Islamabad: Pakistan’s Gross Domestic Product (GDP) could raise by 2 percent per annum if they grant India the Most Favoured Nation (MFN) status, which could normalize trade relations between the neighbouring nations, according to study by an independent organization.
Trade normalization with India can also add to national funds by over Rs 470 billion per annum in addition to benefits of Rs 70 billion to consumers in the shape of cheap imported goods, but this would require outsmarting smart Indian negotiators, the Express Tribune reports.
Dr Hafiz Pasha, former finance minister and vice chairman of the Institute of Public Policy said their organization’s research shows that trade normalizations, commonly known as granting the Most Favoured Nation (MFN) status to India, will also help trim down inflation on the back of availability of comparatively cheap Indian goods.
Pasha added that over a period of three years the country would achieve 700 million dollars in annual gains besides creating 200,000 new jobs. However, in comparison with Pakistan, India will only gain 0.5 percent of its gross domestic product (GDP).
Pasha said the Pakistan government should go ahead with MFN status for India, but should get meaningful concessions while negotiating further reductions in sensitive list maintained by India under South Asia Free Trade Agreement. In February last year, Pakistan had abolished positive list containing only 1,956 items or 27 percent of the allowed tariff lines with 1,209 non-importable negative list, only 18 percent of tariff lines.
The government has not met its commitment of abolishing the negative list by the end of December 2012, citing concerns over the grant of MFN.