Home > Planning Process

Planning Process in Pakistan

Pakistan came into being in 1947, it was considered a "Economic Wasteland" and many had doubts about its economic survival.

It was a rare spectacle of the birth of a new nation based on ideology composed of two geographical regions separated by 1000 miles of an alien hostile territory and 3000 miles of not too friendly Arabian Sea. The new "State" faced an "Identity Crisis" further compounded by diversity of languages and cultures.

With the birth of a new state, every thing came to a grinding halt. The industrial base was virtually non existent, we were producers of some of the major items of raw material but did not have the processing facilities, the new state also woefully lacked in administrative, entrepreneurial, business and financial expertise. Means of transport and communication were in shambles. Millions of unexpected refugees swarmed the new state and required rehabilitation at an enormous cost.

These were some of those formidable challenges in the face of an extra ordinary situation, which could only be met through planned development of the economy. Before independence, the colonial rulers were merely interested in prolongation of their rule and any development that took place, was incidental to this objective. Construction of roads, harbours, bridges, barrages, railways etc., can all be viewed in this perspective.

Keeping in view the above realities, the leadership immediately took up the task of amending the economic neglect of the past.

"Development Board" was established in 1948 under the Minister for Economic Affairs, with Secretaries of development ministries as members. D.B was directly answerable to the Cabinet or the "Economic Committee of the Cabinet".

A '"Planning Advisory Committee" was also established to render advice, review progress and to arouse public enthusiasm for planned economic development.

D.B could not play its role effectively due to the resentment of the Ministry of Finance who considered it an intruder into its territories. The D.B was looked up on with suspension and mistrust. Its guidelines were flouted both by the borrowers and lenders. Its directives were spurned and it was by-passed in crucial economic decisions.

The "Colombo Plan" (1950), a regional plan formulated for member countries of the "Common Wealth" belonging to the South and South East Asia, was however put into effect under the aegis of the Development Board, The Colombo Plan infact had followed formulation of a, "Commonwealth Consultative Committee" that had been assigned the task of accelerating the pace of economic and social development in the region. Each member state had submitted a list of development schemes for consideration of the "Consultative Committee", and were incorporated into a comprehensive regional plan called the "Colombo Plan",

Colombo Plan was conceived for implementation for a period of six years (1951-57). The size of Colombo Plan or Pakistan schemes was estimated at Rs. 3.05 billion with an FPA of Rs. 1.20 billion.

The projects included in the Colombo Plan were prepared in haste and without proper homework. The implementation coincided with an outbreak of the Korean war, and hence necessitG1ted revision/downsizing of the Plan in 1951, carving of a "Two year Priority Plan" and execution of certain vital projects on priority basis. Due to the Korean war, there was a drastic negative impact on the economic scene in the region including Pakistan and the meagre foreign exchange resources had to be diverted for import of food grains etc. All this resulted in revising and recasting the ongoing projects and shifting in emphasis of the policies.

Due to failure, to deliver the goods, "The Development Board" was replaced by a new economic organ, “The National Planning Board" in July 1953.

Working under various constraints viz. Poor database, shortage of trained man-power, lack of clear demarcation of its rights and responsibilities in the power hierarchy, continued opposition and resentment of other financial organs and institutions and absence of a close rapport with the operating agencies, the National Planning Board, among other assignments was given the task of preparing a medium term National Plan starting April 1954.

The above factors obviously had their toll and the draft plan could not see the light of the day until May 1956. Its approval and sanction by the government was further delayed due to political turmoil and quick changes of the governments (five governments changed in quick succession between 1955 to 1958). The draft Plan was finally approved in May 1958, when three years of the Plan had already elapsed.

The military coup in 1958 imparted a semblance of political stability and the new government also undertook a drastic reorientation an revitalisation of the planning agency.

The National Planning Board was renamed as the 'Planning Commission' and important structural changes were brought about to make it more effective and viable. Concrete steps were also taken to institutionalise the whole planning process at both federal and provincial levels. Its status was raised as it became a division in the Presidential Secretariat. In order to impart an added measure of responsibility to the Planning Commission, the Chief Executive was made its ex-officio Chairman and a full-time operational head was also appointed as Deputy Chairman, with the status of a full Cabinet Minister.

Other important steps included: the establishment of Planning Cells in important ministries and departments, representation of the Commission on all important, economic decision-making organs such as the National Economic Council (NEC), the Executive Committee of the National Economic Council (ECNEC), Industrial Investment Schedules (1IS), Foreign Exchange Control Committee (FECC) etc. The Commission was also solely responsible for the preparation of the Annual Development Plan (ADP). The Second Plan (1960-65) was prepared and implemented in the backdrop of these favourable developments, which greatly contributed to its success. This period (1960-65) was also characterised by internal peace and political stability and the planning process received unstinted support of the Government. It was therefore no wonder that Pakistan came to be looked upon as a model of planned development.

The Third Plan (1965-70) was thus launched on an optimistic note in the background of credible performance of the economy during the Second Plan. The Third Plan had an inauspicious and disastrous start. First, skirmishes between armies of India and Pakistan in Rann of Kutch in early 1956 led to general conflagration in September 1965 due to which resources were diverted from development to organisation of war efforts. The plan also suffered on account of stoppage of economic assistance by its major partner in development i.e. USA.

The Third Plan (1965-70), although well-conceived and launched on the heels of the successful conclusion of the Second Plan, was thus only a partial success which too was largely attributable to the growth momentum achieved by the economy in the Second Plan.

The transformation of the political conditions from one of relative stability to that of complete chaos and uncertainty also had an adverse impact on the fortunes of the planning agency. The period was also marked by further sharpening of difference between the Eastern and Western regions of the country. The situation remained very fluid and unpredictable amidst major developments such as break-up of the One-Unit, restoration of the principle of parity and preparations for the holding of the first ever general elections.

The Fourth Plan (1970- 75) was therefore launched a mid great uncertainties and lacked vital support and commitment of the government which was preoccupied with the tackling of the tangled political scenario. The rejection of the 'growth philosophy' relentlessly pursued by the Planning Commission, which was the primary vehicle for concreting the philosophy into a solid shape. The Planning Commission was therefore obliged to keep a low profile with its image badly tarnished and the Government was also obliged to keep it at a distance.

The political conditions deteriorated after the elections, which sprang many surprises, and the Fourth Plan, which was almost a non-starter from the very beginning, became absolutely irrelevant under the dramatically changed political landscape. The Plan was thus buried in the debris of the United Pakistan without any formal ceremonial rites.

This followed a difficult period of distress for the Planning Commission as professional economists and other highly skilled personnel left its ranks in utter frustration. The Government which took over reins of power in the remaining or 'New Pakistan' also did not look upon the Commission's past in a favourable light due to its close proximity with the Ayubian economic policies.

The Planning Commission was also greatly immobilised, as the new Government altogether abandoned medium-term planning and switched over to short-term planning. The annual development plans became the main instrument of planned development. Perhaps this was the only realistic course in view of the deepening. Political and economic uncertainties .The period 1972- 77 was marked by' ad- hoc planning' with major reliance on annual plans.

The period was also characterised by a major shift in the economic strategy followed thus far. The 'GNP growth' strategy, which stood discredited, was replaced by that of 'Social Justice’, which also brought in its trail nationalisation of basic industries with a view to enabling the government to control 'the commanding heights' of the economy.

The history and evolution of the Planning Agency in Pakistan is so inter-twined with the political developments that one cannot be viewed in isolation from the other.

The period of 'ad-hoc' planning ended in July 1977 and the new government immediately reverted back to medium-term planning. The Planning Commission was dusted off after a fairly long period of relative inactivity and was asked to formulate a new five year plan-fifth in sequence covering the period from 1978 to 1983. A full time Deputy Chairman of the Planning Commission was appointed after a lapse of many years. The Planning commission was also reconstitued ensuring better regional representation and professionalism. Later in the day, a full-fledged and independent Ministry of Planning & Development was created and made incharge of the affairs of the Planning Commission. Another development of even greater importance was the subsequent merger of the Ministry of Finance and the Ministry of Planning & Development. This was perhaps a good resolution of the simmering friction between the two powerful ministries. The merger was however short-lived and was abolished with the coming into power of a yet new government as a result of the 1985 general elections.

The Fifth Plan (1978-83) also remained handicapped due to political unrest, Afghan war and the refugee influx, adverse developments in the World economy such as oil crisis (1979), economic recession in the West (1980) and increase in interest rates (1981), while the continued large inflows of remittances and a number of policy measures aimed at reviving the confidence of the business community, helped to achieve a growth rate of 6.7% during the plan period.

The Sixth Plan (1983-88) which was turned into a rolling plan during the last two years of its life, can be regarded only a partial success.

The Seventh Plan (1988-93) was conceived as first, in a chain of three consecutive medium term plans or to be more precise within the frame work of the second perspective plan of Pakistan (1988-93) Launched simultaneously with the Seventh Plan. Therefore the Plan entailed a long term vision of the society and vowed to work for the realisation of the broad socio-economic objectives spelt out in the Perspective Plan.

The Eighth Plan: The Eighth Five Year Plan (1993-98) was launched at a crucial period. While the overall objectives of planning were pivoted around the enhancement of social and economic welfare of he people, they were pursued at a time of fundamental change in domestic and global economies; most notably the redefinition of the government's role in, the economy. This warranted a reorientation of the planning process. The conventional approaches to planning reflected in a large public sector investment programme, detailed sectoral planning, elaborate controls on imports and domestic credit, highly differentiated tax and tariff regimes, and exclusive reliance of the government for the provision of social and physical infrastructure, needed a change. The often neglected areas of equity and economic environmental stability were required to be brought under sharper focus.

The readjustments in economic management included privatization, decontrol, deregulation, liberalization, market orientation, community involvement and conservation physical environment. At the policy level, there was a parallel shift towards the use of incentives, inducements and deterrents in preference to direct controls. Public investment increasingly focused on physical and social infrastructure. And even in these areas the private investment was encouraged. Legal instruments, institutions and monitoring mechanisms were being developed to ensure the effective functioning of the new policies.

It was anticipated that initiatives will alter the nature of planning. In contrast to earlier approaches. Which saw the government as a catalyst, a manager, and a motivator. The objective of policy was no longer what the government could accomplish on its own, but how it could induce other economic agents to act in concert for the pursuit of the collective interest. These agents included business managers, workers, investors (both local and foreign). NGOs and common households. Inducing them require the use of economic incentives, institutions for engendering cooperation, training and skill development, monitoring. Information and dissemination, I provision of infrastructure, proper maintenance of assets, stability of systems and policies, and the removal of obstacles. The exercise of economic planning helped the government step into its new role. This transformation marked a shift from allocative planning to indicative planning, from direct intervention to market signals. Fiscal, monetary, trade and sectoral policies became more relevant.

Apart from addressing these basic concerns, the Eighth Plan aimed at redressal of certain imbalances, which had tended to distort the developmental process. The Plan aimed to achieve five basic balances:

Balance between planning for the public and private sectors: i.e. a balance between planning and policy.

Inter and intra-Sectoral balance: Balance between growth in GDP and progress of the social sectors and physical infrastructure.

Balance between new investment and use of existing capital stock: improve the utilization of capacity, the quality of output and more generally the productivity of capital and labour.

Balance between project preparation and implementation: serious and growing weaknesses in implementation capacity affect the efficacy of public expenditures. An improvement would lower incremental capital output ratios and raise the growth rate from a given level of investment. If the neglect of implementation issues continues, wastages would multiply, gestation time would be longer and the aid pipeline would remain clogged.

Balance between committed and available resources: at the stage of formulation of a five Year Plan it is generally discovered that the major part of resources has to be allocated to the ongoing projects. This militates against realization of new priorities. The main reason is that the number of projects is too large, and there is no control over the size of project portfolio of any sector. The aim is to ensure that substantial shares of the Plan resources are available for new Initiatives. A close scrutiny of the ongoing projects will be undertaken with a view to cutting down and eliminating low
priority projects so as to accommodate emerging priorities.

Project entry into the funding stream would be more selective, to avoid thin spread of resources and to accelerate the pace of completion.

The Eighth Plan was not therefore aimed to be simply a summation of public sector expenditures or a list of schemes drawn up by ministries, departments and agencies and put together within a financial framework. It aimed at breaking new grounds. It was to be more releant to the pressing problems of today, and the awesome challenges of tomorrow. It must be more balanced in content and style. It was to reflect architecture and not merely a mosaic of micro level proposals. It was not to be restricted to the creation of physical assets but encompassing sustained improvement in the productive capacity of the people. It aimed at synthesising dynamism with stability, creativity with discipline and encouragement linear economic advancement, but a total transformation, so that Pakistan's polity could fulfil its appointed destiny in the more challenging world of the twenty first century.

The Ninth Plan (1998-2003) The Planning Commission engaged in this task of making 9th Five Year Plan which was to be made in the second half of 1990s. But the document of the 9th Five Year Plan was not launched until the year 2000 and was subsequently abandoned due to the changing socio-economic and global scenario. However the background and salient features of the plan are provided below.

The Ninth Plan was to be prepared in the background of profound trends towards globalization in the international economy and a rapid pace of marketization and deregulation in the national economy.

Copyright: Planning and Development Department, Government of Sindh