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Answer 4 Early Life of Bhutto: Bhutto Undertook Large Scale Nationalization of Industry, Insurance and Banking

Zulfikar Ali Bhutto nationalized major industries and financial institutions in Pakistan between 1972-1977. He nationalized 32 major industries in 1972, followed by 26 vegetable ghee units in 1973. Banks were also nationalized in 1974. Bhutto aimed to curb the power of wealthy families and fulfill promises of economic reform, but nationalization damaged investor confidence. Production and GDP growth fell as nationalized entities were mismanaged by bureaucracy instead of professionals. Nationalization of small industries further harmed the economy. Macroeconomic imbalances widened as growth slowed and inflation rose due to global oil shocks and poor weather impacting agriculture.

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238 views3 pages

Answer 4 Early Life of Bhutto: Bhutto Undertook Large Scale Nationalization of Industry, Insurance and Banking

Zulfikar Ali Bhutto nationalized major industries and financial institutions in Pakistan between 1972-1977. He nationalized 32 major industries in 1972, followed by 26 vegetable ghee units in 1973. Banks were also nationalized in 1974. Bhutto aimed to curb the power of wealthy families and fulfill promises of economic reform, but nationalization damaged investor confidence. Production and GDP growth fell as nationalized entities were mismanaged by bureaucracy instead of professionals. Nationalization of small industries further harmed the economy. Macroeconomic imbalances widened as growth slowed and inflation rose due to global oil shocks and poor weather impacting agriculture.

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Saniya sohail
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Answer 4

Early life of Bhutto

Zulfikar ali Bhutto was the Son of Shahnawaz Bhutto who was a
wealthy landlord of Sindh).he was born at a time (1927) when the
struggle for Independence was approaching its climax. His father
Shahnawaz residence at Bombay was a popular meeting spot for
leaders, hence Bhutto developed a sense of politics in his early
life. Zulfiqar Got a Law degree from University of Oxford after
which he returned to Pakistan and started teaching in the Karachi
University. On October 22, 1958 Bhutto joined Ayub Khan’s
government as the minister of power and natural resources.In
January 1963, he became the minister of foreign affair. (big
achievements: negotiations of an oil exploration agreement with
USSR in 1961, and development of close ties with China)

Nationalization policies of zulfiqar Ali Bhutto era between 1972 to 1977

Nationalization is the term used when the government takes the control of anything that was
ownned private previously. Nationalization was the policy that was implemented by Zulfiqar
Ali Bhutto. Bhutto according to his promise restored the economic order that was badly
shaken by the war.

Bhutto undertook large scale nationalization of industry, insurance and banking . The party had
programed in their manifesto to nationalize the industries gradually. After two months of
Bhutto’s resuming office, under the Economic Reforms order that was passed in January
1972, the government took over 32 industries from the private sector. The industries were
put under to basic categories 1) Iron and steel industries 2) Basic Metal industries 3) Heavy
Engineering industries 4) Heavy Electrical Industries 5) Assembly and Manufacture of Motor
vehicles 6) Tractor Plant Assembly and Manufactures 7) Heavy and Basic chemicals 8)
Petrol chemical industries 9) Cement industries 10) Electricity, gas and oil refining.

It was first step towards the policy of nationalization in September 1973, 26 vegetable ghee
units were nationalized.

Banks were also nationalized in 1974. They were in placed the hands of government on the
financing of Banks.
Bhutto’s government also took full control of country’s educational system by nationalizing private
educational establishments.

The economic consequences of the separation of East Pakistan and the large and unexpected oil shocks
in 1973 led to major changes and problems faced by Bhutto’s regime;

Agricultural output during the same year also suffered a lot because of adverse weather conditions,
both draught and floods which caused the economic growth to slow down, inflation accelerated and
macroeconomic imbalances widened.

The large scale inflows of foreign capital and remittances after 1973 cushioned the impact of the steep
rise in the oil import bill.

• Macroeconomic Management

During the five years of Bhutto's government the annual growth rate of economy
averaged 4.9% and this followed the virtual stagnation of GDP at 1.7% annual growth in
the transition years 1970-2.

With the deteriorating economic and political relations with East Pakistan and eventual
breakup of the country, the slow down of growth was inevitable.

Between 1972-73 and 1976-77, the agriculture growth rate was 2% per
year as opposed to 6.4% per year recorded throughout the 1960s.
As for Cotton Trading Corporation, it managed to operate less than half
of the nationalised ginning units. It was largely used as a source of
unproductive employment, as its number of workers almost doubled in
just one year.

PNationalization

• PPP came into power with the slogan of “Roti, Kapra and Makan” the Reason was not
sufficient for nationalization

• The government took over the management and control of thirty-one industrial
units in January 1972 in ten basic industry groups including iron and steel, heavy
engineering, motor vehicles, heavy chemicals and cement.

• In March 1972, the government took over the management and control of thirty-
two life insurance companies.

• The Pakistani banks were not nationalized till 1974.

• Cotton export and cooking oil industries were nationalized during 1973.
• The final wave of nationalization during the Bhutto period came in July 1976 when government
unexpectedly took over about three thousand cotton ginning factories, rice and flour mills with
a total turnover of Rs.14 billion and employing 3,000 persons.

• The nationalization of heavy industries, insurance and banking were part of the relatively well
thought out actions to curb the power of 22 families, whereas the decision to nationalize cotton
export trade, edible oil industry and agro processing units were largely ad hoc, responding
either to economic or political pressures.

Problems with nationalization policy

He Handed over of these entities to the


bureaucracy instead of professional corporate
management

Bhutto made the mistake of nationalizing small


and medium industry (Pakistan National Alliance)
• Damaged the confidence of the investors

• drastic fall in production & GDP growth which consequently led to low savings & tax collection,
public sector overweighed, sick industries, fall in production and most importantly increase in
corruption

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