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Economic Performance of Paksiatn From 1947 to 2004

Economic Performance of Paksiatn From 1947 to 2004

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Published by farhanaslam

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Published by: farhanaslam on Jul 16, 2009
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Page 1 of 27
In August 1947, Pakistan was faced with a number of problems, some immediate but others long term. The mostimportant of these concerns was the role played by Islam. Was Pakistan to be a secular state serving as a homelandfor Muslims of the subcontinent, or was it to be an Islamic state governed by the sharia, in which non-Muslimswould be second-class citizens? The second question concerned the distribution of power between the center andthe provincial governments, a question that eventually led to the dissolution of the country with the painful loss of the East Wing (East Bengal, later East Pakistan, now Bangladesh) in 1971, an issue that remained unresolved in themid-1990s.Due to the formation of Pakistan West Pakistan lost Hindus and Sikhs. These communities had managed much of the commercial activity of West Pakistan. The Sikhs were especially prominent in agricultural colonies. They werereplaced largely by Muslims from India, mostly Urdu speakers from the United Provinces. Although some people,especially Muslims from eastern Punjab (in India), settled in western Punjab (in Pakistan), many headed for Karachi and other cities in Sindh, where they took the jobs vacated by departing Hindus. In 1951 close to half of the population of Pakistan's major cities were immigrants (
--refugees from India and their descendants).Partition and its accompanying confusion also brought severe economic challenges to the two newly created andantagonistic countries. The partition plan ignored the principles of complementarity. West Pakistan, for example,traditionally produced more wheat than it consumed and had supplied the deficit areas in India. Cotton grown inWest Pakistan was used in mills in Bombay and other West Indian cities. Commodities such as coal and sugar werein short supply in Pakistan--they had traditionally come from areas now part of India. Furthermore, Pakistan facedlogistic problems for its commercial transportation because of the four major ports in British India, it was awardedonly Karachi. But the problem that proved most intractable was defining relations between the two wings of Pakistan, which had had little economic exchange before partition.The two dominions decided to allow free movement of goods, persons, and capital for one year afteindependence, but this agreement broke down. In November 1947, Pakistan levied export duties on jute; Indiaretaliated with export duties of its own. The trade war reached a crisis in September 1949 when Britain devaluedthe pound, to which both the Pakistani rupee and the Indian rupee were pegged. India followed Britain's lead, butPakistan did not, so India severed trade relations with Pakistan. The outbreak of the Korean War (1950-53) and theconsequent price rises in jute, leather, cotton, and wool as a result of wartime needs, saved the economy of Pakistan. New trading relationships were formed, and the construction of cotton and jute mills in Pakistan wasquickly undertaken. Although India and Pakistan resumed trade in 1951, both the volume and the value of tradesteadily declined; the two countries ignored bilateral trade for the most part and developed the new internationaltrade links they had made.The assets of British India were divided in the ratio of seventeen for India to five for Pakistan by decision of theViceroy's Council in June 1947. Division was difficult to implement, however, and Pakistan complained of nodeliveries. A financial agreement was reached in December 1948, but the actual settlement of financial and other disputes continued until 1960.Prepared by: FARHAN ASLAM , MBA(R) University Of Agriculture Faisalabad(UAF)
Page 2 of 27
History of planning of Pakistan can be divided into following phases1.The period of economic coordination (1947-1953)2.The period of planning board (1953-1958)3.The period of powerful planning commission (1958-1968)4.The period of decline of planning commission (168-1980)5.Attempt at revival of planning commission
First of all economic planning development was established in1948. in order to (a) act as clearing house and(b)toestablish economic coordination, Colombo plan was established in 1959 and the main emphasis was given toagriculture. But this plans was not implemented well in time. No aggregates targets were mentioned for theeconomy as a whole. There were no attempts to relate particular projects to achieve total targets. The planningmachinery was hardly equipped to do its job effectively.
The creation of planning board (later named as planning commission) in 1953 marked the beginning of second phase of economic planning, which lasted till 1958. The planning board faced the serious difficultiesa)Shortage of trained staf b)Non-availability of accurate and reliable data.c)Its uncertain condition in govtd)It was regarded as a rival of ministry of finance and state bank of Pakistane)Political instability in the economyf)The annual plan was never followed at that timeg)Various advices of the planning board were in most cases disregarded by the implementing agenciesh)Priorities were in ignoredi)The budget decisions were also distorted
The third phase in the evaluation of the planning process begin in October 1958.the reliance of private sector as its primary objective .the new govt gave proper attention to achieve the following targetsa)Rapid industrialization in the country b)Removal of food shortagec)Removal of political instabilityd)Over coming the problem of deficit of BOPThe second five-year plan (1960-1965) was made in this phase and this plan was so successful that Pakistan ledan example for other nations of world. But unfortunately Pakistan had to fight war against India in 1965. Thanthere was hue and cry against Ayub govt which was toppled out.Prepared by: FARHAN ASLAM , MBA(R) University Of Agriculture Faisalabad(UAF)
Page 3 of 27
the decline of planning commission is an important decision making body coincided with the fall of Ayub govt.after march , 1969 , the third five plan was virtually abandoned. The govt of PPP, which followed the collapseof the military govt, continued to be extremely suspicious of the planning commission and, in the early years, itwas almost totally ignored. One reason for this was that the govt decided to run the economy through annually plans, rather than through a comprehensive five-year plan, mainly because of the considerable politicaluncertainties in the country as well as economic uncertainties. Zia govt emphasized the need for a five-year  plan. Consequently, the fifth five-year plan to cover the period (1978-1983) was published but the govt never seriously perused the plan. Little reference was, therefore, made to he fifth five-year plan in the annual plansand the over all review of the economic performance.
in early 1980’s the Zia govt took steps to revive the planning commission as an effective and authoritativeeconomic decision making body. The sixth five year plan was formulated in 1983 fot the period (1983-1988)and was successfully implemented. In this period the planning commission played its role effectively. In 1988 ,the document of seventh five year plan and second perspective plan for the periods 1988-1993 and 1988-2003was prepared and published bur in 1988 , PPP govt gained power and the seventh five year plan was never implemented . 
Early Foreign Policy
Pakistan's early foreign policy espoused nonalignment. Despite disputes with India, the policies of the twocountries were similar: membership in the Commonwealth of Nations; no commitment to either the United Statesor the Soviet Union; and a role in the UN.Pakistan's foreign policy stance shifted significantly in 1953 when it accepted the United States offer of militaryand economic assistance in return for membership in an alliance system designed to contain internationalcommunism. When the administration of Dwight D. Eisenhower sought a series of alliances in the "NorthernTier"--Pakistan, Iran, and Turkey--and in East Asia, Pakistan became a candidate for membership in each. In 1954Pakistan signed a Mutual Defense Agreement with the United States and became a member of the Southeast AsiaTreaty Organization (SEATO). The following year, Pakistan joined Iran, Iraq, and Turkey in the Baghdad Pact,later converted into the Central Treaty Organization (CENTO) after Iraq's withdrawal in 1959. Pakistan also leased bases to the United States for intelligence-gathering and communications facilities. Pakistan saw these agreementsnot as bulwarks against Soviet or Chinese aggression, but as a means to bolster itself against India.
Pakistan attained nationhood under difficult circumstances .At the partition of British India in 1947 resulting in thecreation of the independent nations of India and Pakistan, Pakistan was an agrarian economy in which a smallnumber of powerful landowners with large holdings dominated the countryside. The majority of the populationconsisted of tenant farmers who cultivated small plots for a meager existence. Scant rainfall in West Pakistan(present-day Pakistan) forced farmers to rely on the extensive irrigation system developed by the British. Theheadwaters of the Indus River and its main tributaries, however, were under Indian control. Disputes arose betweenthe two nations and were not settled until the Indus Waters Treaty of 1960 was signed.Prepared by: FARHAN ASLAM , MBA(R) University Of Agriculture Faisalabad(UAF)

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