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Economics assignment

Economics assignment

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Published by: Syeda Umme Rubab on Jan 22, 2013
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SITUATION PF PAKISTAN: The Situation in Pakistan is that of increasing economic and political instability and the destabilized government

is losing control. The biggest threat confronting Pakistan is the growing hegemony of the Taliban and allies of Al Qaeda. The situation in Pakistan is really dangerous as the Taliban could take over the rule of Pakistan, and, hence, possess nuclear weapons which can be a threat the security of the entire world. Regarding what you need to know current situation of Pakistan. Political situation of Pakistan seems to be in trouble because of foreign bombings in Northern areas, Security situation is still worse with fear of bombings, Social problems include increasing street crimes, abuses against women, child labor, increasing inflation with people bearing still low income. Well the election had decided Pakistan peoples party with heavy mandate and Muslim league nawaz got the 2nd position, the Pakistan peoples party in collision with Muslim league nawaz made the government. The government is not trying to solve issues but creating problems for the president musharaf and forcing him to resign for the job. Fighting for the restoration of judges and nowadays submitted a bill for the restoration of judges in parliament house, but they do not have 2/3rd majority in senate... So these issues are not going to solve, but his will create a chaos in Pakistan politics. In the span of the last three years, since 2004, there has been a flurry of foreign funded projects, one after the other in various provinces of Pakistan. On a statistical front, almost dozen projects are launched in Sindh while Punjab has beheld the inception of more than 18 foreign-funded projects. As for Balochistan, almost 15-16 mega projects have been launched. These projects involve both the federal government as well as the respective provincial governments. It is a common pattern among almost all projects that are funded by foreign sources, that they are still in their most initial stages of implementation. The pace is so slow that that the planners in Karachi conjecture a trepidation of a massive cost over runs in attribution to the extremely slow generation of funds. Moreover the menace of inflation is also lurking over, which the planners consider another vital threat to the future course of profitability of all these projects. ECONOMIC INDICATORS: 16, Apr 2011, CEST. Welcome to the Pakistan economic statistics pages provided by the beta version of EconomyWatch.com's Econ Stats database. Economic Indicators For: Pakistan National or Regional Currency: Pakistani Rupee, PKR

Year of data: 2010 Number of Indicators Listed: 28 Full Dataset: From Year 1980 to 2015 Date of Last Update: 28 February 2011 Population: 174,578,558 (July 2009 est.) Area: total: 796,095 sq km Natural Resources: land, extensive natural gas reserves, limited petroleum, poor quality coal, iron ore, copper, salt, limestone Capital: name: Islamabad Data Sources: IMF, World Bank, UN, OECD, CIA World Factbook, Internet World Statistics, The Heritage Foundation Pakistan, an impoverished and underdeveloped country, has suffered from ten yearss of internal political conflicts, depressed levels of Foreign Direct Investment (FDI), and declining exports of manufactures. Faced with untenable budgetary deficits, high inflation rates, and hemorrhaging foreign currency exchange national reserves, the state agreed to an international Monetary Fund Standby Arrangement in November 2008. Between 2004-07, Gross Domestic Product (GDP) growth in the 6-8 per cent range was spurred by gains in the industrial and service sectors, despite severe electric power shortfalls. Poverty levels decreased by 10 per cent since 2001, and Islamabad steadily raised development spending in recent years. In 2008 the financial deficit - a result of chronically depressed taxation collection and increased spending - exceeded Islamabad's target of 4 per cent of Gross Domestic Product (GDP). Inflation rates remains the top concern among the public, jumping from 7.7 per cent in 2007 to 24.4 per cent in 2008, primarily because of rising world fuel and commodity prices or pricing. In addition, the Pakistani rupee has depreciated markedly as a result of political and economic instability.

Pakistan Economy
Pakistan is a South Asian country that was established in 1947. Its neighboring regions include India, Iran, Tajikistan, Afghanistan, and China. It is located along the Arabian Sea and has a coastline spanning 1,046-kilometre (650 mi). The mountain ranges of Karakoram and Pamir in the northern and western highlands of the country include K2 and Nanga Parbat which are counted among the highest peaks in the world. The major by-air gateways to Pakistan are Islamabad, Karachi and Lahore. It can also be reached by train from India and Iran. Pakistan’s main cities are Quetta, Gawadar, Peshawar, Sialkot, Multan and Faisalabad.

the country remained impoverished due to internal political disturbances and negligible foreign investment. Pakistan Economy: Statistics • GDP (purchasing power parity): • GDP . The economy grew between 2004-07 due to rise in GDP from 5 to 8%. However. However. the country’s poverty levels reduced by 10% from the year 2001 to 2007. This was largely due to development in industrial and services sector irrespective of severe electricity shortfalls. the year 2007 witnessed a lot of political and economic instability leading to depreciation of Pakistani rupee.Pakistan Economy: Profile Pakistan is a developing country and its economy is the world’s 27th largest economy based on its purchasing power. The growth of the economy was affected once again during the 2008 global economic recession. since independence. With rise in development spending by Islamabad.real growth rate: .

) Population: 168.5 billion (2009 est.2% (2009 est. Punjab and Karachi states constitute the major share in the economic growth of the country.) $2. Pakistan’s economy has grown tremendously since its independence in 1947.500 (2010 estimate) The Pakistan economy faces several long term challenges such as curbing inflation and expanding investment in healthcare.500 (2007 est.) • Inflation rate (consumer prices): o 14.• • GDP (official exchange rate): $166. the growth became slower due to imprudent policies and internal .per capita (PPP): • o o o $2.) $2. Pakistan Economic Structure Characterized as semi-industrialized.600 (2009 est. education.976. and electricity production.) GDP .500 (2008 est.3% (2008 est. During the 1990s.) o 20.

tangerines. rice.8% to the country’s economy in 2009. Although Pakistan has a considerable livestock population. the IT industry is emerging as a flourishing service industry. The secondary sector experienced a growth of 5. rice. date palm. Primarily an agrarian economy. apricot.instability that has always been a part of the country. chemicals. rugs. insurance. With increase in the country’s software exports. the Pakistani government is actively engaged in privatization of banking. Pakistan Economic Structure: Primary Sector Pakistan’s primary sector plays a major role in the country’s economy. Dairy farming is also a large industry in Pakistan.3% of the country’s labor force (est.4% in 2007-08. cotton. Pakistan Economic Structure: Tertiary Sector The services sector of Pakistan mainly includes industries such as finance. Pakistan produces a range of agricultural products. Some other popular industries are construction materials. Wholesale and retail trade has 30% share in the GDP. communications and storage that account for 24% of the country’s GDP. sports goods and leather goods. telecommunications and utilities to produce more jobs in the country. Pakistan Economic Structure: Secondary Sector Pakistan’s manufacturing sector provides employment to 20. Around 43% of the country’s labor is engaged in the primary sector. it spends around $40 million a year on formula milk import. In fact. Some other major agricultural products of Pakistan include onion. 2005). Pakistan is the second largest producer of Chickpea and the third largest producer of mango in the world according to the 2005 Food and Agriculture Organization of the United Nations. Some major manufacturing industries include cotton textile and apparel manufacturing. transport. food processing and beverages. Around 51. Despite union unrest. sugarcane. which in turn contributes 20. leading to improvement in the country’s economic outlook. The first decade of the 21st century has experienced wide-ranging economic reforms particularly in manufacturing and financial services sector. However. oranges. mineral. carpets. paper products. Pakistan is the fifth largest milk producer in the world. . electricity shortage remains the biggest challenge in ensuring development of Pakistan’s secondary sector.4% of country’s exports include textile and apparel. Clementine and wheat.

electrical appliances.5 percentage points. wheat. This will help in dealing with high inflation rate in Pakistan. software. textiles. Economic review of Pakistan shows that there has been a growth rate of 7 percent per year for four successive years till 2007. Economic review at Pakistan shows that there has been improvement in currency reserves and foreign exchange reserves of Pakistan have developed. surgical instruments. Syed Yousaf Raza Gilani who is Prime Minister of Pakistan has initiated a number of procedures to address regional economic imbalances. In present situation of recession. ship building. Major items for exports include cotton fiber. Pakistani assembled Suzuki cars. vegetables.5 billion to $18 billion in financial year 20072008. marble and engineering goods to mention a few. . In present analysis. furniture. fertilizer. Though Pakistan is a poor country. rugs. Pakistan economic review projects that government encourages foreign investments in various fields of real estate. tiles. Economic indicators look positive in present situation. salt. cement and automotives. textiles. ice cream. yet its growth rate has been better than global average growth rate. Economic review of Pakistan has been focusing in recent times on how to deal with economic recession. onyx. Discount rate of central bank has been improved to 1. telecommunications. leather goods. dams and power generating plants to generate more job openings and increase development. steel. sports goods. however.Pakistan Economic Review Pakistan economic review projects that because of strong economic policies taken up by Pakistan government manufacturing and financial services sectors have flourished in fiscal 2008. clothing. seafood. processed food items. Export of goods is a major concern for Pakistan economy. rice. powdered milk. carpets. According to new plan. livestock meat. arms manufacturing. 541 billion rupees will be used for economic development of country. Reduction of poverty from Pakistan is a major issue for economic department of government. aerospace. software. energy. exports of Pakistan have increased from $7. chicken. plans have been made to develop roads. cement. marble. As per economic review in Pakistan several economic reforms that have been taken up in recent years helped in its economic growth. From 1999. defense equipment. growth in economy of Pakistan has been held back a little bit.

civilian aircraft.5% in the 70s. trucks.5% in the 80s. which could not provide Post-independence. Growth picked up momentum in the 21st Century. construction machinery. 6. However. 4. food items. computer parts. automobiles. growth decade after decade. Pakistan's economy was based on employment on a large agriculture and controlled by feudal elites. the economy was largely dependent on agriculture. 60 YEARS OF THE ECONOMY OF PAKISTAN: Economy Moving ahead slowly but steadily In the initial years of its formation.5% of the British colonial country soon got back government's financial reserves after partition to tackle on its feet to post with the dislocation of the population and to build a new decent economic country. medicines.Some important import items of Pakistan are petroleum and petroleum products.8% in the 60s. pharmaceutical products. computers. iron and steel. toys. and 4. Pakistan was completely ill-equipped to handle the situation. the was left with only 17. defense equipment.8% in the 90s. and today Pakistan is the third fastest growing economy in Asia after . electronics. Its average growth rate was 6. the country was bogged down by the massive displacement of people. The country scale. To make matters worse. industrial machinery.

Moving ahead. and services the lion’s share of 52. Domestic demand has largely driven this broad-based growth. industry 26. . the major speed bumps in the country’s growth path are likely to be high inflation.9%. the country’s Gross Domestic Product (GDP) was $128. and a significant tightening in the monetary policy.7%. which was around 17.8 billion.China and India. Agriculture contributed 20.2% in April 2008. As of 2006.5% of the GDP. The Pakistani economy’s average growth in the period 2003-2007 has been an impressive 7.5%.

cotton yarn.3% in 2007 effectively combat competition from India. expanding output 5%. Other major industries revolve around construction materials.On the agricultural front. and beverages. Quality issues. shipbuilding. sugar. The manufacturing sector contributes a quarter of the GDP. though the land under cultivation has been going up. and production inefficiencies led to the slowdown. The fertile basin along the river Indus has a lot of potential for robust cultivation.9% in Bangladesh and Vietnam. Agriculture is mainly rain-fed and output varies greatly year-on-year because of inadequate irrigation facilities. electric goods. However. cotton cloth. 2006. fertilizer. The Government of Pakistan is taking steps to encourage privatization . irrigation facilities improved. The economy’s reliance on the agricultural sector has been decreasing gradually. which the Government of Pakistan has doled out typically account for 60% of total subsidies of $367 million to this sector to exports. dropped to 3. Textile exports. the nation’s main exports are raw cotton. lack of diversification. and rice. production. food processing. The only hurdle is lack of irrigation facilities. paper products. the good news is that in 2007. The largest industries are apparel manufacturing and cotton textile Due to a decline in Pakistani textile exports. from an impressive 14.

as well as other services. transportation and communications. has been corrected through a series of government-backed reforms. five newspapers. The services sector. 12 energy sector units. one major telecommunication corporation. financial services and telecommunications. have been witnessing substantial growth and flow of Foreign Direct Investment (FDI). which has been the chief contributor to GDP in recent years. there has been a sea change in the financial system of the country. The problem of inadequate supervisory standards and governance. has turned into a more competitive and liberalized sector. is comprised of construction. The main subsectors. five hotels. one major power utility. trade. Further. This sector expanded 8% in 2007. Though slow. The telecommunications segment. which was largely a regulated and monopolized market until some time back. which plagued the system for a long time. the committee has privatized as many as 143 public sector enterprises. . and about 100 industrial units. one advertising agency.of public sector industries through the Privatization Committee it formed in 1990. including seven banks.

S. To make the stock exchanges more competitive and to ensure better corporate governance. financial services. The U. Largely due to consolidation in the banking sector. the government is mulling demutualization. oil and gas. the KSE-100 has surged. On the back of these reforms. The country’s stock markets underwent a drastic transformation after reforms to achieve macro-economic stability were introduced.The total FDI inflow into the country stood at $5. and cigarettes. . The country’s equity markets attracted inflows of around $1 billion in 2006. FDI has largely been flowing into sectors such as telecommunications. Others are Japan.1 billion in 2007. is the largest trading partner of Pakistan. Stock markets in the country mirror the progress of the economy as a whole. the UK. which means its imports exceed its exports. tobacco.6% year-on-year. Germany. The Karachi Stock Exchange (KSE)’s 100-share index is the national benchmark. Persian Gulf states. China. India. reflecting an increase of 45. Pakistan’s financial industry was the second largest FDI recipient amounting to $897 million between July 2006 and May 2007. The country has a trade deficit. and Iran. Political instability has largely kept investors out of the stock markets. Sectors like manufacturing attract hardly any FDI.

especially in the rural areas.8% of the population is still under the poverty line. as is expected after the recent Parliamentary elections. convey that social development in Pakistan is far behind countries with comparable per capita incomes. . The country’s population is 159 million and annual growth rate 2. Poverty remains a serious concern. However. Pakistan has many challenges on the social development front.1%.If the situation improves.9 years in 2005). the stock markets are bound to pick up steam. A literacy rate of just about 50% and a wide literacy gender gap. It is ranked 136 among 177 countries on the Human Development Index. and an improvement in health and education services. a decrease in infant immortality. Quite a bit to be done The progress on the economic front notwithstanding. As much as 47. there has been some significant progress in terms of an increase in life expectancy (59 years in 1990 to 64.

Exports remain sector dependent and. The Indian subcontinent was divided on a religious basis. KHALID BHATTI. a stable political environment as well steady economic growth should see Pakistan emerge a force to reckon with in Asia. and sanitation facilities should be given high priority. drinking water. there’s a drastic need for diversification. Further. however. Poverty alleviation.S. Therefore. After the recent parliamentary elections. Those years have been dominated by right-wing military rule. improved agricultural output could ease supplyside constraints and bring down food prices. a parasitic capitalist class and feudal landlords in rural areas. The new government should concentrate on bringing about all-round development in the country. the country is on the threshold of democracy and peace. Inflation and the possibility of a slowdown in exports. therefore. of the Socialist Movement Pakistan. Improvements on the social development front. Pakistan independence: 60 years of shattered dreams Pakistan celebrates its 60th anniversary on 14 August 2007. MILLIONS OF POOR Muslims from all over India rushed to the new homeland of dreams when British imperialism announced the partition of India in August 1947. Skyrocketing crude oil prices are another big challenge. Sikhs and Muslims in which around two million people were killed. Non-food inflation could be tackled through a tighter monetary policy. FDI inflow is mostly concentrated in only some sectors of the economy. literacy promotion. The working class and poor face grinding poverty. which paved the way for hatred and communal violence between Hindus. the government needs to take steps to make the manufacturing sector more efficient. This laid the basis for the hostility . It can bring in better technology and processes to attract FDI. and provision of accessible health care. the economy is chugging along nicely on the growth track. reports from Lahore. but problems aplenty Fueled by strong domestic demand.Marching ahead. economy could prove to be a significant challenge as the superpower is Pakistan’s main trading partner and chief ally on the foreign relations front. remain a concern. Nevertheless. The slowdown in the U.

The ruling Muslim League did organize provincial elections in Punjab and East Bengal (now Bangladesh) in the early 1950s. the colonial state structure. They developed this party to protect their class interests against the rising Congress Party. military interventions. Millions of people migrated to Pakistan for a better life for them and future generations. hunger. ex-officials of different small states called rajs (there were many small states in British India with limited sovereignty). To understand the present situation. clean drinking water. created many problems for the new state which not only still exist but have become bigger and more complicated. They failed to finalise a constitution for the country or hold general elections (the first general elections were held in 1970 after 23 years of independence). repression. working class. working-class movements. political movements and society in general have developed over the last 60 years. injustice. He left behind a bunch of opportunists and power hungry politicians with little mass support. He died in 1948 after just one year of independence. The masses feel betrayed by the ruling elite. a few capitalists and former civil servants. Muslim traders. police brutality. it is important to see how the Pakistani state. The weak indigenous ruling class. wars.and long-term enmity between the newly independent neighbouring states of India and Pakistan. The majority of the population is still living without proper healthcare. betrayals. education. unemployment. military domination. Quide-Azam Muhammad Ali Jinnah (the official founder of the nation) was the only leading figure in the Muslim League to have authority amongst the masses. A mass Pakistan movement did not develop until the 1940s. But the results were a nightmare for the ruling elite. Feelings of disappointment and desperation are running high. religious extremism. sanitation. They lost miserably in East Bengal and . housing and transport. ruling classes. The leadership of the Muslim League (the political party which started the campaign for a separate Muslim state) was mainly from the aristocracy and Muslim elite. superexploitation. Chronic poverty. and social and political explosions. The whole history of Pakistan is full of crises. A weak ruling class PAKISTAN INHERITED A weak ruling class mainly consisting of Muslim feudal lords. the majority seeing no future. But their dreams have been shattered by the parasitic ruling class and successive governments. economy. experiments. are the everyday realities faced by the masses after 60 years of independence. and the rotten capitalist and feudal system. the strong establishment and imperialist domination.

The military generals have become the ruling class or. Generals and intelligence agencies became so dominant in politics that they started to decide who would form the next government even before elections. the beginning of a long period of military interventions and domination which is still continuing (the only exception was the period of the early 1970s). Pakistan is experiencing its fourth military government since 1958. This alliance led to the intervention of this establishment into politics. intellectuals. It was a pro-Soviet Union party and considered to be anti-imperialist. The military not only increased its political influence but also developed its own industrial and commercial business empire. and a powerful nexus developed which was to play an important role in the future. the generals became the most powerful factor in politics. Alienated from the masses. They were frightened of the masses and the consequences of general elections. NAP was a mixture of communists. Political activities were banned. During the dictatorship of General Zia-ul-Haq in the 1980s. The US encouraged the military senior command to impose martial law and cancel the planned elections in 1958. The judiciary also sided with the bureaucracy. foreign policy and important decisions since the 1980s have been taking by GHQ. The lack of public support forced them to form an alliance with the civil bureaucracy and military establishment. The majority of the ruling class were feudal lords from Punjab and Sindh. This dictatorship lasted for more than ten years. . radical reformists. Nearly a dozen prime ministers were appointed and removed in just ten years. General Ayub Khan became the country? first s military dictator. All the major political. Now. the ruling elite become more and more dependent on the establishment to maintain power. The already very strong civil bureaucracy became more powerful.succeeded in Punjab only after widespread rigging. This was a nightmare situation for US imperialism because Pakistan was its key ally in the region against Stalinist Russia. nationalists and left-wing individuals. fully backed by US imperialism with all sorts of financial aid and easy loans. But it was clear that the ruling Muslim League would be routed in elections and that the radical left nationalist National Awami Party (NAP) would win a majority. The constituent assembly finally agreed a constitution in 1956 and general elections were planned for 1958. Military domination THE CIVIL ESTABLISHMENT took full advantage of the weakness of the politicians and became a dominating factor in politics. as well as tribal chiefs from Baluchistan and North West Frontier Province.

at least. Religious political leaders joined the ruling class in the early 1980s and have further strengthened their position since. It is becoming increasingly difficult for the army generals to justify their rule and political domination. It has reacted strongly against the removal and started to take independent decisions against the executive. capitalists and big business. the most powerful and dominant section in the ruling elite. The generals and intelligence agencies have been running the affairs of the country with comfort for 25 years. There was a dramatic policy shift on many issues. The regime of General Pervez Musharraf was forced to change the decades-old policies of the Pakistani state after the 9/11 events in the US. Musharraf also made some changes in Kashmir policy and started dialogue with India. fighting to control the state apparatus. feudal lords. But these policies have not only enraged Islamic fundamentalist elements in the state apparatus but also hurt the feelings and interests of conservative and nationalist elements. the situation has started to change again as resistance and opposition to military domination is on the rise. The recent removal of the Chief Justice has brought a change in the attitude of the judiciary. There are members of the higher judiciary who still side with the executive. There is a deadly nexus between generals. social and economic crisis has developed serious tensions within the state institutions. Former and serving senior military officers occupy almost all the key posts in the administration. The Pakistani state was forced to act against the Islamic fundamentalist groups which it created and developed in the 1980s and 1990s. The most attractive civilian posts also go to military officers. but they are isolated. There is a very strong reaction from some sections of the civil bureaucracy and politicians against military domination. State in crisis THE INCREASED POLITICAL. and the mullahs ? the generals being the senior partners supported by reactionary mullahs and feudal lords. The main capitalist political parties and politicians accepted this domination and fully capitulated to GHQ. . The crushing military domination over all the other state institutions has created a situation in which different sections have started taking on each other. Pakistan was forced to change its long-held Afghan policy. as well as public-sector departments and corporations. The generals have directly ruled this country for 31 years and failed to solve a single problem faced by the working masses. Today. He started speaking against the jihadi culture and banned some Islamist organisations. People have begun questioning the military? s intervention into politics. It is the first time that these two old and traditional partners are standing face to face.

fertilizer and seeds. This high economic growth and accumulation of wealth laid the basis for the biggest revolutionary uprising of the working class in the history of Pakistan. The national question is becoming a very explosive issue in Baluchistan and Sindh. but now even the army has started to lose that credibility. the most hated state institution. The rising tide of Islamic extremism. nearly 40% of the population lives in the cities and towns.Most state institutions have already lost their credibility with working-class people. highly expensive electricity. On the one hand. But this high growth has failed to decrease poverty or improve living conditions of the poor and working-class people. Sections of the ruling class and state officials are becoming increasingly concerned about the situation. The 1960s were called the decade of development and economic growth. This is not a new phenomenon in Pakistan as history shows. The economy had been developed to benefit the elite. this gave rise to the famous 22 richest families in Pakistan controlling most of industry and the economy. the so-called ? golden decade? averaging 6. it created the sea of poverty in which 46% of the population was living. Feudalism. to Islamist groups or nationalist militias. is directly challenging the writ of the state as they run parallel administrations in many areas. Agriculture was the main contributor to GDP. The army was the most respected in many parts of the country and among many sections of the population. decreasing land for cultivation. in 1968-69. Distorted economic growth THERE HAS BEEN high economic growth for the last four years. The people have no respect for the police. with agriculture employing 43% of the workforce and contributing 23% of GDP. are the main reasons for this crisis. On the other hand. There is a massive fall in support for the army because of its political role. very low output and yield. also the era of industrialisation. water shortages.7%. Feudal lords and criminal gangs have developed their own respective states within the state. the rural population started to move to the industrial cities. Now. A few hundred feudal families dominate the rural economy (industry is also owned by a few dozen families). Nearly 60% of the population is still dependent on agriculture which is in severe crisis. averaging more than 7%. In the industrialisation of the 1960s and 1970s. and old methods of farming. . The rising social and political polarisation along with increased class tensions are further increasing the state crisis. including armed groups. Pakistan was an agricultural economy at the time of independence with more than 85% of the population living in rural areas. The state has practically lost control over many parts of the country. It was .

This was the period when the US imposed some sanctions and the IMF and World Bank attached hard conditions for loans.5%. The prices of food items and everyday essentials have doubled in the last few months. There is no doubt that the present economic growth has benefited the ruling elite. It is not sustainable in the long run. Inflation and price hikes badly hurt the working masses. There are 35. India and Bangladesh intensifies. In the 1960s s and 1980s Pakistan received aid. especially banking. More than 300 textile units have been closed down in the last two years. sanitation. boundary walls and proper seating arrangements. it received aid and loans worth $12bn. There has been growth in automobile. and 72% have no access to clean drinking water or proper sanitation. when total bank deposits are around $20bn. . This flow of money has pumped new life into the financial and banking system. The poor have become poorer: 88% of the population live on less than $2 a day. assistance and loans worth $40bn. In the first three years of 2000. Textile exports are falling as competition from China.The textile industry is the main industry in Pakistan. These loans and increased remittances have developed and maintained a layer of the middle class. Stock market shares are at a record high. the increase has been eleven rupees. desperate poor THE PAKISTAN ECONOMY kick-started after 9/11. the growth rate was around 3. creating a new layer of arrogant super-rich. IT and electronics. Europe and Middle East have crossed the $5bn mark. These unprecedented price hikes have made life even more miserable for the working class. The banks are offering generous loans for consumer spending. But this layer cannot be maintained in the long run. In the last four years. and the services sector is also booming. Bank profits have surged from $130 million in 2002 to $1. Pakistan stands third for bank profits. only behind Colombia and Venezuela. but fell to 3% in last two years of that decade. Super-rich. 63% live below the poverty line (less than a dollar). in the last ten years. Pakistan? economy is largely dependent on foreign aid and loans. real estate is booming. Annual remittances of Pakistani migrant workers in the US.000 primary schools in the country without proper facilities like running water. The price of cooking oil has doubled in recent months.8bn in 2006. Consumer loans stand at $6bn. and is also in crisis. In the 1990s economic growth was around 4%. There are 200% to 300% increases in the cost of food items and other commodities. But it has left behind the majority of the people. There was an increase of six rupees in the price of flour from 1947 to 1997 but. with nearly $21bn in the last four years.

But that all changed. politics and political parties were all about the ruling class. The rail union was the largest and most militant. unemployment and poverty. In some areas. Thousands of new trade unions were formed and hundreds of strikes. in the media or among the intelligentsia. The founder of the Pakistan People? Party (PPP). Trade union movement THERE WERE A dozen trade unions in Pakistan at the time of independence. structural adjustments and trade liberalisation began in the late 1980s and early 1990s.000 middle and high schools are without laboratories and scientific instruments. the post office and a few industries. Seventeen percent of the population was living below the poverty line in 1988. Unemployment is rising. A few cities remained under workers? control for more than two weeks. Socialism was the main slogan in the movement. This shows the brutality and super-exploitation of the capitalist system. The trade union s movement flourished and gained strength in the last years of the 1960s. The ruling class was terrified. There were other unions in Karachi? port and shipyard. coexisting with feudalism. The working class rose onto the political scene with an exceptional revolutionary movement. Workers started to occupy factories and peasants took over lands from feudal lords. the largest city and industrial hub of Pakistan. Zulifqar Ali Bhutto. Industrialisation gave birth to the proletariat and this ? virgin proletariat? played the leading role in the revolutionary uprising of 1968-69. There was no revolutionary party and leadership able to carry through the revolution and overthrow capitalism and feudalism to establish a workers? . growing to a general strike led by the working class within a few months. and played an important role in the development of a strong trade union movement. . deregulation. Socialist revolution could be smelt in the air. Living standards are falling. occupations and protest movements were organised in this period. There was no mention of the working class and its political role. known as the era of the ? free-market economy? giving rise to price hikes. privatisation. There is an acute shortage of power. which started as protests against the regime of Ayub Khan led by students in November 1968. The neo-liberal economic policies of counter-reforms. came to its s rescue. Karachi. The working class took control of the cities and started to run the administration. Before 1968. and 12. increasing to 34% in 1999 and increasing again in the last eight years. From 1967 to 1974 can be called the golden era of the Pakistani trade union movement.Seventeen thousand schools are without proper buildings. with breakdowns becoming part of everyday life. in Pakistan. faces power cuts lasting for hours. the peasantry organised armed struggle against the landlords. Tenants refused to pay rents.

S Zulifqar Ali Bhutto was the founding chairman. The PPP became the largest political party in Pakistan in just a few months. He was a big feudal lord from Sindh and served as minister in the military government of Ayub Khan. he came forward with radical anti-capitalist and anti-feudal slogans. Some important struggles and strikes have emerged in last few years. Leaders betrayed many struggles against privatisation and neo-liberalism. The trade union movement started to decline in the 1980s and has weakened significantly since. Many left-wing unions. It became the largest party in West Pakistan. in the aftermath of the revolutionary movement of the working class. The working class lost this opportunity and later paid the price for this failure. The trade union movement is at a crossroad. But struggle and organised resistance can provide strength and much needed confidence to the labour movement. there will be a resurgence of workers? struggles and strikes. and banning trade union activities in many sectors of the economy. In next few years. only 3% of workers are affiliated with trade unions. The main trade union leaderships also adopted the policy of compromise and opportunism against government attacks on workers and trade unions. The collapse of Stalinist Russia and the Stalinist states of Eastern Europe also affected the trade union movement. Now. The military and civil establishment refused to hand over power to the Awami League and this resulted in a civil war and then the separation of East Pakistan (now . In the absence of an organised left party and movement. He correctly understood the mood of the masses and put forward a radical programme with socialist slogans. And the numbers of trade unions have begun to increase as new sections of the working class have started to organise. the last 15 years being the most difficult time.state. Respective regimes viciously attacked the most militant and conscious layers of the working class. Rise & fall of the PPP THE PAKISTAN PEOPLE? Party was founded in 1967 with just 35 people. Compromise and capitulation will lead to further weakness and decline. including the historic strike of PTCL (telecommunications) and textile workers. introducing laws to prevent strikes and the formation of unions. Teachers are also fighting for their rights. while the Awami League trounced the other parties to win a landslide in East Pakistan in the first ever elections in 1970. federations and their leaders fully capitulated to capitalism and started preaching free-market economy to their ranks. He put forward demands for bread. houses and clothes for everyone. He also talked about a socialist planned economy and a classless society. Bhutto took advantage of the situation and derailed the potential socialist revolution into a reformist democratic movement. and industrial workers have won some important battles. He was a clever politician.

The PPP government introduced neo-liberal economic policies and led the way for privatisation and counter-reforms. The betrayal of the PPP was and still is a big blow to working-class politics. Benazir compromised with the establishment and became prime minister after the 1988 general elections. Benazir Bhutto. His hanging again made him popular with the masses. Thousands of die-hard workers have left. He came to power with popular support. Bhutto became the leader of the rest of Pakistan. The military organised a coup against him in 1977 after a violent right-wing movement against him. became PPP leader in 1979. But he was frightened of a strong working class and used repressive measures against the trade unions. His daughter. but not the idea of a possible working-class uprising and revolution. The PPP started to lose its support from 1993. and nationalising more than 70% of the economy. because it showed he had refused to compromise with the military dictator. but a party with a leadership from the upper and middle classes with solid support in the masses. What future for Pakistan? MANY WESTERN AND US think-tanks and commentators are raising serious doubts about the future of this country. It was never a traditional working-class party. The PPP organized a movement for the restoration of democracy (MRD) in 1983 against the military dictatorship of General Zia-ul-Haq. It is no more seen as a party of the poor and working class. She completely capitulated to the ruling class and US imperialism. There is no doubt that Pakistan is facing . The PPP is finished as a party of the masses and working-class people. It was a new beginning for Benazir and the PPP. He betrayed the working class and started attacking its advanced layers. The present day PPP is not even a shadow of the old party. They raise the possibilities of Talibanisaton. His support started to decrease in the last years of his rule. The PPP leadership consists of feudal lords and big capitalists. introducing a few reforms in the early period of his rule. No working-class party exists in Pakistan at the moment. disintegration and civil wars. It cannot be ruled out that in the absence of an alternative some sections of the working class might vote for the PPP again.called Bangladesh) in 1971. He was later hanged by the military government. She betrayed the millions of poor working people and party activists who had spent years in prison. but is still an electoral force which can win elections ? though only with the support of the establishment. But it would be a critical and protest vote that cannot be compared with the vote it received in 1970 or even 1988. emptying out the party.

and a possible economic meltdown. strategy and tactics. But under capitalism and feudalism there will be no future for working-class people. The working class has not yet started to move but once it starts the whole political scenario will be different. Socialism is the only viable system to replace capitalism. and mass support. an explosive national question. The outcome of this showdown will determine the future of this country and for the masses. There is no prosperity. crisis in the state. There will be no change in the lives of the masses on this basis. There is a 43 million strong working class. Such a party. The ruling class has failed to establish a functioning democracy. The working class needs its own revolutionary party and leadership to organise the struggle. social and economic justice or political freedom. The working class cannot take full advantage of independence and cannot enjoy real freedom without the overthrow of capitalism and feudalism. The ruling class has failed to solve the basic problems faced by the people. Pakistan is heading towards another showdown between the ruling and working classes.many serious problems. . can win the future for the masses. one third of the total population. The Pakistani working class and masses have showed again and again that they have the potential. including the rise of right-wing political Islam. The only class which can bring change and transform the lives of the working masses is the working class. with a clear programme. courage and capability to conduct a revolutionary struggle against the rotten rulers.

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