Submitted to:

Prof.Bushra Usman
Submitted by:
Anam hashmi --12(M)
Mehwish Khalil --14(M)
Saira Yousaf --18(M)
Zunaira Azhar --24(M)
Aneeqa Zahid—25(M)
Atiqa Mirza—51(M)
 ECONOMIC PLANNING OF PAKISTAN

TABLE OF CONTENTS:
What is planning?
Why is planning so important?____________________________________________________3
Importance of planning: ._______________________________________________________3
Economic Planning:____________________________________________________________3
Importance of Economic Planning_________________________________________________4
Economic planning in Pakistan:__________________________________________________5
Planning Machinery in Pakistan__________________________________________________5
National Economic Council (NEC):____________________________________________________5

Executive Committee of NEC (ECNEC):_________________________________________________5

Annual Plan Coordination Committee (APCC):_____________________________________________6

Central Development Working Party (CDWP):_____________________________________________6

Plan Preparation and Implementation Cycle:________________________________________6

5 YEAR PLANS:_______________________________________________________________7
FIRST FIVE YEAR PLAN__________________________________________________________7

SECOND FIVE YEAR PLAN (1960-1965)_______________________________________________________7

THIRD FIVE YEAR PLAN (1965-1970)_________________________________________________________8

FOURTH FIVE YEAR PLAN (1970-1975)_______________________________________________________8

FIFTH FIVE YEAR PLAN (1978-1983)_________________________________________________________8

SIXTH FIVE YEAR PLAN (1983-88)___________________________________________________________9

SEVENTH FIVE YEAR PLAN (1988-1993)______________________________________________________9

Medium Term Development Framework (MTDF) 2005-1010

Factors hindering Effective Planning in Pakistan13

Pakistan’s economy hit by flood,terrorism,energy crisis15

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What is planning?
Planning is preparing a sequence of action steps to achieve some specific goal.
Planning is also crucial for meeting your needs during each action step with your time, money, or other
resources. With careful planning you often can see if at some point you are likely to face a problem. It is
much easier to adjust your plan to avoid or smoothen a coming crisis, rather than to deal with the crisis
when it comes unexpected.

Why is planning so important?

Noted author Mark Twain hit it on the head when he said,

"The Secret of getting ahead is getting started. The secret of getting started is breaking your
complex overwhelming tasks into small manageable ones – then starting on the first one."
If you don't know where you are going, it is very difficult to get there. It is this simple statement which
explains why planning is so important when working for a nation.

Importance of planning:

• Planning is leveraged time.

• Planning provides the framework for informed decision making.
• Planning reduces crisis management.
• Planning allows focus and personal energy direction.
• Planning allows you to set priorities and focus on what is important.

Economic Planning:
There is no precise definition of economic planning which is acceptable to all economists and political
thinkers. The idea under-lying planning is a conscious and deliberate use of resources of a community
with a view to achieve certain targets of production for the overall development of the economy. As
the targets of production and development are different in different economies, so the definition of
economic planning is different for all economists.
Prof. H.D. Dickinson defines economic planning as

The making of major economic decisions, what and how mush is to be produced and to whom it is to
be allocated by the conscious decision of a determinate authority, on the basis of a comprehensive
survey of the economic system as a whole.

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Importance of Economic Planning

In developing countries, planning is considered an essential mean of guiding and accelerating their
development. The need for planning arises because the market mechanism does not function well and
efficiently in underdeveloped nations. However, Pakistan is an under developed country and economic
planning is necessary to boosts its resources.
This economic planning should be long-term because annual economic development plans cannot
offer satisfactory results. That’s the period of development plans are usually kept five years. All
developments plans of Pakistan are of five years. The importance of economic planning can be looked
from these perspectives.

1. Decisions of the Planning Authority are Superior

The planning authority has a better insight into the economic problems of the country. It can mobilize
and utilize the available resources in the best interest of its citizens.

2. Coordinated Programme
In a country there are millions of persons who are engaged in economic activities for earning profit.
The decisions taken by some of most of them may be short sighted, irrational, self frustrating and
socially disastrous. If machinery is created to coordinate the working of the businessmen, the economy
can be set on the right lines and the country can progress at the maximum possible rate of growth .

3. Eliminating Business Fluctuations

All the market economies of the world have faced and are passing through various phases of trade
cycle. The period of prosperity is followed by a period of low activity. Planning has proved to be a
powerful instrument in eliminating business fluctuations.

4. Reducing Economic Inequalities

In the capitalist countries, the gap between the rich and the poor is widening. Planning has proved to
be an effective weapon in reducing the shocking inequalities in income.

5. Provision of Job Opportunities

With the aid of planning, the resources of country are utilized to the maximum. All the able bodied
persons are gainfully employed. There is also security of income, tenure and employment.

6. Proper Distribution of Resources

In a planned economy there will be proper distribution of resources, between the production of
essential and non-essential goods.

7. Prevents Artificial Shortages

In an unplanned economy, the industrialists and businessmen withhold the supply of goods and create
artificial scarcity with a view to making profits. Through planned production and proper supply of
goods, the prices of the commodities are not allowed to fluctuate.

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8. Making Major Economic Changes

In a free enterprise economy the market mechanism fails to create major economic changes such as
industrial revolution, rationalization movement in the country. The government measures facilitate,
stimulate, guide and control the means of production through planning.

9. High Rate of Capital Accumulation

As planning makes optimum allocation of a country’s resources, it can, therefore, secure for greater
rate of capital accumulation than is possible in a market economy.

Economic planning in Pakistan:

Planning Machinery in Pakistan:

Following are the planning agencies in Pakistan:
 
National Economic Council (NEC):
The planning machinery in Pakistan is headed by the NEC as the supreme policy making body in the
economic sphere. It has the President as the Chairman and all Federal Ministers, in charge of
development ministries and provincial governors as members.
Functions of NEC:
(a)   To review the overall economic situation in the country
(b)  To formulate plans with respect to financial, commercial and economic policies and economic
development
(c)   To approve the Five-Year Plans (MTDF), the Annual Development Plans (ADP), provincial
development schemes in the public sector above a certain financial limit and all non-profit
projects.
 
To ensure implementation of the decisions, the secretary of each Ministry is expected to keep a record
of all the decisions conveyed to him and to watch the progress of action until it is completed. 
Executive Committee of NEC (ECNEC):
The body directly below the NEC is the ECNEC. It is headed by the Federal Minister for Finance,
Planning and Development. Its members include all Federal Ministers in charge of development
ministries, provincial governors or their nominees and provincial ministers, in charge of planning and
development departments.
 
Functions:
(a)   To set up development schemes (both in the public and private sectors) pending their
submission to the NEC.
(b)  To allow moderate changes in the plan and sectoral adjustments within the overall plan
allocation.
(c)   To supervise the implementation of economic policies laid down by the Cabinet and the NEC.

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Annual Plan Coordination Committee (APCC):

Another body concerned with economic policy is the APCC which is a purely advisory body responsible
for advising the Cabinet and the NEC regarding the coordination of policies. It is headed by the
Secretary General, Finance, Planning and Economic Coordination. 
Central Development Working Party (CDWP):
Below ECNEC is the CDWP which is responsible for the scrutiny and sanction of development projects.
The Secretary, Planning Division, is the president of CDWP. Its members include federal secretaries of
the concerned departments, federal finance secretary and chairman of the provincial planning and
development departments.
 
Plan Preparation and Implementation Cycle:
The process of development appraisal and performance evaluation is an intrinsic component of
planning. The success of the whole process of planning, implementation, monitoring and evaluation
rests upon the very first step of ‘identifying and specifying clearly the real objectives and targets’.

The standard plan preparation and plan implementation cycle includes:

 
(a)   Establishment of goals, objectives and targets;
(b)   Formulation of strategies;
(c)   Formulation of operating plans composed of policies and specific measures necessary to
achieve the real targets;
(d)   Implementation of policies and measures to the plan;
(e)   Monitoring and evaluation of performance (both financial and physical) against targets;

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5 YEAR PLANS:

FIRST FIVE YEAR PLAN

(1955-1960)

First draft of this plan was developed in 1956, but due to lack of
administrative and professional staff this draft could not be published. It was revised in late 1956 and
published in May 1958.

Size of Plan:
The size of plan was Rs.11, 500 Million which was revised to
Rs.10, 800 Million.

Objectives:
 To raise national income and per capita income
 Creation of employment opportunities

Targets:
 Increase in national income by 15%
 Increase in population by 7%

SECOND FIVE YEAR PLAN (1960-1965) :

The second plan was approved and implemented in June 1960. The
plan was revised after only one year and the revised plan was
published in November 1961.

Size of the Plan:

The size of the plan was Rs.19 Billion after revision.

Objectives:
 To increase national income
 To create job opportunities inside and outside the country

Priorities of the Plan:

Highest priority was given to agriculture sector in order to
reduce the food grain shortage and attain self sufficiency in

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agriculture products.

Targets:
Increase in GNP up to 24% and per capita income up to 12%
Achievement of growth rate of 4.7%

THIRD FIVE YEAR PLAN (1965-1970) :

Third five year plan was approved by National Economic Council (NEC) in May, 1965 and it was revised
in 1966 due to war 0f 1965 with India.

SIZE OF THE PLAN:

Total size of the plan was Rs.52, 000 Million out of which 30, 000 Million was allocated for public
sector and 22,000 Million was decided to be spent in private sector.

FINANCING:
It was decided that 68% of total size of plan will be financed by internal sources and the remaining 32%
will be financed by external sources.

FOURTH FIVE YEAR PLAN (1970-1975) :

Forth five year plan was prepared within the framework of perspective plan. The period of plan was
from 1st July to 30th June.

SIZE OF PLAN:
The total size of the plan was Rs.75, 000 Million out of which Rs.49, 000 Million was allocated to public
sector and 26, 000 Million to private sector.

PRIORITIES:
 Water and power sector was given the highest priority by investing 31%
 Transport and communication was given the second priority by investing 31%

FIFTH FIVE YEAR PLAN (1978-1983) :

Fifth five year plan was formulated in 1977 by Martial Law Government and launched on July;
1978.The plan was launched in very difficult economic & political condition

SIZE OF PLAN:
The total size of the plan was Rs.210.22 Million. A sum of Rs.128.22 was allocated to public sector and
Rs.62.00 Billion to private sector. 75% of total expenditure was decided to be financed by internal

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sources and 25% from external sources.

TARGETS:
 To increase national income by 7.2 % per annum and per capita income by 4.2% per
annum
 To create emplacement opportunities

SIXTH FIVE YEAR PLAN (1983-88) :

Sixth five year plan was launched on 1 st July, 1983. The draft of this plan was prepared and
implemented by newly created Ministry of Planning.

SIZE OF PLAN:
The total size of the plan was Rs.495 Billion. This amount was allocated between public and private
sector in respective amounts of Rs.295billion and Rs.200 Billion.

TARGETS:
 To increase GNP by 6.5% per annum
 To increase family income by Rs.900 per annum

STRATEGY:
 Increased opportunities for small farmers and provision of infrastructure
 Creation of 4 billion new jobs by emphasizing on small scale production in agriculture and
industry

SEVENTH FIVE YEAR PLAN (1988-1993) :

SIZE OF PLAN:
An amount of Rs.660.2 billion had been allocated to 7th plan to meet the financial needs and
expenditures. Rs.322.95 Billion was allocated to public sector and Rs.292.4 Billion was allocated to
private sector.

TARGETS:
 To attain annual growth rate of 6.5% of GNP
 Increase in per capita income to Rs.3,562 at the end of plan’s period

ACHIEVEMENTS:
 GDP rate increased to 5%
 Increase in per capita income to Rs.3,562 at the end of plan’s period

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EIGHTH FIVE YEAR PLAN (1988-1993)

SIZE OF PLAN:
Size of the plan was Rs.1, 701 Billion. An amount of Rs.752 Billion was to be spent on public sector and
Rs.949 Billion on private sector.

TARGETS:
 GDP growth rate of 7%
 4.9% growth rate in agriculture sector

STRATEGY:
 Encouraging participation of private enterprises
 Industrial and commercial policies to attract private and foreign investment

Medium Term Development Framework (MTDF) 2005-10

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Pakistan Economic Outlook – June, 2010

Released…. July 16, 2010
Pakistan economy exhibited signs of recovery amid ongoing war on terror, global economic
crisis and prevalent flood. With an economic growth provisionally estimated 4.1% for 2009-10.

 Wheat crop of 24 million

tons in 2009-10
Real Sector:  Likely to export up to five
million tons of surplus
wheat.

 The Consumer price index

(CPI) of 374 items
increased by 12.7%
Inflation:
 Food inflation (14.8%)
 Non food inflation (10.4%)

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May be attributed to the recent

increase in the power tariffs during

Rs1310 billion
Government borrowing

(FBR) tax collections by May 2010

showing a decrease of 31.6%

Fiscal position: The tax collections remained low due

to tax incentives on sugar, the tax relief
package announced for Khyber-
Pakhtunkhwa

 Deficit of $2.98 billion

 The positive growth in exports due
to increase in exports of
Balance of Payments: o Food group (16 %),
o Lubricating oil (11.5%),
o Motor spirit (7.7%)
o Textile (3%).

Overseas Pakistani Remitted the highest-ever amount of

workers remittances nearly $9

Pakistan and the current war on terror have been the factors deterring investments for the last few
years. The power shortage has also been a hurdle in the growth of industry particularly small and
medium enterprises (SMEs).

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Reforms: In order to give boost to the industrial sector in Pakistan, the government has approved
to provide incentives to those industries that ensure the use of newest technology, give high
value addition, depend least on imports and are environment friendly. The government would
give incentives to such industry at par with the incentives available to special economic zones by
declaring it a ‘pioneer industry’.

The key elements of the MTDF strategy are as under:

(a) In agriculture, not only crops but livestock and fisheries will also be developed
(b) In manufacturing , the production base would be expanded through the development of
engineering goods, electronics, chemicals and other high technology-based and value added
industries..
(c) The social and physical infrastructure would be expanded by investing more in water, energy,
education and health and encouraging private sector to move into these sectors.
(e) To generate employment and to reduce poverty, investment will be encouraged in agriculture
and livestock, SMEs, housing and construction sectors.
(g) To encourage higher investment and savings, efforts would be made to provide the enabling
environment to foster local and foreign investment and enhance both public and private savings.

Factors hindering Effective Planning in Pakistan

Pakistan, like other less developed countries, is caught up in the vicious circle of poverty. Since
Partition, the Government of Pakistan is anxious to raise the standard of living of the people but
it has not yet been able to come out of the boggy of poverty. The gap between the developed
and the developing countries is widening instead of narrowing. The main factors which have
inhibited partially or wholly effective planning in Pakistan are as follows:

1. Lack of Basic Data

In Pakistan, the date on natural, human and financial resources provided to the planning
machinery are mostly inaccurate and unreliable. If the date are obsolete or continue wide
margins or error, the objectives of the plans would not be achieved and the plan ends in failure.

2. Appointment of Non-Technical Persons

In the entire history of the Planning Commission, (except for ten years) of Pakistan, the
Planning Commission has been headed by a senior member of the civil service, rather than by a
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professional economist.

3. Lack of Public Co-operation

Lack of co-operation and mistrust of the Government has remained an important hurdle to
effective planning in Pakistan.

4. Political Instability
The rapid change over of the government set up, has led to unplanned, haphazard economic
growth. The uncertainties of the election results have hindered, and slowed down the rate of
economic development in the country and have made the plans mostly ineffective.

5. Role of Foreign Assistance

So long the interest between the aid giving countries and the aid receiving countries do not
conflict, the aid is given. As and when the interests of the two clashes, the aid is immediately
stopped or reduced Pakistan aid has been curtailed many a times in the past and the
achievement of the plans fell short of expectations.

6. Natural Calamities
Agriculture is the backbone of our country. It now contributes 25% of GDP accounts for 45% of
foreign exchange earning and engages 50% of the labor force. If in any year or years, the rain is
untimely, weather unfavorable or locust storm attacks the standing crop, the agricultural
productions falls short of the target. Export of raw material and manufactured goods decline.
Expenditure on the import of food-grain increases. The sectorial allocations in the plan then
have to be revised which upsets the whole programme of planning.

7. Dualism
Dualism is another important constraint on the effective planning in Pakistan. The difference in
social customs, difference of technology and a gap in the level of per capital income between
the four provinces of the country, have stood in the way of effective planning in Pakistan.

8. Ambitious Plan
If we look at the objectives of all the Eight Five Year Plans, we will find them too ambitious but
they are not properly fetched in time. When the objectives of plans are partially achieved , it
create discontentment among the people and reduce the usefulness of the development plans.

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Pakistan’s economy hit by flood, terrorism, energy

crisis

As low as zero percent

FLOOD:
4.5%
25 percent

GDP growth 4 million

Could reach 25 percent
GDP loss

Cotton crop loss

Homeless people

Inflation
According to SakibSherani, a senior adviser to the finance ministry:
There is a whole range of growth estimates which would be revised once the actual impact of the floods
became clear. Zero percent is the lower bound of these estimates, zero growth estimates are based on
the economic impact of the damage caused to key crops and livestock, adding an estimated 25 percent
of the cotton crop has been affected.

TERRORISM:
Terrorism has done incalculable damage to the economy which is struggling to recover from a
Deep crisis. According to a recent survey terrorism has cost the economy a hefty sum of Rs 380
billion in 2009 alone over all terrorism has cost the country economy more than $35 billion in
lost exports, revenues, opportunity etc.

ENERGY CRISIS:
Shortages of energy and power do not let the boom entered into the industrial sector. In addition the sanction applied
by IMF on different sectors creating a hurdle. This resulted in unemployment and services sector decline.

It worsened the economic conditions of the country by decreasing agricultural production as well
as stopping industrial process. Being an agricultural country, a huge quantity of agricultural raw
material is produced in Pakistan. But due to energy crisis, industrial process stopped and
Pakistan has to face economic setback. Consequently, millions of the people working in
industrial units have been deployed

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Being an agro based economy Pakistan should focus on the development of agriculture department. Financial sector
should be developed. Instead in focusing to much on macro financing, micro financing must be given a chance. Trade
deficits should be reduced. This can only be done by eradicating the trust deficit, which will boost our exports as well
as imports. It will also bring FDI’s (Foreign Direct Investment) at home. There should be short term as well as long
term policies. As Pakistan’s economy is dependent economy so it should be made strong enough to reject the foreign
aid or loans on their conditions, which can directly or indirectly bring harm to the economy. Still the Government is
unable to differentiate and reorganize the developed and non-developed budget. Solid fiscal policies should be made
to give advantage to both, demander and supplier. This would also be beneficial for the skilled workers, who fly away
from the land. Despite all these, there must be political, economic and social stability in the state. A proper
accountability set up must be introduced to eradicate corruption as it leads to massive human deprecation. And the
final solution of this problem is good governance.

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