first five year plans

7/31/2019 First Five Year Plans

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Introduction

Pakistan has a semi-industrialized economy, which mainly encompassestextiles , 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

1983s 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 thenationalizations of the mid-1970s.

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http://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Internalhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Chemicalshttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Internalhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Textiles


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Yearly Analysis of First Five Year Plans &Findings Regarding Objectives,

Achievements & failures

During 1961-62 The increase in industrial production in the 2-was about 18 percent, as

compared to only 6 percent during 1961.

During the first 2.5years of the plan period (July 1960-dec 1962), theprevious made in last industrial investment schedule (November 1960) hadbeen over committed to the extent of 43 per against the total provision of rs.284 crores the amount committed war s 407 crores.

Guiding objective of government industrial policy to is to maximize theproduction of manufacturing goods within the country and to accelerate e thedevelopment of the less developed regions.

Protection from foreign competition and the various fiscal and monetaryconcession and facilities are some of the many aids which the government hasprovided to industry. Government policy to entrust the public sector with onlysuch enterprises as the private sector is either unable or unwilling to

undertake, because of large capital investment or low return. Special attentionfrom government to the industrial development of less developed areas theestablishment

Projects of heave industries and the heavy sophisticated and first half of 196y industries such as trucks, machine tools and electronics equipment havealready been sanctioned.

During 1962-63

Investment schedule:

It will de seen from the above that the amount so far sanctioned hasexceeded the provision made in the schedule by 43 percent. Of the 107 industries provided for in the schedule,provision in respect of 69 has either been fullycommitted or over utilized. Some of the importantitems fro which allocation have been exhausted are

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steel, pipes, cotton spinning and weaving and processing of fish, and shrimps,edible oils and vegetable ghee.

During 1963-64

The industrial policy of government continued to aim at rapidlyexpanding the production of consumer, exportable and producer goods,improving the industrial efficiency and quality of local products andaccelerating the development of less developed regions.

Production of large and medium industries during the first three years of the second plan period increased by 34 per cent and that of small industriesby 15 per cent, against 60 per cent and 25 per cent respectively aimed atduring the entire plan period.

Taking 1959-60 as the base year the index of industrial production rosefrom 119.2 in 1961-62 to 133.6 in 1962-63 and is estimated to have increasedto 156.5 in the quarter oct to dec, 1963.

West Pakistan industrial development corporation:

Heavy engineering: the feasibility report on the heavy industry complex,estimated to cost 25 crores has been received. Effort is also being made toassociate foreign capital participation.

Chemical fertilizers: The expansion will raise capacity from 50/000 tons to 1lakh tons. Financing arrangement s with thesupplying countries is being made for theLyallpur factory expansion aimed at raisingthe capacity by 36,000 tone of superphosphate.

Cement factories: a scheme for the 5 th

plan of the zeal par cement factory to raisepresent capacity by another 2, 10,000 tonsper annum is in hand, while cement plant of 15,000 tons capacity are in early stages of execution.

Sugar industry: W.P.I.D.C has sponsored two sugar mills at bannu and bad ineach with a capacity of 15,000 to 18,000 tons of white sugar per annum.

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Jute: This mill at jaranwala in west pak will manufacture 17,000 tones of jutegoods per annum.

shipyard : the expansion scheme form the Karachi shipyard has beenprepared by the corporation. it provides a second dry-dock and a second berthand constriction of ships of 10,000 tons per year.

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During 1964-65

The efforts made both by the government and by private enterprises toachieve these objectives have met with a large measure of success. The

increase in manufacturing output was on less spectacular. Its index which hadrisen by 12 per cent to 134.2 in 1962-63 rose by 13.8 per cent to 152.7 in1963-64 and stood at 157.6 in oct- dec 1964.

Almost all industries contributed to the increase in production so muchthat self-sufficiency has been attained in a large number of consumer goodsindustries and attention is now being focused on the development of heavyand more sophisticated industries like steel mills machine tools plant petrolchemicals and fertilizers factories etc.

During 1965-66During 1965-1966the pace of industrial growth was slower because of

the several factors like the effect of war with India which for sometimerestricted the operation of some industries, suspension of foreign economicaid and consequent reduction in imported industries raw material and spareparts and diversion of some national resources to defense. But in-spite of these problems the industrial growth maintained.

According to central statistics office the index of production of

manufacturing industries increased by 6% from201.7 in 1964-65 to 214.2 in1965-66. There was significant increase in 65-66 in the production of sugar,vegetable ghee, cigarettes, jute goods, art silk and rayon cloth, some varietiesof and some organic chemicals like sulphuric acid and chlorine gas. Andhowever there were declines in the production of cotton, textile, newsprint,straw, and paper board, packing and other paper, tea, sea salt, cement, tiresand tubes, paints, super phosphate and few fertilizer and soda ash.

During 1966-67

The production trend during this year appears to b encouraging with theexpectation of chemical and cotton textile. The production of mineralsincreases very slowly. The index of minerals production rose by 1.5% pointfrom 174.5 to 176 during this year. It rose by 6.2 points to 182.2 during 66-67.

The index is estimated to rise by 9% to 233 in 66-67.

Investment: A comprehensive industrial investment schedule for the entirethird plane period aimed ensuring fulfillment planes investment target of 830

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crores. It covered 200 items involving large medium and small industries theinvestment allocation is rupees 1088.53 crores in the private sectors, 586.07crores West Pakistan and 502.46 crores for East Pakistan.

Credits: Major allocations during this year from France 16.19 million $. USSR

9.67 million $.UK 15.98 million $. WORLD BANK 9.18 million $ and Belgium 4million $. Total allocation increase from 89.21 million $ in this year to 121.48million $.

During 1967-68 The government entered into an agreement with the government of

Poland will provide the equipment required for the implementation of thisproject and it consists of 2.6 crore expenditure. In western Pakistan duringthis year 143 miles of new forest roads and bridle paths were constructed and

another 150 miles are expected to be constructed. This year government hadgiven the attention to developed heavy and more sophisticated industriessuch as engineering, electrical equipment, machine tools and petro chemicalsetc.

During this year there is increase in the production of tea, salt, cottoncloth and yarn, board, caustic soda, cement and cycle rubber tires and tubes.

The increase in the quantum index of manufacturing industries from 100 in1959-60 to 201.7 in 1964-65.

During 1968-69Growth in 68-69 was 7.4% that was previously 7.8%. And in 49-50 the

share go agriculture was standing 60% which cam\e down to 46% in 68-69. This trend towards diversification is also reflected in the pattern of exportsand imports the share of primary commodities, which was 95% of our exportsin 1950 to 1951 decline to 69% in 64-65 and future to 53% in67-68 the rest being accounted for bymanufacture and semi manufacture. During1967-68 and 1968-69 the increase in

manufacturing output in certain industrieswas a quite impressive. Production of seasalt and cigarettes have already exceed thepain target, while the performance of newsprints and mechanical paper was 47%,cotton yarn 79.6%, white sugar 63.9%, vegetable ghee 68.6%, juice goods53.4$%. During 1967-68, substantial gains were also recorded by cotton yarn

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and cloth fertilizes and chemicals, writing and printing paper etc. production of board and cycle tires and tubes, however, declined during the year.

During 1971-72

Industrial manufacturing is second largest sector in the economy in termof its contribution to the gross domestic products. Currently its account one -fifth of GDP. Cotton, Textile, Cement, leather goods etc are the productsthrough which Pakistan enter in the world markets. Cotton textile 48% addedvalue in the sector and cigarettes 10%, sugar 7%, basic metals, electric andtransport 5%.

Industrial growth is not smooth through out the history. Shortfall in thecase of chemical and chemical fertilizing because of different factor, war withIndia and tight credit polices and East Pakistan crisis. Conditions are remaining

unfavorable. The growth rate of large scale industrial decline from 13.9% in1969-70 to 2.8 in 1970-71 and showed a negative growth rate of 5.6 percentin 1971-72.

During 1972-73

Industrial sector had all along been leading sector in terms of sustaingrowth. Value added fell by 6.8%during 1971-72 compared to depress basedof 1970-71 when the growth was only 1.2%. GNP decline 12.7% 1970-71 to11.7%.in 1971-72. Factors that affect GNP is loss of East Pakistan market and

shortage of raw material. Now manufacturing is now second largest sectorafter agriculture in terms of contribution in GNP. Raw material of capital goodsaccounted for 10.5 % of total imports and capital goods constituted 42.4% of total imports.

Heavy industry: A machine tool factory in Karachi already gone inproduction and produce Rs.15 crore annually. Heavy Mechanical Complex attextile being built with Chinese assistance. The plant is producing sugar,cement, road building machinery worth over Rs. 9 crore annually. A steel millof 1 million ton capacity near Karachi with assistance of U.S.S.R.

Strikes of labor also disturb the industrial production. Labor reformsintroduce to improve the workers.

In the start of 1972-73 improve some implications through which growthof different product increase. Quantum index of manufacturing industry which

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had decline 162.1 in 1970-71 to 151.1 in 19971-72 is estimated to haveincreased to 160.6 in 1972-73.

During 1973-74

Steady growth in 1973-74. Different factor, like war with India and tightcredit polices and East Pakistan crisis growth decline 6.8% in 1971-72. Steadyimprovement or recovery in 1972-73. Greater availability of industrial rawmaterial increased growth rate 11.8% during 1972-73. In 1973-74 slow downin growth rate due to slackness, difficulties in obtaining raw material andgrowth rate is 7% projected in this year. Large and small manufacturing scale15% of total GDP. Pakistan not only manufacture consumer goods its alsoexport cotton cloth, carpet, sports good cement and leather.

During 1974-75

Manufacturing sector slow-down during 1974-75 because low level of investment and shortage of raw material. Textile has heavy weight age in totalindustrial production.

Decline export of cement fulfills the need of cement in the country.Import of raw material increased 66.6% fairly satisfactory. Improvements inindustries of cotton, sugar and cement in 1974-75. Also public sectorinvestment industry is estimated at 1974-75.

During the period july 1974-march 1975 different items decline/increaseover a comparable period of last year.

Cotton yarn and cloth: Decline of 6.8 % in the production of yarn and 23.5% decline in cloth.

Fertilizer: Increase in fertilizer production. The factories are working abovetheir rated capacities to fulfill the demand of the agriculture sector.

Vegetable ghee : The sharp increase of vegetable ghee production betterutilization of installed capacity. Actual production is 2.27 lakh tons during

1974-75.

Sugar: Decline in 4.4% in the production of sugar in 1974-75.

Cement: 16.2 % increase in cement because of operations plants are aboverated capacity.

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Cigarette: 0.3 % decrease in the production of cigarette during the periodfactory in Punjab closed.

Safety Matches: Production of safety matches 20 % increased during 1974-75.

Electric fans & M.S. products: Electric fans decline 18 % & also decline of M.S. products 6.6 %

During 1975-76

Affects of international recession cause the large scale manufacturingsector estimated to have growth of 1% with 15% for the whole sector 1974-75there was also difficult when value added project to grow by 10% in the LSMsector recorded negative growth of 1.7%

Index of manufacturing industries was 120.4 in 1974-75 and has beenrisen to 121.6% in 1975-76

At that time overall projects had been embraced both in public andprivate sector that supports the manufacturing sector that is performance of the most of the industries was satisfactory.

During 1976-77

During this time manufacturing sector continue to remain under

pressure due to various national and international factors.Export of cotton yarn 186.2m in 1972-73 decreases to 143.7 in 1975-76.

Yarn exports was 105.9m (1975-76) decreases to 87.3m in 1976-77

Export of cotton clothes, 97.1 m 1975-76 increases to 99.2m 1976-77but quantity decreases because exported prices of yarn had improved

Production of cotton yarn and cloth decreases by 18% in 1976-77 as in 1975-76

In 1976-77 LSI sector record negative growth of 2% against target of 9%In 1976-77 SSI record growth of 3%

In 1976-77 manufacturing sector overall decline by 0.8%

In 1975-76 witness the inauguration of heavy foundry and forge at Texilla thatcost about 616m.

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Processing capacity national refining increase from .5m tons to 1.5 m tons

Project of Fertilizers also continue to further broader the countiesindustrial base setting up a number of new fertilizers Cement and other plants.

During 1977-78All the industries were going good but the decline in cotton cloth

industry brought down the overall contribution made by all the industries.

Trend of Industrial Production

Some of the items were having got rise in production while some of them got short fall:

Cotton Textiles: The decline of 6.5% in the production of cloth is a follow-up

in the main.

Art-silk & Rayon cloth: In 1977-78 art-silk and Rayon cloth got 9%increase as compare to the period 1976-77 due rising domestic demand andavailability of synthetic fiber.

Vegetable Ghee: In the period 1977-78 vegetable oil got rise of 15.9% overthe period of 1976-77 due to high imports of edible oil and better availabilityof domestic cotton seed oil from large cotton crop this year.

Sugar: The increase of 22.9 % in the production of sugar was due to thebetter availability of sugar cane.

Fertilizers: Fertilizers got a small decline of 2.2% in the production wasoffset by an increase of 1% in the out of fertilizers.

During 1979-80 The industrial recovery in initiated in 1978-79,after virtual stagnation for three years hasbeen further consolidated the sector recordeda growth rate of 9.2% in 1977-78, 4.8% in1978-79 and 8.1 % in 1979-80. The privatesector lost confident in Govt. Policies and therewas a visible decline in industrial investment.

Policy/ Institutional Measures:

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Denationalization the agro based industry was the first step took byGovt. in December 1980. Ever since 32 large industries units under 10categories were take over in Public sectors.

During 1981-82Manufacturing is second largest sector in economy and accounts for

17% of GDP. This industrial gain is due to the Present Industrial policiespursued since 1977. Principle measured and incentive provided by the Govt.are indicated below:

Monetary Incentives: Mandatory target was settled for small scale industry.In July 1978, the interest rate on loans for fixed investment in industry andagriculture was reduced from 12.5% to 11%.

Fiscal Incentives: With effect from September 4, 1978 compensatoryrebates ranged from 7.5% to 12.5% on F.O.B value of the exports of maycotton textile products have been allowed. These incentives have beensubsequently extended to manufacture of engineering goods.

Other Measures: A sponsor can apply for import license for machinerydirectly to the chief controller of Imports and Exports. But normally duty ispayable on the import of machinery. The NRI projects are entitled to 25%concession in normal custom duty applicable.

During 1982-83Manufacturing sector registered a growth of 8.3% during 1982-83 as

compared to last year 11.9%. The growth performance of 9% during fifth planreflects significant increase in the production of all major consumer items andsome capital goods.

Measures to Encourage Industry:

Fiscal Measures:

The major additional fiscal measures to encourage private industrial

investors which were announced in 1981-82 and 1982-83: Initial depreciation allowance on plant and machinery were raised from

25-40%.

Monetary limit of investment rose from 45000 to 50000 RS.

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Incentives for Overseas Pakistanis: Machinery up to RS. 15 million wasallowed to be imported against non-reportable investment without any priorsanction from any agency.

Export processing Zone: To attract the foreign investors an

export processing zone has been set up at Karachi over anarea of 80.94 hectares. In this zone every kind of importtakes place and export of goods was freely allowed.Investment in zone has been allowed income taxexemption for a period of 5 years and capital gain on saleof assets will be exempt from taxes.

Pakistan Development plans There are shown first five year plans which have been presented in the historyof Pakistan which are listed below:

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

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

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

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Here we are not discussing the whole Five Years Plans but going to takespecific and relevant part related to our topic from each Five Year Plan.

First Five Year Plan (1955-60)-An Erratic Beginning to

planned Development. The revised total size of the First Plan was Rs. 1,080 crores with the publicsector expenditures of Rs. 750 crores and private sector expenditures of Rs.330 crores. The First Plan was implemented within certain obvious handicapsand limitations and its release was delayed by two Years. The GNP recoded agrowth of 13% instead of 15% as targeted in the Plan.

Industry together with fuels and minerals received another 31% of the totalresources which exceeds the target of 28% provided in the Plan.

Second Five Year Plan (1960-65)- An Experiment InFunctional Inequality.

The revised total size of the second Plan was fixed at Rs. 2300 crores inApril, 1961. As regards sector distribution, the size of the private sectorexpenditure was fixed at Rs. 1240 crores, while public sector was allocated Rs.

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680 crores and the newly introduced semi-public sector consisting of autonomous corporations was allocated the remaining sum of Rs. 380 crores.

The strategy paid off very well as the actual growth rate surpassed theprojected growth rate. The GNP registered a growth of 30% over the plan

period compared to 24% proposed in the plan and per capita income grew15% instead of 12% projected in the plan.

The large scale industrial production exhibited nearly 161% increases inproduction 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 to11.5% in 1965.

Third Five year Plan (1965-70)- A Prisoner of ExtraordinaryEvents. The revised total size of the second Plan was fixed at Rs. 5200 crores as

compared to Rs. 2300 crores in (1960-1965). In this Plan there was a greatvisible investment shift from consumer goods to capital goods industry.

If we talk about the achievement of this Plan, the performance in theindustrial sector was also far from satisfactory particularly in the large-scaleindustrial sector. The large-scale industrial sector exhibited a growth rate of 10% as against 13% targeted in the Plan. The industrial sector as a wholeexpanded at an annual growth rate of 7.8% instead of 10% targeted in thePlan. The small-scale industry also performed well.

Fourth Five year Plan (1970-75)- A non-starter from thebeginning. The revised total size of the second Plan was fixed at Rs. 7500 crores,

an increase in 44% over the Third Plan size. The increase 6.5% annual growthrate as compared to 5.5% targeted in the Plan.

The share of the industrial sector that had 10% growth rate in the lastPlan was drastically slashed from 26% in the Third Plan to 10.2% in the Fourth.

Fifth Five Year Plan (1978-83)-A Return of the MediumTerm Planning.

The total size of the Plan was targeted at Rs. 21000 crores out of which Rs.14820 crores were proposed to be spent in the public sector and Rs. 6200crores were proposed for the private sector.

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No major new industrial projects was planned for the public sectorhowever it was emphasized the completion of the under construction Pakistansteel mills and fertilizers and cement factories. Private sector was expected topay a vital role in the development of few industries which is good for the well-being of the country. As a whole, the growth rate projected for the industrialsector was almost fulfilled (growth rate was 9.7% as compared to 10%targeted in the Plan).

ConclusionDuring 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 in1959-60 to 201.7 in 1964-65. Growth in 68-69 was 7.4% that was previously7.8%. And in 49-50 the share go agriculture was standing 60% which camedown to 46% in 68-69. During 1967-68, substantial gains were also recordedby cotton yarn and cloth fertilizes and chemicals, writing and printing paperetc. The growth rate of large scale industrial decline from 13.9% in 1969-70 to2.8 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 andseparation from the Bangladesh where exist the big industry of jute.

Industrial 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 polices and East Pakistan crisis growthdecline 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 totalindustrial production. 1974-75 there was also difficult when value addedproject to grow by 10% in the LSM sector recorded negative growth of 1.7%. in1976-77 During this time manufacturing sector continue to remain underpressure due to various national and international factors.

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Recommendations As we know that the government is not strong enough and does not

have enough resources to boost up all the sectors of economy. Thatswhy they should go for the unbalanced growth where investment is tobe invested in one of the leading sector that is textile sector thatultimately results in improvement to the all lagging behind sectors thatare agricultural sector, Industrial sectors, and small and large goodsmanufacturing sector etc.

About 30 to 40 percent of the GDP ratio is to be invested in one sectorwhich will result the country to go out from the vicious circle of povertyand extension in the markets when the economies of scale achievedrather bit by bit. That will result in increase in demand side, increase in

production function and supply of savings. There should be proper the law and order situation in the country for

the purpose of abolishing the bribery, Corruption, terrorism and othersocial and economic evils.

The Govt. should encourage the foreign investor to invest in the countryand should restrict the local investor to invest only in Pakistan.

Govt. should not fully dependent on the agrarian industries. Theyshould also encourage the other sectors in the industry like IT sector,Automobile sector and others.

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first five year plans

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