Assessment of Car Industry Boom in Pakistan and its Impact on Economic Vitality in the Area

Abstract

Invention of car led to shift from mass mobilization by Railways to personalized convenient transportation and resul ted into socioeconomic and cultural changes. Pakistan Railways was the primary mode of transportation in the country till seventies. Resources were diverted for the expansion of road networks and relevant infrastructure. Road transport is now backbone of Pakistan's transport system, accounting for 90% of national passenger traffic and 96% of freight movement. Over the last ten years road traffic has grown much faster than the country's economic growth. Banking reforms were initiated during 1997-98, however, financing cost was high due substantial banking spread despite fall of inflation. Privatization and deregulation, governance, fiscal transparency and financial sector/ banking/ Tax and trade reforms were initiated by new GoP during 1999-2000. Reduction in repo rates by SBP since 1998-99 and return on NSS products by GoP resulted in to decrease in lending rates by the major banks. 9/11 caused fears among Muslims for global assets freezing/ scrutiny/monitoring of financial transactions to localize the source of funding to various terrorists groups. Therefore, inflow of remi t tances into Pakistan accelerated at much higher pace. Availability of cheap credit and higher liquidity in market gave boost to consumerism growth model adopted by GoP. These basic factors alongwith GDP/per capita income growth, least availability of public mass transit facilities and leasing/financing facilities resulted into steep demand for private motorization ie cars etc. Co relations of above factors were developed and data acquired through various sources was collected, compared and analyzed with relation to the boom in car industry in Pakistan. In light of the analysis, various measures have been recommended and the research was concluded while taking in to consideration the demand/ supply of cars and overall trend with respect to the already stipulated factors of co relations.