Economic & Political History

Of Pakistan

Presenter: Abdul Lateef

 OVERVIEW
 The Flat Fifties.
 The Golden Sixties.
 The Socialist Seventies.
 The Revivalist Eighties.
 The Muddling Nineties.
 The Reforming Hundreds.
 Current Scenario.
 Key issues
 Conclusion.
 THE FLAT
FIFTIES
Refugee influx.

Absence of stable institutions.

Hostilities with India.

Political tug of war.

 THE GOLDEN
SIXTIES
 Planning commission on economic management.
Green Revolution .
Influx of aid.
Increase in exports.
Rise in economic inequality.
THE SOCIALIST SEVENTIES
Bhutto’s Islamic socialism.
Fall of Dhaka.
Nationalization of industries.
Oil crisis.
Floods.
The REVIVALIST EIGHTIES
Influx of military and civilian aid
Increase in foreign remittances
Liberalization of economy.

Year Remittances

1978 $0.5 billion.

1984 $3.2 billion.

 The MUDDLING NINETIES
Political instability.

Ineffective governance.
Privatization commission set up in 1991.
Sanctions due to nuclear program.
Foreign currency accounts frozen in
1998.
 REFORMING HUNDREDS
Pakistan joins war against terror.

Increase in foreign direct investment.

Growth of financial sector.

Employment generation.

Deepening of energy crisis.

CURRENT SCENARIO

• Current GDP growth= 4.14%

• Tax to GDP = 9%
• Debt per capita= Rs82,627
Key issues
Following three areas need to be discussed in detail

1. Tax reforms.

2. GSP Plus status.

3. Privatization.
 Tax reforms
Characteristics of an ideal
taxation system: F.A.T.A
Tax-GDP ratio is 9%.
About 61 percent of the
legislators did not pay taxes in the
year they contested the elections.
Uneven sector wise contribution:
Tax reforms
 Over reliance on indirect taxation:

S.No Mode of Taxation Contribution

1 Taxes on goods and services 54%
2 Taxes on income and profits 32%
3 Taxes on international trade 12%

 Heavy taxation on corporate sector.

 Lack of transparency in Statutory regulatory orders (SROs).

 Need to bring agriculture and services sector in tax net.

 Autonomy of FBR.
GSP Plus Status
The European Union’s GSP covers three separate regimes
1. Standard GSP.
2. GSP Plus
3. Everything but arms (EBA)
EU on 12-December-2013 granted GSP Plus status to Pakistan.
As per initial assessments exports are expected to increase by 574
million euros annually.
50,000 new jobs were expected to be created in textile sector alone.
Caveats in GSP Plus status
Hurdles faced by the industries.
Privatization
Zulfikar Ali Bhutto’s policy of nationalization.

Change in national economic policy after end of Bhutto’s

regime.

Privatization commission set up in 1991.

A total of 166 state-owned enterprises have been sold since

1990 for a cumulative sum of 476.5 billion rupees.

Privatization
Arguments in favour of Privatization: Its not the business of
government to be in business.
Will inject much needed cash in economy.
It will foster competition.
Loss making PSE are burden on national exchequer. Around $5
billion annually.
Improve the efficiency and contribute in tax generation.
It would also please IMF and World Bank.

Success stories: Indian economy, Pakistan’s Banking sector, K-

Electric.
Privatization
Arguments against Privatization: the government is actually
never ‘out’ of business.
Could lead to increase in unemployment rate.
These organizations are heavily debt ridden so won't attract
many investors.
Public interests may suffer due to personal interests of
corporation.
Some profit making corporations like OGDCL,PPL are being
sold, which makes no sense.
Political affiliations play key role, as witnessed in the 90's.
Privatization of industries owned by military?
Study by Akhtar Hasan Khan, shows that only 20pc of firms
perform better after privatisation.
 REFERENCES

• The role of politics in Pakistan's economy by Dr. Ishrat Hussain.

• A perspective on Pakistan's economic history: Growth, economic structure
and governance by Akmal hussain.
• Economic survey of Pakistan 2013-14.
• Pakistan bureau of statistics.
Questions?