Some Reflections on Income Redistributive Intermediation in Pakistan

Mobilization of domestic saving for economic development may be attempted by alternative methods, namely, through taxation and public revenue surplus, through higher incentives to savers and financial intermediation, and through income redistribution in favour of sectors which are provided high incentives to save and invest. In view of the lack of an active financial sector, fiscal weaknesses and other market imperfections, Pakistan primarily depended on the last strategy to mobilize domestic saving. This paper elucidates the mechanics of this strategy and some of its effects on sectoral resource transfer, aggregate savings, financial intermediation and resource allocation.