The undocumented economy of Sutar Mandi (2024)

FAQs

The undocumented economy of Sutar Mandi? ›

FAISALABAD: Undocumented transactions worth millions of rupees conducted by yarn and fabric traders in Sutar Mandi are hurting the national exchequer. Located in Faisalabad, Sutar Mandi – also known as Yarn Market – is one of the biggest yarn and fabric markets in Asia.

In Pakistan, the informal economy is mostly caused by corruption among tax authorities and businesses. According to a LUMS study, out of Rs100 of tax collected, only Rs38 goes to the government while Rs62 is divided among the taxpayer, tax collector and tax practitioner, leading to unrealised tax income.

Sutarmandi is an online yarn marketplace. Inspired from the Clock Tower in Faisalabad, it is the first of its kind product for the textile industry of Pakistan.

Informality is also associated with higher income inequality, poverty, and less progress toward Sustainable Development Goals (SDGs). In Pakistan, a sizable segment of small and medium-sized industries operates in the informal sector, which employs 72.5pc of the country's non-agricultural labour force.

Pakistan has experienced an economic crisis as part of the 2022 political unrest. It has caused severe economic challenges for months due to which food, gas and oil prices have risen. The Russian invasion of Ukraine has caused fuel prices to rise worldwide.

Political instability and macroeconomic imbalances have been reflected in poor creditworthiness ratings, even compared to other countries of similar income levels, with resulting capital flight and lower foreign direct investment inflows.

Average incomes are substantially lower in the informal economy and there is a higher preponderance of impoverished employees working in the informal sector. In addition, workers in the informal economy are less likely to benefit from employment benefits and social protection programs.

The high incidence and persistence of informal labor, particularly in emerging market and developing economies, is increasingly recognized as an obstacle to sustainable development. Informal firms do not contribute to the tax base and tend to remain small, with low productivity and limited access to finance.

Is Pakistan a strong country? ›

Pakistan is considered a middle power nation, with the world's sixth-largest standing armed forces. It is a declared nuclear-weapons state, and is ranked amongst the emerging and growth-leading economies, with a large and rapidly-growing middle class.

Economic activity is expected to remain subdued, with real GDP growth estimated at 1.8 percent in FY24, reflecting continued tight macroeconomic policy, import controls, high inflation, and continued policy uncertainty. Output growth is expected to increase to around 2.5 percent over FY25-26, remaining below potential.

As of June 2023, Total Public Debt and Liabilities of Pakistan is estimated to be about Rs. 62.881 trillion/US$223.86 billion which is 74.3 percent of gross domestic product (GDP) of Pakistan. About Rs. 24.309 trillion (US$87.24 Billion as of June, 2024) is owed by the government to domestic creditors, and about Rs.

Half-hearted implementation of reforms, political manipulation, structural problems, disregard for human rights, inadequate training and investigation facilities and corruption hinder effective policing in Pakistan.

Moreover, the low growth rates, high levels of debt, inflation, low productivity, and poor competitiveness have, among other factors, contributed to widespread poverty and slow development in Pakistan.

The increasing burden of huge foreign loans impeded the economic growth prospects of Pakistan. Lack of Political Stability: The lack of political stability demanded huge public expenditure for maintaining law and order in the country. This huge public expenditure acted as a drain on the country's economic resources.

Main factor behind the improved trends in income inequalities in 1980s has been the increases in employment and real wages in the agriculture and manufacturing sectors. inequality widened both in urban and rural areas, the increase was more pronounced in urban areas than in rural areas.