Steps to Increase Capital Formation

Following steps are suggested for expediting the process of capital formation in Country.

• Developing Capital Market
• Increasing people's trust in capital markets.
• High imports duty on luxurious items
• Offering high rate of return on saving schemes
• Increasing FDI in Country
• Utilization the labor in productive activities
• Increasing high rates of return on money market instruments.

Involuntary Savings

Involuntary are savings affected indirectly by the actions of the government. If government increase the rate on saving schemes, it will increase the involuntary savings. If the government increases the GS or other taxes on luxurious goods, it will decrease their consumption and increase savings.

Food Provision

We, being the agricultural country, are compelled to import food gains from other countries. The countries from where we import food gains exploit our weakness. If agricultural sector develops, Pakistan and India can be sufficient in food supply and we would be free economic slavery of other developed countries.

Supplier or Labor

Agriculture sector supplies the labor also to the different sectors of the economy because the dominant portion of the total population is settled in the rural areas. Since the agriculture sector is not capable to absorb the available total supply of workers therefore it faces problem of unemployment. The problem of over population can be controlled by transferring this surplus labor of rural areas can be transferred to the manufacturing sector. The transfer of surplus labor would also cater the need of labor in the industrial sector.