Five-Year Plans of Pakistan

The Five-Year Plans for the National Economy of Pakistan (otherwise publicly known as Five-Year Economic Plans for the National Economy), were the series of nation-wide centralized economic plans and targets as part of the economic development initiatives, in the Pakistan. The plan was conceived by the Ministry of Finance (MoF), and were studied and developed by the Economic Coordination Committee (ECC) based on the theory of Cost-of-production value, and also covered the areas of Trickle-down system. Supervision and fulfillment of this programme became the watchword of Pakistan's civil bureaucracy since early 1950s.

Inspired by the Five-Year Plans of Soviet Union, the programme was visioned and proposed by the Finance Minister Malick Ghoulam to Prime minister Liaquat Ali Khan who initially backed the programme, in 1948. The first five-year plans were approved by the prime minister Ali Khan in 1950 for the period of 1950-55; it was accepted in a view to to serve in the rapid and intensified industrialization, expansion of banking and financial services, with a major focus on heavy industry. Although not five-year plans did not take up the full period of time assigned to them, some of the plans were failed and abandoned whilst some completed successfully. Altogether, there were eight five-year plans (starting 1950 till 1999) and were replaced with more effective programme: "Medium Term Development Framework (MTDF)" programme of Prime minister Shaukat Aziz (office: 2004-2007).

History

Main articles: Pakistan–Soviet Union relations, Partition of India, Indo-Pakistani War of 1947, Pakistan-United States relations, Pakistan-United Kingdom relations, and History of Pakistan

First Five-Year Plans (1948-1955; 1955-60)

Main article: Government of Liaquat Ali Khan

At the time of partition of British India by the United Kingdom, Pakistan was an under-developed country, relatively standing with Asian countries with distressful economic situations. The country's systems of production, transportation, trade and consumption yielded a very low standard of living of the people, with little opportunity for education, or economic advancement in the country. The industries and financial services were non-existed in the country and agriculture development was among the lowest in the world. The vast majority of the population was still habitated in villages and were untouched with the scientific and technological development in past two centuries. The partition had the major effect on country's existing economic infrastructure that disrupted the wholesale transfers of population, trade and business, channels of communication, industrial and commercial organization, and the pressing need to establish new provisional governments.

The economic development planning began in 1948 when Prime minister Liaquat Ali Khan presented the first Five-Year plans at the parliament of Pakistan on 8 July 1948. The first plan was conceived by the Ministry of Finance (MoF), and were studied and developed by the Economic Coordination Committee (ECC) based on the theory of Cost-of-production value, and also covered the areas of Trickle-down system. As part of this programme, the State Bank of Pakistan was established to give a kick start to banking services in the country. Quickly, the major economical infrastructure was expanded and the gap was filled by hiring as the government revenue began to rise. The currency war with India, following the devaluation of Pound Sterling— the currency of United Kingdom, led the deadlock of India-Pakistan trade which was caused by Indian refusal to recognition of country's currency, in 1949.

In the middle of 1950, the relations were restored when India and Pakistan began export trade once again, and in February 1951, India formally accepted to give recognition of Pakistan's currency after entering in new trade agreement, but the older trade relations were not restored. The Korean War led the boom of country's economy but the growth declined after the assassination of Liaqat Ali Khan in October 1951. More ever, the efforts were failed to continuing the programme which was initially unsystematic, partially due to inadequate staff officers and lack of ambitions. In 1953, the programme collapses when the shortages of clothes, medcines and other essential consumer goods were arise; there was also a serious food shortage as aresult of a sharp falling of the production of foodgrains in 1951-52 and 1952-53 due to monsoon floods. Prime minister Khawaja Nazimuddin was forced to end the programme after sending his request to provide economical assistance from the United States and other friendly counties.

Reassessment and collectivization

The new studies were again conducted in 1955 after the collapse of first programme. According to the census, over 90% of the population was living in rural areas whilst only 10% was living in urban areas. In East-Pakistan, the urban proportion was low as 4.0% as compared to 18.1% in West-Pakistan, although the urbanization had been increased at an accelerated level. In 1955, Prime minister Muhammad Ali Bogra again revived the plan and published in 1956. After reassessing, the programme was again launched with focusing (as highest priority) on agricultural development, and the strong emphasis placed on rapidly increasing the developmental effort in East-Pakistan and in the less-developed areas of West Pakistan. Prime minister Huseyn Suhrawardy of Awami League gave much priority to food development, agriculture and social development in both states. The concept of Collective farming was introduced by Suhrawardy as part of his agricultural policies and around 27.0Mn rupees were spent in order to organized the agricultural in the country. However, this programme was built entirely in the absence of much essential information and basic statistics.

In practice, this plan was not implemented because of its enormous size that lacked the physical and personnel assistance. The shortage of technical knowledge also devastated the programme. The Awami League's government also had shortage of foreign exchange to execute the plan, and was unable to find outside assistance to fulfill its commitment to the first five-year plans.

Second Five-Year Plans (1960-1965)

The Second Five-Year Plan (1960-65) surpassed its major goals when all sectors showed substantial growth. The plan encouraged private entrepreneurs to participate in those activities in which a great deal of profit could be made, while the government acted in those sectors of the economy where private business was reluctant to operate. This mix of private enterprise and social responsibility was hailed as a model that other developing countries could follow. Pakistan's success, however, partially depended on generous infusions of foreign aid, particularly from the United States. After the 1965 Indo-Pakistani War over Kashmir, the level of foreign assistance declined. More resources than had been intended also were diverted to defence. As a result, the Third Five-Year Plan (1965-70), designed along the lines of its immediate predecessor, produced only modest growth.

When the government of Zulfikar Ali Bhutto came to power in 1971, planning was virtually bypassed. The Fourth Five-Year Plan (1970-75) was abandoned as East Pakistan became independent Bangladesh. Under Bhutto, only annual plans were prepared, and they were largely ignored.

Fifth Five-Year Plans (1978-1983)

The Zia government accorded more importance to planning. The Fifth Five-Year Plan (1978-83) was an attempt to stabilize the economy and improve the standard of living of the poorest segment of the population. Increased defense expenditures and a flood of refugees to Pakistan after the Soviet invasion of Afghanistan in December 1979, as well as the sharp increase in international oil prices in 1979-80, drew resources away from planned investments (see Pakistan Becomes a Frontline State , ch. 5). Nevertheless, some of the plan's goals were attained. Many of the controls on industry were liberalized or abolished, the balance of payments deficit was kept under control, and Pakistan became self-sufficient in all basic foodstuffs with the exception of edible oils. Yet the plan failed to stimulate substantial private industrial investment and to raise significantly the expenditure on rural infrastructure development.

Sixth Five-Year Plan (1983-88)

The sixth five year plans represented a significant shift toward the private sector. It was designed to tackle some of the major problems of the economy: low investment and savings ratios; low agricultural productivity; heavy reliance on imported energy; and low spending on health and education. The economy grew at the targeted average of 6.5 percent during the plan period and would have exceeded the target if it had not been for severe droughts in 1986 and 1987.

Seventh Five-Year Plan (1988-93)

The seventh plans provided for total public-sector spending of Rs350 billion. Of this total, 36.5 percent was designated for energy, 18 percent for transportation and communications, 9 percent for water, 8 percent for physical infrastructure and housing, 7 percent for education, 5 percent for industry and minerals, 4 percent for health, and 11 percent for other sectors. The plan gave much greater emphasis than before to private investment in all sectors of the economy. Total planned private investment was Rs292 billion, and the private-to- public ratio of investment was expected to rise from 42:58 in FY 1988 to 48:52 in FY 1993. It was also intended that public-sector corporations finance most of their own investment programs through profits and borrowing.

In August 1991, the government established a working group on private investment for the Eighth Five-Year Plan (1993-98).

Eight Five Year Plans (1993-98)

This group, which included leading industrialists, presidents of chambers of commerce, and senior civil servants, submitted its report in late 1992. However, in early 1994, the eighth plan had not yet been announced, mainly because the successive changes of government in 1993 forced ministers to focus on short-term issues. Instead, economic policy for FY 1994 was being guided by an annual plan.

From June 2004, the Planning Commission gave a new name to the Five Year Plan - Medium Term Development Framework (MTDF). Thirty two Working Groups then produced the MTDF 2005-2010.

Source

This image is available from the United States Library of Congress Prints and Photographs Division under the digital ID {{{id}}}
This tag does not indicate the copyright status of the attached work. A normal copyright tag is still required. See Wikipedia:Copyrights for more information.

• "Development Planning" (April 1994) A Country Study: Pakistan. Library of Congress.

External links

• Five year plans Planning Commission of Pakistan.