Economic Planning in Pakistan
History of Economic Planning in Pakistan
The history of national economic planning in Pakistan is divided in the following periods:
Period of economic coordination (1947 – 1953): Pakistan’s first planning board was established in 1950 with main emphasis on agriculture. Unfortunately, that plan was not well implemented on time. There were no targets fixed for the plan and the planning machinery was so weak to tackle with implementation. Therefore, the economic planning efforts during this period was a complete failure.
Period of planning board (1953 – 1958): The planning board of Pakistan was renamed as Planning Commission in 1953. The planning commission was facing the following serious problems:
- Shortage of trained staff,
- Non-availability of accurate and reliable data,
- Uncertain conditions in the planning machinry
- It was regarded as a rivalry between Ministry of Finance and the State Bank of Pakistan
- Political instability
- Annual economic planning was never seriously followed
- Most of the economic advices were rejected by implementing authorities
- Economic priorities were not given due importance
- Budget decisions were also distorted.
Period of planning commission (1958 – 1968): The third period of the planning process began in October 1958 with the assumption of power by the military government of Ayub Khan. The new regime chooses to make economic development through a marked economy and reliance of the private sector as its primary objective. The new government gave proper attention to achieve the following targets:
- Rapid industrialization in the country,
- Removal of food shortage,
- Removal of political instability, and
- To overcome the problem of deficit of balance of payment.
Period of decline of planning commission (1968 – 1977): This is the period of decline of Planning Commission as an important decision-making body coincided with the fall of Ayub Khan’s government. During the Yahya Khan period (1969 – 1971), the serious planning on national level was completely ignored. The Third Five-Year Plan (1965 – 1970) was virtually abandoned by the Yahya Khan’s government. In 1970, the Fourth Five-Year Plan (1970 – 1975) was made and it was also a big failure because of the worst political conditions and instable government policies. In 1972, the newly elected government of Z. A. Bhutto decided to run the economy through annual planning, rather than through a comprehensive five-year plan. During the same year, the Planning Commission was placed directly under the control of Ministry of Finance as a Division. During the period from 1972 to 1977, the Planning Commission, with very less powers, have very few favourable economic decisions. In other words, the Planning Commission was powerless and ineffective.
Period of revival of planning commission (1978 – 1988): After taking charge of the government, the Zia-ul-Haq’s regime emphasised on the needs of five-year plans. In early 1980s, the Zia government took steps to revive the Planning Commission as an effective and authoritative economic decision-making body.
During this period, two Five-Year Plans were formulated, i.e., Fifth and Sixth. In 1978, the Fifth Five-Year Plan to cover the period of 1978 – 1983 was published. But the Government failed to pursue the plan mainly because of uncertain political as well as economic conditions at that time. The Sixth Five-Year Plan was formulated in 1983 to cover the period 1983 – 1988. At that time, Dr. Mahbub-ul-Haq was the Finance Minister. He formulated the plan and because of his great efforts, this plan was a success. During his tenure, the Planning Commission has played a vital role in effectively formulating and implementing the economic planning. Not only the Sixth Five-Year Plan, but also the annual plans were formulated by the Planning Commission.
The period of (1988 – 1999): The period of 1988 to 1999 the period of political and economic instability. During this period, four elected governments were dismissed by the President on the charges of corruption. The role of Planning Commission was over-shadowed by political decisions. Its role was just limited to the preparation and submission of reports. It has nothing to do with the implementation of planning.
The Seventh Five-Year Plan was formulated during the Zia-ul-Haq period. But after his death, in 1988, the newly elected government of Benazir Bhutto took over the charge and so the Seventh Five-Year Plan has never been implemented. The Ninth Five-Year Plan was formulated by Nawaz Sharif government to cover the period 1998-2003. Following were the priorities of Ninth Five-Year Plan:
(a) Maintenance of fiscal deficit at a sustainable level,
(b) Maintenance of GDP growth at 7% p.a.
(c) Investment in physical infrastructure,
(d) Export-led industrialisation,
(e) End of agriculture-water dichotomy,
(f) Developing a civil society, etc.
Period of restructuring of economy (1999 – 2008): In October 1999, the Nawaz Sharif government was dismissed with the military coup by Chief of Army Staff, General Pervez Musharraf. The entire country was in a state of jeopardy. Before that, the businessmen have already lost their confidence due to economic instability with the Nuclear Test, freezing of foreign currency accounts, devaluation of rupee, and the Kargil War in 1998. Therefore, the targets of Ninth Five-Year Plan were never been well implemented.
The era of General Pervez Musharraf is known as the era of economic and political restructuring. During this era, the economy grew at an average growth rate of 5.1% (started from 2.6% in 2000-01 to 8.4% in 2004-05). President General Pervez Musharraf invited Mr. Shaukat Aziz to take charge of the Ministry of Finance in November 1999. He very quickly assembled a team of highly trained economists and extremely talented civil servants. The present economic team under the stewardship of Shaukat Aziz has not only salvaged a near bankrupt economy but has put it on a path of sustained high growth with financial stability and considerably improved external balance of payments. Much has been done in the past five years. The country has witnessed a decline in poverty to 24% in 2008 and other improvements in social indicators. The up-gradation of Pakistan in the Human Development Index of the UNDP of 2005 was a vindication of the policies pursued by the government during this period.
The plan had also anticipated the share of manufacturing sector in GDP to increase from 18.3% in 2004-05 to 21.9% in 2009-10. It was also anticipated that the production base would be expanded through the development of engineering goods, electronics, chemicals and other hi-tech industries. The Government was also anticipating fastest growth of IT/Telecom sector. Pakistan had seen an explosive growth in IT/Telecom sector in the last few years. The number of mobile phones achieved their 2007 targets two years earlier, and the recent deregulation of LDI, WLL and other sections had served to provide faster, better and wider coverage, all at lower cost. Nearly 60,000 IT professionals were operating in the country with an annual turnover of Rs. 12 billion of which 15% was exported. The plan had also estimated that major exports (gross) would increase from Rs. 14.05 billion in 2004-05 to Rs. 28.12 billion in 2009-10.
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Planning Experience of Pakistan
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