16.66
 23. Urban Manual 12.15 14.48 1738
 24. Urban Employer 25.15 43.02 71.78
 25. Urban Self-employed 14.91 15.83 17.81

VII.

 Employment in 1000s
 Numbers

 1982-83 1987-88 1992-93

 Household Group
 1 Rural 20160.98 23144.06 26569.99
 21 Urban Profes-
 sionals 317.76 356.94 40236
 22 Urban Non-
 manual 1393.37 1577.65 1803.00
 23 Urban Manual 1659.79 1900.51 2184.46
 24 Urban Employers 29.42 33.47 38.31
 25 Urban Self-
 employed 3142.30 3644.77 4198.52
 Total 26703.62 30657.40 35196.64

VIII. Values

 1982-83 1987-88 1992-93

 Utilization UTL -83.37 -36.18 -70.91
 Budget Deficit Share
 in 90' of GDP 3.52 5.01 8.21

 Annual Growth
 Rate

I. Expenditure Sixth Seventh
 Plan Plan

 Total Consumption 5.065 5.71
 Total Investment 7.511 6.37
 Exports-imports -2.406 -0.85
 Gross Domestic Product 5.751 6.15

II.
 Annual Growth
 Percentage Distribution Rate

 1982-83 1987-88 1992-93 Sixth Seventh
 Plan Plan

 Wheat 5.12 5.03 4.93 5.370 5.75
 OAgri 17.82 17.44 17.15 5.295 5.79
 Mining 1.15 1.23 1.36 7.130 3.33
 LManf 27.22 27.45 27.75 5.934 5.38
 SManf 4.27 4.17 4.07 5.263 5.64
 Const 3.87 4.18 4.22 7.410 6.34
 Owner 2.85 2.69 2.60 4.550 5.41
 Elect 2.47 2.45 2.45 5.632 3.09
 Whole 13.72 13.58 13.52 5.547 6.05
 Trans 6.27 6.17 6.12 5.396 5.99
 Bankg 2.31 230 2.29 5.613 6.04
 Govns 12.93 13.30 13.56 6.343 6.57
 GDP 100.00 100.00 100.00 5.751 6.15

III.
 Annual Growth
 Percentage Distribution Rate

 1982-83 1987-88 1992-93 Sixth Seventh
 Plan Plan
 Household Group
 Rlarge 11.08 11.05 11.08 5.163 5.85
 Rmediu 1138 11.29 11.29 5.077 5.78
 Rsmall 26.87 26.47 26.30 4.914 5.64
 RLLess 0.30 0.29 0.28 4.478 5.44
 Rnfarm 3.51 3.51 3.54 5.195 5.95
 Uprof 2.26 2.14 2.05 4.098 4.84
 Ucler 6.21 5.87 5.65 4.076 4.98
 Umanl 7.02 7.02 7.11 5.239 6.05
 Uemolr 0.26 0.35 0.49 12.145 13.03
 Uselfe 16.26 14.76 14.00 3.206 4.68
 Firms 0.76 2.86 4.94 37.276 18.02
 Govmt 0.14 14.39 13.27 5.655 4.08
 Total 100.00 100.00 100.00 5.230 5.78

IV.
 Annual Growth
 Rate

 Sixth Seventh
 Plan Plan
 Household Group
 RLarge 2.306 2.90
 Rmediu 2.217 2.90
 Rsmall 2.059 2.77
 Rlandl 1.634 2.56
 Rnfarm 2.332 3.07
 Uprof 1.705 2.36
 Ucler 1.523 2.21
 Umanl 2.427 3.14
 Uemolr 9.290 10.00
 Uselfe 0.189 1.75
 Avrg 1.753 2.65
 GDP/cap 2.671 3.26

V. Essential Needs
 Annual Growth
 Rate

 Sixth Seventh
 Plan Plan

 1. Food per Household Group
 a. Rsmall/lless/nfarm 2.081 2.590
 b. Uselfe 0.673 1.997
 c. Nation 1.873 2.582

 2. Rent, Fuel, Health, Education per Household Group

 a. Rsmall/lless/nfarm 2.079 2.587
 b. Uselfe 0.673 1.997
 c. Nation 1.805 2.567

VI. Labour Market

 Annual Growth
 Rate

 Sixth Seventh
 Plan Plan
 Household Group
 11. Rural Large Holdings 2.957 3.312

 12. Rural Medium Holdings 2.869 3.247
 13. Rural Small Holdings 2.720 3.131
 14. Rural Landless 2.394 2.993
 15. Rural Non-Farm 2.800 3.203
 21. Urban Professional 2.807 2.945
 22. Urban Non-Manual 2.627 2.807
 23. Urban Manual 3.568 3.720
 24. Urban Employer 11.333 10.780
 25. Urban Self-employed 1.202 2.388

VII. Annual Growth
 Percentage Distribution Rate

 1982-83 1987-88 1992-93 Sixth Sventh
 Plan Plan
 Household Group
 1 Rural 75.50 75.49 75.49 2.798 2.799
 21 Urban Profes-
 sionals 1.19 1.16 1.14 2.353 2.425
 22 Urban Non-
 manual 5.22 5.15 5.12 2.515 2.706
 23 Urban Manual 6.22 6.20 6.21 2.746 2.824
 24 Urban Employers 0.11 0.11 0.11 2.613 2.738
 25 Urban Self-
 employed 11.77 11.89 11.93 3.011 2.869
 Total 100.00 100.00 100.00 2.800 2.800

VIII. Annual Growth
 Rate

 Sixth Seventh
 Plan Plan

 Utilization UTL -15.376 14.406
 Budget Deficit Share
 in 90' of GDP 7.328 10.377

Table 5
Employment forecasts

 (in thousands)

 1982-83 (Actual) 1987-88 (Predicted)
Sectors Wage Non-wage Wage Non-wage

Agriculture (1,2) 1795 11256 1979 15030
Industry (3,4,5,8) 1884 1945 2225 2214
Construction (6) 935 276 1213 308
Services (7,9-12) 3300 3733 3356 4326
 7914 17213 8773 21878

Total employment 25127 30651
Unemployment 1018 625 (a)
Total supply 26145 31276
Underemployment x+1005 x-42
Additions to +1005 (b) -42
 Underemployment

 1992-93 (Predicted)
Sectors Wage Non-wage

Agriculture (1,2) 2200 17631
Industry (3,4,5,8) 2591 2201
Construction (6) 1516 298
Services (7,9-12) 3738 5021
 10045 25151

Total employment 35196
Unemployment 718 (a)
Total supply 35914
Underemployment x-279
Additions to -279
 Underemployment

Notes: (a) Target 2 percent of total supply.

(b) 1983-84.

Table 6
Conditional Forecasts ofDemand, Supply and Imbalances 1992-93

 (in thousands)

Tape Demand D Supply S Imbalance (S-D)/S

Occupation
 PROF 902 1158 .22
 ADMI 255 532 .52
 CLER 1344 1692 .21
 SALE & SERV 5209 9697 .46
 AGRI & PROD 27487 22835 -.20
 Total 35197 35914 .02

Education
 Below PRIM 23563 24800 .05
 PRIM 4194 3915 -.07
 MSEC 2769 2884 .04
 HSEC 2680 2653 -.01
 INTE 1063 916 -.16
 DEGR 590 490 -.20
 POST 338 257 -.32
 Total 35197 35974 .02