With Covid19 Under Control, Pakistan Enjoys V-Shaped Recovery in Manufacturing
With coronavirus spread contained, Pakistan economy is rebounding with V-shaped economic recovery. Pakistanis have once again defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. The nation's monthly Quantum Index of Manufacturing (QIM) for July 2020 has returned to where it was a year ago in July 2019, according to data released by Pakistan Bureau of Statistics. Meanwhile, the number of daily new cases has declined from over 6,000 a day in June to around 500 a day now. There has also been dramatic reduction in hospital admissions and the need for intensive care. The LSMI output increased by 5.02% for July, 2020 compared to July, 2019 and 9.54% in June, 2020. The recovery in manufacturing is quite broad, extending from cement production to fuel sales and growing demand for automobiles to home appliances, according to Bloomberg News. Pakistan has successfully overcome the challenges posed by the pandemic and its economic impact. Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.
|Covid19 Cases in Pakistan. Source: Our World in Data|
|Pakistan Monthly Quantum Index of Manufacturing. Source: PBS|
Pakistan is once again experiencing a construction boom with new incentives under Naya Pakistan Housing Program. Monthly cement sales rose to near all-time high of almost 5 million tons in July 2020 as construction activity picked up in both housing and CPEC-related projects.
|Pakistan Cement Sales. Source: Bloomberg|
Gasoline sales in June, 2020 hit new record and local car deliveries rose to about 10,000 units as people returned to work after easing of lockdown in May, 2020. Kia Motors Corp.’s local unit is planning to add a second shift at its factory in Karachi from January.
|Pakistan Car Sales Recovery. Source: Bloomberg|
Multiple Sectors Growing:
Sectors including food, beverages & tobacco, coke & petroleum products, pharmaceuticals and non metallic mineral products saw an increase in production in July 2020. Muzzammil Aslam, chief executive officer at Tangent Capital Advisors Pvt., was quoted by Bloomberg as saying, “It has surprised everybody". Aslam expects Pakistan economy at 4%-5% in current fiscal year, higher than the government’s 2.1% target. “The growth is led by an aggregate demand push.”
Pakistanis have defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. Pakistan has successfully fought off the deadly COVID19 virus and begun to bounce back economically. Moody's rating agency has raised Pakistan's economic outlook from "under review for downgrade" to "stable". Pakistan's Planning Minister Asad Umar is talking of a "V-shaped recovery". Monthly cement sales have rebounded to pre-pandemic level, fuel sales have increased, tax collection is up, exports are rising and the Karachi stock market is booming again. Prime Minister Imran Khan and Army Chief General Javed Bajwa have been on the same page in tackling the health and economic crises faced by Pakistan. Contrary to the critics of Pakistan's civil-military ties, Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.
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The momentum has not only persisted but amplified in on-going FY 21 with a whopping $2.77 billion remittance in July, followed by an inflow of $2.095 billion in August. This unprecedented surge is bemusing, and what has baffled many is the fact that this escalation has occurred during the pandemic. So, what could the potential triggers to this mammoth inflow be?
The extraordinary leap can be primarily due to the tightening of informal money markets, which has augmented the inflow through formal banking channels. In the budget for FY 2020-21, the incumbents allocated Rs25 billion to formalise foreign remittances, which would aid in stockpiling foreign exchange reserves to service colossal national debt obligations.
Pakistanis typically used to carry cash in their luggage physically. But due to flight reduction and sparse international travels, they would have been compelled to access official banking channels for money transfers. Also, remittances might have incremented on account of significant job losses in the Gulf region due to the Covid-related recession. Hence the spiral may demonstrate high one-time repatriation of money back to Pakistan.
On the other hand, the State Bank of Pakistan (SBP) has emphasised an orderly ‘market-based’ exchange rate management and sound policymaking under the Pakistan Remittance Initiative. The SBP sheds the spotlight on the reduction of the threshold for eligible transactions from $200 to $100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme. It also stressed on adoption of digital channels and targeted marketing campaigns to promote formal routes. Similarly, IT-related freelance services’ payment limits have increased from $5,000 to $25,000 per individual per month. The SBP believes that it has facilitated to enhance home remittances through formal banking channels in Pakistan.
The crux of the matter is remittances will upslope further in the future due to effectuated compliance of formal banking channels. Still, the recent abnormal increment will ease down in the coming months when the western economies recuperate from the ramifications of the Covid-related slump.
Pakistan earned US $ 1438.827 million by providing different information technology (IT) services in various countries during July-June (2019-20).
This shows growth of 20.72 percent when compared to US $ 1191.864 million earned through provision of services during the corresponding period of fiscal year 2018-19, Pakistan Bureau of Statistics (PBS) reported.
During the period under review, the computer services grew by 23.44 percent as it surged from US $ 895.990 million last year to US $ 1106.027 million during July-June (2019-20).
Among the computer services, the exports of software consultancy services witnessed increase of 14.98 percent, from US $ 354.397 million to US $ 407.492 million while the export and import of computer software related services also rose by 11.62 percent, from US $ 285.235 million to US $ 318.368 million.
The exports of hardware consultancy services decreased by 16.55 from, US$ 2.345 million to US$ 1.957 million whereas the exports of other computer services rose by 51.91 percent from US$ 247.976 million to US $ 376.699 million. In addition the export of repair and maintenance services however witness decline of 74.97 percent from $6.037 million to $1.511 million.
Meanwhile, the export of information services during the period under review increased by 61.39 percent by going up from US $ 1.580 million to US $ 2.550 million.
Among the information services, the exports of news agency services increased by 100.89 percent, from US $ 0.677 million to US $ 1.360 million whereas the exports of other information services also increased by 31.78 percent, from US $ 0.903 million to US $ 1.190 million.
The export of telecommunication services also witness increase of 12.22 percent as these went up from US $ 294.294 million to 330.250 million during the fiscal year under review, the data revealed.
Among the telecommunication services, the export of call centre services increased by 26.17 percent during the period as its exports increased from US $ 98.858 million to US $ 124.730 million whereas the export of other telecommunication services also increased by 5.16 percent, from US $ 195.436 million to US $205.520 million during the period under review, the PBS data revealed.
It is pertinent to mention here that the services trade deficit of the country during the fiscal year (2019-20) decreased by 42.96 percent as compared to the corresponding period of last year.
During the period from July-June, 2019-20, services exports decreased by 8.66 percent, whereas imports reduced by 24.25 percent, according the data released by Pakistan Bureau of Statistics.
The services worth US $ 5.449 billion exported during the period under review as compared the exports of US $ 5.966 billion in same period of last year, whereas imports of services into the country was recorded at US $ 8.284 billion as against the imports of US $ 10.936 billion, the data revealed.
The latest study by Pakistan's leading blood diseases institute suggests there is a slim chance of a second wave of the novel coronavirus here, further strengthening the government's policy of reopening of businesses.
The cross-sectional study conducted from May to July at the National Institute of Blood Diseases (NIBD) Karachi, has been published by the Oxford University Press's Journal of Public Health.
Titled, “Challenges in acquiring herd immunity for COVID-19,” the study conducted by a team of microbiologist, hematologists and pathologists, led by Dr Samreen Zaidi, includes nearly 1,700 people from three groups – health care, community and industrial workers.
It included adult male and female participants, who ranged in age from 18 to 60.
The study conducted to assess antibodies levels in diverse a group of residents to comprehend prevalence in the community, revealed that 36% of the workforce of Karachi, the country’s largest city and commercial capital, have already developed immunity against the COVID-19.
"This study has been instigated to evaluate the seroprevalence of anti-SARS-CoV-2 antibodies in different healthcare and community population from Karachi and with the aim of assessing the importance of seroprevalence in these groups," the report said.
The overall seroprevalence or the immunity rate, it added, is found to be 36% with highest positivity in industrial employees (50.5%), whereas only 13% of health care workers tested positive.
Moreover, the community that comprised of healthy blood donors and walk-in patients for antibody testing had a 34% positivity rate.
Seroprevalence is the incidence of a disease or illness within a distinct population at one time, as measured by serology tests.
The seroprevalence rate, the study pointed out, identified in the US population varies from 1.9 to 6.9%, which is very low compared to Pakistan.
The seropositivity rates reported were 10.8% and 5.0% from Switzerland and Spain, respectively.
The study showed that one-third of Karachi's industrial population developed immunity against the COVID-19, which is still far from the 60% to 70 herd immunity that is needed.
"In addition, if we consider acquiring 60% of seroprevalence in next couple of months, then herd immunity is not far from reality provided the antibodies did not decline with time," the report said. "The present study raises the possibility that if 36% of adult population of Karachi is supposed to be seropositive, then we can hypothesize that in the next 2–3 months 60% of general population will become seropositive [immune].”
However, according to Dr. Samreen Zaidi, follow up studies show that the seroprevalence rate has reached 60%, as per expectations.
"We, on the basis of a gradual drop in cases, and other relevant factors, assume that there are low chances of a second wave of coronavirus, " Zaidi told Anadolu Agency.
However, she acknowledged "assumptions are assumptions."
"The only limitation with this study is that our sample size is small. Therefore, we have recommended a further and wide-ranging research on the government level to double check the results of this study," she maintained.
#India's #Economy Heads for Double-Digit Plunge as #CoronaVirus Spikes. Goldman Sachs estimates a 14.8% contraction in #GDP for fiscal 2020-21, while #ADB is forecasting -9%. OECD sees the #Indian economy shrinking by 10.2%. #COVID19 #Modi #BJP #Hindutva https://www.bloomberg.com/news/articles/2020-09-17/india-s-economy-heads-for-double-digit-decline-as-virus-spikes
India’s economic recovery prospects have gone from bad to worse after the nation emerged as a new global hotspot for the coronavirus pandemic with more than 5 million infections.
Economists and global institutions like the Asian Development Bank have recently cut India’s growth projections from already historic lows as the virus continues to spread. Goldman Sachs Group Inc. now estimates a 14.8% contraction in gross domestic product for the year through March 2021, while the ADB is forecasting -9%. The Organisation for Economic Co-operation and Development sees the economy shrinking by 10.2%.
The failure to get infections under control will set back business activity and consumption -- the bedrock of the economy -- which had been slowly picking up after India began easing one of the world’s strictest and biggest lockdowns that started late March. Local virus cases topped the 5 million mark this week, with the death toll surpassed only by the U.S. and Brazil.
“While a second wave of infections is being witnessed globally, India still has not been able to flatten the first wave of infection curve,” said Sunil Kumar Sinha, principal economist at India Ratings and Research Ltd., a unit of Fitch Ratings Ltd. He now sees India’s economy contracting 11.8% in the fiscal year, far worse than his earlier projection of -5.8%.
Goldman Sachs’s latest growth forecast came last week after data showed gross domestic product plunged 23.9% in the April-June quarter from a year ago, the biggest decline since records began in 1996 and the worst performance of major economies tracked by Bloomberg.
India is “likely to see a shallow and delayed recovery in corporate sector profitability over the next several quarters,” said Kaushik Das, chief economist at Deutsche Bank AG in Mumbai, who has downgraded his fiscal year growth forecast to -8% from -6.2%. That will “reduce the incentive and ability for fresh investments, which in turn will be a drag on credit growth and overall real GDP growth,” he said.
Still, foreign investor sentiment will likely return once the pandemic eases, said Todd Buchholz, a former White House economist and now author.
“The virus is seen as a temporary phenomenon,” he said in an interview. “Those investors who were lining up to invest in India in January 2020 will do so in 2021 also, and deregulation has to continue.”
Fitch Ratings-Hong Kong-08 September 2020: The coronavirus pandemic and subsequent impact on the oil market are having a considerable effect on migrant workers and are likely to supress remittance flows in the APAC region, Fitch Ratings says in a special report. We expect flows to weaken in the coming quarters, even though recent amounts have been surprisingly robust in some countries due to temporary factors. Declining remittances in economies that are dependent on them may affect sovereign ratings through pressures on external finances and economic growth.
Demand for migrant labour has provided an important and stable source of foreign-currency remittance flows for a number of APAC sovereigns, including Bangladesh (6.0% of GDP), Pakistan (7.9%), Sri Lanka (8.0%) and the Philippines (8.4%). India is the largest recipient of remittances globally but they account for a small share of GDP at 2.9%. Remittance flows have helped keep current account deficits contained by offsetting large trade deficits. Indeed, without remittances the Philippines, Pakistan, Sri Lanka, and Bangladesh would all have large current account deficits of between 7%-10% of GDP.
Remittances in APAC also provide economic benefits to recipient countries. First, they support domestic consumption by providing an additional income source to households. According to the Asian Development Bank, about 14% of households in Bangladesh receive remittance income, 8% in the Philippines, 4% in Pakistan and 2% in India. Second, job opportunities for migrant workers relieve slack in domestic job markets.
Remittance flows in APAC were surprisingly mixed in the second quarter of 2020. Monthly data show a considerable and broad decline in remittances during April and May, as Fitch expected, but a recovery in June and July. The rebound in flows was particularly robust in Pakistan and Bangladesh, where flows broke records in both June and July. Sri Lanka and the Philippines also saw an improvement in remittance flows in June, but much more modest.
Anecdotal evidence points to temporary factors for the increase in recorded remittances in the recent period. These include migrant workers transferring their savings in preparation to return home, the impact of lockdown restrictions on transferring funds and a shift to formal remittance channels, which are picked up in the official data.
Fitch forecasts a 12% decline across the region in the second half of the year as the temporary support factors fade.
The deterioration in remittance inflows is likely to widen current account deficits, contributing to higher external financing needs. For countries with fragile external finances, such as Pakistan and Sri Lanka, the shock to remittances could exacerbate existing challenges. Lower oil prices and subdued import demand, however, are likely to soften the aggregate impact on external balances.
Remittances typically provide a countercyclical buffer for economic activity and vulnerable households. In domestic economic shocks, family members working abroad can increase remittances to help mitigate the impact of sluggish domestic activity. The pandemic, however, represents a much more synchronised global economic shock than previous downturns. This limits the potential support of the remittance channel.
Lower remittance flows could affect public finances through two channels: lower revenue collection from weaker consumption and higher social spending to support remittance-dependent households as well as returning migrant workers. Many countries in the region already have limited fiscal space to address the current coronavirus shock and the decline in remittances could exacerbate current challenges.
Pakistan's central bank held its benchmark policy rate at 7% on Monday, saying the economy looked set to pick up due to the lifting of lockdown restrictions aimed at curbing the coronavirus pandemic though risks remained.
"Business confidence and the outlook for growth have improved," the State Bank of Pakistan said in its monetary policy statement. "This reflects the decline of COVID-19 cases in Pakistan and the easing of lockdowns."
The central bank had slashed rates by 625 basis points in the three months to June, the most pronounced cuts in its history, as the pandemic hit the South-Asian nation.
The bank said that economic growth was expected to pick up to around 2% in the financial year 2021, compared to a contraction of 0.4% in the year ended June.
The decision was largely in line with expectations that the bank would ease off its dovish stance due to the rosier economic outlook while being mindful of the risks to inflation, which had ticked higher in June and July after it cut rates.
"As expected rates remain unchanged, (the) SBP highlighted risks to inflation while economic recovery this year can lead to GDP growth of more than 2%," said Mohammad Sohail, head of Topline Securities.
However, progress was expected to be patchy with construction and manufacturing driving growth in part due to central bank incentive policies, and remittances holding up despite global economic uncertainty.
Hospitality was expected to remain weak and the bank cautioned there heightened risks remained on the horizon due to the pandemic.
"Risks include a potential second wave of COVID-19 domestic infections, a possible sharp increase in infections...in Pakistan's major export markets in Europe and the U.S. and the threat to agriculture from locust attacks," the bank said.
Migrant workers from Asia’s developing countries have managed to send home record amounts of money in recent months, defying pandemic expectations and propping up home economies at a critical time.
Remittance doomsayers see something else in the bigger-than-usual transfers: a coming crash, triggered by a bleak job market, particularly in the Middle East. As they see opportunity drying up along with demand for oil, workers are sending money home in advance of their own return.
Unlike Latin American countries, which continue to benefit from a tentative U.S. recovery, Asian countries are vulnerable to economic austerity in Saudi Arabia and elsewhere in the Middle East. More than 60% of remittances to India, Bangladesh and Pakistan come from Gulf Cooperation Council countries, said Khurram Schehzad, chief executive officer at Karachi-based advisory Alpha Beta Core Solutions Pvt. The region is also the top destination for workers from the Philippines, lone of the world’s largest suppliers of overseas labor.
Saudi Arabia has already raised taxes and import fees to make up for falling oil revenue. Job cuts in the kingdom appear to target foreigners first, with Riyadh-based Jadwa Investment estimating more than a million foreign workers will leave the labor market this year.
After eight years of sending money to family in Karachi, Abdul Hanan Abro is one of the workers who will follow his money home. He was laid off from his acc ..He was laid off from his accounting job in Dubai in May and hasn’t found a new gig -- and he’s not the only one. “No one is getting anything,” said Abro. “Two to three of my friends have already moved back to Lahore. People are selling their cars and stuff, doing their final settlements.”
For Abro, coming home means starting over. He wants to use the savings he accumulated overseas to start a business. “It’s high time to just focus on what I was planning for two to three years now,” Abr ..coming home means starting over. He wants to use the savings he accumulated overseas to start a business. “It’s high time to just focus on what I was planning for two to three years now,” Abro said. “It’s better than wasting more time in finding a job in this market.”
In April, the World Bank predicted overseas workers would send home 20% less this year, the biggest drop since at least 1980. The lender hasn’t updated its forecast to reflect the recent resilience, but a decline is still ..
“People are returning home,” said Thomas Isaac, the finance minister for Kerala, which accounts for the country’s largest share of remittances. “Therefore, they bring back all their savings.” India is the world’s top recipient of transfers and a leading supplier of labor to the gulf; it took in $83 billion last year, exceeding the $51 billion it took in as foreign direct investment.
Overall, remittances to the Asia-Pacific region will drop 12% in the second half of 2020 compared with th ..
Kerala’s proud record for near-total literacy gave its citizens a leg-up over other Indians — not to mention Pakistanis, Bangladeshis and others — seeking jobs in the Gulf. Despite their better education, the overwhelming majority of Keralites did jobs that indeed required being “roasted in the desert sun,” as Dad put it. In the classic migration pattern, young men endured great physical hardship and forewent luxuries to save up, remit money home and bring over friends and relatives. The steady ..
Imbalances between humans & natural world have led to zoonotic #pandemics. Pakistan's billion tree project has helped the economy and the community.
Pakistan's climate minister and advisor Malik Amin Aslam says nature has taught us two key things during the coronavirus pandemic.
Firstly, if you treat it badly, it will strike back. And secondly, if you treat it well, there are many benefits.
The minister for climate change, who also advises Pakistan's prime minister, was speaking on the first day of the World Economic Forum's Sustainable Development Impact Summit.
"When you start investing in nature, nature always pays you back," he said, referring to Pakistan's billion tree planting project, which has reaped dividends by creating jobs, engaging the community and helping develop a new economy.
He said his country's experience proved that for every dollar you invest in nature, you get nine dollars back.
"We don't have to come out of this pandemic on the same pathway that got us in there. You've seen the different world during this pandemic when humans have retreated. What has happened? You've seen the blue skies, the clean air that we've all built," he said, describing this as a positive opportunity.
Hanging in the balance
On the other hand, treating nature badly could lead to more difficulties down the line, the minister warned.
"The stark warning that nature has given to all of the world is that there are boundaries and nature works within certain limits and certain balances. And if we tried to tilt that balance, nature will strike back," he said.
The minister pointed to the fact that we are living in the middle of a zoonotic pandemic because humans have invaded the territory of animals as evidence of nature striking back.
Zoonotic diseases are those that jump from animals to humans. Rats, bats, monkeys and apes are among those more likely to spread zoonotic germs. Other illnesses and diseases that have been spread this way include Ebola, HIV, SARS and MERS, and Zika.
The UNEP has warned that human activity including urbanization and industrialized agriculture has laid the foundations for pandemics by causing biodiversity loss and environmental damage.
The coronavirus is now present in more than 200 countries, with more than 31 million global cases and almost one million global death, according to figures compiled by the Johns Hopkins University.
https://www.ft.com/content/d1d69573-c3f8-4e6b-b147-2f29e9721c0d via @financialtimes
India and Pakistan have ramped up production of the coronavirus drug remdesivir under a licensing agreement with Gilead Sciences, but onward distribution to other developing countries has been slow.
Vamsi Krishna Bandi, managing director at pharma company Hetero, said there was no longer a remdesivir shortage in India — the country with the second-highest number of coronavirus infections in the world — and that the business had delivered about 800,000 doses of the drug domestically since starting production in June.
But while doctors in India are prescribing the experimental Covid-19 treatment, the majority of the 127 countries in the Gilead licensing deal have yet to start buying it.
Few countries “have actually put in a system for procurement”, said Mr Bandi, adding that few African countries in particular were placing orders. Hetero has exported to 25 countries, while Cipla, another Indian manufacturer, said it had only shipped to South Africa and Nepal.
Developed as a potential treatment to the haemorrhagic fever Ebola, Gilead’s remdesivir inhibits the development of viruses in the body and was found to shorten recovery time from Covid-19. It received emergency use authorisation in the US in May after a large randomised control trial of more than a thousand patients showed that it cut the time to recovery to 11 days, from 15 days in the placebo group.
More recent trials in July, showed the drug may also reduce the risk of death, suggesting the antiviral treatment could do more than just speed up recovery.
Since May, Gilead has signed licensing agreements with nine generic pharmaceutical companies in India, Pakistan and Egypt to supply remdesivir to 127 developing countries, following a model pioneered during the Aids/HIV epidemic.
“Currently, our licensees have made remdesivir available to patients in need in more than 40 countries, and we expect this number will continue to grow over the coming months,” Gilead said, adding “we are pleased by the rapid progress made by this effort”.
Osman Waheed, chief executive of Ferozsons Laboratories Limited, one of Pakistan’s largest pharma companies, said that he had a stockpile of more than 100,000 remdesivir doses after waiting weeks for healthcare authorities in Islamabad to approve exports.
Ferozsons is now shipping the drug to the Caribbean, Kenya and the Philippines, though is still sitting on large stocks after the Covid-19 cases in Pakistan declined.
“We have 100,000 doses today, we have nowhere near that level of demand in Pakistan,” said Mr Waheed. “The [coronavirus] burden on the healthcare system has almost dropped off a cliff.”
According to this Economist piece, "Imran Khan crowed" about Pakistan's success against COVID19 pandemic. It quotes an Indian professor at Princeton saying "Test not, find not" and Pakistan's "relative backwardness" as the reasons for Pakistan's lower cases. Conspicuously absent from Economist's narrative is the fact that the percentage of tests (25,000-30,000 a day) that are positive has been below 2% since August, 2020.
Excerpt: " “We have not only managed to control the virus, stabilise our economy, but most importantly, we have been able to protect the poorest segment of our society from the worst fallouts of the lockdown,” crowed Imran Khan, Pakistan’s prime minister, in a recent video address to the un General Assembly."
Excerpt: "There are less heroic reasons for Pakistan’s lower covid toll, too. Some, ironically, stem from its relative backwardness. “Basically, it is undertesting on a massive scale,” contends Ramanan Laxminarayan of Princeton University. He notes that Pakistan tests for covid at less than a quarter of India’s rate, per person, adding that the relatively poor Indian state of Uttar Pradesh, with a population equal to Pakistan’s and a similar failure to test widely, has also registered similar numbers of cases and fatalities (see chart). “Test not, find not,” says Mr Laxminarayan. “It’s the same with authoritarian regimes the world over.”
Demography is another factor. Both Pakistan and India have a far smaller proportion of old people than rich countries do. Just 4% of Pakistanis are over 65, for example, compared with 23% of Italians. Yet the median age in Pakistan, 23, is four years lower than India’s, and its average life expectancy, 67, is two years shorter. This puts a far smaller proportion of Pakistanis in the age bracket most vulnerable to covid.
Although both countries remain largely rural, Indians are much more mobile, both domestically and internationally. Some 160m Indians travel by air annually compared with fewer than 10m Pakistanis; passenger traffic on Indian railways is 130 times greater. Mr Modi’s lockdown, ironically, first bottled tens of millions of migrant workers inside cities that were often reservoirs of covid and then, as pressure mounted to let them return to their villages, distributed the epidemic more widely. Pakistanis, by and large, have instead stayed put at home, which more often means a family home in a village, and less often the kind of crowded workers’ colonies that ring Indian cities. The laxness of Pakistan’s lockdown meant that most small businesses stayed open, whereas nearly all in India were forced to close.
Despite the starkly different trajectories covid has taken so far in India and Pakistan, experts warn against drawing firm conclusions. “Our lockdown may have hurt India more than the disease itself, but in other respects we are much like Pakistan,” says Jayaprakash Muliyil, an adviser to India’s National Institute of Epidemiology. None of the numbers coming from either country is likely to present a true picture, he suggests: “We both really cannot see what is happening in villages, where most people live, and we share the same disdain for proper data.”
In the largest study ever of transmission patterns for COVID-19, researchers in India tested more than a half-million contacts of 85,000 cases to examine how and to whom the coronavirus is spreading.
The first interesting finding: Children are spreading the virus amongst themselves and also to adults. Second: The greatest risk for infection among the people studied in the two southern Indian states of Tamil Nadu and Andhra Pradesh is a long bus or train ride.
The attack rate — or the risk of transmission from a primary case to someone else — was 80% for passengers sitting next to an infected person on a bus or train for more than 6 hours without a mask. By comparison, there was only a 9% chance of an infected person giving the virus to another member of their household. The chances of a person passing on the virus in a hospital or clinic was 1.2% and the attack rate was just 2.6% for interactions in the general community.
In fact most people — 71%, according to this study — appear to have never passed the virus on to anyone. Given that the outbreak continues to grow, this means there are a small minority of patients responsible for the vast majority of spread.
"Some people just transmit more than other people do because they shed virus," says Ramanan Laxminarayan, the director of the Center for Disease Dynamics, Economics and Policy in New Delhi and one of the lead authors of the study, published this week in the journal Science.
"We've never had a good handle on [superspreaders], and certainly no large-scale study," he says. "Here in this study, we found that 8% of the people who were infected were responsible for 60% of the infections that grew out of these primary cases."
India, unfortunately, has become an ideal place to study the spread of the novel coronavirus. Recently, the country has been reporting nearly 100,000 new cases per day. Testing is widely available and in the states of Tamil Nadu and Andhra Pradesh, where this study was carried out, public health workers have been aggressively tracking local infections.
“Actual number of deaths is much higher,” said Dr. Anant Bhan, a health researcher at Yenepoya University in southern India. “But how much higher it is, that is difficult to know.”
More than 100,000 people in India have died from the coronavirus, the government said on Saturday, even as officials plan to lift more restrictions in hopes of reviving the crippled economy.
India’s health ministry reported 1,069 new Covid-19 deaths, bringing the official total to 100,842, though experts say the true toll is probably much higher. Until Saturday, only the United States and Brazil had reported more than 100,000 deaths from the virus.
At 6.4 million, India’s official caseload is the second-highest in the world, surpassed only by the United States, which has more than 7.3 million cases. India’s death and infection rates have climbed in recent months, with September alone accounting for more than 40 percent of its cases and about a third of its deaths.
The numbers have fallen somewhat since mid-September but remain high. Over the past week, India reported almost twice as many new cases as the United States did. And experts suspect that many Covid-19 fatalities in India have gone unreported.
Prime Minister Narendra Modi’s government imposed a harsh nationwide lockdown in March, a move that many experts say was poorly planned, devastating the economy while failing to stop the virus’s spread.
Now, despite the climbing numbers, officials are lifting restrictions in hopes of easing the economic suffering. Cinemas will be allowed to reopen with limited capacity this month, for example, and some states are expected to reopen schools.
Dr. Bhan said the reopenings could imperil older Indians and other vulnerable people who have been staying home. Children who return to school are likely to bring the virus home, he said. “The potential for exposure to infection would go up.”
Thekkekara Jacob John, a former head of clinical virology at Christian Medical College in the southern state of Tamil Nadu, said many lives could have been saved if the March lockdown had been handled properly.
“Now, today, the economic revival has priority over handling the virus,” Mr. John said.
“The swarm started declining from August and we cleared last few hectares of land in two districts this week,” Ejaz said at a ceremony in the capital Islamabad.
Pakistan deployed drones, helicopters, hundreds of vehicles and thousands of agriculture workers since declaring an emergency in February.
Locust swarms first entered Pakistan in June 2019 from neighbouring Iran and quickly devastated large areas of agricultural land across southwestern districts, ravaging cotton, wheat, maize and other crops.
The damage prompted Pakistan, a country of 220 million people, to miss its production target for wheat by about 2 million tonnes, forcing the government to import the grain for the first time in almost 10 years.
The low yields have pushed up the price of wheat and other foodgrains, pushing overall inflation to almost 10 percent in September piling political pressure on the government.
Despite the government’s claims, officials did not rule out the possibility of another attack by the insects.
“There can be a [resurgence] but based on our experience we will be ready to pre-empt that,” said Mohamed Afzal, head of Pakistan’s disaster management agency.
China, Pakistan’s close ally and neighbour, had donated drones, thousands of tonnes of pesticides and technical expertise to help the country tackle the crisis.
The Orange Line Metro Train project in Lahore under the China-Pakistan Economic Corridor (CPEC), has been completed and was delivered to the Pakistani side, it was announced.
As an early-harvest project of the CPEC, the Orange Line is Pakistan’s first-ever mass rapid urban transit train service, and the project is built by a joint venture of China State Railway Group Co., Ltd. and China North Industries Corporation, Xinhua news agency reported.
With a total investment of around $1.6 billion, the construction work of the Orange Line project started in September 2015, and the project is expected to be put into commercial operation soon.
Wang Yunlin, executive deputy general manager of the Orange Line project, told the media that despite the Covid-19 pandemic and tight construction schedule, the project was successfully completed and delivered.
Over 2,000 local people were employed at the peak of the project’s construction, he said, adding that the travelling of local people will be greatly improved after the project is put into commercial operation.
According to the joint venture, the length of the Orange Line project is 25.58 km, and the project has 26 stations including 24 elevated stops and two underground stations, connecting several densely-populated areas of Lahore.
A total of 27 sets of trains will be put into use which are expected to provide travelling service for 250,000 passengers daily, at the early stage of the commercial operation.
October 12, 2020
Trend of Strong Workers' Remittances Continues in September
Workers' remittances remained above $2 billion for the fourth consecutive month in September. They increased to $2.3 billion, 31.2 percent higher than the same month last year and 9 percent higher than in August.
On a cumulative basis, remittances rose to a record $ 7.1 billion in Q1-FY21, 31.1 higher than the same period last year.
The level of remittances in September was slightly higher than SBP's projections of $ 2 billion. Efforts under the Pakistan Remittances Initiative (PRI) and the gradual re-opening of major host destinations such as Middle East, Europe and United States contributed to the sustained increase in workers' remittances.
Honda up 67% year-over-year
Toyota up 102% year-over-year
Suzuki down 23% year-over-year
Pakistan's market for initial public offerings is coming out of hibernation and heading for a record year. The nation, which has posted the fastest equity rally in Asia since March, will host about 10 new share sales in the fiscal year to June 2021, according to its top adviser Arif Habib Ltd.
That follows a 17-month streak of no new initial share sales and beats the previous record of nine deals in 2008. "IPOs will always be active when the stock market is performing and company valuations are good," Arif Habib's CEO Shahid Ali Habib said in Karachi.
"There is a lot of liquidity too with funds shifting allocation from the fixed-income class to equities."
Pakistan's benchmark stock index has jumped 52 per cent since March, beating runners-up Vietnam and India, and gaining twice as much as China. Yet, it remains one the world's cheapest markets with forward price-earnings multiple of 7.4 times.
The appeal of momentum and valuation is luring companies to tap public funds. Pakistan had two company listings in July. Now, Agha Steel Industries Ltd. is raising 3.8 billion rupees ($23.5 million), in the country's third-largest deal from the private sector.
Also, industrial-automation company Avanceon Ltd. and rubber-products maker Service Industries Ltd. plan to list their subsidiaries. Arif Habib, which has led two offerings this year, expects at least another five deals. The adviser has handled half of the 36 initial public offerings in the past decade, according to data compiled by Bloomberg.
Equity gains in Pakistan have been partly fueled by falling returns on fixed income after benchmark interest rates fell by almost half to 7 per cent. The nation's economic growth is also recovering thanks to a drop in new virus cases.
83 companies of #PSX have so far announced quarterly (July-Sep) results showing an AVG earning growth of 51% yoy. Out of KSE100, 43 companies have announced so far showing an AVG earning growth of 46% yoy. Outstanding growth pace in this quarter!
On the front of global trade, the pandemic-related disruptions and trade barriers such as higher tariffs on key suppliers (China and India) opened up a window of opportunity for Pakistani exporters. The changing market dynamics in the West, where economic stress increased the share of low-end products in the market, also worked for the advantage of Pakistan. The fact that the country dealt with the health crisis better and succeeded in containing the number of cases and the mortality rate also encouraged overseas importers to mark Pakistan as a safe and viable source for imports.
“I have been in the business of industrial chemicals and dyes for years, but had just been catering to local demand. But with over 20pc tariff on Chinese products in the United States, my produce entered the gigantic US market. I started exports to the West this year for the first time and the month-on-month increase has given me confidence to look at the possibility of scaling up the capacity to realise the full potential of exports,” a former president of a chamber of commerce and industry said.
“Pakistan’s industry is bouncing back on the strength of sound fundamentals. Cheaper credit and supportive fiscal measures helped, but it’s the rising demand that has energised businesses. We hope that the government and the opposition will realise the gravity of the economic situation and ensure stability if it cares about the country and its hard-pressed people,” said Shariq Vohra, newly elected president of the Karachi Chamber of Commerce and Industry (KCCI). He said there are 2,700 industrial units in the city, 90ppc of them being small with 10-20 employees.
The Board of Directors of Shell Pakistan Limited on Wednesday announced the company’s financial results for the third quarter ending September 30, 2020.
The company posted an after tax profit of Rs1,812 million in 3Q2020 compared to the profit of Rs570 million in the same period of last year.
“Overall, the financials still present a challenging situation, driven primarily by the unprecedented coronavirus pandemic and its effects, which resulted in declining fuels demand and volatility in the international oil prices,” read a statement issued by the company.
Over the course of the nine months, Pak Rupee devalued against the US dollar by a further 6pc. Although Pak Rupee remained relatively stable during the quarter, its effects were felt in the overall results of the company.
Being part of an import dependent industry where a large percentage of the company’s costs are denominated in foreign currency, this devaluation had an impact on its cost base and, in turn, on its financial performance.
Pakistan’s decision to loosen pandemic restrictions early has helped the nation’s exports emerge stronger than its South Asian peers.
Outbound shipments have grown at a faster pace than Bangladesh and India as textiles, which account for half of the total export, led the recovery, data show. Islamabad saw total shipments grow 7% in September, compared with New Delhi’s 6% and Dhaka’s 3.5%.
Pakistan Prime Minister Imran Khan’s administration was the first in the region to ease pandemic restrictions, allowing export units to reopen in April, a month after locking them down to stem the spread of Covid-19. That’s helped draw companies from Guess? Inc., Hugo Boss AG, Target Corp. and Hanesbrands Inc. to the South Asian nation, according to people familiar with the matter, who requested anonymity since details about buyers is private.
“Pakistan has seen orders shifting from multiple nations including China, India and Bangladesh,” said Shahid Sattar, secretary general at the All Pakistan Textile Mills Association. “Garment manufacturers are operating near maximum capacity and many can’t take any orders for the next six months.”
Hugo Boss said in an email that it focuses on long-term supplier partnerships while watching for “additional or new procurement channels.” Hanesbrands said it sources from many countries, including China and Pakistan, to supplement production from company-owned facilities. Neither company provided details. Guess and Target didn’t respond to requests for comment.
Even as lockdown curbs disrupted trade in India and Bangladesh for at least two months beginning late March, Pakistan was already making face masks and personal protective gear for export. The South Asian nation also gained some orders from companies looking to diversify their supply chains amid the trade war between the U.S. and China, the world’s top textile exporter, despite factories there reopening as early as April.
“This war between two giants has given us new opportunities in polyester-cotton products,” said Khalid Mehmood, head of garment and home textile operations at Nishat Mills Ltd., the nation’s largest textile maker. “So there is a six-month slot for Pakistan now to capture maximum number of customer that were China based.”
Executives from Nishat Mills and Interloop Ltd., one of the world’s largest manufacturers of socks that counts Nike Inc. and Adidas AG among its clients, said they have seen some orders diverted to them from China. Meanwhile, Gadoon Textile Mills Ltd. has received orders redirected from Bangladesh, the world’s second-largest apparel exporter, and India, the third-largest textile exporter.
“The orders we were exporting to Europe and the U.S. have not recovered,” Muhammad Imran Moten, chief financial officer at Gadoon, said during an analyst briefing. “But diversion of orders from China and Bangladesh is the compensating factor.”
Increase in exports, which account for some 10% of Pakistan’s gross domestic product, can help spur growth in the economy after its first contraction in 68 years in the year ended June. Khan’s government is targeting a growth of 2.1% in the current financial year.
But there are risks on the horizon that may temper growth prospects for the economy. Khan’s government announced measures this week to contain a second wave of Covid-19 infections, including mandatory wearing of masks in public and early closure of markets and restaurants. Then there’s the issue of competitiveness.
He said that despite the challenges posed by Covid-19, Pakistan's industrial sector was thriving as Large scale Manufacturing Industry (LSMI) including textile production and auto-sales were on the rise. "PTI government incurred 48pc less external liabilities in first 9 quarters compared to
PML-N government's last 9 quarters while doing 78pc more debt servicing. Despite the challenges posed by Covid-19, Pakistan's industrial sector is thriving. LSM, textile production & auto-sales are on the rise," the advisor tweeted."
The advisor shared State Bank of Pakistan's data which showed that the net to external debt stood at $24.8 billion during PML-N tenure from March 2016 to June 2018, where as in PTI's tenure from June 2018 to September 2020, the net external debt stood at $18.5 billion.
The overall liabilities impact was recorded at $31.1 billion during the PML-N period under review whereas the overall liabilities impact has been recorded at $16.1 billion in PTI's tenure under review.
The external debt serviced (principal + interest) stood at $16.7 billion in PML's period whereas it stood at $29.7 billion during the PTI's tenure of nine quarters under review.
Meanwhile, quoting Pakistan Bureau of Statistics latest statistics, he said, the Large Scale Manufacturing growth increased 7.65 percent in September 2020, compared to last September whereas it grew by 4.81 percent during the first quarter of the current fiscal year (July-Sept 2020-21).
On year-on-year basis, the non-metallic mineral products grew by 21 percent in September 2020, pharmaceuticals by 20 percent, food by 10pc, autos by 28 percent, textiles by 2.5 percent, fertilizers by 8 percent, paper and board by 12 percent, chemicals by 8 percent and rubber 15 percent.
On the other hand, the car sales have increased from 10,853 units in October 2019 to 14,054 October 2020, showing an increase of 29 percent.
Likewise, the sale of motorcycles also increased by 12 percent, from 156,872 units in last October to 175,294 units in October 2020 whereas the sale of tractors went up from 2,861 to 4,482, showing growth of 57 percent and trucks and buses sale grew from 349 units to 388 units, a growth of 11 percent.
Much of the increase in net ext debt during PTI period (of $18.5bn) has been thanks to the legacy left behind by PMLN of burgeoning current account deficit - $13.43bn FY18/19 + $2.96bn FY19/20. As we experience current account balance net debt increment should further decelerate
According to the Covid Resilience Ranking by Bloomberg, 12 Asian countries have scored better than India in handling the coronavirus pandemic.
India has been ranked 34th among 53 countries in the world that have handled the coronavirus pandemic most effectively, according to a Covid Resilience Ranking by Bloomberg.
The survey was published Tuesday and gives India a resilience score of 58.1, way below top performer New Zealand which has a score of 85.4. Pakistan, with a score of 61.7, has performed better than India and was ranked 27th, whereas Bangladesh, with a score of 64.2, was placed at the 24th position.
Effective testing and tracing is a hallmark of almost all the top 10, embodied in South Korea’s approach. The country approved home-grown diagnostic kits within weeks of the virus’s emergence, pioneered drive-through testing stations and has an army of lightning-fast contact tracers who comb through credit card records and surveillance camera footage to track down clusters. Like Japan, Pakistan and other parts of Asia, Korea has drawn on recent epidemic experience after suffering an outbreak of Middle East Respiratory Syndrome, or MERS, in 2015.
In contrast, developing countries like Pakistan and Bangladesh have benefited from their relative remoteness. Their populations are also much younger on average, which has helped hold down their overall mortality rates. Limited testing and poor-quality data obscures the picture in these places, though under-reporting of cases and deaths is occuring everywhere.
As per the report, the surge in economic activity plus attractive valuations could bring 20 percent growth sending the Pakistan Stock Exchange (PSX) index to 52,000 by December next year.
“Led by strong earnings growth, economic growth, broadly stable external position, and cheap valuations, we expect the KSE-100 Index to generate a lucrative total return of 28pc (USD-based: 23pc) during CY21 taking index level to 52,000 by Dec’21,” the report said.
The report was of the view that it expects the economic activity in Pakistan to continue the robust pace it has shown over the last couple of months.
The GDP growth is expected at 1.8 percent during FY21. Whereas, The Current Account, while swinging into a deficit, is expected to be manageable (-0.9pc of GDP), attributable to consumption-driven, import-dependent GDP, the report stated.
The report expects no significant depreciation of the currency with PKR/USD 168 expected by Dec’21, owing to orderly market conditions, continued robust inflows from remittances and improved exports.
Housing finance, construction package and TERF (subsidized investment scheme for industries which expires on December 2020) are some of the government’s efforts to fuel investment activities in the country, it said.
The G20 debt relief and low-interest rates would allay the stress off debt servicing expenditure, the report pointed out.
Talking about the Sectoral Outlook; the report stated that in the cement sector, aggregate demand revival and government incentives for the construction industry should help propel dispatches growth. Whereas, in the auto sector, the stability in the PKR/USD parity, and strong volumes growth amid demand revival and low-interest rates should stimulate bottom-line of companies.
“Prime Minister Imran Khan has already given approval to it. After consultation, both the countries will formally sign this framework agreement,” a senior official said.
On Tuesday, representatives from both the countries held the fifth meeting of Joint Working Group (JWG) on industrial cooperation under CPEC through video conference.
The Chinese side appreciated the efforts undertaken by Pakistan to elevate the MoU (Memorandum of Understanding) on industrial cooperation into a Framework for an increased cooperation under CPEC and agreed to continue consultation for its signing at the earliest. They also hailed the idea of joint industrial diagnostic studies followed by an action plan.
Khashih-ur-Rehman, Additional Secretary/Executive Director General, Board of Investment (BOI) and Ying Xiong, Director General, National Development & Reform Commission (NDRC), China co-chaired the meeting. Representatives from line ministries, provincial governments, and embassies attended the meeting.
Rehman remarked that elevation of the MoU on IC (Industrial Cooperation) between Pakistan and China into a comprehensive framework would create new avenues for strengthening industrial cooperation under CPEC which is also open to third party participation.
Cooperation would likely enhance B2B and project to project (P2P) ties, balance and modernise existing industry, expedite SEZs development and promotion, seek technical and financial assistance from China, increase production capacity, and facilitate businesses with support of financial institutions from both sides, etc, he added.
Asim Ayub, Project Director of Project Management Unit (PMUC-CPEC-ICDP) on Industrial Cooperation of BoI, appreciated the Chinese side for accepting the Draft Framework Agreement shared by the Pakistani side in early November 2020.
Early signing of the Framework Agreement on IC would help both sides achieve maximum objectives of CPEC in line with its long-term Plan, Ayub said, adding that immense efforts had been ensured by Pakistani to devise the Draft Framework, taking all the provinces and other stakeholders on board and final approval of the Honorable Prime Minister was also obtained accordingly.
He stressed a Framework Agreement was the need of the hour for a measurable impact with regards to Industrial Cooperation, SEZs, Business to Business (B2B) and People to People (P2P) collaboration.
Ayub said Pakistan highly regarded the idea of Industrial Diagnosis by the Chinese side and extended its highest support to the group of experts from CIECC for the Textile Industrial Diagnosis last year. However, he was of the view that the Industrial Diagnosis needed to be carried out in a joint manner involving experts from both sides who might submit the Diagnosis Report to the JWG along with an Action Plan that would be imperative for the respective industrial sector.
The meeting also discussed progress made on Rashakai, Dhabeji, Alama Iqbal Industrial City, and Bostan SEZs under the CPEC, the revival project of Pakistan Steel Mill, China Pakistan Young Workers Exchange and Cooperation, and Karachi Coastal Comprehensive Development Zone.
The sell-out success of the Chang’an Alsvin sedan is the latest Pakistani-Chinese joint venture to have raised eyebrows in the automotive world
Chinese car firms seeking new avenues for growth, while hampered in India, see Pakistan as an entry point to the right-hand-drive markets of South Asia
The stock-clearing sale of 15,000 Chang’an Alsvin passenger vehicles is the latest in a series of headlines about joint ventures between privately held Pakistani conglomerates and Chinese state-owned automotive enterprises.
The Alsvin is assembled at a US$136 million plant near the port city of Karachi owned by Master Chang’an Motors (MCM), established in 2017 as a 70:30 joint venture between the local Master Group and leading Chinese carmaker Chang’an Automobile. In addition to the 30,000 units a year of the Alsvin, it began producing two pick-ups and a multi-purpose vehicle in 2018.
Shanghai-based SAIC Motor, owner of the British car brand MG, this month broke ground at the site of a US$100 million plant near Karachi which is expected to begin production of three small-engined sports utility vehicles, or SUVs, next year.
KA Hanteng Motor, a joint venture with China’s Hanteng Automobile, is building a US$50 million plant in Pakistan and is expected to start making 15,000 SUVs and passenger cars this year.
Al-Hajj FAW, a Karachi-based joint venture formed in 2012, ramped up production of hatchbacks last year to 20,000 vehicles.
When the Master Group proposed the joint venture to Chang’an Automobile in 2016, it did so with the ambition of leveraging the estimated US$60 billion China-Pakistan Economic Corridor (CPEC) to gain access to other Asian markets targeted for investment under the Belt and Road Initiative, MCM’s chief executive Danial Malik said.
The Lucky Motor Corporation (LMC), manufacturer and distributor of Kia vehicles, entered into a Licence and Technical Assistance Agreement this week with the Stellantis Group to assemble and distribute one of their European brands in Pakistan.
The Stellantis Group is the world’s fourth largest car group which was recently formed and it contains a portfolio of 14 international brands.
The LMC in mid-2019 had signed an MoU and expression of interest (EoI) with Groupe PSA which is now part of the Stellantis Group. Last year before achieving the manufacturing licence under the government’s new entrant policy, the LMC (then known as Kia Lucky Motors) had informed the government of its intentions to partner with Peugeot, a brand of the Stellantis Group.
Total local dispatches during July-March FY2022 slightly decreased by 0.03 percent to
36.17 mt from 36.18 mt last year. While, total exports clocked in at 4.64 mt (-35.04
percent) against 7.15 mt during the same period last year. Local dispatches from the
northern region decreased by 2.27 percent, while southern region dispatches surged by
12.3 percent. Exports from the north nosedived by 64.5 percent, while south witnessed
fall of 24.3 percent growth during the period.
Cumulative dispatches (local & exports) posted a decline of 5.8 percent and reached
40.82 mt during July-March FY2022 against 43.32 mt in the corresponding period.
Table 3.9: Cement Production Capacity & Dispatches (Million Tonnes)
2006-07 30.50 79.23 21.03 3.23 24.26
2007-08 37.68 80.14 22.58 7.72 30.30
2008-09 42.28 74.05 20.33 10.98 31.31
2009-10 45.34 75.46 23.57 10.65 34.22
2010-11 42.37 74.17 22.00 9.43 31.43
2011-12 44.64 72.83 23.95 8.57 32.52
2012-13 44.64 74.89 25.06 8.37 33.43
2013-14 44.64 76.79 26.15 8.14 34.28
2014-15 45.62 77.60 28.20 7.20 35.40
2015-16 45.62 85.21 33.00 5.87 38.87
2016-17 46.39 86.90 35.65 4.66 40.32
2017-18 48.66 94.31 41.15 4.75 45.89
2018-19 59.74 78.48 40.34 6.54 46.88
2019-20 63.63 75.14 39.97 7.85 47.81
2020-21 69.26 82.93 48.12 9.31 57.43
2020-21 69.26 83.41 36.18 7.15 43.32
2021-22 51.94 78.58 36.17 4.64 40.82
Source: All Pakistan Cement Manufacturers Association (APCMA)
3.5 Small and Medium Enterprises
Small and Medium Enterprises (SMEs) are indispensable to the progress of the nation as
it contributes significantly to the economic and social development of the country in a
myriad way: create employment opportunities, foster human resource development and
stimulate value addition to the economy.
To support SMEs to play their due role in economic development, Small and Medium
Enterprises Development Authority (SMEDA) has taken various initiatives.