Pakistan Five Year Development PlansSince 1955 to 2010

An Overview

Introduction Almost all five-year plans prepared during political or military regimes were

shelved in the country’s history after regime change and none of them succeeded in getting the desired results.

Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries.

The economy has suffered in the past from decades of internal political disputes, a fast growing population and ongoing confrontation with neighboring India.

Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period.

Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade.

Two wars with India, in Second Kashmir War 1965 and

Bangladesh Liberation War 1971 and separation of Bangladesh adversely affected economic growth. In particular, the latter war brought the economy close to recession, although economic output rebounded sharply until the nationalizations of the mid-1970s.

Pakistan is aggressively cutting tariffs and assisting exports by improving ports, roads, electricity supplies and irrigation projects. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003, a necessary step towards reversing the broad underdevelopment of its social sector.

Introduction

There are total 8 Development plans have been presented in the history of Pakistan which are listed below:

1- First Five Year Plan (1955-60)-An Erratic Beginning to planned development.

2. Second Five Year Plan (1960-65)- An Experiment In ‘Functional Inequality’

3. Third Five year Plan (1965-70)- A Prisoner of Extraordinary Events

4. Fourth Five year Plan (1970-75)- A non-starter from the beginning

5. Fifth Five Year Plan (1978-83)-A Return of the Medium Term Planning

6. Sixth Five year Plan (1983-88)- Development of the people, By the people, For the people

7. Seventh Five Year Plan (1988-93)-Precursor of a long Term vision

8. Eighth Five year Plan (1993-98)- An exercise in better macro-economic Management.

First Five Year Plan (1955-1960) Highlights

Targets

Emphasis mainly on achieving high national income.

The First Plan was implemented within certain obvious handicaps and limitations and its release was delayed by two Years.

In practice, this plan was not implemented, however, mainly because political instability led to a neglect of economic policy, but government, Deputy Chairman Planning Board (Commission) Said Hassan announces the plan in 1957.

The development expenditures were regarded as the foundation for rapid progress in the future and plans explicitly affirmed that some sectors of the economy must be expanded much more rapidly than others in order to secure maximum gains.

The size of the First Plan initially was Rs. 11.5 billion which was revised and

decreased to 10.8 billion out of which Rs. 750 million for the public sector and Rs. 3.3 billion for the private sector was allocated. Of the total plan amount of Rs. 6.6 billion from the internal sources and R.s 4.2 billion was to be achieve from the foreign sources in the form of loans and aid.

First Five Year Plan (1955-1960) Highlights

Achievements/Failure

The GNP recoded a growth of 13% instead of 15% as targeted in the Plan.

Industry together with fuels and minerals received another 31% of the total resources which exceeds the target of 28% provided in the Plan.

Second Five Year Plan (1960-1965) HighlightsTargets

The 2nd five year plan was approved by the Economic Council of the Government of Pakistan on June 21, 1960.

The 2nd plan aims at increasing national income by 20 %. In view of the anticipated increase in population of about 9%, this will mean an increase of about 10% in per capita income. The plan assumes the rate of growth of population as 1.6% at the end of the 1st plan and 1.8% at the end of the 2nd plan.

Three dominant strains run through the plan.1. The stubborn problem of agriculture production- low productivity and

inability of the country to feed itself. Foreign exchange expenditure on food imports has averaged Rs. 470 million a year during the 1st plan period. An over all increase of 14 per cent in agricultural output is projected.

2. No industries are reserved for the public sector; public investments is provided only in those activities that are ordinarily developed with private capital. Private investments will not be forthcoming. Both indigenous and foreign capital will receive positive encouragement.

Second Five Year Plan (1960-1965) Highlights

3. Education at all levels is to be expanded and advanced as fast as the required institution and personnel san be provided.

The revised total size of the second Plan was fixed at Rs. 2.3 billion in April, 1961.

As regards sector distribution, the size of the private sector expenditure was fixed at Rs. 12.4 billion, while public sector was allocated Rs. 6.8 billion and the newly introduced semi-public sector consisting of autonomous corporations was allocated the remaining sum of Rs. 3.8 billion.

Achievements/Failure

During 1965-66 there is increase in the production of tea, salt, cotton cloth and yarn, board, caustic soda, cement and cycle rubber tires and tubes. The increase in the quantum index of manufacturing industries from 100 in 1959-60 to 201.7 in 1964-65. Growth in 68-69 was 7.4% that was previously 7.8%. And in 49-50 the share go agriculture was standing 60% which came down to 46% in 68-69.

The strategy paid off very well as the actual growth rate surpassed the

projected growth rate. The GNP registered a growth of 30% over the plan period compared to 24% proposed in the plan and per capita income grew 15% instead of 12% projected in the plan. The large scale industrial production exhibited nearly 161% increases in production compared to only 60% increase proposed in the Plan. The share of the manufacturing industry in GNP as a whole rose from 9.3% in 1960 to 11.5% in 1965.

Second Five Year Plan (1960-1965) Highlights

Third Five Year Plan (1965-1970) Highlights

Targets

The Third Plan was approved by National Economic Council in May 1965 and it was revised in 1966 due to following two reasons:

a. Pakistan had to fight battle with India.b. The seasonal conditions became worst for agriculture sector which

affected production.

An amount of Rs.52000 million was allocated for the plan out of which Rs.30,000 million for the public sector and Rs.20,000 million for the private sector were allocated. 66 percent of the total plan size was to invest from the local sources and remaining 32 percent through the external sources.

In this Plan there was a great visible investment shift from consumer goods to capital goods industry

Third Five Year Plan (1965-1970) Highlights

Achievements/Failure

Performance in the industrial sector was also far from satisfactory particularly in the large-scale industrial sector. The large-scale industrial sector exhibited a growth rate of 10% as against 13% targeted in the Plan. The industrial sector as a whole expanded at an annual growth rate of 7.8% instead of 10% targeted in the Plan.

The small-scale industry just performed well.

During 1967-68, substantial gains were also recorded by cotton yarn and cloth fertilizes and chemicals, writing and printing paper etc. The growth rate of large scale industrial decline from 13.9% in 1969-70 to 2.8 in 1970-71 and showed a negative growth rate of 5.6 percent in 1971-72.the negative growth in this year was due to the war with India and separation from the Bangladesh where exist the big industry of jute.

Fourth Five year Plan (1970-75) Highlights Targets

When the government of Zulfiqar 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.

The revised total size of the second Plan was fixed at Rs. 75 billion, an increase in 44% over the Third Plan size. The increase 6.5% annual growth rate as compared to 5.5% targeted in the Plan.

The share of the industrial sector that had 10% growth rate in the last Plan was drastically slashed from 26% in the Third Plan to 10.2% in the Fourth.

Fourth Five year Plan (1970-75) Highlights Achievements/Failure

Industrial sector had all along been leading sector in terms of sustain growth. Value added fell by 6.8% during 1971-72 compared to depress based of 1970-71 when the growth was only 1.2%.Steady growth in 1973-74. Different factor, like war with India and tight credit polices and East Pakistan crisis growth decline 6.8% in 1971-72.

Steady improvement or recovery in 1972-73. Manufacturing sector slow-

down during 1974-75 because low level of investment and shortage of raw material. Textile has heavy weight in total industrial production. 1974-75 there was also difficult when value added project to grow by 10% in the LSM sector recorded negative growth of 1.7%. in 1976-77 During this time manufacturing sector continue to remain under pressure due to various national and international factors.

The volume of national product had been increased and the symptoms of construction were being reflected from the basic structure of the economy.

It was imperative that the development efforts were concentrated on the higher income group and the majority was deliberately neglected. The social needs like housing, health, education etc were not paid due attention in planning.

Targets

The economic growth in Pakistan became stagnate due to the application of Annual Planning in Pakistan by Peoples Party Government during the period of 1970-78 therefore, the Marshall Law Government drafted the Fifth Five Year Plan in 1977 and it was implemented in very difficult and unfavorable condition because:

Commodity Production sector had turned into completely a stagnant sector. Imports increased fast. Foreign exchange reserves were decreasing very fast.

The total size of the Plan was targeted at Rs. 210 billion out of which Rs. 148.2 billion were proposed to be spent in the public sector and Rs. 62 billion were proposed for the private sector.

No major new industrial projects was planned for the public sector however it was emphasized the completion of the under construction Pakistan steel mills and fertilizers and cement factories.

Private sector was expected to pay a vital role in the development of few industries which is good for the well-being of the country.

Fifth Five Year Plan (1978-83) Highlights

Fifth Five Year Plan (1978-83) Highlights

Achievements/Failure

As a whole, the growth rate projected for the industrial sector was almost fulfilled (growth rate was 9.7% as compared to 10% targeted in the Plan).

In July 1978, the interest rate on loans for fixed investment in industry and agriculture was reduced from 12.5% to 11%.

The Zia government accorded more importance to planning. Fifth plan was an attempt to stabilize the economy and improve the standard of living of the poorest segment of the population.

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) HighlightsTargets

The approval was given to this plan by the National Economic Council at the proper time, it was implemented also at the right time.

Represented a significant shift toward the private sector.

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 total size of the Plan was fixed at Rs. 495 billion which was more than twice the size of the fifth Plan. Out of which Rs. 295 billion and Rs. 200 billion were allocated to public and private sector respectively.

The share of the private investment in industrial development was to go up from 53.6% in 1982/83 to 91% in 1987/88 and in total investment from 32.9% to 44% during the same period.

The share of the public sector industries in public sector development program was therefore expected to decline from 15.6% to 5.1% as compared to forth Plan.

Sixth Five year Plan (1983-88) Highlights

Achievements/Failure

The economy grew at the targeted average of 6.5 % during the plan period and would have exceeded the target if it had not been for severe droughts in 1986 and 1987.

The industrial sector as a whole exhibited a growth rate of 7.7% per annum against the Plan targeted of 9.3% per annum.

In 1984- 1985 manufacturing growth was about 8.6% after a slow down last fiscal year which was 8.1%.During 1985-86, GDP for manufacturing output has been 19.9%. During this year the manufacturing is expected to grow by 8.2% as compared to 8.6% of previous year. The manufacturing output has grown by 7.4% in 1986-87 as compared to 7.8% in 1985-86. This year 1987-88 show that the output has grown by 7.6%.The rate of growth in large-scale industries during 1987-88 was 7.4%.

Seventh Five Year Plan (1988-93) HighlightsTargets

The Seventh Five Year Plan was prepared by semi-political government of Muhammad Khan Junaejo which culminated in to the political government of Mrs. Benazir Bhutto, therefore, the Seventh Five Year Plan was the First Medium Term Plan after the Third Five Year Plan implemented in a political environment.

Provided for total public-sector spending of Rs350 billion. Of this total, 36.5 % was designated for energy, 18 % for transportation and communications, 9 % for water, 8 % for physical infrastructure and housing, 7 % for education, 5 % for industry and minerals, 4 % for health, and 11 % for other sectors.

Total planned private investment was Rs 292 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.

Achievements/Failure

The plan gave much greater emphasis than before to private investment in all sectors of the economy.

The share of industry decreased from 5.1% in the sixth Plan to 2.0% in the seventh sector Plan.

Eighth Five year Plan (1993-98) HighlightsTargets

The Planning Commission of Pakistan appointed a committee to make strategy for the planning development during the period of 1993-98 which recommended the following for the achievement of social welfare.

1. The national income, keeping the 20 years Perspective Plan in view, should increased by double of present by the end of 2000.

2. Increase in the GNP by 8.1 %.3. Reduction in the population growth to the extent of 2.6 % till 2000.4. Maximum utilization of the available investment resources through

technological changes.

Increase in the share of industry to the GNP more than share of agriculture.

Correlating industrial and agriculture development.

Expanding tax structure to reduce budget deficit gradually.

Implementation of agriculture taxation to make tax structure wide, efficient & justice.

Eighth Five year Plan (1993-98) Highlights

The total size of the Plan was fixed at Rs. 1700.5 billion. The size of public sector investment is estimated at Rs. 752.1 billion while private expenditure is placed at Rs. 984.4 billion. Overall GDP growth rate increases from 4% in 1993/94 to 7% in 1997/98.

The target set for improvement of industrial sector was to achieve 9.4%

Achievements/Failure

During 1993-94 policies of privatization, deregulation and market friendly environment were reinforced.

A new concept of public-private partnership was also introduced to enable private sector to play a key role in social sector growth.

Manufacturing during 1995-1996 grew 4.8%. That was previously 2.9% in 1994-1995.

The large scale manufacturing grew by 3.13% during 95-96. . In 1996-97 small scale manufacturing maintained its growth. But large scale declining by 1.43% in value added. And over all growth of manufacturing sector was 1.78% which was previously 4.4%.

MTDF (2005-2010)

The Medium Term Development Framework (2005-10) relied on upgrading physical infrastructure for accelerating output growth.

Specific spheres were identified where support to private sector could be extended and finally social sector policies were envisaged for timely achievement of millennium development goals.

It further states that never has there been a more pressing need in Pakistan’s history to search for a new model; however, at the outset it should be said that if there has to be a common vision on growth, it should by all means take account of the damages caused by security and governance issues currently facing the country.

Conclusion

Except 2nd and 6th 5 year development program all were considered as a failure in terms of achievements.

However 2nd and 6th 5 year plans had achieved somewhat as per set targets and economic development were also observed.

There is a need to look at the economic strategies society where foremost objective is to provide opportunities for learning, increase potential of communities by linking them in networks and ensure fair competition in trade and investment. Malaysia’s New Economic Model launched in 2010 aims towards a coherent ‘big push’ to boost transformation and growth through developing quality workforce, competitive domestic economy and transparent markets.

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