Pakistan Government

1947-1958
 Post Freedom-Religion
• After freedom the Government got busy in day-to-day affairs of the new country-most
importantly the settlement of refugees
• In early 1948, the Ulemas with new found space drafted paper for the creation of
Ministry of Religious Affairs to promote and control religious institute. The role of the
RA would be regulate and encourage the institution and also to monitor the civil
servants
• They demanded an Islamic state on the lines of early period of Islam where all laws
conform to Sharia. They based their model of the state on the lines of Khulfa-e-
Rashideen from early era of Islam. Important elements were
- The President for life need to be well versed in Islam
- A committee of theologian to approve that all laws conform to Islam
• Ulema, also had not full support of the masses and the 1952 riots against Qadians
were quelled by imposing Matrial Law
• It was 1970s under Bhutto that this desire was acheived
 ML response
• ML was a weak party and remained afraid of the street power of the religious
groups. ML also lacked confidence in masses
• Most importantly, ML failed to play the role of Congress Party in India namely
formation of a national government through democratic elections
• In response to Ulemma’s paper on Islamic State, ML government issued a
statement of intent regarding the future constitution titled “Objective Resolution”
that was kept vague. It reiterated the need for the Islamic State but did not define
the form of such state and it was opposed to a theocratic state
• The weakness in ML leadership led the tiny minority of Mohajir-Punjabi civil-
military group to grab larger than real power. Yet, the bureaucrats were concerned
about survival of the new state of Pakistan
• In the 1950s, Pakistan joined US led military alliances SEATO and CENTO which
secured essential defense equipment needed for the defense of Pakistan
• A US umbrella was perceived to have added to the security
 Bureaucracy and ML
• As the Civil-Military bureaucracy was grabbing power, ML could not
react and missed the call to elections. ML’s ethnic divisions prevented
it from taking such action. Its leadership hailed from North India and
Bombay and were unable to deal with Bengali leadership
• The fear of majority province of East Pakistan taking over powers was
overriding all other processes
• The ML central leadership remained in inertia as elections would have
shifted the power center to the East- not a good choice for them
• ML could not develop it self into a national representative political
force. It stuck to the notion “If you destroy Party, you destroy Nation”
• ML’s dependency on the bureaucracy kept on growing and it finally
led to the fall of political force. The rise of military became obvious
 Constitution-Delays
• The fear of power shift delayed the constitution making. All proposal
under consideration were geared to reduce influence of the Bengali
leadership. In fact all efforts were made to reduce the voting power of the
majority Bengali population
• 1948-1954, the CA met, on average, 16 days and attendance remained
only 46 members-shows lack seriousness
• 1952, the constitutional proposals by Khawaja Nazimuddin were rejected
as these were against the interest of Punjab
• To enhance the power of West Pakistan its four provinces were hastily
merged in “The One Unit”. In 1954, due to opposition to One Unit the
provincial government of Sindh was dismissed by Governor General. Soon
the provincial government of NWFP met the same fate
• Also, the Governor intervened when Punjab objected to some aspects of
One Unit
• In the process of dragging feet ML’s mass appeal was reduced
 Constitution-Delays
• The draft constitution bill was brought before assembly three
months after the creation of One Unit
• The first Constitution was adopted in March 1956. There was
much dissatisfaction on part on East Pakistan as this constitution
could not reflect the supremacy of law. The process of drafting
the Constitution was done by civil servants
• The ML, since beginning had stressed on a strong central
government and the constitution clearly reflected it. It was a
deviation from the original concept of federalism between the
Eastern and Western wings of Pakistan
• During 1947-1954, the ML was in power at Center and Provinces.
After 1954, ML lost power at both level
 Post Constitution-ML looses power
• Between 1954-58 the political system became a joke. 6 PMs were asked to resign
• The civil setup with the help of military controlled the system and finally Military
became so strong that they took over
• 1956, civil bureaucrat Iskander Mirza took over as the head of State. He
appointed Khan Sahib as the Chief Minister of NWFP. ML opposed this move as
Khan sahib was ex-Congress.
• Iskandar Mirza encouraged creation of a new political party “The Republican
Party” based on defections from ML
• This party outed ML from center through alliance with Awami League of
Suharwady
 Events leading to Military take over-1958
• The power struggle led to weakening of political parties that started haggling
outside the Assembly
• The Constitution had not provide legislative powers to the Political parties to
control its legislators
• The establishment of Central Executive Rule, rather than Cabinet system,
provided opportunity to the officials to concentrate power
• The civil servants were disconnected from masses and political process. In post
Liaquat Ali Khan era, the top posts of Governor General and Prime Minister were
occupied by those from the administrative apparatus
• The setup was unable to satisfy four out of five provinces and became weak
• Military coup 1958 was just formality. All the work had been done
 Issues & weakness of Constitution
1956
• Strong stress on powers to Center-No sharing
• Jinnah was in favor of a strong center and his stress on Urdu language as the only
and official language of Pakistan created resentment in Eastern wing
• Shift towards cabinet system was not followed
• Civil services grabbed power after Liaquat Ali Khan
• ML has also failed to reform economic and social structure of Pakistan
• Role and control of Political parties over its office bearer and legislator was not
ensured in the constitution
 Development Plans
Introduction of Medium term planning
• Colombo plans 1951-57 as a six-year development plan overtaken by
Korean War
• First five year plan, which was to cover the period 1955 to 60.
Although a very impressive document, was never seriously
implemented
• It was officially published in late 1957 and was never given formal
approval by legislation.
• Martial law October 1958
Pakistan Economy

1947-58
 Initial conditions and Actions
• After independence there was the flow of refugees into the country
• The decision not to devalue the currency in September 1949
following the devaluation of the pound sterling when India and
number of other countries followed suit
• The years from mid 1950 to early 1952 when, as a result of the war in
Korean, there was a boom in the world prices of raw materials
• The decision in 1952 to impose import controls after the collapse of
the Korean boom and the balance o payments crises
• 1954, Pakistan joining the military pacts with the western countries
i.e. SEATO and CENTO and the beginning of aid flows into the country.
• 1955, the decision to devalue currency
• The military coup of October 1958 that marked the end of the first
phase of the country’s economic history.
 Problems-Refugees
• Large-scale population movement and heavy influx of refuges
• It is estimated that about 7 million refugees entered West Pakistan as compared
to about 5.6 million Hindus and Sikh refugees who had left Pakistan for India
• Total central government expenditure on refugees by 1958 was almost Rs 491
million
• The immediate problem was that of providing relief to the migrants through the
provision of shelter, food, clothing and medical attention.
• In order to help the artisans and craftsmen among the refugees, the government
established a Refugee Rehabilitation Finance
• Corporation to provide credit facilities gave Rs. 17 million in loans, invested 3
million in industrial colonies, distributed sewing machines worth 4 million and
supplied raw materials worth 12 million to refugees at cheap rates
• The central government offered both loans and grants-in-aid. The center also
imposed special taxes that yielded Rs 117 million
 Initial Years 1947-58
Initial conditions
• Improvement in living standard of the middle class Pakistanis
• Low savings and investments
• Domestic saving rates 2% of GDP till 1958
• Shortages of infrastructure
• Some positive development in the West Pakistan but negative growth in East
Pakistan
External shocks
• Jinnah’s death 1948
• Assassination of Liaqat Ali Khan
• String of Prime Minister’s between 1951-58
 Devaluation Decision in 1955
• The devaluation of Pakistani rupee in July 1950 by 30% in relation to the
pound sterling
• The impact of devaluation on the balance of payments situation was mixed
• There were some improvements in exports but imports, which were earlier
also being curtailed by government control, saw no fall
• In 1955-56 the balance of trade showed a surplus and government too this
to mean the success of the devaluation decision
• Due to devaluation domestic prices rose, especially for food items, and this
reflected itself in a rising cost-of-living index
• Another adverse affect of devaluation was that the government had to pay
more for the food grain and, though the government tried to reduce the
effect on retail prices by providing subsidies, there was increase in retail
prices
• Rationing through public and private outlets
 Issues-Agriculture
• Annual growth for Pakistan for the period 1949-50 & 1950-60 was
2.5%
• Par capita income growth was negative in East Pakistan and slightly
positive in West Pakistan
• The biggest policy failure in Pakistan’s early years was agriculture
failure. The Policy makers in the years immediately after the partition
were preoccupied with stimulating industrial growth, which had
lagged behind in areas comprising Pakistan
• Agriculture growth rate was less than population growth as Policy
makers laid more emphasis on industrial growth
• The root cause of problems was the severe floods in the Sind and
Punjab in 1948
 Issues-Agriculture
• Agriculture for the economy as a whole grew by 1.7% annually
• Floods adversely affected food grain shortages
• In 1951, the failure of the monsoon, continued drought conditions
and locus attacks led to a poor wheat crop harvest
• In order to meet the shortage the government approached the USA,
CANADA, and AUSTRALIA, and other countries to provide long-term
credits as well as outright gifts to help in the import of food grains
 Industrial Policy
• Government’s industrial policy statement issued in April 1948 emphasized
particularly manufactured goods based on domestic raw material
• Manufacture of cotton textiles for the home market presented attractive
opportunities
• There was ranging increase in the production of sugar, cigarettes,
vegetable ghee, cement and natural gas (Sui fields)
• In 1947-58 the average annual growth was over 19%.
• Jute industry was set up in East Pakistan in late 50s
• A large demand for domestic markets was created by imposing import
controls and for the early entrants who could charge monopoly prices,
profits were very high
• High profits, high savings, high investments, and high rates of growth
were the main features of the industrial development in the earlier years.
 Industrial development-Financing
• Non-devaluation decision of September 1949. The main motivation
behind the non-devaluation decision was to be able to sell raw jute to
Indian industry at higher prices
• As a result of this India suspended trade by not accepting the value of
the Pakistani currency and a trade deadlock ensured
• Decision not to devalue the currency lead to selective import control on
the economy
• These import controls became a powerful lever in the hands of
government to affect and influence resource allocation in the domestic
market
• Decision not to devalue the currency lead to price control
• The government also controlled prices with major of bringing down the
prices of consumer goods so as to lower the cost-of living index.
 Industrial development-Financing
• Controls were exercised on the prices of cloth and yarn together with
articles like drugs and medicines, paper, chemical dyes, cigarettes,
vehicles, and construction material
• In many cases they resulted in the hoarding or black markets of products
• Korean war (195-53) response to Korean boom and collapse raw material
boom, high exports earnings for Pakistan. Pakistan had a strong balance of
payments surplus. Its export of raw material came under heavy demand
• India had to rescind its earlier decision and trade was once again opened
between the two countries
• The ratio of central bank govt tax revenue to GDP at 5.2% in 1955-58 was
only moderately higher than in 1949-50.
• Total central government revenues showed improvement because of
improved earnings from commercial departments
 Issues-Deficit Financing & Capital
formation
• Throughout the 1950’s there were reliance on deficit financing as an instrument
of government policy
• Credit creation in the public sector at Rs 679 million record in 1957-8
• Though the proportion of government budget deficits financed from money
creation came down to less than 40% during 1955 from nearly 90% during 1951-5
Capital formation
• The statistic for domestic capita formulation n 1950’s shows some discrepancies
among various resources
• The rate of growth for both private and public investment was high during 1950-5
• Some investments were made in large irrigation projects such as Taunsa barrage
and lower Sind barrage
• Significant investments were made in infrastructure development especially in
transport and communication sector
 Institutional growth
• Institutional growth in early years was very rapid
• Establishment of PIFCO (Pakistan Industrial Finance Corporation) in 1949
later changed to IDBP (Industrial Development Bank of Pakistan)
• ADFC in 1949 later changed to ADBP
• National Bank of Pakistan in 1949
• PIDC (Pakistan industrial Development Corporation) in 1952;The major
objective of PIDC was to help establish industries which were handed over
to private sector when they were completed
• PIA in 1956
• WAPDA in 1958
 Capital Formation
• There was also substantial private sector investment in housing,
which was mainly undertaken by higher income groups
• Investments in social sectors, i.e. education and health were minimal
and these sectors had very low priority in the total development
expenditure
• The increase in public investment in 1950’s was truly dramatic
• After 1955, the rate of growth of real private investment showed
down in west Pakistan because of the sharp increase in the price of
investment goods triggered by he 1955 devaluation
Fixed Investments As Percentage Of GDP
1949-50 1954-5 1959-60
Pakistan
• Public 1.5 2.6 5.8
• Private 1.3 2.1 3.4
• Overall 2.8 4.7 9.3
West Pakistan
• Public 1.6 3.8 7.3
• Private 2.5 3.2 4.2
• Overall 4.1 7.1 11.5
East Pakistan
• Public 0.6 1.2 3.7
• Private 0.9 1.0 2.3
• Overall 1.5 2.2 6.0
 Pakistan Defense
• 1947, Pakistan had its first taste of war almost immediately in the First Kashmir
War
• When India refused to join an anti-communist pact, Pakistan willingly did so
• 1954, the US decided that Pakistan, Iran and Turkey would be ideal countries to
counter Soviet influence. Therefore, Pakistan and USA signed the Mutual Defense
Assistance Agreement and American aid began to flow in Pakistan
• 1955, Pakistan joined the South East Asian Treaty Organization (SEATO) and the
Baghdad Pact later renamed as Central Asian Treaty Organization (CENTO) after
Iraq left in 1959
• Pakistan received over a billion dollars in military aid from United States between
1954 and 1965. This aid greatly enhanced Pakistan's defense capability as new
equipment and weapons were brought into the armed forces, new military bases
were created and existing ones were expanded and upgraded and two new Corps
commands were formed
• This strength was visible in 1965 war
 Pakistan Defense
Afghan border
• Armed tribal incursions from Afghan side into Pakistan's border areas began with the
transfer of power in 1947 and became a continual irritant
• Afghans regarded the 19th century Anglo-Afghan border (historically called
the Durand Line) treaties as void and were trying to re-draw the borders with Pakistan
or trying to help create an independent state
• The Pakistan Army had to be continually sent to secure the country's western borders.
Afghan-Pakistan relations were to reach their nadir in 1955 when diplomatic relations
were severed with the ransacking of Pakistan's embassy in Kabul and again in 1961
when the Pakistan Army had to repel a major Afghan incursion in Bajaur region
• Pakistan used American weaponry to fight the Afghan incursions but the weaponry
had been sold under the pretext of fighting Communism and the USA was not pleased
with this development, as the Soviets at that time became the chief benefactor to
Afghanistan
 Issues-Defense of the Country
• After independence the major tension with neighboring India was on
Kashmir conflict
• This led to a firm commitment on the part of the government to give
high priority to strengthening the county’s defense capability
• This was done by setting aside major portion of the country’s revenue
for building up the defense forces
• Huge amount is spent on defence of the country
• In 1954 Pakistan signed a Mutual Defense Agreement with the United
States under which the US government started providing military
assistance
 Pakistan Defense 1965-79
• Pakistan, after the China-India War in 1962, saw Indian army as being weakened
• This analysis was proven true when a small border skirmish occurred between India and
Pakistan in the Rann of Kutch on April 1965 where the Indian Army was caught
unprepared
• Emboldened by this success, Operation Gibraltar, an infiltration attempt in Kashmir was
launched later in the year for the freedom of People of Kashmir and a full-fledged war
across the international border
• Pakistani Army pushed back the Indian forces. Indian Army failed to fulfill its aspiration
of capturing Lahore and Sialkot, while on the offensive both the armies were occupying
some of each other's territory resulting in a stalemate
• US had imposed an arms embargo on both India and Pakistan during the war and
Pakistan was affected more by the arms embargo as it had no spare parts for its Airforce
and tanks, and other equipment while India's quantitative edge making up for theirs.
The war was finally ended in a ceasefire
• The war of 1971 resulted in a total surrender by Pakistan
 Prime Ministers
• Liaquat at Ali Khan – 14 August 1947 to 16 October 1951
• Khawaja Nazimuddin - 17 October 1951 to 1 7 April 1953
• Mohammad Ali Bogra - 17 April 1953 to 12 August 1955
• Muhammad Ali - 12 August 1955 to 12 September 1956
• Huseyn Shaheed Suhrawardy - 2 September 1956 to 17 October 1957,
• Ibrahim Ismail Chundrigar- 17 October 1957 to 16 December 1957
• Sir Feroze Khan Noon- 16 December 1957 to 7 October 1958
• Nurul Amin-7 December 1971 to 20 December 1971
• Zulfikar Ali Bhutto -14 August 1973 to 5 July 1977
• Muhammad Khan Junejo - 24 March 1985 to 29 May 1988