Pakistan Five Year Development PlansSince 1955 to 2010

An OverviewINTRODUCTIONAlmost all five-year plans prepared during political or military regimes were shelved in the countrys history after regime change and none of them succeeded in getting the desired results.Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries.The economy has suffered in the past from decades of internal political disputes, a fast growing population and ongoing confrontation with neighboring India.Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period.Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade.Two wars with India, in Second Kashmir War 1965 and Bangladesh Liberation War 1971 and separation of Bangladesh adversely affected economic growth. In particular, the latter war brought the economy close to recession, although economic output rebounded sharply until the nationalizations of the mid-1970s.Pakistan is aggressively cutting tariffs and assisting exports by improving ports, roads, electricity supplies and irrigation projects. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003, a necessary step towards reversing the broad underdevelopment of its social sector.

There are total 8 Development plans have been presented in the history of Pakistan which are listed below:

1- First Five Year Plan (1955-60)-An Erratic Beginning to planned development.

2. Second Five Year Plan (1960-65)- An Experiment In Functional Inequality

3. Third Five year Plan (1965-70)- A Prisoner of Extraordinary Events

4. Fourth Five year Plan (1970-75)- A non-starter from the beginning

5. Fifth Five Year Plan (1978-83)-A Return of the Medium Term Planning

6. Sixth Five year Plan (1983-88)- Development of the people, By the people, For the people

7. Seventh Five Year Plan (1988-93)-Precursor of a long Term vision

8. Eighth Five year Plan (1993-98)- An exercise in better macro-economic Management.

First Five Year Plan (1955-1960) HighlightsTargetsEmphasis mainly on achieving high national income.The First Plan was implemented within certain obvious handicaps and limitations and its release was delayed by two Years.In practice, this plan was not implemented, however, mainly because political instability led to a neglect of economic policy, but government, Deputy Chairman Planning Board (Commission) Said Hassan announces the plan in 1957.The development expenditures were regarded as the foundation for rapid progress in the future and plans explicitly affirmed that some sectors of the economy must be expanded much more rapidly than others in order to secure maximum gains.The size of the First Plan initially was Rs. 11.5 billion which was revised and decreased to 10.8 billion out of which Rs. 750 million for the public sector and Rs. 3.3 billion for the private sector was allocated. Of the total plan amount of Rs. 6.6 billion from the internal sources and R.s 4.2 billion was to be achieve from the foreign sources in the form of loans and aid.

Achievements/FailureThe GNP recoded a growth of 13% instead of 15% as targeted in the Plan. Industry together with fuels and minerals received another 31% of the total resources which exceeds the target of 28% provided in the PlanThe GNP recoded a growth of 13% instead of 15% as targeted in the Plan.Industry together with fuels and minerals received another 31% of the total resources which exceeds the target of 28% provided in the Plan.

Second Five Year Plan (1960-1965) HighlightsTargetsThe 2nd five year plan was approved by the Economic Council of the Government of Pakistan on June 21, 1960.The 2nd plan aims at increasing national income by 20 %. In view of the anticipated increase in population of about 9%, this will mean an increase of about 10% in per capita income. The plan assumes the rate of growth of population as 1.6% at the end of the 1st plan and 1.8% at the end of the 2nd plan.Three dominant strains run through the plan.The stubborn problem of agriculture production- low productivity and inability of the country to feed itself. Foreign exchange expenditure on food imports has averaged Rs. 470 million a year during the 1st plan period. An overall increase of 14 per cent in agricultural output is projected.No industries are reserved for the public sector; public investments is provided only in those activities that are ordinarily developed with private capital. Private investments will not be forthcoming. Both indigenous and foreign capital will receive positive encouragement.Education at all levels is to be expanded and advanced as fast as the required institution and personnel san be provided.The revised total size of the second Plan was fixed at Rs. 2.3 billion in April, 1961.As regards sector distribution, the size of the private sector expenditure was fixed at Rs. 12.4 billion, while public sector was allocated Rs. 6.8 billion and the newly introduced semi-public sector consisting of autonomous corporations was allocated the remaining sum of Rs. 3.8 billion.

Achievements/FailureDuring 1965-66 there is increase in the production of tea, salt, cotton cloth and yarn, board, caustic soda, cement and cycle rubber tires and tubes. The increase in the quantum index of manufacturing industries from 100 in 1959-60 to 201.7 in 1964-65. Growth in 68-69 was 7.4% that was previously 7.8%. And in 49-50 the share go agriculture was standing 60% which came down to 46% in 68-69.The strategy paid off very well as the actual growth rate surpassed the projected growth rate. The GNP registered a growth of 30% over the plan period compared to 24% proposed in the plan and per capita income grew 15% instead of 12% projected in the plan. The large scale industrial production exhibited nearly 161% increases in production compared to only 60% increase proposed in the Plan. The share of the manufacturing industry in GNP as a whole rose from 9.3% in 1960 to 11.5% in 1965.

Third Five Year Plan (1965-1970) HighlightsTargetsThe Third Plan was approved by National Economic Council in May 1965 and it was revised in 1966 due to following two reasons:Pakistan had to fight battle with India.The seasonal conditions became worst for agriculture sector which affected production.An amount of Rs.52000 million was allocated for the plan out of which Rs.30,000 million for the public sector and Rs.20,000 million for the private sector were allocated. 66 percent of the total plan size was to invest from the local sources and remaining 32 percent through the external sources.In this Plan there was a great visible investment shift from consumer goods to capital goods industry

Achievements/FailurePerformance in the industrial sector was also far from satisfactory particularly in the large-scale industrial sector. The large-scale industrial sector exhibited a growth rate of 10% as against 13% targeted in the Plan. The industrial sector as a whole expanded at an annual growth rate of 7.8% instead of 10% targeted in the Plan. The small-scale industry just performed well.During 1967-68, substantial gains were also recorded by cotton yarn and cloth fertilizes and chemicals, writing and printing paper etc. The growth rate of large scale industrial decline from 13.9% in 1969-70 to 2.8 in 1970-71 and showed a negative growth rate of 5.6 percent in 1971-72.the negative growth in this year was due to the war with India and separation from the Bangladesh where exist the big industry of jute.

Fourth Five year Plan (1970-75) HighlightsTargetsWhen the government of Zulfiqar Ali Bhutto came to power in 1971, planning was virtually bypassed. The Fourth Five-Year Plan (1970-75) was abandoned as East Pakistan became independent Bangladesh. Under Bhutto, only annual plans were prepared, and they were largely ignored.The revised total size of the second Plan was fixed at Rs. 75 billion, an increase in 44% over the Third Plan size. The increase 6.5% annual growth rate as compared to 5.5% targeted in the Plan.The share of the industrial sector that had 10% growth rate in the last Plan was drastically slashed from 26% in the Third Plan to 10.2% in the Fourth.

Achievements/FailureIndustrial sector had all along been leading sector in terms of sustain growth. Value added fell by 6.8% during 1971-72 compared to depress based of 1970-71 when the growth was only 1.2%.Steady growth in 1973-74. Different factor, like war with India and tight credit policies and East Pakistan crisis growth decline 6.8% in 1971-72. Steady improvement or recovery in 1972-73. Manufacturing sector slow-down during 1974-75 because low level of investment and shortage of raw material. Textile has heavy weight in total industrial production. 1974-75 there was also difficult when value added project to grow by 10% in the LSM sector recorded negative growth of 1.7%. in 1976-77 During this time manufacturing sector continue to remain under pressure due to various national and international factors.The volume of national product had been increased and the symptoms of construction were being reflected from the basic structure of the economy. It was imperative that the development efforts were concentrated on the higher income group and the majority was deliberately neglected. The social needs like housing, health, education etc were not paid due attention in planning.

Fifth Five Year Plan (1978-83) HighlightsTargetsThe economic growth in Pakistan became stagnate due to the application of Annual Planning in Pakistan by Peoples PartyGovernment during the period of 1970-78 therefore, the Marshall Law Government drafted the Fifth Five Year Plan in 1977 and it was implemented in very difficult and unfavorable condition because:Commodity Production sector had turned into completely a stagnant sector.Imports increased fast.Foreign exchange reserves were decreasing very fast.The total size of the Plan was targeted at Rs. 210 billion out of which Rs. 148.2 billion were proposed to be spent in the public sector and Rs. 62 billion were proposed for the private sector.No major new industrial projects was planned for the public sector however it was emphasized the completion of the under construction Pakistan steel mills and fertilizers and cement factories.Private sector was expected to pay a vital role in the development of few industries which is good for the well-being of the country.

Achievements/FailureAs a whole, the growth rate projected for the industrial sector was almost fulfilled (growth rate was 9.7% as compared to 10% targeted in the Plan).In July 1978, the interest rate on loans for fixed investment in industry and agriculture was reduced from 12.5% to 11%. The Zia government accorded more importance to planning. Fifth plan was an attempt to stabilize the economy and improve the standard of living of the poorest segment of the population.Nevertheless, some of the plan's goals were attained. Many of the controls on industry were liberalized or abolished, the balance of payments deficit was kept under control, and Pakistan became self-sufficient in all basic foodstuffs with the exception of edible oils. Yet the plan failed to stimulate substantial private industrial investment and to raise significantly the expenditure on rural infrastructure development.