Developed economies are movers, developing economies are the followers
and the underdeveloped economies have no say in the scheme of things. All
economic conditions are the certain result of policies. No economy can itself
produce positive results. It is the people and their actions which steer the effects. The economy of Pakistan was
not doomed for disaster. It has become the victim of eccentric policies of our
past rulers. It has been mismanaged up to this extent that the country has
virtually become bankrupt and made to dance on the tunes of donor agencies as
Pakistan has bartered its freedom with them.
For the last thirteen years there has been no noticeable addition to
basic industries and the economic infrastructure of the country. Instead the
number of sick industrial units increases each year. The public sector is
shrinking and suffering losses. Although agriculture has helped the nation to
survive but the sector itself is faced with crises. In regard to oil,
retrogression has set in after a good progress.After attaining one third self sufficiency in the country’s oil
requirements, advancing steps have been retracted and the annual import of oil
has increased. Exports could not be enhanced despite repeated devaluation of the
External debt are touching new heights and the irony is that new loans
are obtained simply to pay back a portion of the earlier loans.
According to the genesis of the present situation the deterioration in
economic activity is mainly caused by weak performance of large scale industry,
erratic behavior of agriculture, decline in real investment, macro economic
instability that includes large fiscal deficit, large bank borrowing, using
interest payments on domestic debts double digit inflation and personal
The economic situation of Pakistan at the time of independence was
also very bleak but it improved over the years. Its economic policies were
exemplary and countries like Korea had learned the tricks of economics from
Pakistan in 60’s, while Pakistan revived meager financial resources at the time
of independence, it was deprived of Kashmir. Ever since, the Kashmir issue has
been haunting Pakistan for which Pakistan has fought several wars with India and
each war had its price paid by Pakistan. It had to maintain a large armed forces
causing huge burden on economy.
Agriculture Economy in Pakistan
Agriculture has always been neglected. Feudalism is in vogue even
today and about six thousand families posses forty percent of the total
cultivable land. There is no retrieval policy in regard to the agricultural
inputs. The cost of seed is four times higher than its cost of production.
Irrigation system is also upset. Per acre productivity of East Punjab and
Haryana is four times higher than that of West Punjab and Sindh. The level of
land and human efforts are the same but the difference in policies, facilities
and other factors account for the disparity. Pakistan may become self sufficient
in agriculture within two to three years but at present twenty percent of total
imports comprise food cereals. On the one hand, there is the common cultivator
who finds it difficult to meet his expenses, on the other, there is a particular
class that not only rolls in wealth but also upholds the oppressive and unjust
As we are very heavily dependent on borrowing to meet the resource
gap, our major donor International Monetary Fund insists upon narrowing the
revenue expenditure gap to under five percent of the gross domestic product.
Since other lenders follow the policies of International Monetary Fund, Pakistan
has no choice but to enhance its taxes and revenues. These foreign lenders and
donors also demand that we reduce taxes on international trade which means the
reduction in the custom duties which has always been the main source of our
revenues. This puts further pressure on the other taxes to make up for the loss
caused by the reduction in the custom receipts.
Business Sector Trust
The real issue of our economy is how to achieve higher productively,
and to strengthen and develop the infrastructure. For this purpose the foremost
need is to restore the confidence of our businessmen, cultivators and
industrials to engage them in product processes. In the past, various Government
of Pakistan have made some efforts to build up infrastructure and productive
potential of the economy, through the process of many plans which was the
beginning to prepare for future advancement. It was started by launching a six
year Development Program in in 1951. The plan was suspended two years before its
completion due to the repercussions of the Korean war. Besides this plan, five
other five years development plans
were drawn up. These efforts did not prove successful due to economic, social
cultural and administrative obstacles.
As majority of the people in Pakistan are poor and backward, they have
always been preoccupied mainly in meeting the basic needs. They live in
unhygienic conditions. Electricity is a luxury for them. Health services have been thinly spread in the country.
Floods, drought or diseases affect people and the livestock. The combination of
malnutrition, illiteracy, diseases, high birth rate, unemployment and low income
has closed the avenues of escape from serious economic crises. The most
unfortunate aspect of these serious economic crises and pathetic state of
affairs is not because of the lack of natural resources but due to inefficient
use of the key factors of production.
The sociocultural attitude of the people is also an obstacle in the
way of economic development of Pakistan. More than 50 % people are illiterate.
They are ignorant of what is happening in their own country and the world at
large. The majority of the people are extravagant. Pakistan, in fact, has a
consumption oriented society. The native culture and are generally not receptive
to new foreign methods of production. The caste system functioning mostly in
terms of occupations like tailoring, carpentry, jewelry etc. restrict
occupational and geographical mobility.
For accelerating the rate of economic development, there should be
political stability in the country. If there is a change in the government set
up due to election, or of dictatorship, the planning projects initiated by the
previous government should not be altered or given up altogether. The planning
machinery and all others involved in administration should be loyal to the
country. They should be competent and honest in the performance of the duties
assigned to them. In Pakistan, since its inception, there have been rapid
changes of governments. Each government which came in power condemned the
planning work done by the previous governments. They introduced their own plans,
formulated their own strategies of development and left the chain without
achieving the targets of their plans. A history of planning shows that with the
exception of fifth five year plan, all other plans have failed to achieve their
objects and have proved mere rigmaroles.
Now the time has come to adopt some practical means to set aside the barriers to
economic development. It is a big challenge to the planners. According to the
above mentioned circumstances the following suggestions can be recommended in
order to raise the economic development of Pakistan:
Export Promotion Bureau and Embassies/High commissions abroad should
explore markets for Pakistan’s products through trade shows, business
delegations and international advertising. Moreover the export base should be
broadened by exporting software handicrafts, fresh fruits, vegetables, fish,
livestock and flowers etc. Suitable arrangements for processing or packaging of
fish, fruits and vegetables should be made.
In order to counter the huge debt a “debt management committee”
comprising Ministers of Commerce and Finance, Chairman Privatization Commission
and Governor Sate Bank of Pakistan should be formed. This committee will develop
debt retirement instruments independently having power to implement them in
letter and spirit. The committee should draft two separate policies for short
term and long term debts.
Currency Rate Differences
The difference of US Dollar and Pakistani rupee in official and open
market rats should be kept minimum and confidence of the overseas Pakistanis may
be restored which was shaken after freezing of foreign currency accounts in May
1998. Steps may be taken to attract investment from overseas Pakistanis and
New dams should be constructed to increase availability of water for
irrigation purposes, as irrigation water has a vital importance for better
agricultural production. The quantity and quality of irrigation water should be
improved through desalting and other water conservation techniques.
The of electricity for agriculture purpose should be lowered to ensure
at least 40
% share of agriculture sector in consumption of power.
The health facilities provided by private and autonomous hospitals are
not within the reach of the poor. The government should discourage
commercialization of health and ensure availability of adequate health
facilities to all segments of society at reasonable rates.
In the field of education a new policy broadly aiming at increasing
literacy rate by universalizing basic education, enforcing compulsory primary
education encouraging private investment and increase in total expenditure on
education up to 4 per cent of gross national product is required to be
The construction of deep sea port at Gawadar and its connection to the
rest of the country should be taken up at the earliest to facilitate exports
from Balochistan to provide transit for trade of Central Asian States and to get
suitable share in international trade, making use of ideal geographical location
Another important recommendation is regarding information technology
policy. This policy mainly emphasized on human resource development and
providing infrastructure, should be announced and implemented at the earliest.
So, conceived in this way, although a critical look at Pakistan’s
economy, presents a gloomy picture. The above mentioned measures are hoped to
stabilize the ship. Today not only the country is burdened with heavy debt, it
has also reached a stage where it can not simply move forward. Growth is
stagnant. All other indicators too, look quite disappointing. Exports are not
satisfactory and revenue from taxation is not sufficient. Unemployment is
rapidly increasing. The overall scenario presents a dismal situation. This could
be seen from the fact that many times a default situation emerged and it had to
be faced by making great sacrifices of national sovereignty and in addition a
further rise on the debt servicing front.
In spite of all these cataclysmic facts, one may hope that with newly
introduced economy revival plan, the time will be changed and the economic
development rate will be enhanced. Now the time has come that if we want
Pakistan to rise up to that extent where the prosperity, integrity, solidarity
and economic stability will be all around, (then) every Pakistani will have to
work as far as dedication in him lies. By working with whole concentration and
conviction we may achieve that much a strong Pakistan dreamed by Quaid-e-Azam,
and by working this way that day will not far away when Pakistan will bear the
palm and it will show its mettle to rest of the world.