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Planning in Pakistan
Public Disclosure Authorized

FILE C BY ALBERT WATERSTON

F o'IL
Public Disclosure Authorized

THE ECONOMIC DEVEIOPMENT INSTITUTE

International. Bank for Reconstruction and Development
 loot 6$4~

Return to BRI2C2, 10-2..3

PLANNING IN
PAKISTAN
Organization and Implementation

by Albert Waterston
assisted by
C. J. Martin and Fritz A. Steuber

THE ECONOMIC DEVELOPMENT INSTITUTE

International Bank for

Reconstruction and Development

The Johns Hopkins Press,

Baltimore, 1963
( 1963 by The Johns Hopkins Press, Baltimore, Maryland 21218
Printed in the United States of America
Library of Congress Catalog CardNo. 63-21770
Foreword
By the Directorof the Economic Development Institute

THIS IS THE FIFTH PUBLICATION of the Economic Development Institute.

The Institute was established in 1955 by the International Bank for
Reconstruction and Development. Its objective is to improve the quality
of economic management in government in the less developed countries.
At the Institute, senior officials of member governments of the Bank are
given an opportunity to study and discuss the practical problems facing
them as administrators as well as the larger features of the economic
landscape which their immersion in the rushing stream of day-to-day
tasks often prevents their seeing clearly. An effort is made to put before
them the growing experience of the Bank and of the international com-
munity as a whole in promoting economic development.
Publications of the Economic Development Institute are primarily
designed for use by persons working in responsible administrative and
advisory capacities in government, financial institutions or other impor-
tant sectors of the economy of the Bank's less developed countries. It is
hoped that they may also prove informative and useful to educational
institutions and groups and organizations of all kinds concerned with the
problems of economic development.
The publications are the work of individuals. While in every case
inestimable benefit has been derived from intimate contact with the work
of the Bank, the publications in no sense purport to set forth the official
views of the Bank or to be an authoritative statement of its policies in
general or in detail.
John H. Adler
Preface

THERE ARE MANY STUDIES available which discuss techniques of planning

but there are few which deal with the organizational and administrative
aspects of planning or with the design of policies, procedures and institu-
tional arrangements for implementing development plans. Because of
the lack of published material in these fields, developing countries often
establish their own machinery for planning and implementation without
benefiting from the experience of other countries. As a consequence,
they often spend undue amounts of time seeking solutions to problems
and correcting errors which have been encountered before in other
countries. These countries have, of course, used different methods to
organize the preparation and execution of development plans and pro-
grams, with varying results. In spite of this diversity and of the political,
economic and social differences among countries, which make it undesir-
able, even if it were possible, to evolve one planning system for all, there
are nonetheless enough features common to most developing economies
to make accounts of the experience of individual countries useful as
guidelines for others.
For some years, the Economic Development Institute has been assem-
bling, and using in its courses, documentation on the planning experience
in developing countries. From these materials, three country case studies
have been prepared. Planning in Morocco was the first, Planning in
Yugoslavia the second and Planning in Pakistan the third. Also under
way is a comparative analytical study of planning experience in repre-
sentative countries throughout the world, which will seek to draw such
lessons and conclusions as may be useful.
V
vi PREFACE

The material for this study came from Pakistani and other publica-
tions, both official and nonofficial, listed in the bibliography and from
numerous conversations with Pakistanis and others who have first-hand
knowledge of Pakistan and Pakistan's planning. The authors owe their
greatest debt, however, to colleagues in the World Bank. Their patient
and sympathetic guidance were of inestimable value.
So many persons have contributed to this study and have read and
commented on the several drafts through which it proceeded to its
present form that much space would be required to list their names. All
richly deserve the thanks which the authors extend to them. In par-
ticular, Richard H. Demuth, David L. Gordon and Paul E. Booz of the
World Bank, Azizali Mohammed and Moeen A. Qureshi of the Inter-
national Monetary Fund, Prof. Gustav F. Papanek of Harvard Univer-
sity, Harry Case of the Ford Foundation, G. Ahmed, formerly Chairman
of the Pakistan Planning Commission and now Pakistan's Ambassador
to the United States and Aftab Ahmad Khan of the Pakistan Planning
Commission made many thoughtful contributions which improved the
study in many ways. If errors remain, however, the fault clearly lies with
the authors.
Albert Waterston
C. J. Martin
Fritz A. Steuber
Contents

Foreword .................................................. iii

Preface .................................................... v
Essential Statistics .......................................... ix
General Map of Pakistan and Pakistan, Location Map ... (faces page) viii
I. INTRODUCTION ..................................... I
II. HISTORICAL, ECONOMIC AND
POLITICAL BACKGROUND .......... ................. 5
Resources: People and Land ............ .................. 5
Partition and Aftermath ................ ................. 8
Constitutional Changes . .................................. 10
HII. FIRST EFFORTS AT PLANNING ........ ............... 13
IV. THE FIRST FIVE YEAR PLAN ........ ................ 20
The Planning Board ..................................... 21
Provincial Planning Organizations ......... ................ 27
East Pakistan ....................................... 28
West Pakistan ...................................... 30
Local Planning ....................................... 32
The Role of Foreign Advisers ........... .................. 33
Formulating the Plan ..................................... 40
The Plan's Provisions and Publication ....................... 46
Implementing the Plan . .................................. 51
The Plan and the Budget ............ .................. 51
The Development Working Party ........ ............... 55
Public Administration ............... ................. 56
The Projects Division .............. .................. 57
Policy Making and Operations ......... ................ 59
Projects and Programs .............. .................. 61
Public Participation and Government Support ..... ........ 64
The First Plan's Results . .................................. 68
viii CONTENTS

V. THE SECOND FIVE YEAR PLAN ...... ................ 73

Planning Machinery ............. ........................ 73
The Planning Commission ........ ..................... 73
"Progressing" Machinery ........ ...................... 75
The Economic Council and The National Economic Council 81
The Economic Committee of the Cabinet and Its Successors 82
The Governors' Conference ....... .................... 84
Ministerial and Departmental Programing Units ..... ...... 84
Provincial Planning Organizations ...... ................ 87
East Pakistan .............. ...................... 88
West Pakistan .............. ...................... 91
Local Planning ............ ....................... 93
The Advisers . .......................................... 98
Formulating the Second Plan ........ ..................... 99
The Second Plan's Provisions ........ ..................... 105
Implementing the Second Plan ........ .................... 109
The Plan's Relation to the Budget ...... ................. 109
The Central Development Working Party ..... ........... 112
Project Preparation and Execution ...... ................ 113
Administrative Reforms ......... ..................... 116
The Private Sector ........... ........................ 121
The Government and the Plan ....... .................. 125
Results After Two Years .......... ....................... 127
VI. THE THIRD FIVE YEAR PLAN ....... ................ 130
VII. EVALUATION AND CONCLUSIONS ...... .............. 132
Appendix-Pakistan's Central Planning Agencies
in Order of Establishment ........ ................... 142
Bibliography............................................... 145

Charts:
I. Organization Chart, Planning Commission, President's Secretariat 80
II. Organization for Planning and Implementation in Pakistan: 1962 85
III. West Pakistan Planning and Development Department
Organization and Staffing Pattern: 1962 ...... .............. 93
Essential Statistics

Absolute Numbers Per-

centages
Area 365,529 sq. miles 100
East Pakistan 55,126 sq. miles 15.1
West Pakistan 310,403 sq. miles 84.9
Population (Feb. 1, 1961) 93.8 million' 100
East Pakistan 50.8 million' 54.2
West Pakistan 43.0 million' 45.8
Population Density
East Pakistan (including area of rivers) 922 per square mile2
West Pakistan 138 per square mile 2
Rural and Urban Distribution
Rural 86.9
Urban 13.1
Annual Rate of PopulationIncrease (1951 to 1961) 2.1
East Pakistan 1.9
West Pakistan 2.4
Total Labor Force (Estimated for 1961) of which in 29.4 million
Agriculture 23.0 million 78.2
Currency Equivalents
I rupee = US $0.21 Jsice
1 US dollar = Pakistan Rs. 4.762 1955
Rs. 1 lakh (written Rs. 1,00,000) = 100,000 rupees
Rs. 10 lakhs (written Rs. 10,00,000) = 1,000,000 rupees
Rs. 1 crore (written Rs. 1,00,00,000) = 10,000,000 rupees
Gross National Product 1961/62 Rs. 33.5 billion
Origin of National Product (1961/62) 100.0
Agriculture, forestry and fishing 55.2
Manufacturing and mining 14.9
Other economic activities 26.0
Public administration and defense 3.9
Per CapitaIncome (1961/62) Rs. 317, equivalent to about US $66.60
Gross Investment Ratio 10.5 percent

I Official figures.
2 Rivers are so large in East Pakistan that they make a substantial difference in
land area and population density if excluded. If rivers are excluded, the density of
East Pakistan's population is 979 per square mile. The density of population in
West Pakistan is almost the same with or without rivers.

ix
I.

Introduction

SINCE PAKISTAN HAS EXISTED as a nation only since the Partition

of British India in 1947, its planning experience is confined to the
period since then. Within these sixteen years, however, a faltering
economy with a precarious outlook has been converted to one
beginning to grow at an encouraging rate with promising prospects
for continued advance. Planning helped bring about this trans-
formation. From inauspicious beginnings in a politically unstable
and largely unsympathetic environment, planning has developed
into an accepted function of Government. Within a decade of its
establishment as a temporary body, the central planning agency is
not merely accepted as a permanent part of governmental admin-
istration; it is widely recognized as one of the most effective govern-
mental bodies in Pakistan. Few planning offices in developing
countries can claim such clear progress.
In the process of institutionalizing the planning function, Paki-
stan has accumulated a considerable amount of experience in
formulating and implementing development plans. As might be
expected, that experience encompasses factors which have favored
development and others which have impeded it. Since Pakistanis
are vigorous critics of their own performance, both in speech and in
print, there is no lack of information about why performance some-
times fell short of expectations. It is not that Pakistan made more
mistakes than others; Pakistanis have merely been more forthright
in admitting them. In presenting the Objectives of the Second Five
1
2 INTRODUCTION

Year Plan to the people, the President of Pakistan strongly defended

candor as a condition for achieving planning success:
If the past has not produced what was hoped for, no good will come
from blinking that fact. Better far to find out where the error was and
how it can be corrected. Some factors which led to unsatisfactory per-
formance were outside our control; others were well within it. Both
must be recognized as such, examined carefully and assessed critically.
Self-knowledge remains for the nation, as for the individual, the first
step in wisdom.'
By frankly exposing shortcomings, airing the reasons responsible
for failures, and reforming administrative procedures and organiza-
tion to correct deficiencies, the Pakistan Government has diligently
sought to reduce the repetition of errors. This is, of course, a sensi-
ble approach, but uncommon. Pakistan has been able to learn
much from candid reviews of the dangers to which the planning
process has been subject within its own borders. Other countries
may also find it valuable to study Pakistan's experience. The
knowledgeable reader should have little trouble substituting, for
Pakistan, the names of other countries, outside as well as inside
Asia, where problems of planning and execution similar to those
encountered in Pakistan have hampered progress.
This is not to say that Pakistan has no special problems of its
own. The fact that the nation is composed of two greatly dissimilar
segments, different in language and mode of life, and separated
from each other by over a thousand miles of alien territory, un-
doubtedly creates special difficulties. But these difficulties, although
exaggerated in degree, are not basically unlike regional problems
found in other countries. When Pakistan gained its independence,
it also faced unusually trying circumstances which greatly retarded
its progress. When these were overcome, however, Pakistan's ex-
perience was analogous to that of other newly emergent nations
which seek to plan the development of their economies.
The lessons of Pakistan's planning experience are therefore likely
to have wide applicability. They cover an unusually broad range of
subjects. These lessons reveal, among other things, the long period
1 Planning Commission. Objectives of the Second Five Year Plan, p. i.
 INTRODUCTION 3

of time needed to establish a viable planning organization; the dis-

advantage of establishing a planning body on a temporary basis;
the debilitating effect on a central planning agency of low salary
scales and archaic personnel policies; the deficiencies of the com-
mission type of planning agency; the necessity for locating a
national planning agency near the center of political power; the
deficiencies of a planning body (East Pakistan's) located outside
the regular civil service establishment; the desirability of decentral-
izing the formulation and implementation of plans in a country like
Pakistan; the necessity for combining progress reporting and evalua-
tion of plan results with the planning function, and the undesir-
ability of linking planning with either expediting or operational
functions; the inseparability of. the planning and policy-making
functions and the desirability of having the central planning agency
coordinate all foreign aid and technical assistance activities; the lag
of implementation behind the formulation of plans when operating
departments and agencies lack effective programing units to prepare
sound projects and programs; the desirability of tying long-term
plans to budgets through annual development programs; the prob-
lems of converting an administration created in a previous era to
preserve law and order and collect taxes into a modern govern-
mental organization capable of promoting a country's development;
the related shortcomings of a corps of top officials composed almost
entirely of "generalists" when faced with problems requiring special-
ized technical knowledge; the need for appropriate distribution of
foreign technical assistance between central and provincial planning
agencies and operating agencies; the danger of subordinating the
training to the operational function when foreign advisers are given
both tasks to perform; and, finally, the desirability of having the
Central planning organization coordinate all governmental foreign
aid and technical assistance.
But the most important lesson to be learned from Pakistan's plan-
ning experience does not lie in the list enumerated in the preceding
paragraph. The cardinal lesson of the Pakistan experience is that if
a development plan is to be carried out, it must have the Govern-
ment's firm and constant support. The history of the First Plan
showed that although the Planning Board could produce a develop-
 4 INTRODUCTION

ment plan, the Plan could not get very far without the help of the
Government. Given that support, with reasonably stable political
leadership, the Second Plan appears to be well on the way toward
achieving its objectives.
It is idle to speculate whether Government commitment was a
necessary or a sufficient condition of Pakistan's development. When
Pakistani leaders were too immersed in other political issues to give
the lead, administrative, organizational, land and other reforms
which the First Plan required for its successful implementation were
not forthcoming. The political climate at the time was not condu-
cive to fundamental changes in these fields. Mere talk, of which
there was a considerable amount by Government leaders, about the
importance of economic development, could not significantly
change the attitudes and performance of a civil service oriented
toward the maintenance of law and order and tax collection, or
bring about essential reforms. On the other hand, when the Gov-
ernment created the proper atmosphere by giving strong support to
the Second Plan and by using its powers to adopt policies and
measures to give effect to the Plan's objectives, conflicts of interest
were resolved, administrative bottlenecks were broken, intractable
problems were overcome and the civil service responded to the will
of Government leaders. The lesson was clear: good administration
and activity below depend heavily on firm and constant leadership
from above.
II.

Historical, Economic and

PoliticalBackground

RESOURCES: PEOPLE AND LAND

THE REPUBLIC OF PAKISTAN is composed of East and West Paki-

stan, two widely separated provinces comprising the main former
Muslim majority areas of British India and covering a total area of
365,529 square miles. According to the census taken in February
1961, the total population in 1961 was about 94 million, but the
distribution of land and population between the two Provinces of
the country is unequal and the bulk of the population is concen-
trated in a small area. East Pakistan with only 15 percent of the
area has 54 percent of the population while West Pakistan, with
85 percent of the area has 46 percent of the people. 2 The average
population density for East Pakistan is 979 (excluding rivers) and
for West Pakistan only 13 8.
In the decade prior to 1961, population increased at an average
annual rate of 2.1 percent, a rate of increase which greatly ex-
ceeded most previous estimates. Unofficial data indicate that in
East Pakistan population is now growing at a rate of not less than
2.6 percent and in West Pakistan at not less than 2.5 percent.8
2 Unofficial estimates indicate that the total population in 1961 approximated
100 million, with about 54 million in East Pakistan and 46 million in West
Pakistan. Krotki, Karol J. "Population Growth, Size and Age Distribution-Fourth
release from the 1961 census of Pakistan," The Pakistan Development Review,
Vol. III, No. 1, Spring 1963.
s Ibid.

5
6 PLANNING IN PAKISTAN

Although urbanization has been increasing steadily for a long time,

the country remains predominantly rural. Eighty-seven percent of the
population still lives in rural areas, with East Pakistan more rural
than West Pakistan. About 86 percent of the population is Muslim,
but there are important differences in the people of the two Prov-
inces. Bengali is the language of the East while Urdu is widely
understood in the West. According to the 1961 census, 81 percent
of the population was illiterate.
Pakistan is one of the poorest countries in the world. In 1961/
62, gross national product was estimated at Rs. 33.5 billion or
about Rs. 317 (US$67) per capita. Most people live at, or barely
above, subsistence levels. Agriculture is the main source of employ-
ment, income and raw materials for domestic use and export. It
employs almost four-fifths of the labor force and contributes about
55 percent of the gross domestic product, compared to 15 percent
for manufacturing. Rice and wheat are the principal crops, the first
being grown mainly in East Pakistan, the second in West Pakistan.
Agricultural raw material exports account for 70 percent of total
exports, and including jute and cotton manufactures, for over 80
percent. Pakistan is the world's largest producer of jute. This crop
is grown in East Pakistan, while cotton is produced almost entirely
in West Pakistan, largely under irrigation. Other agricultural ex-
ports include wool, skins and tea.
In both Provinces, agricultural output depends greatly on
weather, but their climate and physical features differ markedly. In
East Pakistan, where most of the land is river delta, less than 50
feet above sea level, irregularities in the time of arrival of the
monsoon and in the periodic flooding by the Brahmaputra and
Ganges Rivers of about one-third of the crop lands can lead to
large variations in the production of rice and jute. In West Pakistan,
which has extensive areas of barren deserts, upland and mountains,
differences in the amount of rainfall can greatly affect yields, par-
ticularly of wheat. In East Pakistan, the scarcity of land is offset by
its great fertility, aided by subtropical rainfall averaging 88 inches
a year. Only one crop a year is now produced on about two-thirds
of the cultivated land, although irrigation, flood control and drain-
age during the dry season could greatly increase output through
 BACKGROUND 7

double cropping. Apart from the northern section of the Province,

West Pakistan is an arid to semi-arid region, with an annual average
rainfall of only 12 inches. Irrigation of some 22 million acres in
the Indus Valley, 58 percent of the cultivated area of the Province,
constitutes the largest system in the world of man-made irrigation in
a single river basin. Even in the irrigated areas, cropping is not
intensive and large areas are left fallow because of insufficient
water. Outside the Indus Basin, the West Pakistan country is
mainly inferior range land used in varying degrees for grazing.
Standards of husbandry are low. In the dry farming areas soil ero-
sion is a major problem. Agriculture in the Indus Valley is en-
dangered by poor drainage and periodic flooding which have
produced widespread waterlogging. Rising water tables and evap-
oration lead to the deposition of salt on the land, diminishing yields
on over 7 million acres and taking about 70,000 acres a year out of
production.
Throughout the country, farming is mostly in the hands of
tradition-bound, largely illiterate farmers who live in isolated vil-
lages and work generally small, often fragmented, farms. Most
farming is for subsistence and only about 20 or 25 percent of the
food crops produced are sold for money. Much of the country has
been endowed with good soils, but primitive agricultural methods
and tools, as well as declining fertility of the soil, produce yields
which average among the lowest in the world. There is virtually no
mechanization.
Except for large supplies of natural gas both in East and West
Pakistan, the country lacks important mineral resources. West
Pakistan produces only enough coal and oil to meet a part of its
total requirements and the cost of importing fuel is a heavy drain
on foreign exchange earnings. Known iron ore deposits are gen-
erally of poor quality, except for those in a remote region of West
Pakistan. There are adequate supplies of limestone and gypsum for
cement production in the West, as well as small deposits of manga-
nese, chromite and antimony.
Although urban commerce is well developed, trade and market-
ing throughout the country suffer from inadequacies of transport
and communications, particularly in the East. Apart from railways,
8 PLANNING IN PAKISTAN

East Pakistan relies for>,inland transport principally on its extensive

river system. In West Pakistan, the road system is good in the north
and northwest, but road communications in other parts of the Prov-
ince are poor. As a result of the difficulties of long distance
transport, prices in the various centers frequently differ widely, par-
ticularly as between West and East Pakistan.

PARTITION AND AFTERMATH

Few countries which gained their independence after World

War II started with greater handicaps than Pakistan. Before the
Partition of British India, the economies of the areas which now
constitute Pakistan and India were largely complementary. The
areas composing Pakistan furnished the raw jute and cotton for two
of India's most important industries, as well as surplus wheat for
food deficit regions in undivided India. In return, what is now
Pakistan received jute manufactures, cotton textiles and other manu-
factured products, as well as coal, iron and steel, tobacco, sugar,
vegetable oil and other commodities.
The severance of these well established relationships by Partition
and the accompanying mass transfers of population, disrupted
Pakistan's trade, commercial and industrial organization, marketing
relations, channels of communication and Government. Almost
7.5 million refugees crossed the new frontiers from India4 and as
many are believed to have left Pakistan for India. While a few of
the Muslim refugees who came from India were wealthy, most were
destitute farmers and craftsmen; on the other hand, among the
Hindus and Sikhs who left Pakistan with much of their capital were
many merchants, businessmen, money lenders, office workers and
members of the professions. Besides the problems raised by the
confusion and violence which accompanied these mass movements
and the immediate and costly urgency of the refugee problem, this
unplanned population exchange caused many difficulties by remov-
4 Maudlin, W. Parker and Hashmi, Sultan S., "Illustrative estimates and projects
of the population of Pakistan, 1951 to 1991," Population Growth and Economic
Development with Special Reference to Pakistan, edited by M. L. Qureshi,
Karachi: The Institute of Development Economics.
 BACKGROUND 9

ing people with qualifications most needed by Pakistan's economy

and by adding large numbers of farm laborers to an already over-
crowded agriculture.
Schools, hospitals, clinics and other institutions, which had been
run mostly by non-Muslims, were left without supervisory person-
nel. Many professors, teachers and research workers from univer-
sities, colleges, schools, and agricultural and other research insti-
tutes left the country. Municipal services almost came to a halt.
Businesses, banks and insurance companies were incapacitated in
varying degrees for lack of managerial staff. Many closed down.
There was virtually no industry. Except for Lahore in West Paki-
stan, Partition cut Pakistan off from major centers of trade and
industry. The jute growers of East Pakistan were separated from the
jute processing industry of India, and the irrigation system on which
the agriculture of the Indus Valley in West Pakistan depended was
cut into two, with the headwaters and parts of the canals in India.
The run-down railways inherited at Partition were almost at a
standstill because of coal shortages. Other transportation services
also were disorganized and lacked essential fuel and spare parts.
Formerly pivoted upon Lahore in the west and Calcutta in the
east, the segmented railways had to be reoriented toward Karachi
and Chittagong, respectively. Except for Karachi, port facilities,
especially in East Pakistan, were almost nonexistent. New and
modernized port facilities had to be built at Karachi in West Paki-
stan and Chittagong and Chalna in East Pakistan.
Great difficulties were encountered in establishing a new Central
Government in Karachi, as well as Provincial Governments in
Lahore and, especially in Dacca, the respective capitals of West and
East Pakistan. There was little suitable office space, equipment or
staff available. Only about 100 members of the Indian Civil Service
remained to form the nucleus of a new Civil Service of Pakistan and
many were from the lower ranks. The difficulties of setting up gov-
ernment machinery were intensified by the divergent characteristics
of the two Provinces and by their separation from each other by
1,200 air miles and some 3,000 sea miles. Pakistan had no airline
and only Karachi had a major airport. The country had almost no
merchant fleet and no national radio station. There was almost no
10 PLANNING IN PAKISTAN

movement of people or commerce between the two Provinces which,

except for their Muslim religion and inherent poverty, had little in
common. In almost every field a fresh start had to be made.
It is against this background of severe economic and financial
stresses and almost complete disorganization, urgent refugee prob-
lems, shortages of experienced administrators and technicians and
lack of banking, industrial, commercial and service organizations
that Pakistan's development efforts must be considered. By 1950,
some initial difficulties had been partly overcome. The Korean War
boom of 1950-51 stimulated the economy by increasing prices of
Pakistan's principal exports. Occupational gaps caused by the
wholesale migrations were gradually filled and a governmental ad-
ministrative apparatus was created. A central bank, the State Bank
of Pakistan, established in July 1948, helped to re-establish banking
services. The creation of the National Bank of Pakistan, a largely
state-owned commercial bank, added greatly to the availability of
commercial credit facilities, particularly for the movement of jute.
The Pakistan Industrial Finance Corporation was set up to provide
industrial credit, and other institutions were established to make
credit available for refugees engaged in cottage industries, for agri-
culture and for home building.
After the collapse of the Korean War boom the condition of the
economy rapidly worsened. Large outlays for development and
military expenditures, which never fell below 30 percent of the
Central Government's budget, greatly strained public finances. Sub-
stantial budgetary deficits, aggravated by food shortages in 1952
and 1953, generated strong inflationary pressures and, in spite of
substantial foreign assistance, foreign exchange resources declined
drastically.

CONSTITUTIONAL CHANGES

Political instability exacerbated economic problems. After Parti-

tion in 1947, the Constituent Assembly of Pakistan had begun to
draft a constitution for the new country. Factional rivalries delayed
the work of the Assembly. Although it finally approved a draft
 BACKGROUND 11

constitution in September 1954, the Assembly was dissolved the

following month and nothing came of its efforts. A second Con-
stituent Assembly began work in July 1955 and succeeded in enact-
ing a Constitution which went into force in March 1956. Under the
new Constitution, the Republic of Pakistan became a federa-
tion of the two Provinces of East Pakistan and West Pakistan. At
the federal level, the Constitution provided for a President, a
Cabinet of Ministers with a Prime Minister at its head and a uni-
cameral National Assembly. At the provincial level, each Province
had a Governor appointed by the President and a Cabinet of Min-
isters headed by a Chief Minister, as well as a unicameral Assembly.
The National Assembly replaced the Constituent Assemblies as
the center of power struggles in which party lines were often less
important than the ambitions of individual politicians. The country
fell prey to widespread dissension which, among other things, ac-
centuated differences between East and West Pakistan. Coalition
governments changed frequently. None of them stayed long enough
to improve substantially the economic situation.
The country could ill afford the heavy burden placed on its im-
poverished resources. Although many gains had been made since
Partition, economic growth had been disappointing in spite of
mounting development expenditures, increasing foreign aid and the
consumption of foreign exchange reserves. Increased food imports
were needed to compensate for worsening food shortages. It was
generally believed that hoarding and smuggling were intensifying
the scarcity of foodgrains. Standards of public administration and
probity declined. Increasing political dissension and growing eco-
nomic problems finally precipitated a crisis.
After the President had met the crisis by abrogating the Constitu-
tion, dismissing the National and Provincial Assemblies and abol-
ishing all political parties, a military regime assumed power in
October 1958. Drastic measures which the new Government took
to contain inflation and to halt the loss of exchange reserves caused
some initial uncertainty, but popular confidence in the regime in-
creased as it gave increasing evidence of political, economic and
financial rectitude, political stability and a desire to support meas-
ures for developing the economy.
12 PLANNING IN PAKISTAN

In March 1962, a second Constitution was adopted for the coun-

try. It provides for a federal form of government, a President with
strong powers elected indirectly through the Basic Democracies sys-
tem and unicameral national and provincial leglislative assemblies.
All legislation requires the assent of the President, who may also
promulgate ordinances when the National Assembly is not in ses-
sion, subject to subsequent approval by the Assembly. The Presi-
dent appoints a Council of Ministers to assist him in the perform-
ance of his functions. The Central Government has jurisdiction
over matters relating to security, coordination of national economic
affairs, planning and development, coordination of the two Prov-
inces where required, international relations and dealings with inter-
national agencies. The Provinces are given considerable autonomy
in fields which are not reserved to the Central Government. Pro-
vincial Governors, who are appointed by the President, name
Provincial Councils of Ministers subject to the President's approval.
Bills passed by a provincial assembly do not become law unless the
Governor assents to them.
III.

First Efforts at Planning

SHORTLY BEFORE THE END of World War II, the Government of

British India created a Department of Planning and Development to
prepare development projects which could be carried out after the
War. In response to this Department's invitation, the Provincial
Governments of undivided India prepared many projects which
were to be executed with the aid of Central Government loans or
grants. Before action on these projects could be taken, Partition of
the country occurred, and so when Pakistan was established in
August 1947, its States and Provinces had available a stock of
projects which had been prepared before independence.
Despite the formidable difficulties faced after Partition, the Gov-
ernment gave almost immediate attention to these projects and to
the problems of development. Early in 1948, a Development
Board was established with authority to coordinate development
plans, recommend priorities, watch the progress of development
projects and make periodic reports to the Cabinet on the progress
of development projects. At the same time, the Government also
created a Planning Advisory Board composed of officials and repre-
sentatives of the private sector, to advise the Government on matters
relating to planning and development, review progress in imple-
menting plans, educate the public regarding the necessity for
projects to be undertaken and promote public cooperation of the
development effort. The Planning Advisory Board was assisted by
a series of industrial boards and committees established by the
Central and Provincial Governments. In cooperation with the

13
14 PLANNING IN PAKISTAN

Development Board, these industrial boards and committees fixed

targets for 27 industries.
The Development Board and the Planning Advisory Board were
at first administratively responsible to the Cabinet Secretariat of the
Government of Pakistan, but after March 1948, when a separate
Ministry of Economic Affairs was created to coordinate the plan-
ning and economic activities of the various ministries, they were
transferred to that Ministry. The Minister of Economic Affairs was
Chairman of the Development Board. The highest civil servant in
Pakistan, the Secretary-General of the Cabinet, was Vice-Chairman
and the members were the Secretaries, i.e., the permanent chief
administrative officers, of the Ministries of Finance, Industries,
Commerce and Education, Health and Works, Food and Agricul-
ture, and Communications.
At the time of Partition, the two important British India Prov-
inces of Punjab in the West and Bengal in the East had been cut
in two. This change, as well as the need to give greater attention
to the development of some sectors than had been done in the past,
made it necessary to review the projects which had been largely pre-
pared by the Provinces before Partition. The Development Board
therefore asked the central ministries and the Provincial Govern-
ments to re-examine and update the old projects and to prepare new
ones which would give greater emphasis to Pakistan's changed
needs.
In response to this request, old projects were modified and new
projects were prepared and submitted to the Development Board.
Notwithstanding the existence of the Board, the Government fre-
quently approved projects without referring them to it. The Board
made recommendations that loans or grants by the Central Govern-
ment be made subject to conditions which the Board believed were
essential for proper implementation of projects, but it had no effec-
tive means of controlling the execution of the projects which it had
approved. Although the Prime Minister had indicated that the best
way of assuring the country's development "would be to prepare a
plan for the next five or ten years with clear-cut objectives and
targets which must be achieved according to a pre-determined
 FIRST EFFORTS AT PLANNING 15

rate," 5 the Board made no attempt to prepare a plan or even to

relate projects to one another.
Planning in Pakistan received added impetus when, in May 1950,
member countries of the then newly formed Colombo Plan for Co-
operative Economic Development in South and Southeast Asia,
agreed to prepare coordinated six-year development plans to begin
in mid-1951. Pakistan's Six Year Development Programme for
July 1951 to June 1957 was compiled in three months and incor-
porated into the Colombo Plan in September 1950. The Govern-
ment of Pakistan adopted the Plan in November 1950.
The Six Year Development Programme provided for investments
totaling Rs. 2.6 billion, of which Rs. 2.2 billion were to be public
development expenditures and Rs. 0.4 billion were to be private
investments. Agriculture received almost one-third of the proposed
total allocation; transport, power and industry each received be-
tween 18 and 20 percent and social services obtained the small
remainder.
Although envisaged by its compilers as a development plan be-
cause it included some reference to the private sector and attempted
to group public investment projects by sectors, the Six Year Devel-
opment Programme was little more than a public investment pro-
gram containing projects which had been selected on an ad hoc
basis without reference to available resources and the requirements
of the economy. For agriculture and for some other sectors, where
no projects were ready, lump sums were allotted. The bulk of the
Programme consisted of a list of 67 "main projects." The Pro-
gramme set physical targets, especially in agriculture, but there was
no attempt to relate the projects to the targets; nor was there any
indication how the expected increase of 30 percent in the standard
of living had been estimated.
The official initiation of the Plan in July 1951 coincided with the
economic boom which followed the outbreak of the Korean War.
Rearmament and stock piling programs in the United States led to a
steep increase in Pakistan's jute and cotton export prices which in-
creased Pakistan's public revenues and foreign exchange earnings.
5 Address of the Prime Minister, Record of the First Meeting of the Planning
Advisory Board, p. 2.
16 PLANNING IN PAKISTAN

The country's economic prospects looked bright. On the other

hand, the Korean hostilities were threatening to reduce the supply
and raise the cost of machinery, equipment and essential materials
which Pakistan required for its larger development projects. The
Government was therefore anxious to accelerate the Six Year Pro-
gramme. The Programme had been hastily formulated without basic
statistics and other essential information, it omitted many important
projects, some of which were already under construction. Conse-
quently, there was also urgent need to modify it on that account.
Declaring that the Six Year Programme "had never been con-
ceived as a rigid set of development projects" and that it "easily lent
itself for adaptation and expansion with the availability of financial
and material resources,"' the Government adopted in April 1951 a
Two Year Priority Programme for 1951/52 and 1952/53. The
Two Year Priority Programme was intended to give precedence, in
the early stages of the Six Year Programme, to development
projects in the fields of fuel and power, industry and mining, trans-
port, communications and agriculture, which the Government felt
were essential to the needs of the country. The Two Year Pro-
gramme included projects in the Six Year Programme as well as
many new ones. Total investment outlays for the Two Year Pro-
gramme were estimated at Rs. 505 million, almost half of which,
Rs. .225 million, were for projects which were not in the Six Year
Programme: As the Six Year Programme proceeded, more projects
were added and the schedule of projects was ultimately a greatly
expanded version of the list in the original Programme.
The Government set up new planning machinery in January
1951 to implement the Six Year Development Programme. The
Planning Advisory Board was abolished and the Development
Board was replaced by a Planning Commission with 20 members.
Membership included the Minister of Economic Affairs as Chair-
man, the Secretary-General of the Cabinet as Vice-Chairnan, the
permanent Secretaries of almost all the central ministries, the Direc-
tor General of the Railways, and after its creation, the head of the
Pakistan Industrial Development Corporation, as well as nominees
a Ministry of Economic Affairs. Progress of Economic Development in Pakistan,
p. 4.
 FIRST EFFORTS AT PLANNING 17

of the Provincial Governments. Besides the Planning Commission,

an Economic Council was created. 7 It was presided over by the
Prime Minister and included the Ministers of Food and Agriculture,
Communications, Education, Economic Affairs, and Finance and
Industries. A Planning Wing in the Ministry of Economic Affairs
acted as Secretariat for both the Planning Commission and the
Economic Council.
The Economic Council was responsible for implementing the
Six Year Development Programme, for approving projects under
the Programme and for reporting periodically on the Progranmme's
implementation. The functions of the Planning Commission com-
bined those formerly held by the Planning Board and the Planning
Advisory Board. In practice, however, its main task during the
period of the Six Year Programme was to examine all nonrecurring
development projects estimated to cost Rs. 500,000 or more and
recurring projects costing Rs. 100,000 or more and to recommend
action thereon to the Economic Council.
The Planning Commission got off to a slow start. Rules of proce-
dure for the consideration of development projects were worked
out only after two years. A series of six subcommissions, each
headed by the secretary of the ministry most concerned, with tech-
nicians from the ministries and Provincial Governments and others
as members, had been established to determine the extent of re-
sources available to meet requirements and to prepare projects for
agriculture, irrigation, industries, education, health and housing.
These subcommissions never functioned. Moreover, projects were
frequently approved which had not been fully worked out and at
times projects were started although they had not been subjected to
the scrutiny of the Planning Commission or the Economic Council;
nor did any agency follow the progress of approved projects and
compare results with expectations. 8
7 Cf. Nos. 4 and 5 in the Appendix. In Pakistan different planning agencies have
been given the same title while some have been created and then abolished, ab-
sorbed into other organizations or reconstituted. For these reasons a list of all
central planning agencies in the order of their establishment is given in the
Appendix, together with their years of operation and purpose.
8 Ministry of Economic Affairs. Report of the Economic Appraisal Committee,
pp. 173-174.
18 PLANNING IN PAKISTAN

The decline in Pakistan's export prices and serious food shortages

which followed the cease-fire in Korea made it unfeasible to carry
out the Six Year and Two Year Programmes as originally envisaged.
Annual public outlays for development more than doubled from
Rs. 339 million in 1950/51 to Rs. 746 million in 1954/55. In-
creased development outlays financed mainly by foreign aid and
loans and by internal borrowing from the banking system, as well
as high defense expenditures, produced inflationary pressures which
severely strained available external and domestic resources. Actual
outlays for development, however, usually fell considerably behind
budgeted amounts, not so much because of a lack of funds, but
because of an acute shortage of administrators, managers, tech-
nicians, foremen and other skilled and experienced manpower in
Government and industry. Better progress might have been possible
on the more important projects if the scarce managerial, technical
and skilled labor, as well as material and financial resources, had
not been dispersed over many large and small projects. Although
the Planning Commission and the Ministry of Finance tried to
eliminate obviously low-priority projects already in progress, the
pressure for continuing outlays for projects already started was
often too strong to overcome.
Nevertheless, much was accomplished. Industrial assets increased
by three and a half times between 1950 and 1955.9 Although the
industrial base was extremely narrow in 1950, substantial absolute
increases in capacity occurred in existing and new industries. Both
private investment and government outlays through the Pakistan
Industrial Development Corporation (PIDC)," contributed to the
growth. Power, transport, ports and communications, and social
9 Papanek, Gustav F., "The Development of Entrepreneurship," American Eco-
nomic Review, May 1962, p. 51. The computation was made on the basis of
supplementary information for 1950 furnished by Prof. Papanek.
10 The PIDC was a public authority established in 1952 to promote industrial
enterprises which private industrialists were unable or unwilling to undertake. It
took the initiative in promoting industries which required heavy initial capital
investment, took a long time to construct, or involved processes requiring advanced
technical knowledge. PIDC often invested in industrial enterprises jointly with
private investors. Its Charter required that enterprises it had established be trans-
ferred to private ownership when this became feasible.
 FIRST EFFORTS AT PLANNING 19

and municipal service facilities were greatly expanded, although not

nearly enough to meet demand. But partly because of official em-
phasis on industrial development, agriculture was neglected and
little progress was made in this sector.
IV.
The First Five Year Plan

As THE EXECUTION of the Six Year Programme proceeded, there

was growing realization that the presentation of isolated projects to
the Planning Commission without relation to a general development
program or even to other projects in the same sector and the undue
delays in getting projects approved, constituted grave defects. In
August 1952, an Economic Appraisal Committee was appointed by
the Government to review the progress made in executing develop-
ment projects under the Six Year Programme and to make recom-
mendations on the over-all pattern of economic development during
the following five years. In its report, the Committee pointed out:
that though certain targets in different fields have been laid down, they
have not been considered in relation to the overall resources and
requirements, and consideration and approval of schemes has pro-
ceeded essentially on an ad hoc basis . .. [The Committee thought
that] . .. initially, this was unavoidable and did not prove harmful,
because the field of development was so large and the needs so
obvious that any project was bound to bring in substantial benefits ...
[However] ... more orderly and integrated planning should be done
than hitherto. For the successful prosecution of the development
programme . . . an adequate and efficient planning organization is
essential."
Although the "constitution of a planning group of technical experts
has been suggested by some foreign experts, in order to undertake
planning in various sectors," the Committee felt that "considering
"1Report of the Economic Appraisal Committee, pp. 174 and 203. The other
citations in this paragraph are either from pages 174 or 203 of this Report.

20
 THE FIRST FIVE YEAR PLAN 21

the shortage of qualified persons in the country and other limita-

tions, the existing organization and the procedure for its working
appear on the right lines." However, the Committee emphasized
that it would consider the existing organization adequate only if the
six planning subcommissions previously mentioned worked prop-
erly, and for this "we would suggest that it is high time that the
planning subcommissions were asked to start functioning and to
complete at an early date the study of resources and requirements
in their respective spheres."

THE PLANNING BOARD

Notwithstanding the Economic Appraisal Committee's recom-

mendation that the Planning Commission be revitalized and put into
position to plan within the limits of available resources, the Govern-
ment chose instead to have the Planning Commission continue to
consider individual projects as in the past. But although the Six
Year Development Programme was scheduled to continue until
June 1957, the Government seems to have agreed with the Com-
mittee's recommendation that it had to engage in "more orderly and
integrated planning." For this purpose, it created a Planning Board
in July 1953 and directed it to assess the resources available for
development during five years beginning April 1, 1954, prepare a
new national development plan for that period making the fullest
possible use of resources and propose changes in administrative
organization which it considered necessary to assure successful im-
plementation of the Plan.
The governmental resolution which provided for the establish-
ment of the Planning Board had expressed the hope that a draft
five-year plan for the period beginning April 1, 1954 would be
ready by that date. But on April 1, 1954, only the Chairman of
the Planning Board, a few administrative staff members and three
or four senior professional staff members had been engaged. Be-
cause of the lack of staff, the starting date of the proposed plan
period was postponed by a year to April 1, 1955. In July and August
1954, two additional members were appointed to the Planning
22 PLANNING IN PAKISTAN

Board. One was a former member of the East Bengal (later East
Pakistan) Government; the other was the permanent Secretary in
the Central Ministry of Economic Affairs, who continued to hold
this position while serving as a member of the Board.
The Board ran into difficulties in trying to recruit a suitable
Pakistani staff. As was to be expected, there was a great shortage
of trained and experienced economists and technicians and consid-
erable competition for their services. But the usual difficulties of
obtaining a qualified staff were intensified. The Board was greatly
handicapped because it was a temporary organization in an environ-
ment in which civil servants considered job security, seniority, rank
and status to be of prime importance. Because it was a temporary
agency, the Board could not offer jobs with permanent civil service
status and had to obtain people either on short-term contracts or on
loan from other agencies. But since a position with the Planning
Board did not carry the prestige and power that a position in an
operating ministry conferred, the Board found it difficult to get
personnel from other parts of the Government. In addition, by
decision of the Establishment Division in the Cabinet Secretariat,
no member of the so-called central superior services, which in-
cluded some of the ablest officials in the Government, could be
assigned to the Board, except at the top level of Secretary. But
almost all positions in the Board were classified at much lower
levels. Finally, the Board, like most other government offices, fol-
lowed cumbersome rules for establishing positions and for selecting,
engaging, training and promoting personnel which seriously im-
peded the acquisition and retention of qualified staff. Under these
rules, salaries were determined on the basis of seniority rather than
merit and performance. The salaries which the Board offered well-
trained candidates without seniority were not high enough to com-
pete with either private industry or other alternative employers and
attempts to get the Ministry of Finance to approve higher salaries
met with little success. In some cases inability to obtain adequate
living accommodation in Karachi prevented acceptable candidates
from other parts of the country from accepting offers of appoint-
ment.
After an intensive recruiting campaign, however, the Board suc-
 THE FIRST FIVE YEAR PLAN 23

ceeded in building up the professional staff in April 1955 to a peak

of about 65 professionals; by September 1955 the number had been
reduced to a more stable complement of about 55. Although the
staff included some able people, many were not of high caliber and
most were junior personnel with inadequate training and little ex-
perience who required close supervision.
By 1955, the organization of the Planning Board had also taken
shape. The Board had three divisions: Economic, Projects and
Administrative.`2 Each member of the three-man Board was
nominally responsible for supervising the day-to-day activities of
designated sections of the Board. The Chairman was in charge of
the Economic Division and all administrative and personnel
matters. In theory, the members of the Board collectively made all
policy decisions. But the Chairman, an exceptionally able senior
civil servant with great prestige, who had formerly been Governor
of the State Bank of Pakistan, was the de facto executive head of
the agency.
The Board found it impossible to fill all vacancies. Because of
the frequently large gaps in the table of organization, the Economic
Division in practice operated as a single unit without sections while
the sections in the Projects Division, which was without a regular
Chief, reported directly to the Board. Development of procedures
and methods of operation, scheduling of the Board's activities,
liaison with other governmental agencies and the solution of many
other problems which were theoretically within the jurisdiction of
the Administrative Division actually consumed much of the Chair-
man's attention and greatly reduced the time which he could give
to substantive matters.
12The Economic Division, which was responsible for economic research, pro-
posing sectoral priorities and preparation of the proposed plan, had four sections:
(1) Fiscal and Monetary, (2) International Trade and Foreign Exchange, (3)
National Income and Statistics and (4) General Economics. The Projects Division,
which was responsible for examining and proposing projects for inclusion in the
proposed plan had nine sections covering the main sectors of the economy: (1)
Agriculture, (2) Industry and Commerce, (3) Power, Irrigation and Reclamation,
(4) Transport and Communications, (5) Housing and Settlements, (6) Education
and Training, (7) Health, (8) Manpower and Employment, and (9) Social Serv-
ices. The Administrative Division, which was concerned with office administration
and the Board's relations with outside agencies, had two sections. These were later
increased to the following five sections: (1) Administration, (2) Coordination,
(3) Development Authorisation, (4) Publicity and (5) Budget and Accounts.
24 PLANNING IN PAKISTAN

The Planning Board, unlike its predecessors, was a technical and

advisory body without authority to make decisions. Its views, even
the plan it eventually prepared, were merely recommendations
which could only gain official status if and when approved by the
Government. The idea of a staff, i.e., advisory, agency such as the
Board was an innovation in Pakistan, where almost all govern-
mental units were executing bodies. Not surprisingly, therefore, few
persons in the Government, among the public and even within the
Board itself, clearly understood what the Board was supposed to do.
The Board's requests for information or for the submission of pro-
posals frequently encountered passive resistance which handicapped
and delayed its work. When the Board began making suggestions
for changing projects submitted by the various ministries, depart-
ments and agencies, apathy sometimes gave way to open hostility.
Nor were working relationships made smoother when some of the
Board's staff, accustomed to the command tradition typical of the
executing agencies, tried to order other governmental bodies to
comply with the Board's requests and recommendations.
There were also unresolved jurisdictional issues involving the
Ministry of Economic Affairs which created problems for the Plan-
ning Board. The Planning Board was administratively attached to
the Ministry of Economic Affairs, but in fact operated as an inde-
pendent unit. The Ministry had responsibility for planning, initia-
tion of projects, development coordination, progress reporting and
evaluation of development projects. It carried out these functions,
in greater or lesser degree, through its Planning Wing, which acted
as the Secretariat of both the Planning Commission and the Eco-
nomic Council."
In his capacity as Chairman of the Planning Commission, as well
as the head of the Ministry which acted as its Secretariat, the Min-
ister of Economic Affairs had effective control over the Planning
Commission. In theory, the Planning Commission assessed projects
and set priorities, but in practice these activities were carried out
within the Ministry. The Planning Commission, largely composed
of the permanent secretaries of the various ministries, was, to quote
the report of a Federal Reorganisation Committee which the Gov-
13 Cf. Appendix, Nos. 4 and 5.
 THE FIRST FIVE YEAR PLAN 25

ernment set up in mid-1956 to recommend needed administrative

and organizational reforms: "a rather heterogeneous body, im-
perfectly equipped to conduct objective evaluation of projects and
fixation of priorities, a disability which is accentuated by the hurried
manner in which it has to perform its task."' 4
Although the Federal Reorganisation Committee recommended
that the Planning Commission, as well as the Ministry of Economic
Affairs, be abolished as redundant and that the Planning Board be
given responsibility for assessing projects and determining priorities,
the Government did not act on the recommendation. An arrange-
ment was worked out whereby projects submitted to the Planning
Commission were referred, prior to decision, to the Planning Board
for recommendations. In this way, inconsistencies between Com-
mission and Board actions on projects were generally avoided.
Nevertheless, there were instances when projects were approved
which the Planning Board had not considered.
In spite of jurisdictional problems, the Planning Board was fortu-
nate in its early years to have a strong supporter in the Minister of
Economic Affairs, who had taken the lead in getting the Board
created. The Minister, who was also Minister of Finance until
August 1955 when he became Prime Minister while retaining the
portfolio of Economic Affairs, was one of the most important mem-
bers of the Government. Although his time was greatly circum-
scribed by his numerous responsibilities, it was mainly because of
his sympathetic interest and support that the Planning Board ac-
quired some status in the early period of its existence. It was fre-
quently necessary for the Chairman of the Planning Board to confer
with the Minister about policy, procedural or personnel matters.
The fact that the Chairman had direct access to the Minister with-
out having to go through the Secretary of the Ministry, the custom-
ary procedure in Pakistan, largely accounted for such success as the
Board had in establishing itself as an operating organization.
The replacement of this Prime Minister in September 1956 by
another, followed by the departure of the Board's able first Chair-
man at the end of that year, seriously weakened the Board's posi-
tion. The two Prime Ministers who came afterward also had little
14 Report of the Federal ReorganisationCommittee, p. 5.
26 PLANNING IN PAKISTAN

appreciation or understanding of the Board's function or the plan-

ning process. As a result, the Planning Board entered into a period
of decline which was not reversed until the change of Government
in October 1958.
The Board had made many attempts to get itself established as a
permanent agency, but opposition from some ministries delayed this
step until late in April 1957. When the Board was made perma-
nent, its scope was broadened to include some functions formerly
exercised by the Ministry of Economic Affairs and the Planning
Commission. In addition to the preparation of plans, the Board was
authorized to advise the central ministries and the Government on
financial, economic and other subjects affecting development; to
stimulate and, if need be, initiate the preparation of projects (by
making suggestions or proposals to the appropriate ministries, de-
partments or agencies); to examine and include projects in develop-
ment plans; review economic conditions and follow the progress of
development; to encourage and expand research, especially in eco-
nomics, and to submit periodic reports as desired by the Govern-
ment. The Board tried to get authority to supervise the execution of
plans, but failed because of the opposition of ministries which were
fearful that the Board was trying to become involved in operations.
Because of determined opposition from the Ministry of Finance, the
Board's request that it be authorized to prepare annual development
programs was also turned down.
The Federal Reorganisation Committee, already mentioned, had
also recommended that the central planning function be removed
from the Ministry of Economic Affairs and placed under the direct
charge of the Prime Minister. When the Board was made a perma-
nent agency in April 1957, this recommendation was adopted. The
Prime Minister assumed the office of Chairman of the Planning
Board while the Secretary to the Ministry of Economic Affairs, who
had been one of the three members of the Board since 1954 and
who had succeeded the first Chairman at the beginning of 1956,
became Deputy Chairman."5 This shift, which in the governmental
5 In mid-1957, a former Minister from Sind before the formation of the inte-
grated Province of West Pakistan was appointed a member of the Board. Since
the other ordinary Board member was from East Pakistan, the effect and the intent
of the appointment was to give political representation on the Board to both
Provinces.
 THE FIRST FIVE YEAR PLAN 27

table of organization seemed to bring the Board closer to the source

of executive power, had no practical significance.
It was after the Planning Board had been made a permanent
agency that the prestige of the Board reached a nadir. Although
the Prime Minister manifested his interest in the Board on several
occasions, the unstable political situation and the fact that he held
the portfolios of four ministries, in addition to being Prime Minister,
made it difficult for him to attend to the Board's business. He
stayed in office only a few months after the Board had been made
permanent. His two successors also held their positions for short
periods. They played little part in the Board's activities. The Board
was often unable to obtain necessary policy decisions and to get its
recommendations considered. The work of the Board slowed down.
Low staff morale, not improved by the Board's poor personnel
policies, resulted in the departure of some of the Board's ablest
economists.
In April 1958, after the Prime Minister (there had been two
changes in incumbents meanwhile) concluded that he was unable
to devote sufficient attention to his duties as Chairman of the Plan-
ning Board, the Chairmanship was therefore shifted to the Minister
of Economic Affairs. The Minister had much less power and pres-
tige than either the Prime Minister or the Minister of Economic
Affairs at the time the Board was created. Consequently, the
change brought no improvement in the Board's status or influence.

PROVINCIAL PLANNING ORGANIZATIONS

From the beginning, each Province had its own planning ma-
chinery. Under Pakistan's federal system of Government, the Plan-
ning Board, as an agency of the Central Government, had no legal
control over planning agencies or developmental activities in the
Provinces. In practice, however, the Planning Board could greatly
influence provincial development since the Provincial Governments
depended on the Central Government for funds to finance most of
their development programs.
28 PLANNING IN PAKISTAN

East Pakistan
East Bengal, later East Pakistan, began in 1948 with an organ-
ization incorporating:
a) a Cabinet Development Committee composed of Provincial Min-
isters of departments concerned with development and with the
Chief Minister as Chairman. Other ministers acted as temporary
additional members when their projects were discussed;
b) a Development Board, composed of the permanent Secretary of
the Finance Department, the secretaries of development depart-
ments and the Chief Secretary of the Provincial Government who
was the Chairman. The secretary of any other department could
be co-opted when a subject concerning his department was under
discussion;
c) a Planning Department, headed by a full-time Development Com-
missioner, acted as the Secretariat of the Development Board.

In order to coordinate these three groups, the Development Com-

missioner acted as Secretary for both the Cabinet Development
Committee and the Development Board, while the Chief Secretary,
besides being Chairman of the Development Board, also attended
all meetings of the Cabinet Development Committee.
The Cabinet Development Committee had authority to consider
the administrative, financial, legislative and general aspects of
projects submitted by provincial departments after their examina-
tion by the Development Board and to indicate whether and in what
order they should be included in provincial development plans; to
review progress in the execution of projects; to coordinate the execu-
tion of projects; and, when unable to take action itself, to recom-
mend action by the Cabinet.
As the clearing house for the Cabinet Development Committee,
the Development Board had authority to formulate and modify
integrated provincial development plans; keep watch over each de-
partment's projects and programs; endorse, modify, coordinate and
set priorities on projects or initiate projects; and recommend courses
of action to the Cabinet Development Committee.
The original membership of the Development Board had been
limited to the "nation-building," i.e., the developmental depart-
 THE FIRST FIVE YEAR PLAN 29

ments, with the secretaries of other departments attending only

when subjects within their jurisdiction were under consideration.
Unfortunately, the Board soon expanded to an unwieldy size with
the secretaries of practically all the departments attending its meet-
ings. Meetings were infrequent, usually taking place once every
three months. The Board's conclusions, usually circulated in the
form of minutes, were rarely put into effect.
The ineffectiveness of the Development Board and of the Devel-
opment Commissioner, together with the distrust felt by the Pro-
vincial Government for the Civil Service at the time, led the East
Pakistan Government in February 1957 to add a non-civil service
Planning Board to the existing organizations. The Chief Minister
of the Province was Chairman, the other members being the Pro-
vincial Director of Statistics (who, although a civil servant, enjoyed
the Chief Minister's special confidence) and from outside the
Government two economists who were associated with the Univer-
sity of Dacca.
The Development Board, formerly the chief medium for approval
of projects and programs, was relegated to a perfunctory consulta-
tive body to advise generally on the implementation of development
programs. The new Planning Board was given primary responsi-
bility for assessing development resources and requirements, setting
priorities for projects, formulating long-range and annual plans, en-
couraging research and the preparation of projects, advising the
Provincial Government on development policies and maintaining
liaison with the central Planning Board. The Planning Department,
renamed the Planning and Development Department and headed by
another Development Commissioner, was to act as Secretariat to the
Planning Board.
The results of the attempt to circumvent both the civil service and
the Development Commissioner through a non-Civil Service Plan-
ning Board, were not satisfactory. A new Development Commis-
sioner was appointed who was more energetic than his predecessor,
but this advantage was greatly offset by his rivalry with the Planning
Board. The lack of an adequate staff for the Board and the devel-
opment of dissension among its members, made it possible for the
Development Commissioner to take the initiative in reviewing
30 PLANNING IN PAKISTAN

projects and programs, functions which the Planning Board was

supposed to exercise. While the Board was given an opportunity to
comment on projects and programs, it was handicapped by being
outside the civil service and therefore outside the flow of essential
operational and other information. Although the Development
Board no longer was important, the civil service permanent secre-
taries who composed its membership had ways of circumventing the
Planning Board's decisions.
Eventually, it became apparent to the Provincial Government
that the Planning Board, as constituted, could not operate effec-
tively. The Development Commissioner was therefore added to the
membership of the Planning Board in an attempt to bring about
some coordination between the Board and the operating depart-
ments. When this step did not bring the desired results, an attempt
was made to include on the Board more representatives from the
operating departments. Despite this, the Board never succeeded in
establishing an effective relationship with the other parts of the
Government.
West Pakistan
With the exception of the Northwest Frontier Province, the plan-
ning agencies in the various Provinces and States, which later were
combined to form the Province of West Pakistan, were even less
satisfactory organizations than those in East Pakistan. Because
officials designated as development commissioners in West Pakistan
were also frequently responsible for one or more operating depart-
ments, they usually had little time for planning; since their rank
was often no higher than that of other secretaries and was some-
times lower, they did not have the status needed to oversee the
planning and implementing of development in operating depart-
ments. These conditions continued after the formation of the
Province of West Pakistan.
In 1956, the Development and Irrigation Department began to
function as West Pakistan's coordinating agency for development
projects and programs. It acted as the Secretariat for:
a) a Development Council, composed of the three Ministers repre-
senting West Pakistan on the National Economic Council, and
 THE FIRST FIVE YEAR PLAN 31

b) a Development Committee, consisting of the permanent secretaries

of all provincial departments except Home and Law.

The Development Council had final authority to approve projects

and programs after they had cleared the department concerned, the
Provincial Finance Department, the Development Wing of the De-
partment of Development and Irrigation and the Development
Committee. Experience soon showed that the permanent secretaries
who constituted the membership of the Development Committee
were neither interested in, nor competent to consider, projects and
programs of departments other than their own. Since the secretaries
did not take time to read documents relating to projects, the meet-
ings of the Committee were largely unproductive. In a move to
overcome the Committee's inadequacy, it divided into a series of
subcommittees. The membership of each subcommittee was limited
to secretaries directly concerned with projects or programs which
it was to consider. The National Planning Board'" nevertheless
remained critical of West Pakistan's planning set up:

The greatest weakness of this set of arrangements would seem clearly

to be the mixture of responsibilities vested in the Department of
Development and Irrigation. It is, on the one hand, supposed to
evaluate and coordinate schemes emanating from all other depart-
ments, and to produce balanced overall development programmes; at
the same time, it bears direct administrative responsibility for two of
the most important development fields-viz., irrigation and electric
power. This places it inevitably in a somewhat anomalous position in
its dealings with other departments and must affect significantly their
willingness to accept its efforts to achieve balance and coordination.
It also places an impossible burden on the Development Secretary,
who should be able to devote his full attention to the department's
planning and coordinating functions. He is compelled at present to
devote a very large proportion of his time and energies to water and
power problems."'

"I Early in 1958, the Planning Board of the Central Government had been re-
designated the National Planning Board in order to distinguish it from the East
Pakistan Planning Board.
17 National Planning Board, The FirstFive Year Plan, p. 99.
32 PLANNING IN PAKISTAN

The National Planning Board therefore recommended that co-

ordination of planning and development be separated from all oper-
ating functions in a Provincial Development Department. Despite
the conflict of interest in West Pakistan's planning arrangements,
the main weakness of West Pakistan's planning organization, like
East Pakistan's, appears to have been the lack of trained staff quali-
fied to deal with the technical and economic aspects of development
projects and programs."8 Because of this shortcoming, more than
any other, the Development Commissioners in both Provinces were
unable to make a real contribution to provincial development plan-
ning, coordination or review.

Local Planning
At the local level within each Province there were no effective
planning or programing bodies. District officers and divisional com-
missioners were only infrequently consulted by provincial depart-
ments about development problems. For their part, district officers
generally had insufficient staff, were overburdened with day-to-day
administrative duties and were largely concerned with law enforce-
ment and revenue collection. Few had the time or the inclination
to pursue developmental activities. Unduly rapid rotation of district
officers also greatly reduced their effectiveness. Local self-governing
bodies in the districts, which had formerly been important media
for constructing roads, schools, waterworks and other local facilities,
had also lost their effectiveness as developmental agencies. As
popular pressure for official action increased, Provincial Govern-
ments gradually assumed many of the functions formerly exercised
by local bodies and as the functions of these bodies were reduced,
public confidence in them diminished still further. By the time the
First Five Year Plan was formulated, there was "a tendency for
plans of development to be prepared at the Provincial and Central

" In West Pakistan, the rapid turnover of deputy secretaries who, under the
direction of the permanent Secretary of the Department of Development and
Irrigation, were in direct charge of development activities, seriously reduced the
Department's efficiency. Between mid-1956 and mid-1959, there were no less than
12 deputy secretaries for development. Most stayed for only about three months
and some for as little as one.
 THE FIRST FIVE YEAR PLAN 33

headquarters, and nearly all decisions are taken at these levels, espe-
cially at the latter."'"

THE ROLE OF FOREIGN ADVISERS

The central planning organization's extensive use of foreign tech-

nical assistance has been a significant feature in Pakistan's planning
experience. Soon after the establishment of the Planning Board, the
Chairman recognized that he could not obtain in Pakistan a staff
which could carry out the Board's mandate. He therefore made ar-
rangements under which the Ford Foundation made a grant to
finance the cost of a group of foreign advisers to the Board recruited
and supervised by the Graduate School of Public Administration of
Harvard University. The first foreign adviser obtained under these
arrangements reported for duty in April 1954. Eventually, there
were eight to twelve full-time advisers, in addition to about four or
five consultants who served for periods up to six months.
Most of the advisers and consultants were general economists,
but there were also specialists in agricultural economics, industrial
engineering, irrigation, power, social services, housing, manpower
and public administration. They came from colleges and univer-
sities, governmental organizations and private business. Although
most were from the United States, others came from Europe and
other parts of the world. The level of competence was high, al-
though none of the first advisers had had planning experience in
underdeveloped countries. Advisers' working arrangements within
the Board were flexible and designed to meet needs as they arose.
While there was a Chief Adviser, who headed the Harvard Group,
each adviser was assigned to a specific section and considered him-
self an employee of the Board and responsible to its Chairman.
Since the advisers held regular meetings amongst themselves to ex-
change ideas and to synchronize their approach to problems, they
were more than a mere collection of individual advisers. But they
did not operate as a team in the sense that they prepared joint pro-
posals for collective presentation to the Board.
19 National Planning Board, The First Five Year Plan, p. 103.
34 PLANNING IN PAKISTAN

Some advisers were able to restrict their activities to an advisory

role, but most found it necessary to work, in greater or lesser de-
gree, on the same tasks as the Pakistani staff members. Rarely and
then only temporarily did an adviser in fact act as head of a section.
The system worked well. The Advisory Group was accepted, both
within the Board and within the Government, as a useful com-
ponent of the central planning organization. The Advisory Group
attributed this acceptance, in part, to the fact that it was not subject
to direction or control by a foreign government.
The Harvard Group started out with three objectives. The first
was to help the Planning Board prepare a five-year development
plan for the country; the second, to organize and train on the job
Pakistanis to staff a central planning body which could, without
outside assistance, carry out research and other activities required of
such an organization. The third objective was to provide advice to
the Government on current economic, financial and fiscal policy.
During the first three years of the Harvard Group's activity, when
the Planning Board was concentrating on the preparation and, later,
the revision of the First Five Year Plan, no attempt was made to
start a training program for the Pakistani staff. Since advisers
worked closely with their Pakistani colleagues, the advisers were
often able to impart, by example, precept, criticism and discussion,
knowledge which gradually improved the ability of individual staff
members to cope with planning problems. Such transfers of in-
formation and technique were perforce incidental to operational
activities. It was generally the more advanced Pakistanis who
learned most from their working association with the advisers, while
those who had less education and training and had more to learn
were usually unable to profit as much from informal and unsystem-
atic discussions with the advisers.
Under pressure to produce a good plan, advisers often yielded to
the immediate advantage of doing the work themselves. In many
instances, there was no choice since some sections of the Board had
no Pakistani staff members or only a few inadequately trained junior
professionals. The Chairman of the Planning Board himself wrote
several chapters of the Plan and other sections were written by
Pakistani staff members. Nevertheless, the tendency of advisers to
 THE FIRST FIVE YEAR PLAN 35

do the substantive work themselves resulted in the Harvard Group

preparing most of the important sections of the Five-Year Plan.
With the advisers doing much of the work, the Board also had less
incentive to respond to the Harvard Group's pressure to set up suit-
able recruitment, salary, promotion and other personnel policies
for attracting and building up a competent Pakistani professional
staff.
The original agreements of the Ford Foundation, Harvard Uni-
versity and the Planning Board provided for the termination of the
Advisory Group's services in August 1955. When it was seen that
the Plan would not be completed by that time, the contracts were
extended for two years to August 1957. They were again extended
until August 1960 because, when the first extension period expired,
the permanent staff was not yet qualified to carry out the Board's
functions without outside assistance. By 1957, however, it had be-
come clear that if the Planning Board was to become a viable insti-
tution the training objective, which, until then, had been subordi-
nated to the operating function, would have to be given precedence.
In order to help persuade the Government to make the Planning
Board permanent, the Harvard Group had taken the position that it
would arrange for foreign training for members of the Board's staff
only after the Board had been made permanent. Otherwise, it was
contended, there would be no assurance that foreign training would
not be wasted on employees of a temporary planning body which
might cease to exist at any time. There is no evidence that this
position, commendable though it was in intent, helped hasten the
day when the Government made the Board permanent in April
1957.
From the beginning, the Harvard Group had considered training
important and had tried to get the Government to recognize its
necessity, but the Government and the Board were more interested
in the advisers' help to produce plans. From 1957 on, the members
of the Harvard Group made a conscious attempt to limit themselves
to advisory roles. Although advisers were able to achieve some re-
duction in the amount of substantive work they did, in many cases
it proved difficult for them to avoid accepting operational assign-
ments, either when these were beyond the capacity of the staff or
36 PLANNING IN PAKISTAN

when urgent time schedules had to be met. For these reasons, the
advisers also did most of the work on the annual development pro-
grams which eventually provided a basis for executing the First
Plan.
The Advisory Group was unable to resolve satisfactorily the con-
flict between doing the work themselves and acting as "in-service"
teachers to the staff of the Planning Board. Nor would it have been
reasonable to expect a different result, given the pressures on the
Board to turn out competent work on schedule and the Board's
failure to engage an adequate number of competent Pakistanis. The
foreign training program which the Ford Foundation and Harvard
University started in 1957 provided training abroad for about 20
Pakistanis 2 0 and night school courses in public administration,
economics, accounting and other subjects at the Institute of Busi-
ness and Public Administration in Karachi for 10 or 15 mostly
junior staff members. In addition, the Institute of Development
Economics, which has been aided by a Ford Foundation grant, is
providing a course of training for staff who have inadequate pro-
fessional education. The Institute also gave a two-month training
course in development planning in 1962 which some staff members
of the central planning body attended. Nevertheless, no in-service
training program for the bulk of the planning agency's staff was
ever established.
By the end of 1957, the Advisory Group had substantially
achieved its first objective to help the Planning Board produce a
development plan for Pakistan. But it had not fulfilled its second
objective to help create a central planning agency with a self-
sustaining professional staff. There were several reasons for this,
notably the lack of both political backing for, and consistently
strong leadership in, the Planning Board, with its consequent low
status and its archaic personnel policies. In addition, the failure to
provide a systematic in-service training program for the profes-
sionals on the Board's staff, the great majority of whom were poorly
trained and inexperienced, must also be considered a significant
20 In the latter part of 1962, short-term training abroad for Pakistani staff
members was abandoned in favor of long-term training up to the Ph.D. degree for
a few members of Pakistani staff who show promise.
 THE FIRST FIVE YEAR PLAN 37

factor. An in-service training program for poorly qualified person-

nel would have had to be conducted at an elementary level and
might have yielded only limited results, but without it little could
be done to raise the competence of most of the staff.
The Advisory Group had only limited success during the First
Plan period in achieving its third objective: to furnish advice to the
Government on economic, financial and fiscal policies. The Plan-
ning Board, and through it the Harvard Advisory Group, were able
to provide the Government with sporadic counsel on some policy
matters, not only in connection with the Plan, but after its comple-
tion, when the annual development programs were under considera-
tion. Nevertheless, the concern with operations, as well as the
Board's low prestige, also inhibited the Advisory Group from giving
advice to the Government on current policy questions. No formal
machinery existed through which the Board's opinions on policy
matters could be conveyed to the Government or the ministries con-
cerned. Nor was it the practice of the Government or the ministries
to consult informally with the Planning Board when policies were
being formulated on tariff adjustments, industrial incentives and
controls, agricultural promotion, fiscal and credit measures, the
negotiation and use of foreign aid and other subjects which influ-
enced the successful implementation of the Plan no less than public
investment decisions.
There had been no expectation at first that the advisers would be
stationed elsewhere than in the Planning Board in Karachi, but it
soon became apparent that the weak provincial planning agencies
would not be able to play a meaningful role in the planning process
without outside technical assistance. The Planning Board sought
as early as the fall of 1955 to persuade each of the Provincial Gov-
ernments to accept Harvard advisers to help with provincial plan-
ning. In the spring and summer of 1956, two advisers were sta-
tioned in each of the two Provinces to work with their respective
Development Commissioners. In East Pakistan, the Provincial
Government, which made no secret of its suspicions that the Central
Government and the National Planning Board would not give East
Pakistan what it considered a fair share of development resources,
did not officially accept the advisers stationed in Dacca until the
38 PLANNING IN PAKISTAN

advisers had been working, often under frustrating conditions, with

the Provincial Development Commissioner for over a year.
In the absence of adequate Pakistani staffs, the advisers of both
Provinces had to do much of the work on the provincial develop-
ment plans. They also acted as advisers to provincial officials when
they met with the National Economic Council, the National Plan-
ning Board and the Ministry of Finance in Karachi. The two ad-
visers in each Province undoubtedly contributed significantly to
provincial planning activities by doing the substantive work, but
they were too few to fill the gap in provincial planning personnel
and their contribution was necessarily limited and transient. The
shortage of staff in the provincial planning departments made it
virtually impossible for the advisers to make a more lasting impact
on provincial planning by training Pakistanis in the use of appro-
priate planning techniques. In the provincial operating depart-
ments, a substantial amount of technical assistance, furnished by
the United Nations, the UN Food and Agriculture Organization,
the Colombo Plan Organization, the United States Government and
others, was available to help them overcome their serious problems
of project preparation and execution. In some cases, foreign tech-
nicians were able to make contributions toward the preparation and
execution of specific projects. But, in general, the departments
made only intermittent and haphazard use of the available foreign
technicians and the long-term results were disappointing.
The lack of Pakistani counterparts to the existing advisers in
Lahore and Dacca, as well as political instability and administrative
disorganization, made it seem preferable at first to limit the number
of advisers in each Province to two, and to concentrate advisers and
consultants in the Planning Board in Karachi. By 1959, it was
found desirable to increase the number of advisers in East Pakistan,
where the need for technical assistance was especially great. How-
ever, its attempts to have two additional advisers stationed in Dacca
were unsuccessful until 1962. West Pakistan might also have bene-
fited from the use of additional advisers but civil servants in that
Province were less inclined than those in East Pakistan to utilize the
advisers' services. It is now clear that in the case of Pakistan, with
its two widely separated and distinctive regions, better results could
 THE FIRST FIVE YEAR PLAN 39

have been achieved if more advisers had been stationed in the Prov-
inces from the beginning.
Although the Harvard Group recommended that programing
units be set up in the operating ministries and departments and that
basic reforms be made in the budgeting procedures of the Ministry
of Finance, the scope of the Advisory Group's technical assistance
activities was not enlarged to encompass either the operating agen-
cies or the Ministry of Finance. As will be seen later, central and
provincial executing bodies were weak in the preparation and exe-
cution of projects and programs and there were critical defects in
budgetary procedures. The Advisory Group, as well as the Resi-
dent Representative which the World Bank maintained in Pakistan,
urged that foreign technical assistance be obtained to establish pro-
graming units in executing ministries, departments and agencies,
and to improve budgetary procedures of the Central Ministry of
Finance and of the Provincial Finance Departments. Foreign tech-
nicians provided by the United Nations and its specialized agencies
and by the United States Government, helped prepare and execute
individual projects and sometimes made suggestions for improving
budgetary practices. But there was no correlated and continuing
program, such as there was for planning, to provide a coordinated
corps of advisers to help establish programing units in executing
bodies and to improve budgetary procedures.
The Planning Board had no control over the selection and use of
foreign technical assistance by the Government, the coordination of
which was the function of the Ministry of Economic Affairs. At
best, the Ministry tended to coordinate technical assistance activities
indifferently. Since it was not completely sympathetic to the pur-
pose of the Planning Board and the goals of the Plan, it did not
actively seek to obtain and place technical assistance where it was
most needed to implement development projects and programs.
Moreover, such technical assistance as was made available was gen-
erally utilized only sporadically and ineffectively, partly because
operating bodies did not know how to make efficient use of tech-
nicians and partly because the technical assistance furnished was
not always sufficiently competent or experienced to cope with the
problems encountered. Consequently, the over-all impact of tech-
40 PLANNING IN PAKISTAN

nical assistance for implementing the Plan fell far short of the need.
This was in considerable contrast to the more successful activities of
the Harvard Advisory Group, whose advisers were carefully selected
and supervised and whose effective utilization was assured through
continuing efforts of the Group's sponsors to coordinate the entire
operation. In retrospect, therefore, it appears that had such a co-
ordinated program of technical assistance been provided to establish
programing units in executing agencies and to improve budgetary
procedures, even if this had involved some reduction in the refine-
ments employed in the preparation of the Plan, the ultimate results
would have been better.

FORMULATING THE PLAN

In determining the magnitude of the Plan, the planners had to

choose between approaching the problem from the point of view of
the country's requirements or of its available resources. If require-
ments were stated as a series of targets for increasing output, na-
tional income, employment and so forth, it would be possible to fix
the financial size of the Plan by estimating the amount of domestic
and foreign resources needed to achieve the targets. The second
approach would involve estimating the maximum amount of
domestic and foreign financial resources which the country was
willing and able to invest and planning the distribution of these
resources among the various sectors of the economy in such a way
as to bring the most desired results. The planners considered the
first approach unrealistic, since targets set without regard to avail-
able resources could lead to serious inflation or to the imposition of
stringent controls. In emphasizing the second approach, however,
the planners attempted to estimate available resources using the
assumption that every possible effort would be made to increase
them.2"
The lack of information in many important fields and the inade-
quacy of those statistics which were available seriously handicapped
the preparation of the Plan. Most of the statistics available for
21 The First Five Year Plan, pp. 73-74.
 THE FIRST FIVE YEAR PLAN 41

planning purposes were defective. Much of the information needed

did not exist. For these reasons, many estimates were little more
than rough guesses.
The Plan itself was formulated through a series of successive ap-
proximations by which available resources were compared with the
claims upon them:
1. Public financial and real resources were first estimated on the
basis of existing official policies and programs, as well as on the
assumption that they would be increased by a reasonable rise in the
rate of taxation and by other means. Foreign exchange receipts
were estimated by means of projections of export earnings and im-
port payments, using available information on both past experience
and future prospects. Total private investment resources were
determined from estimates of potential private savings after allow-
ing for resources to be mobilized by the public sector. To obtain
this information, the Board conducted surveys, including the first
systematic estimate of private savings ever made in Pakistan, and
held discussions with business and industry leaders.
2. A preliminary division of the total resources under government
control was then made among the major sectors of the economy.
3. For the private sector, estimates were made of resource require-
ments and expected returns based on past investment, production
and forecasts of demand.
For the public sector, an attempt was made to select the most
productive projects. Most of these projects were already under way.
Others were proposals invited by the Planning Board. Some of the
projects were fully engineered and well conceived, but because of
the general inadequacy or absence of planning and programing
staffs in the Provinces and in the central ministries and agencies,
many projects were not supported by a proper appraisal of their
technical feasibility, real costs and benefits or the administrative
and technical arrangements required for their implementation and
subsequent operation. Some projects were little more than un-
proved ideas. There were also many important fields where no
projects were submitted. In the absence of basic information, the
Board often found it difficult to make sensible decisions on the use-
fulness and priority of projects received. The Board's officers and
42 PLANNING IN PAKISTAN

staff tried to meet the problem by visiting provincial capitals,

central ministries and development sites and by discussions with the
authorities concerned. In several sectors, e.g., agriculture, industry,
telecommunications and social welfare, projects and programs were
examined with the help of mixed advisory panels. The Board also
filled some gaps with proposals of its own or, especially for East
Pakistan, by setting aside block allocations in the Draft Plan for
projects to be prepared later.
This was hardly the best way for the Planning Board to operate.
The Board would have preferred-the ministries and provincial de-
partments to prepare and submit projects and programs for each
sector of the economy and for each Province, giving their views on
the objectives for the respective spheres and on policies required to
achieve these objectives. This procedure would have permitted the
Board to concentrate on assessing total resources, formulating na-
tional policies, determining priorities, selecting the best pattern of
investment and coordinating the various development projects and
programs into a national plan, activities which it correctly consid-
ered more appropriate to a national planning organization. How-
ever, "no such ideal arrangement was possible during the prepara-
tion of this Draft Plan." 2 2 Instead, the Planning Board found it
necessary to spend much of its time examining several hundred
projects, improving some, discarding others and, where important
gaps became apparent, sponsoring the initiation of projects.
4. The various sector programs built up with available projects
were next subjected to feasibility tests to determine what factors,
technical, technological, institutional, and especially administrative
and organizational, would limit exceution of the programs. Re-
visions were made in sector programs in the light of these tests.
5. Tests were also applied to sector programs to determine whether
their requirements were consistent with expected supplies of local
goods and services, foreign exchange and technical and other scarce
resources.
6. Comparisons were then made of the marginal prospects in each
sector on the basis of expected costs and returns from investment,
22 Planning Board. The First Five Year Plan, 1955-60 (Draft), p. ii.
 THE FIRST FIVE YEAR PLAN 43

and successive revisions were made to take advantage of better

alternatives. Because of limitations in data, "these calculations were
not very fancy" 2 3 and were, besides, necessarily subjective in many
instances.
7. Even after these steps had been taken, the total amount required
to implement the proposed plan was greater than the foreseeable
resources. The planners believed, correctly as events proved, that it
was unrealistic for a planned effort on the scale contemplated to be
achieved fully by 1960. They did not, however, reduce proposed
expenditures to the level of estimated resources by eliminating
projects since this would have posed political problems. Instead,
they estimated that over-all expenditures would fall short of ex-'
pectations by 15 percent. In this way, proposed investment outlays
were brought into line with expected financial resources.
In giving the Planning Board a mandate to prepare a five-year
plan, the Government had set no specific objectives of official devel-
opment policy. The resolution establishing the Board had stated
that:
The economic and social objectives of Government's policy are well-
known. They are to develop the resources of the country as rapidly as
possible so as to promote the welfare of the people, provide adequate
living standards, and social services, secure social justice and equality
of opportunity and aim at the widest and most equitable distribution
of income and property. 2 4
28 Mason, Edward S., Economic Planning in Underdeveloped Areas: Govern-
ment and Business. New York, Fordham University Press, 1958, p. 78. Cf., also,
Bell, David E., "Allocating Development Resources: Some Observations Based on
Pakistan Experience" in Public Policy, A Yearbook of the Graduate School of
Public Administration. Harvard University, Cambridge, Mass., 1959, p. 86 ff., on
the problems encountered in allocating resources among marginal projects where
no marketable product was involved, where data were scanty and where multiple
objectives intervened. After describing the inherent limitations and the unreliability
of the available statistics, Mr. Bell, who was the first Project Field Supervisor of
the Harvard Advisory Group in Karachi, observed: "This is a formidable list of
deficiencies in the data. It meant that only in two or three dozen cases-principally
large-scale industrial projects in the public sector-could comparative returns be
calculated on alternative investments. And even in these cases important elements
of cost or return were usually missing and the data that were available were some-
what unreliable . . . [However] . . . even though the projects for which data were
available were few in number, they were mostly large. Together they accounted
for perhaps 30 percent of the total outlay proposed in the Plan."
24 Planning Board. The First Five Year Plan (Draft), p. i.
44 PLANNING IN PAKISTAN

But this statement was too general to guide the Board in setting
priorities and allocating resources.
Left thus to its own devices, the Planning Board produced five
objectives for the proposed plan. For these, the Chairman of the
Board later obtained the approval of the Prime Minister. Heavy
emphasis was to be laid on the achievement of the greatest possible
increases in national income and the standard of living, but in-
creased health, education, housing and social welfare services
"justified primarily on grounds other than increasing the national
income," 2 5 were to be another objective. The three other objectives
were to improve the balance of payments by increasing exports and
import substitution; to increase opportunities for useful employ-
ment; and to increase rapidly the rate of development in East Paki-
stan and other less-developed areas of the country.
While the first four objectives posed largely methodological prob-
lems in allocating resources, 2 6 it was the fifth objective-which
implicitly recognized the need for increasing East Pakistan's rate of
growth until the average standards of living in the two Provinces
were approximately equal-that created critical political problems
for the Planning Board.
Before Partition, the area which later became East Pakistan was
a largely undeveloped region with a stagnant agricultural economy
and virtually no industry. It had almost no harbor facilities and its
communication system converged on Calcutta. There had been no
development of the area before independence, nor were there any
plans for its development at the time of Partition. On the other
hand, West Pakistan had had a number of power, irrigation and
industrial projects carried out and others were planned. Although
both Provinces lacked administrative and technical experience, East
Pakistan was especially weak in this respect. At the time of inde-
pendence, therefore, East Pakistan was much less developed than
West Pakistan.
25 National Planning Board. The First Five Year Plan, p. 71.
26 In general, where there was a conflict of interest between the national income
and employment objectives, preference was given to the former; on the other
hand, in the few cases where conflicts arose between the national income and
balance of payments objectives, the Board generally gave priority to the latter. Cf
David Bell, "Allocating Development Resources, etc."
 THE FIRST FIVE YEAR PLAN 45

After independence, West Pakistan, with its larger area, mineral

and hydroelectric potential, and with a greater number of projects
and technical and administrative personnel to execute them, con-
tinued to develop at a faster rate than East Pakistan. West Pakistan
had most of the industrial entrepreneurs and skilled workmen,
largely refugees. It regularly received from the Central Government
the greater part of Pakistan's available investment outlays, and since
seven-eighths of the Muslim refugees from India had come to West
Pakistan, it also received much larger sums than East Pakistan to
resettle refugees. Although investments in East Pakistan were
rising, West Pakistan's receipt of a larger share of funds from the
Central Government appeared discriminatory to East Pakistan. A
considerable amount of resentment developed in East Pakistan as a
result and:
the economic disparity between the two Wings ot the country had
become by 1953 an explosive political issue in the less favored East
Wing and geographical parity had become the clear policy of the
national Government. 2 7
In order to promote more rapid development in East Pakistan,
the Board had included in the Plan some projects in that Province
which were expected to yield lower returns than some in West Paki-
stan which had been excluded from the Plan. In taking this action,
the Board felt that a modest restriction of the rate of growth was
not too big a price to pay for bringing about a better balance in the
country's geographical distribution of income. However, the Board
did not include in the Plan many other proposals from East Paki-
stan on which yields were expected to be so low that they would
seriously restrict the planned increase in national income. Instead,
the Board made a block allocation of Rs. 1 billion to East Pakistan
in the expectation that suitable projects would be presented later.
"This was of course an evasion of the issue, or rather a postpone-
ment." 2 8 The addition of a special reserve for East Pakistan helped
increase estimated investment outlays in the Plan well above ex-
pected receipts and largely accounted for the inclusion in the Draft
Plan of the estimated shortfall of 15 percent previously mentioned.
27 David Bell, "Allocating Development Resources, etc.," p. 104.
28 Ibid., p. 105.
46 PLANNING IN PAKISTAN

As events were to prove, the expected shortfall was well below the
actual.

THE PLAN'S PROVISIONS AND PUBLICATION

The Draft Five Year Plan, covering the period April 1, 1955 to
April 1, 1960, was completed in the autumn of 1955, but its release
was delayed by the Prime Minister because he was concerned lest
East Pakistan's dissatisfaction with the Plan's allocation of resources
between the Provinces exacerbate the problems surrounding the
adoption of the Constitution which the Constituent Assembly had
begun drafting in July 1955 and which was eventually approved in
March 1956. When the Draft Plan was finally published in May
1956, more than a year of the Plan period had elapsed.
The Plan was ambitious: it envisaged a 20 percent increase in
gross national product from 1955 to 1960. With population esti-
mated to increase by 7.5 percent over the five-year period,2 9 per
capita income was expected to rise by 12.5 percent. Agricultural
output was to increase by 13 percent with foodgrain production
rising by 9.3 percent, making the country self-sufficient in food by
1960. Irrigation, drainage, flood control and reclamation facilities
were to bring 1.8 million acres of new land under irrigation and to
reclaim from salinity and waterlogging, or to otherwise improve the
water supply of, another 5.1 million acres of land. Industrial pro-
duction was to increase by almost 75 percent. The balance of pay-
ments deficit was expected to decline sharply by the end of the Plan
period as a result of rising exports and declining nondevelopment
imports. It was estimated that the number of new jobs created
during the Plan period would roughly equal the expected rise in the
labor force. To accomplish these objectives, the Plan proposed con-
tinually rising development outlays totaling Rs. 11.6 billion of
29 According to the Deputy Chairman of the Planning Board, it was surmised
that population was growing faster than this, but it was felt that the growth of
population had to be understated in the Plan in order "to keep despair away."
Said Hasan: Address of Welcome to the Seminar on the Problems of Population
Growth and Economic Development with Special Reference to Pakistan, Summary
Report, The Institute of Development Economics (Karachi), 1960, p. vii.
 THE FIRST FIVE YEAR PLAN 47

which Rs. 8 billion would be in the public sector3 " and Rs. 3.6
billion in the private sector.
In response to the Planning Board's invitation, the Draft Plan
was studied and discussed by various agencies and other units of the
Central and Provincial Governments and by chambers of com-
merce, industries, universities, learned societies, trade unions, co-
operative societies and the press. On the basis of the conclusions
which emerged from these discussions, as well as changes in the
economy which had taken place since the start of the Plan period,
the Draft Plan was revised by the Planning Board.
During the review period, it had become apparent that actual
public investments would be less than planned because revenues
would be lower and nondevelopment expenditures higher than had
been estimated originally. In addition, shortages of managerial,
technical and administrative personnel and deficiencies in public
administration had proved to be greater than the planners had ex-
pected. Actual performance during the first two years of the Plan
period had also made it plain that a 20 percent increase in gross
national product could not be realized in the circumstances. As
revised, therefore, the Plan provided for a reduction in expenditures
from Rs. 11.6 billion to Rs. 10.8 billion and for a 15 percent in-
crease in gross national product instead of 20 percent. Public
expenditures were now expected to account for Rs. 7.5 billion,"
while private expenditures would amount to Rs. 3.3 billion.
The Plan in its final form, a monumental work of about 500,000
words, was an exceptionally well written and comprehensive model
of its kind. In addition to dealing with the global and sectoral as-
pects of the Plan itself, the document was virtually a primer on
planning, planning organization and the problems facing the public
service in implementing a national development plan. It made de-
tailed recommendations and pleaded forcefully for basic land
30 Approved public projects were estimated to total Rs. 9.2 billion, but the
expected shortfall of 15 percent was expected to reduce actual public investments
by Rs. 1.2 billion to Rs. 8 billion.
"I The total of approved public projects in the Plan amounted to Rs. 9.3 billion,
approximately the same as in the Draft Plan, but a larger shortfall in expenditures
(about 20 percent) was now expected to reduce actual public investment to Rs.
7.5 billion.
48 PLANNING IN PAKISTAN

reforms, legislation, administrative decisions and governmental re-

organization required in the Center, in the Provinces, and locally to
put the Plan into effect. It made an especially strong plea that the
Plan be brought to the people.
The process of reviewing, revising and adopting the Plan had
been expected to take two or three months but, mostly because of
the unstable political situation, the Plan as revised was not consid-
ered by the newly created National Economic Council until almost
a year after the Draft Plan had been published and two years after
the Plan period had begun. The National Economic Council had
been established at the end of 1956 pursuant to the Constitution of
that year as an advisory body to the Government. 3 2 Its main re-
sponsibilities were to review the country's economic position and to
formulate plans for financial, commercial and economic policies
with the aim of insuring that uniform standards were attained in the
economic development of all parts of the country. The Council had
11 members: five ministers from the Central Government, including
the Prime Minister, who was ex officio Chairman of the Council,
and three ministers from each Province. The Chief Minister of the
Province was included in each provincial delegation.
During the National Economic Council's consideration of the
Plan, the discussion centered on objections by East Pakistan's repre-
sentatives to the Plan's division of resources between the two
Provinces. The East Pakistani representatives argued that the lump
allocations for their Province provided no assurance that projects
equal to the reserve in the Plan would later be approved by the
Government. 3 3 They also claimed that they could be ready with

32 The National Economic Council should not be confused with the Economic
Council (Cf. No. 5 in Appendix), which was really an economic committee of the
Cabinet set up early in 1951 as part of the central planning machinery to imple-
ment the Six Year Development Plan. Upon the creation of the National Eco-
nomic Council in 1956, the former Economic Council was renamed the Economic
Committee of the Cabinet (See No. 7 in Appendix).
3s A number of projects totaling Rs. 300 million received by the Planning Board
from East Pakistan after the Draft Plan was published had been included in the
revised Plan and the reserve of Rs. 1 billion had been reduced correspondingly.
The balance of the reserve of Rs. 700 million had been allocated in the revised
Plan to specific fields (e.g., agriculture, water and power development, village
agricultural and industrial development, etc.) for projects to be prepared at a later
time.
 THE FIRST FIVE YEAR PLAN 49

projects sooner than the Planning Board expected and therefore

wanted their lump sum allocations granted to specific projects in the
early part of the remaining three years of the Plan period and not in
the later part, as proposed by the Planning Board. They pointed
out, moreover, that the Plan did not make an equal division of
available resources between the two Provinces and that no pro-
vincial division had been made of the funds which the Central
Government would expend under the Plan.34
The Council "settled" the matter by an agreement that in the
remaining three years of the Plan period, when a "reinforced effort"
would be made to achieve the Plan's targets to overcome the lag in
the first two years, allocations between the two Provinces would be
approximately equal. The Council stated that "In Pakistan's condi-
tions, particularly in a situation of recurrent food shortages, no
reliable estimate of resources available for development can be
made for periods longer than a year." 35 The equal division of
resources was therefore to be detailed in annual development pro-
grams which, within the framework of the Plan, were thereafter to
form the real basis for action.
The. annual development programs were to be formulated in the
light of expected financial resources and of the available supply of
properly prepared projects, capable of implementation. The pro-
grams were to be incorporated into the annual central and provin-
cial financial budgets for the public sector and were to provide guid-
ance for developmental activity in the private sector. On the basis
of periodic progress reviews, resources were to be diverted from
sectors and projects which were lagging to others which showed
better promise, with the aim of fully utilizing all resources.
The East Pakistani representatives hoped the annual develop-
ment programs would benefit their Province by quickly converting
a4 The revised Five-Year Plan improved the balance of allocations in favor of

East Pakistan, but the proportion it was to receive was still not equal to West
Pakistan's share. Thus, East Pakistan's share of total public expenditures had been
increased from 33 percent of the total in the Draft Plan to 43 percent, but West
Pakistan's share had risen from 38 percent to 50 percent, reducing the Central
Government's proportion from 30 percent to only 7 percent of total estimated
public outlays.
35 "National Economic Council Statement on the Five Year Plan, 1955-60,"
Report of the National Economic Council for the Year 19S7/58, p. 25.
50 PLANNING IN PAKISTAN

their unallocated reserve into allotments for specific projects which

they believed they could produce. The West Pakistani representa-
tives were convinced that the annual development programs would
make it possible for their Province to obtain funds which they felt
East Pakistan would be unable to use because of a lack of well
prepared projects, while the National Planning Board favored the
annual development programs as a means of giving effect to the
Five-Year Plan. With these differing views of the same set of facts,
the Council was finally able to accept the Plan. After the compro-
mise solution was arranged, but with little consideration of the
Plan's other basic issues, the Council voted to recormmend that the
Government approve the objectives, targets and programs in the
revised Plan. However, frequent changes in Government postponed
final publication of the Plan until more than three years after the
Plan was supposed to go into effect.
From the time the Planning Board was established in July 1953
until October 1958, when the military took charge, Pakistan had
five Prime Ministers. None was ever in secure control of the Gov-
ernment. The political maneuverings which preceded and followed
each change in Government and the constantly shifting coalitions
prevented leaders from giving sustained support to the Plan and its
objectives. Perhaps the last of the five Prime Ministers, just before
he authorized the Plan's publication, revealed best the low im-
portance of the Plan when he confessed four months after he had
assumed office:
I was staggered to learn that until a few days ago the Five Year Plan
had not even been authenticated by the Government for publication.
With hardly two more years to go, the Plan continues to be regarded
as routine departmental file, meant only for recording of prolific notes
and cross-notes. Even a properly coordinated machinery for the im-
plementation of the Plan has not yet been evolved. 3 6
36 Address of the Prime Minister at Multan, 24 April 1958, as quoted in Ahmad,
Mushtaq, Government and Politics in Pakistan, Karachi, Pakistan Publishing
House, 1959, p. 68.
 THE FIRST FIVE YEAR PLAN 51

IMPLEMENTING THE PLAN

While the implementation of the Plan as a whole was greatly

delayed, execution of many projects in the Plan went forward be-
cause they had been included in annual financial budgets from
1955/56 onward. Indeed, about two-thirds of the Plan consisted
of projects which were in various stages of execution at the begin-
ning of the Plan period. As the introduction to the Draft Plan
pointed out, "necessarily, therefore, the Plan in its early years must
largely reflect the pattern of the development already under way.''37
Nevertheless, the pace of the Plan's implementation was slow in the
first three years.
The Plan and the Budget
Since two-thirds of the projects in the Plan were already in vari-
ous stages of execution when the Plan was drafted, the capital sec-
tion of the Central Government's annual budget was bound to
reflect the Plan in some ways. - The Planning Board prepared rec-
ommendations on the size and composition of the annual develop-
ment program for inclusion in the Government's budgets for
1955/56 and 1956/57, which were largely accepted by the Min-
ister of Finance. Nevertheless, for the first two years of the Plan
period, there was little attempt to coordinate the Plan with the
annual Budget.
The budgeting procedure followed by the Ministry of Finance
tended to impair the authority of the national financial budget as a
means of financial control. The Ministry customarily incorporated
into the budget requirements submitted by ministries and depart-
ments which it knew were unsound or projects which it knew were
not ready because it had come to discount them. After approval of
the Budget, the Ministry relied instead on its subsequent scrutiny
of all proposals before it allowed any expenditures to be made.
Since a project's inclusion in the Budget and an allotment for it
gave no assurance that the Ministry of Finance would later approve
expenditures to carry it out, the Ministry and the operating bodies
3" Planning Board, The First Five Year Plan (1955-60), Outline of the Plan
(Draft), Vol. 1, p. ii.
52 PLANNING IN PAKISTAN

considered the system by which the Ministry approved expenditures

after the Budget was approved far more important than the original
budgetary allocations. Consequently, operating bodies made little
effort to submit accurate budget requirements when the Budget was
being prepared and generally made exaggerated demands for funds.
This led, in turn, to indiscriminate budget cutting by the Finance
Ministry and the substitution of bargaining and haggling between
the Ministry and the operating bodies for rational consideration of
projects.
In order to reduce expenditures to the level of foreseeable re-
sources and to curb irregularities, the Ministry had evolved a com-
plicated system for approving expenditures following budgetary
allotments, consisting of a series of time-consuming multiple checks,
which required a great deal of useless paper work. This system per-
mitted the Ministry to probe deeply into every detail of each pro-
posal and frequently to go beyond financial considerations. The
expenditure approval system created an illusion of tight central con-
trol, with the Ministry of Finance as the sole guardian of the
Treasury. In fact, the system did not constitute effective control
because decisions on the expenditure of public funds were actually
taken in the operating ministries and agencies. The system did,
however, succeed in shifting responsibility for the cost and progress
of the project from the project supervisor or director to the ano-
nymity of the central staff. It also resulted in considerable delays
which the Planning Board contended made it take "about a year for
the average provincial scheme requiring central review to emerge
from the sanctioning machinery.,' 3 8
In some cases, the Ministry's procedures resulted in retarding
work, at great cost, on projects for which funds were not forth-
coming in time to take advantage of construction seasons. This was
particularly true in East Pakistan, where the construction season is
very short. In other cases, costs increased because of the deteriora-
tion of materials or because supplies could not be obtained when
needed. In a review of the Plan's implementation during its first
four years, the Planning Commission (which replaced the Planning
Board in October 1958) stated:
38 National Planning Board, The First Five Year Plan, p. 95.
 THE FIRST FIVE YEAR PLAN 53

Among the explanation of shortfalls in accomplishment most com-

monly set out in evaluation studies, the uncertainties, delays and
inadequacies of the sanctioning process stand out. The Planning
Commission and the Finance Ministry complain the proposals are not
well thought out and adequately supported. The Ministries and De-
partments blame their lack of interest in the budget and sanctioning
process on the fact that the actual decision making tends to be of an
ad hoc nature on individual expenditures." 9
The Plan had stressed the need for reforming the budgetary proce-
dure in specific ways to increase its effectiveness in achieving na-
tional objectives. Little was done during most of the Plan period to
carry out this recommendation.
Beginning with the third year of the Plan period, after the Na-
tional Economic Council had approved the revised Plan and had
stressed the role of annual development programs in implementing
the Plan, the Ministry of Finance made a greater effort to relate the
Plan to financial budgets. From 1957/58 onward, the Planning
Board prepared each year an annual development program which
was used as a basis for discussion with the Ministry of Finance and
with the Provincial Finance Departments to prepare the capital sec-
tions of their financial budgets.
The annual development programs were expressed in financial
terms and made no attempt to relate expenditures to physical
targets. Nor did they contain information on how much had already
been spent on the projects included or how much these might be
expected to cost when completed. They were, in fact, little more
than lists of projects with amounts to be included in the financial
budgets. The annual development programs permitted the National
Planning Board to propose allocations of expenditures which gen-
erally conformed to the Plan's objectives, but flexibility was greatly
limited because pressure from central ministries and Provincial
Governments made it necessary to allot most of the available funds
to projects already in progress, some of which were of dubious
priority.
It was perhaps inevitable that in Pakistan, where the demand on
39 Planning Commission. First Five Year Plan. Preliminary Evaluation Report,
p. 42.
54 PLANNING IN PAKISTAN

financial resources greatly exceeded available quantities, Finance

should become the dominant Ministry in determining development
expenditures. The Planning Board was frequently able to influence
the size and trend of budgetary development outlays; 4 0 but the
Minister of Finance always made the final decision. This was also
true of foreign aid and technical assistance, when between 1958 and
1961 the Economic Affairs Division of the Finance Ministry, rather
than the central planning agency, coordinated these activities for the
Government. When differences of opinion arose about the need for
aid or technical assistance, it was the budgetary instead of the devel-
opmental and planning view which generally prevailed.
The Planning Board's ineffectiveness in dealing with the Ministry
was partly due to the Board's staff being too small to prepare ade-
quate annual development programs. However, as one of the
Harvard advisers has pointed out, the more important factor was the
separation of the planning function from the budgetary process.
As a result:
If the [Finance] Minister's estimates indicated that the domestic re-
sources or the foreign exchange available for development purposes
would be smaller than had been expected by the planners, he required
that the development program be curtailed ... More might be granted
for non-development uses and less for development than provided in
the annual [development] program. When this determination was
made, however, the planners might not be represented; if represented,
they did not have a vote ...
... In some cases, where the planners had disapproved a project, the
Minister of Finance cited their refusal in justifying a denial of public
funds. But political and bureaucratic pressures often proved to be
more persuasive than the provisions of the development program ...
Some public agencies were able to exert more influence than others
... [and] . . . succeeded in getting what they wanted, whether or not it
was in the plan. Crucial fields, such as agriculture and education, had
to do with less. The [annual] development programs thus were
honored in the breach as well as in the observance. Priorities were

40 Thus, in deciding on the 1957/58 Budget, the Minister overruled his own
staff to accept the Planning Commission's estimates.
 THE FIRST FIVE YEAR PLAN 55

ignored; budget decisions made in June distorted the planning de-

cisions made in May.4 '

The Development Working Party

Repeated complaints by sponsors of public development projects,
notably the Provincial Governments, about the involved and time-
consuming procedures which had to be followed to get the Central
Government's approval for projects, as well as the accumulation of
a large backlog of pending projects led to the abolition of the Plan-
ning Commission and its replacement by a Development Working
Party' empowered with streamlined procedures to approve projects.
The Development Working Party was composed of representatives
of the Ministry of Economic Affairs, the Ministry of Finance, the
National Planning Board and the Central Ministry concerned, as
well as representatives of the provincial or other authority sponsor-
ing a project under consideration. It tried to clear a project within
a maximum period of three months by getting all the central min-
istries and agencies concerned to review projects jointly and simul-
taneously rather than in successive stages, as was the usual practice.
The Development Working Party was at first able to increase the
speed with which projects were considered, but difficulties soon
arose which slowed it down. The Working Party's rules provided
that meetings would ordinarily be presided over by the Secretary or
Joint Secretary, the highest or second highest civil servant of the
Ministry of Economic Affairs, and that only senior officials author-
ized to make decisions on projects under consideration would repre-
sent the other ministries and agencies. Neither of these require-
ments was met. The Ministry of Economic Affairs, which provided
the Working Party's Secretariat, appointed as Chairman of the
Working Party a junior civil servant who had no power to make
final decisions. As a result, senior representatives from the other
ministries and agencies who had attended meetings at first were
soon replaced by lower level civil servants who generally were only
authorized to state the position of their organizations. The Ministry
41 Wilcox, Clair, "Development Planning and Programming in Pakistan" in
Planning Economic Development, Hagen, Everett, Ed. (to be published in Septem-
ber 1963), Chapter 3, pp. 23-25 (manuscript).
56 PLANNING IN PAKISTAN

of Finance also refused to accept the Working Party's decisions as

final and insisted on making a second review of its own. Even after
projects had been cleared by the Working Party and the Ministry of
Finance, meetings of the Economic Committee of the Cabinet,
which made the final decision on projects, were frequently not held
until long afterward.

Public Administration
In both the Draft Plan and the final version of the Plan, the
Planning Board had warned that:
the inadequacies of Pakistan's administrative machinery will operate
as the most serious single impediment to the maximum economical use
of the country's financial and material resources . . . [and] . . . the
pace of implementation of economic and social programmes is likely
to be governed . . . more by the capabilities of the nation's administra-
tive and technical organization . . [than by] . . . the magnitude of
resources . 42
The Board considered that its view was correct because the various
central and provincial agencies were finding it difficult to utilize
fully the budget allotments to their programs, with the result that
actual expenditures often fell short of amounts allocated.
There were also other indications that Pakistan's administrative
machinery, both at the Center and in the Provinces, would en-
counter grave difficulties in carrying out the Plan. In almost every
field, and on all levels, there were great shortages of trained tech-
nicians and administrators to implement the Plan. There was a lack
of organizations with sufficient staff and experience either to pre-
pare or execute development projects. 4 3 In the case of many
projects, the shortage of trained manpower or experienced organ-
izations, rather than the lack of finance, limited the speed of
execution.
42 Planning Board, The First Five Year Plan (Draft), p. 100 and National Plan-
ning Board, The First Five Year Plan, pp. 91-92.
43 Three years after the inception of the Plan period, projects were not yet
available or had not been finally approved for 83 percent of proposed gross public
expenditures of Rs. 9.3 billion under the Plan (cf., The First Five Year Plan, ff.
to Table I, p. 15). This was only partly due to the slowness of the sanctioning
machinery.
 THE FIRST FIVE YEAR PLAN 57

While official policy favored development, there was in many

parts of the Government an unavowed attitude which regarded de-
velopment activity as being of secondary importance. This mani-
fested itself in lower pay and less advantageous conditions of service
for personnel serving in some development departments and in the
fact that junior officials were often assigned to deal with these de-
partments. Functions were haphazardly allocated among operating
departments so that different aspects of one project were often
handled in several departments. This fragmentation of responsi-
bilities, as well as the proliferation of organizations, made it difficult
to coordinate the implementation of many projects. There was,
moreover, unwillingness at higher levels to delegate powers and un-
willingness at lower levels to use the few powers which were dele-
gated. The resultant centralized control caused the Planning Board
to complain that:
This over-centralization is an ineffective and in fact a spurious form
of co-ordination. It exhibits itself in time-consuming, energy-wasting,
and patience-exhausting checks and counter-checks, references and
cross-references, conferences and consultations, often at the wrong
levels and about unimportant matters . . . Co-ordination in the true
sense of unified administrative leadership at vital points is generally
lacking. Apart from pervasive financial controls, which often have co-
ordinative implications of a negative character, and the intrinsic
responsibility of the Cabinet, such agencies as exist for general co-
ordination do not perform this function in a comprehensive manner.4 4

The ProjectsDivision
The Draft Plan had stressed the need for obtaining information
on a regular schedule which would permit the Planning Board to
make a continuous record of the progress made in carrying out the
Plan, appraise the results in terms of benefits achieved and make
periodic reports to the Government and the public. For this pur-
pose, the Draft Plan had proposed that formal procedures for ob-
taining progress reports from the executing agencies in the Center
and the Provinces be set up and, in addition, that periodic visits and

44 National Planning Board, The First Five Year Plan, p. 94.

58 PLANNING IN PAKISTAN

inspections of work in progress on the sites be made in collabora-

tion with the executing bodies concerned.
The recommendation that the central planning organization be
given authority to review and report on the progress of national
plans conformed to a generally accepted principle in most countries
with planning experience and was not inconsistent with the Plan-
ning Board's advisory role. However, the linking in the Plan of the
progress reporting function with field inspections was generally
interpreted within the. Government as an attempt by the Board to
get involved in operations. This led the previously mentioned Fed-
eral Reorganisation Committee to take the view that planning and
supervision of implementation should be separated:
It is our considered view that to combine in a single organisation the
functions of planning and implementation at the Centre would be to
set that organisation a well-nigh impossible task . . . Planning and
implementation, both very heavy tasks, require different qualities in
those responsible for their fulfilment. Good planners may not always
be good executives; . . . Besides, implementation, in view of past
failures and shortcomings, has become such a vital and onerous re-
sponsibility that the entrustment of work of such magnitude to a
planning agency would neither be fair nor would it produce the
desired results."5
For the first four years of the Plan period, however, no effective
machinery existed to follow the progress made under the Plan.
Project directors sent reports to the Ministry of Economic Affairs,
but they were generally poorly prepared and irregular in timing.
In October 1958, the Government approved the creation of a
unit in the central planning body to act as both appraiser and ex-
pediter of the Plan, but this idea was dropped ten months later.
Instead a separate Projects Division was created in the President's
Secretariat to operate under the direction and supervision of the
Economic Committee of the Cabinet.4 6 The Projects Division was
45 Report of the FederalReorganisationCommittee, p. 6.
46 The Projects Division was headed by a Director General and a Deputy
Director General, with headquarters at Rawalpindi. The Division had Progress or
Section Officers responsible for progress reports in the following sectors: agricul-
ture, industry, health and water supply, major irrigation and power, education,
transport and communications, minor irrigation, social welfare, housing and settle-
 THE FIRST FIVE YEAR PLAN 59

given authority to watch over and report on the execution of

projects, to measure performance against estimates, especially cost
estimates, to identify causes of delays and difficulties in implement-
ing projects and to propose appropriate corrective action.
Because of delays in the receipt of reports and the shortage of
staff, the Division's first Report referred "to a period which expired
long ago." 4 " The Report indicated that it was the aim of the
Division eventually to prepare quarterly reports within one and one-
half months after the expiration of the quarter to which each
Progress Report related. Although the form of the Reports, their
frequency and timeliness improved, the shortage of competent per-
sonnel together with the inefficient use of the available staff seriously
hampered the Division in the effective discharge of its responsi-
bilities.

Policy Making and Operations

When independence came, Pakistan had inherited a small disci-
plined Civil Service (CSP) which was probably better trained and
superior to civil services in most emerging countries for the admin-
istration of justice, the maintenance of peace and the collection of
taxes. Its great contribution was to keep governmental services
going when Partition severed the new country from the former
Indian Government. But by its very commitment to tradition and
routine, the CSP soon showed itself unable to operate in the pre-
vailing circumstances with the drive and initiative required to carry
out the Plan:
Trained in the traditions of Whitehall, with every emphasis on.probity
and careful audit, the accurate answer next year if need be, not the
proximate answer today, officials hate the quick decisions and inspired
guesses that rapid development requires. 4 8
ment. The Progress Officers for agriculture and industry were posted at Rawal-
pindi. The others were located in Karachi. The Progress Division also had branch
offices in Lahore and Dacca, each with a Deputy Director General and one
Progress Officer.
4 Projects Division. Development Projects. Progress of Major Schemes Sanc-
tioned by the Government of Pakistan, p. 1.
48 The Economist, (London), December 2, 1961, pp. 931-932.
60 PLANNING IN PAKISTAN

As a small, elite body of public servants with a restricted intake

of recruits, the CSP had its own rules, higher pay scale, perquisites
and prerogatives which distinguished it from, and raised it above,
the other so-called Central Services, such as the Income Tax Service
and the Audit and Accounts Service. Unlike these Central Services,
whose members were recruited to perform specific technical or other
operational tasks, the CSP was conceived as corps of "generalists"
whose members were considered qualified to work in policy-making
and supervisory positions anywhere in the Government.
Since separation of policy-making from administration, defined
as the execution of sanctioned policies, is a cardinal principle of
public administration in Pakistan, the CSP acquired a near mo-
nopoly of the top policy-making jobs. On the other hand, the
members of the other Central Services were generally in technical
positions, i.e., "the execution of sanctioned policies," under the
supervision of CSP members of the ministerial secretariats who
formulated policy."
The First Plan inveighed against the prevailing divorce of policy-
making and operations as unsuited to Pakistan's current needs.
Whenever a developmental problem arose, it generally had to be
channeled through subordinate secretariat personnel for a noting
and filing process which moved through a long series of steps at
lower levels. "Often there seems to be a disposition to shift the file
from one office to another, or from one ministry to another. The
resultant delays are sometimes unbelievably long."50 The Planning
Board felt that this elaborate process of multiple consideration for
each item of business by a hierarchy of officials led to inefficiency
and administrative irresponsibility:
49 In the Government of Pakistan, the policy-making and supervisory portion of
a ministry is referred to as the secretariat, while the executing agency which may
be attached to a ministry is called a department. A ministry may have one or more
divisions. The permanent secretary heading a division is responsbile for policy
formulation and the execution of approved policy. He supervises and coordinates
the work of the various units and departments in his division. In the Provinces,
the distinction between the secretariat and the operating sections within the
provincial departments as well as between the CSP and the other services, is the
same at the Center.
"0 National Planning Board, The First Five Year Plan, p. 118.
 THE FIRST FIVE YEAR PLAN 61

While most decisions move upward, many are disposed of by junior

officers lacking experience, maturity or knowledge of the technical
subjects with which they are dealing. By sitting in judgment on senior
and mature specialist officers they often create frustration and resent-
ment. Departmental heads in practice tend to be required to report to
subordinate members of the Secretariat who are concealed in anonym-
ity and in no position to be held accountable for their decisions. The
imposition of administrative judgment over technical proposals often
results in the substitution of an unqualified and irresponsible judgment
for an informed one.5

Projects and Programs

The technicians' inferior status and pay seriously interfered with
the recruitment and retention of specialists needed to implement the
Plan. Nor was adequate provision made for the establishment of
training programs to increase the supply of scarce technicians. The
shortage of technicians was especially acute in agriculture. There
were other important factors which accounted for failures in this
sector, notably, backward agricultural techniques, poor weather,
the unproductive land tenure pattern and a system of officially con-
trolled prices for agricultural products which had the effect of
curbing farmers' incentives to increase output and investment.
Officials tended to overemphasize big projects and to ignore small
ones which were crucial for increasing agricultural production. In
part, this could be attributed to the preference of foreign lending
and donor agencies for large projects, since one large project was
simpler to finance than a series of smaller ones. But the tendency
of officials to concentrate on large projects went beyond the require-
ments of foreign aid and lending agencies. In East Pakistan, for
example, the Water and Power Development Authority was exces-
sively preoccupied with large and costly irrigation and multipurpose
projects whose benefits could not accrue for many years. The
emphasis on multipurpose projects often was accompanied by
official concentration on the engineering aspects of these projects to
the neglect of their agricultural aspects:
51 Ibid.
62 PLANNING IN PAKISTAN

Take the crucial example of constructing large-scale, multipurpose

dams. The whole scheme is minutely prepared .. . while the dam is
being built, the next phase of the operation-the installation of gen-
erators and transmission lines and the building of subsidiary canals-
is carried forward. Yet again and again when the canals are finished,
the power available and the water flowing, the same phenomenon
recurs. No preparations for irrigated farming have been made. There
are no plans for land use. Feeder channels have not been built. There
are no farm buildings, no roads, no warehouses, no central stores.
The creative inte]ligence that had acted in a perfectly rational fashion
in the sphere of public works seems to stop dead at the frontiers of
agriculture."2
A large number of projects had been started without prior ap-
proval of the Economic Committee of the Cabinet or the Economic
Council. The Committee on the Review of On-Going Schemes,
which the Government appointed in June 1960, to review all "on-
going" projects, i.e., those in process of execution, listed 85 such
agricultural, water, power, industrial and housing projects ranging
in estimated cost from Rs. 2.5 million to Rs. 481 million and total-
ing Rs. 6,300 million.5 3
The Committee felt it had no alternative but to recommend the
completion of many projects which had "reached what may be
called a point of no return . . . [since] . .. the cost of scrapping the
projects or the cost of changing them may be much greater than
the waste involved."5 4 The Committee included in its report an
illustrative list of 27 such projects from the water, power and indus-
try sectors costing Rs. 3.1 billion, of which Rs. 1.6 billion had
already been spent. Some of these projects were wrongly conceived
at the start or were based on assumptions which later proved to be
incorrect; others were less desirable than formerly because unfore-
seen developments had changed the circumstances which had given
rise to the need for the project.
For many projects, original cost estimates were exceeded sub-
stantially during execution, final costs in some cases being "as much
52 The Economist, (London), December 2, 1961, p. 935.
53 Planning Commission. Interim Report of the Committee on the Review of
On-Going Schemes, pp. 9-12.
54 Ibid., p. 2.
 THE FIRST FIVE YEAR PLAN 63

as 260 percent of those predicted in the projects reports, with the

average being about 160 percent."" Summarizing the situation
which prevailed in the field of water and power development during
the First Plan period, the Second Plan commented:
Experience during this period underlines the prime importance of
careful preparation of projects, of sound appraisal of real costs and
benefits, and of careful assignment of priorities and determination of
the pattern of investment. Such comprehensive preparatory work was
in many cases lacking in the past, because of absence of detailed sur-
veys, investigations and statistical data. Impatience and enthusiasm
took the place of prudence and engineering judgment, leading to waste
of, scarce resources-finance, strategic materials, and technical man-
power. In some instances costs were grossly underestimated 'and re-
turns overestimated. In a number of cases, coordination between the
various phases of the same project was indifferently effected. 5"
In public industry, the Pakistan Industrial Development Corpora-
tion (PIDC) under the direction of a dynamic Chairman, made
considerable headway in establishing large-scale basic industries.
But the costs were unexpectedly high. This led the Panel of Econ-
omists which, at the request of the central planning body, examined
the Second Plan to complain of:
a lack of cost consciousness on the part of many public servants in
charge of development projects. It frequently happens that the execu-
tion costs in the public sector are substantially higher than the costs
of execution of similar projects in the private sector. 5 7
PIDC was usually able to obtain funds it wanted even for projects
to which the Planning Board had assigned low priority. PIDC was
favored over the private sector because many officials had a deep-
seated distrust of private business. These officials tended to regard
profits as immoral. "A foreign observer in . . . Pakistan," com-
mented Professor Edward Mason, who was in over-all charge of the
Harvard University Advisory Group, "cannot fail to be impressed
55Data from a Planning Board staff document dated February 1958, as given by
David Bell, "Allocating Development Resources, etc.," pp. 96-97.
56 Planning Commission. The Second Five Year Plan, p. 201.
5 Planning Commission. Report of the Panel of Economists on the Second
Five Year Plan, p. 26.
64 PLANNING IN PAKISTAN

with the strong anti-business sentiment that permeates the civil

service ."58 To an extent, this attitude may have been a response
to the antiquated and sometimes restrictive practices of Pakistani
businessmen, most of whom preferred to limit their operations to
land management, construction, commerce or foreign trade. Never-
theless, civil servants often manifested a "possibly unconscious con-
viction that the economic decisions they make are more likely to be
'in the public interest' than those which are influenced by the 'ran-
dom' outcome of market forces . . ."7 These attitudes tended to
create in public officials a bias toward public enterprise. When allo-
cating foreign exchange or granting permission to start a new enter-
prise, this led them to give preference to the public sector and to
treat the private sector as a residual.
The private sector was subject to a multiplicity of economic con-
trols on imports, exports, the issue of capital stock, prices and
profits. Imposed on a piecemeal and ad hoc basis, and often at
odds with each other, these controls tended to dampen the enthusi-
asm of private investors. Private investors often found it difficult to
obtain Government assistance for securing essential transport, water,
electricity and materials or for removing obstacles and bottlenecks
to their undertakings. In commenting on the lack of official assist-
ance for supplying businessmen with vital facilities for their enter-
prises, the Panel of Economists convened to consider the Second
Five Year Plan suggested that:
the reason why some private investors are anxious to join hands with
the PIDC is not because they have a very high opinion of the business
and technical competence of PIDC but because they think that
through PIDC they will be able to secure the necessary assistance
from the Government.60

Public Participationand Government Support

In its first Report, the Projects Division listed seven reasons why
the Plan's objectives were being achieved only partially. The last,
58 Mason, Edward S., Economic Planning in Underdeveloped Areas, p. 74.
59 The Economist, (London), December 2, 1961, p. 932.
6o Planning Commission. Report of the Panel of Economists on the Second Five
Year Plan, p. 25.
 THE FIRST FIVE YEAR PLAN 65

and in many ways the most important, of these was the "lack of
enthusiastic and coordinated efforts for implementation."'"
In one of its most eloquent passages, the First Five Year Plan
had pointed out that a plan is only as good as its implementation
and had stressed the need for the widest public participation in, and
active popular support for, the Plan's execution:
The preparation and adoption of a plan are the beginning, not the
end, of the development process. A plan has meaning only if it is put
into effect. The success of the Plan will depend upon the cultivators
in the fields and the workers in the factories, upon businessmen and
landowners, upon Government officials and village leaders, upon
public spirited citizens in all walks of life-in short, upon the many
hundred thousands of people in the country who have power or influ-
ence to commit human energy and material resources to action. If
they understand, accept, and are guided by the Plan, we have a strong
conviction that a new day of steady and purposeful progress will dawn
for the country. 6 2
Although the Draft Plan was publicized by the press and widely
discussed, there was little public participation in its preparation,
revision and execution. In general the business community had had
little to say about what went into the Plan. The majority of Paki-
stan's farmers, workers, and villagers never grasped the purpose of
the Plan, even if they were aware of its existence. Although the
Plan had been approved by the National Economic Council, the
controversial regional issue left the Plan with few political sup-
porters. The failure of the Government to adopt it as its official
development program and to provide it with organized political
support greatly diminshed such official and popular interest as the
Planning Board had been able to arouse.
61 Projects Division. Development Projects. Progress of Major Schemes Sanc-
tioned by the Government of Pakistan, p. 2. The other six have already been
mentioned: (1) Improper programming and defective preparation of project esti-
mates based on imperfect data; (2) administrative bottlenecks which delayed ap-
proval of projects at various levels; (3) delays in procuring imported materials,
machinery and equipment; (4) lack of technical personnel and technical knowl-
edge, as well as the lack of training projects for increasing the supply of persons
able to implement projects; (5) paucity of foreign exchange and (6) abnormal
weather conditions and havoc caused by floods.
62 National Planning Board, The First Five Year Plan, pp. i-ii.
66 PLANNING IN PAKISTAN

There had been some hope that the National Economic Council,
consisting of representatives of both the Provincial and Central
Governments, might become an effective instrument for resolving
economic issues among the three Governments. But the Council
did not live up to expectations. Although only an advisory group,
it had been referred to by the President of Pakistan as the "supreme
economic body of the country."6 3 Because of repeated changes in
Government coalitions, the Council's membership was a transient
one. In the eight months between April and December 1957, it was
reconstituted three times. Frequent changes of the Council's mem-
bers made it difficult for them to exert an effective influence on the
country's development policies.
The Council's operations were handicapped because it had no
secretariat of its own. Staff work in preparation for meetings was
generally perfunctory and the performance of members was unin-
formed and unimpressive.
The Council swiftly degenerated into an arena of regional rivalries,
more concerned with provincial claims on national resources than a
dispassionate study of the economic problems, which, as the Prime
Minister had pointed out, was its primary function. 64

After it approved the Plan, the Council met infrequently. Policy

decisions on which successful implementation of the Plan depended
were never taken.
The Planning Board had foreseen that implementation of the
Plan would present the Government and the people with some of
their most difficult problems and had cautioned that" . . . no one
should underestimate the tremendous problem of achieving the
objectives set in this Plan."" 5 Nevertheless, the panel of distin-
guished economists which reviewed the progress of the First Plan
and the terms of the Second Five Year Plan for the central planning
agency contended that the failures during the First Plan period were
not attributable to the Plan's objectives:
63 Message from the President of Pakistan as reproduced in the Report of the
National Economic Council for the Year 1957158, p. 15.
64 Ahmad, Government and Politics in Pakistan, p. 60.
65 Planning Board. The First Five Year Plan (Draft), p. 21.
 THE FIRST FIVE YEAR PLAN 67

The First Plan turned out to be unrealistic in the sense that hopes
raised by it have remained largely unfulfilled . . . However, these
[failures] are a sad commentary on the mode of implementation of
the Plan, not on the Plan itself. The Plan was based on the assump-
tion that it would receive full political support and that the Govern-
ment would make an all out effort for its implementation. It did not
demand an effort that was beyond the capacity of the people. If its
objectives have remained unfulfilled, this only illustrates the lack of
adequate effort for its implementation. 6 "
Pakistani officials have frankly and frequently criticized the fail-
ure of the Government to take appropriate measures to execute the
Plan and to mobilize public support for it. In its report on the
progress of the major projects approved under the Plan, the Projects
Division wrote in 1960:
The former Governments which invariably suffered from political in-
stability were not keen to implement the Five Year Plan with the
seriousness and sincerity of purpose which it deserved. The entire
operation suffered from lack of discipline . .. The result was that the
Plan failed to evoke a spontaneous response from the public and
popular enthusiasm was not harnessed to execute it as a program of
national action."'
Writing in the same year, the Planning Commission (the successor
to the National Planning Board) expressed a similar point of view:
The absence of a widespread interest, both within the government and
in the public at large, in the objectives and substance of the Plan, has
undoubtedly been an important cause of failures in achievement, and
can be ascribed to a significant degree, to the fact the Government
really never gave it a firm endorsement at the highest level. 68
If, however, the Government is held responsible for the inade-
quate implementation of the Plan, it is necessary to remember that it
could hardly have been otherwise in the unstable political circum-

66 Planning Commission. Report of the Panel of Economists on the Second

Five Year Plan, p. 2.
67 Projects Division. Development Projects. Progress of Major Schemes Sanc-
tioned by the Government of Pakistan, p. 2.
68 Planning Commission. First Five Year Plan, PreliminaryEvaluation Report,
pp. 3-4.
68 PLANNING IN PAKISTAN

stances at that time. Perhaps the planners were unduly optimistic

about what could be accomplished in a period when coalition gov-
ernments were following each other with such rapidity that all
public business was seriously impeded. It is possible that Pakistan
was not ready for a five-year development plan which required, as a
condition of fulfillment, land reforms, fundamental administrative,
organizational, procedural and other changes in both public and
private sectors, as well as large increases in technical and mana-
gerial personnel. This is not to say that the Plan, even though
overly ambitious in the current political circumstances, could not
lay claim to some achievements, particularly in laying a basis for
future planning. The conclusion of the Panel of Economists seems
appropriate:
Perhaps the most that can be said is that Plan has been used as a
guide in the preparation of the annual development programmes; that
it has stimulated and aided systematic thinking about development;
and that many of the ideas developed in the Plan have influenced the
evolution of public policy."

THE FIRST PLAN'S RESULTS

Total development expenditures during the Plan period were only

about 10 percent below the Plan's estimate, but accomplishments in
physical terms fell considerably short of targets. The shortfalls were
partly due to factors largely beyond Pakistan's control, including
unfavorable weather, deterioration of the terms of trade and lower
foreign exchange earnings, higher project costs because of increas-
ing world prices and the arrival of external aid at a rate slower than
expected. On the other hand, the failure to achieve physical targets
was also due to unfavorable factors which were within Pakistan's
control, principally, an increase in public and private consumption
"injudicious and often incompetent utilisation of external and in-
ternal resources and non-observance of the discipline of the Plan." 7 0
69 Planning Commission. Report of the Panel of Economists on the Second
Five Year Plan, p. 2.
70 Planning Commission. Objectives of the Second Five Year Plan, p. 2.
 THE FIRST FIVE YEAR PLAN 69

The increase in national income during the Plan period was

about 11 percent instead of the 15 percent expected. Because of a
rise in population greater than expected, the increase in per capita
income was negligible when compared with 7 percent foreseen in
the Plan. The balance of payments worsened. Export earnings de-
clined instead of increasing, partly because of a failure to increase
exports and partly because of a fall in export prices. New jobs
created fell short by 50 percent of the increase in the labor force.
The greatest successes were scored in the industrial sector.
Despite foreign exchange shortages and irksome official controls on
business, there were many opportunities for profits in private indus-
try. Products which were in local demand were protected by severe
import restrictions. Favorable exchange rates for imported capital
goods, reduced tax rates, and high depreciation allowances stimu-
lated reinvestment of large private profits. Loans to industry by
public agencies and heavy public outlays on basic facilities which
industry needed also helped promote investment. In the public
sector, PIDC continued to invest most public funds destined for
industry. Most of PIDC's investments went to establish jute, paper,
woolen and sugar mills, cement factories, chemical plants and ship-
yards. Although the cost of executing PIDC industrial projects was
criticized as being substantially higher than the cost of similar
projects in the private sector, PIDC's activities had an important
effect on expanding capacities in many fields.
While industrial growth was impressive, it had serious limitations.
Most of the industrial expansion was in large and medium-scale
plants; little progress was made in small and cottage industries.
Moreover, the expansion was mostly in consumer goods industries
and not in the basic industries which the Plan sought to foster.
Indeed, the evidence gives the impression that industrial growth
during the First Plan period was almost completely independent of
the Plan. The growth of industry was often haphazard. There were
new industries which neither earned foreign exchange nor helped
reduce the drain on external resources by substituting domestic
products for imports. Some industries, like that producing rayon,
used imported raw materials and actually increased the demand for
imports. In some cases, larger facilities were installed than were
70 PLANNING IN PAKISTAN

justified by the domestic market or export possibilities. Frequently,

not enough attention was paid to the need for supplying new indus-
tries with imported fuel and spare parts. Consequently, operations
often were below installed industrial capacity.
The increase in electric generating capacity was close to expecta-
tions, as were improvements in transport and communications, ex-
cept for inland water transport and roads in East Pakistan. How-
ever, except for natural gas, increases in the output of coal and
other fuels and minerals were far below Plan targets. Progress in
education and public health programs was generally below targets.
Private housing construction, largely of high cost, and the building
of government offices exceeded, Plan targets, but execution of both
the urban and rural public housing programs fell short of the
targets.
The irrigation program fell well behind schedule and costs were
considerably higher than planned and only about 68 percent of the
financial targets for water and power development in the Plan were
met. Most projects cost much more than originally expected.
Acreage reclaimed from waterlogging and salinity amounted to less
than 50 percent of targets.
Foodgrain harvests in the last year of the Plan period were good,
and there are indications that actual production was higher than the
statistics showed. Nevertheless, it was in agriculture, which had the
highest priority in the Plan, where achievements were generally
most conspicuously below targets. Only about 52 percent of
planned investment in agriculture was actually carried out. Most of
the shortfalls in the financial implementation of the agricultural
program occurred in East Pakistan, while development expendi-
tures by West Pakistan and the Center generally either equaled or
exceeded Plan provisions. The availability of funds in a special
reserve for East Pakistan proved to be inadequate to insure the
preparation of projects in the absence of technically qualified
personnel.
Plan targets were technically feasible and capable of attainment
under favorable conditions, but they had little chance of realization
in the circumstances which prevailed. The Government did not
make land reforms which the planners considered essential to the
 THE FIRST FIVE YEAR PLAN 71

fulfillment of the agricultural program. Provincial agricultural

departments were understaffed, both technically and administra-
tively. They were inadequately equipped and the staff was too inex-
perienced to handle development programs of the size in the Plan.
There were insufficient facilities for providing farmers with essential
seed, fertilizer, pesticides and other supplies. Delays in official pro-
curements and difficulties experienced in distributing farm supplies
seriously interfered with the realization of production targets.
The Village Agricultural and Industrial Development (AID)
Program fell short of targets and it was clear that the Plan had ex-
pected too much. The Program called for enlisting mainly young
and inexperienced workers, with little knowledge of agriculture, to
stimulate the interest of villagers in agricultural development. The
lack of civil service support for the program and the temporary
nature of the Village AID organization made it impossible to attract
enough qualified village workers or to retain those who joined. The
training program for AID personnel was inadequate and there was
a lack of appreciation that their efforts were unlikely to yield results
as quickly as the Plan envisaged. In West Pakistan, "a good deal
of unhealthy rivalry [between departmental technicians and village
workers] necessitated strong intervention by the Central Govern-
ment to set matters right."7" In the end, the Village AID Program
was abolished.
While achievements under the Plan were thus a good deal less
than had been hoped for, significant progress was made in a number
of sectors. Total installed electric power capacity expanded from
342,500 kws to 906,000 kws. The railways were partially rehabili-
tated, 1,815 miles of new roads were completed, and 1,400 miles of
old roads were improved. Over a million acres were brought under
new irrigation and an additional 2.6 million irrigated acres were
improved. The use of fertilizers increased almost fourfold and food
storage capacity rose by almost a half million tons.
The First Plan period was necessarily a time for diagnosing ad-
ministrative, organizational and other problems and testing alterna-
tive solutions. It was also a time for resolving difficulties in meeting
the requirements of different foreign aid and international lending
71 Planning Commission, The Second Five Year Plan, p. 393.
72 PLANNING IN PAKISTAN

agencies which had greatly slowed down the flow of foreign financ-
ing for Pakistan's development programs and projects. While the
benefits from these accomplishments did not manifest themselves at
the time, they were essential to the progress made during the Second
Plan period. Moreover, the Plan had made many important recom-
mendations for reorganizing governmental bodies, establishing new
agencies and for reforms which over a period of time were gradually
adopted. Perhaps of even greater importance:
there was unmistakable progress . . . in public recognition of the
importance of planning and development. 7 2
A significant improvement had also taken place,
in the climate for economic growth, making accelerated development
possible during the Second Plan period. Conditions . . . [were] . ..
now ripe for taking a decisive step forward in the advance towards a
self-reliant and self-sustaining economy."

72 Ibid., p. 1.
73 Ibid., p. 3.
V.

The Second Five Year Plan

PLANNING MACHINERY

The Planning Commission

In the first month of its tenure, the new Government which came
into power in October 1958 quickly demonstrated its interest in
planning by strengthening the position of the central planning or-
ganization and enlarging its functions. The National Planning
Board was renamed the Planning Commission and made responsible
to the Chief Executive. The Ministry of Economic Affairs was
abolished and its planning, expediting and progress reporting func-
tions were transferred to the Planning Commission. At the recom-
mendation of the Commission, which felt that detailed progress
reporting should be done by a separate body closely associated with
the Commission, the Government transferred the Commission's
expediting and progress reporting functions to the newly created
Projects Division in the President's Secretariat.
Even after this change, the Planning Commission's authority re-
mained much greater than its predecessor's. Besides keeping all the
functions of the previous Planning Board, the Commission now
became responsible for the preparation of, and getting Government
approval for, the annual development program. The Commission
also retained responsibility for coordinating the review of develop-
ment projects and programs and for securing Government approval
for those which it considered acceptable. As will be seen later, this
authority had the important effect of converting the Development
Working Party into an instrument of the Planning Commission.
73
74 PLANNING IN PAKISTAN

Soon after the new Government came into being, a high civil
servant was installed as Chairman of the Planning Commission. A
strong and dynamic leader, the new Chairman was the real operat-
ing head of the Commission to an even greater extent than his
predecessors. Some members and many other key officials were
new to the Commission. Hardly any had had experience in prepar-
ing the First Plan. Both the Chairman and the Deputy Chairman
were engaged in other important activities. Over an extended
period, the Chairman had to devote much effort to a Government
Reorganisation Committee, which he headed by Presidential ap-
pointment, while the Deputy Chairman, who became Chairman of
the Development Working Party, gave most of his time to the
Working Party's project review activities.
The Planning Board had never solved its problems of personnel
selection, recruitment, training and promotion. As a result, some of
the few qualified members of the staff had left. In August 1961,
the Government took a drastic step to add substantially to the small
nucleus of qualified Pakistani staff by directing that the Commission
would thereafter have first call on any Government economist or
technician. This provision proved not to be enforceable and the
Commission has not succeeded in acquiring the staff, especially on
the top economic level, needed to carry out its functions. During
the last few years, the Commission has been unable to fill one-third
of its vacancies. Even if all had been filled it could not carry out
all of its functions. In spite of recent acquisitions in its technical
sections which promise to alleviate some of the burdens formerly
placed on a few high officials, it is therefore likely that the Planning
Commission will encounter difficulties in the preparation of the
Perspective and Third Five Year Plans now under way.
While in some parts of the Government the Second Plan obtained
limited acceptance, the desirability of planning was increasingly
accepted in official circles after October 1958. However, most Gov-
ernment officials still lacked an adequate appreciation of the impli-
cations of the planning process. They did not fully understand that
effective planning required close and continuing cooperation be-
tween the Planning Commission and the operating ministries and
departments. Working relationships between the Commission and
 THE SECOND FIVE YEAR PLAN 75

the central ministries were weakened further when the Government

moved to Rawalpindi, 800 miles to the north of Karachi, leaving
the Commission behind in Karachi. Nor was there adequate appre-
ciation within the Government, until very recently, of the need to
relate economic, financial and fiscal policy with plan objectives.
Because policy was often adopted by various governmental bodies
without reference to the central planning office, Government
policies for agriculture and industry were sometimes at variance
with plan objectives.
"Progressing"Machinery
The Planning Commission completed work on the Second Five
Year Plan in the spring of 1960, but as will be seen later, the costs
in the Plan soon required two revisions before its final adoption.
During this time, the Government also concluded that Pakistan's
planning machinery needed overhauling.
The Government was also disappointed with the Projects Divi-
sion. The Division had been understaffed since its establishment
and such staff as it had was dispersed. The Director, his Deputy
and five professionals were stationed in Rawalpindi, nine Project
Officers were in Karachi, where they worked largely without super-
vision, and smaller groups operated from Lahore and Dacca. The
Division's consolidated progress reports, while useful as the only
available listings of projects under execution, were incomplete, with
data on many projects omitted. They were issued semi-annually
instead of quarterly, as planned, and referred to periods three or
four months earlier. The number of projects which were included
increased slowly and the timeliness of the reports gradually im-
proved, but their defects continued to impair their usefulness as
guides for removing bottlenecks.
The shortcomings of the Division's reports were due to inade-
quate reporting by the operating ministries, departments and
agencies. Executing bodies were required to prepare progress re-
ports on a prescribed form by specified dates, but many of their
reports did not follow the form and most reports were late. While
some executing bodies submitted accurate and timely reports, others
exaggerated the progress made on their projects and most failed to
76 PLANNING IN PAKISTAN

report essential data. Information furnished was often too vague

and sketchy for the Division to be able to assess the progress made.
Many executing agencies did not maintain up-to-date records on the
progress of their projects and so could not furnish accurate informa-
tion. To some extent, the inadequacy and tardiness of the reports
were probably due to the executing body's hesitation to reveal un-
due delays in execution; but in most cases, it appeared to be the
result of apathy toward the reports, the importance of which was
not made apparent to the reporting officers. The elaborateness of
the forms and the multiplicity of different reports on the same
projects which had to be sent at frequent intervals to several depart-
ments of the Provincial and Central Governments also had some-
thing to do with the lack of enthusiasm evinced by executing bodies
for prompt, accurate and detailed progress reporting.
The poor quality of the reports made it especially important for
the Projects Division to carry out field inspections. However, the
Division's Progress Officers, who were supposed to make periodic
visits to project sites, were unable to do so because their time was
absorbed processing the progress reports submitted by the operating
ministries and departments. The Director General and, more infre-
quently, the Deputy Directors General in Lahore and Dacca made
selective inspections of projects, but they could hardly do more than
visit the most important ones. An effort was made to obtain foreign
technical assistance for the Division, but this did not work out well.
The order creating the Progress Division had directed the Division
and the Planning Commission to work in the closest collaboration.
To this end, the Director General of the Division had been in-
structed to attend meetings of the Commission. However, the Divi-
sion and the Commission tended to act as though their functions
were unrelated and neither made the effort needed to ensure con-
stant cooperation. With the Division's headquarters in Rawalpindi
and the Commission's in Karachi, there was even less communica-
tion between the two than there might have been if both had been
situated in the same city.
In August 1961, the Government abolished the Projects Division
and amalgamated its staff and functions with those of the Planning
Commission, which was made a Division of the President's Secre-
 THE SECOND FIVE YEAR PLAN 77

tariat. The President of Pakistan became Chairman of the Commis-

sion and Minister-in-Charge and the experienced civil servant who
had formerly served as the second Chairman of the Planning Board,
was appointed Deputy Chairman with the rank of Minister, but
without Cabinet membership. By putting the Planning Commission
in his Secretariat, by assuming the Chairmanship himself, and by
raising the Deputy Chairman to ministerial rank, the President
hoped to reinforce the obligation of the ministries and departments
to conform to the Plan and to promote a greater amount of co-
operation between them and the Planning Commission.
When the Ministry of Economic Affairs was abolished in 1958
and its planning and progress reporting functions were transferred
to the Planning Commission, an Economic Affairs Division was
established in the Ministry of Finance to take over the Ministry of
Economic Affairs' responsibilities for preparing and coordinating
foreign aid and technical assistance requests. The Ministry of Eco-
nomic Affairs had never done an effective job in these fields. It was
hoped that an Economic Affairs Division in the Ministry of Finance
would be more effective, but when results did not reach expecta-
tions, the Division was transferred, in 1961, to the President's
Secretariat. However, lack of coordination continued to be a prob-
lem which eventually assumed serious proportions. The Planning
Commission could only occasionally influence requests for aid and
technical assistance and it was becoming apparent that the separa-
tion of the planning function from the coordination of foreign aid
and technical assistance was impeding implementation of develop-
ment plans and programs. Soon after the Economic Affairs Division
was moved to the President's Secretariat, it was therefore placed
under the direct supervision of the Deputy Chairman of the Plan-
ning Commission.
Under the new organization, the Commission's planning func-
tions were assigned to a Planning Wing, while a Progressing Wing
assumed the functions of the former Projects Division. Each Wing
was under a Secretary of Government, who was also an ex officio
member of the Commission. Besides the Chairman (the President
of Pakistan), the Deputy Chairman and the two Secretaries, the
membership of the Commission again included a member each for
78 PLANNING IN PAKISTAN

East and West Pakistan, thereby increasing the number of Com-

mission members to six."
For the second time, soon after it had given the expediting func-
tions to the Planning Commission75 the Government found it desir-
able to transfer these, this time to the Provincial Planning and
Development Departments. The Government's recurrent uncer-
tainty about where the function of expediting implementation be-
longed was partly due to confusion in terminology. Everyone
agreed that implementation, i.e., the execution of projects and pro-
grams, was properly the function of the executing ministries, depart-
ments and agencies. It had appeared desirable to have a separate
organization which would be concerned with "progressing," a term
which embraced field inspections of projects, the issuing of consoli-
dated progress reports, evaluation of results obtained and the ex-
pediting of project implementation by representatives of the prog-
ressing agency. These representatives worked with officials of the
executing agencies to eliminate administrative and other bottlenecks
which retarded the execution of projects. Because progress report-
ing and evaluation of results obtained under the Plan were essential
to effective planning, the central planning agency had sought and
eventually obtained the progressing function when the Ministry of
Economic Affairs had been abolished. Then, because the executive
functions of expediting implementation were clearly incompatible
with the advisory functions of a planning agency, the progressing
function was later transferred to the new Projects Division. The
failure of the Projects Division returned progressing to the central
planning agency again. But the Planning Commission's second ex-
perience with progressing was no more successful than the first. The
amalgamation of the Projects Division with the Planning Commis-
sion had, in fact, taken place only formally. Except for a new name,
74 The resort once more to full-time political members on the Commission raises
a question about the meaning and wisdom of this form of representation. The
supervisory powers of the political members were not effectively exercised in the
past. But more recently, one member has asserted his right to act as the effective
head of the sections under his charge and to fill some staff vacancies on the basis
of the regional origin of candidates. In addition, the Planning Commission, which
never before functioned as a collegiate body, is now beginning to do so.
75 The terms Planning Commission and Planning Division are now used inter-
changeably to identify Pakistan's central planning body.
 THE SECOND FIVE YEAR PLAN 79

the location of the progressing staff and method of operation re-

mained unchanged, as did most of the problems which had led to
the abolition of the Projects Division. In addition, as a Government
Reorganisation Committee had noted:
it had not been possible for the [Planning Commission's] Progressing
Wing to achieve any substantial results on the implementation side
because of certain inherent difficulties in the situation itself arising
from possible resentment on the part of operating agencies against
outside interference . .. it was a difficult role for any organisation to
play as the agencies responsible for accomplishing the task never
welcomed such interference."
The Reorganisation Committee, which had been named by the
Government to recommend organizational changes needed to give
effect to the new Constitution adopted in March 1962, felt that ex-
perience had made it plain "that if the evaluation and progressing
of projects were done by those responsible for planning, the quality
and standard of planning would improve."" Because of the turn of
events, this meant that the Provincial planning organizations rather
than the Planning Commission were now the appropriate author-
ities for progressing. For as part of the movement toward decentral-
ization of official responsibilities from the Center to the Provinces
which followed the adoption of the new Constitution, the Provinces
had taken prime responsibility in most sectors for preparing and
executing projects and programs. In accordance with the Reorgan-
isation Committee's belief that progressing went with planning, the
task of progressing provincial projects and programs was trans-
ferred to the Provincial Planning and Development Departments.
These Departments already combined executive and advisory func-
tions. Therefore there was no problem in assigning the progressing
resnonsibilities to them.
Since the transfer of the progressing function to the provincial
planning organizations eliminated the need for the Progressing
Wing of the Planning Commission, it was abolished. The present
organization of the Planning Commission is shown in Chart I.
76 Report of the Reorganisation Committee as quoted in Dawn (newspaper),
Karachi, April 27, 1962.
77 Ibid.
 Chart I
ORGANIZATION CHART
PLANNING COMMISSION
PRESIDENT'S SECRETARIAT

CHAIRMAN l

| DEPUTY
CARA

l l | ~~~~~~~~~~~~SECRETARtY
(PLANNING) ll

TO THE
SECRETARY CHIEFECONOMIST
l | l ~~~~~COMMISSION I I

r~~~
. _ . . [ J~~~~ ~~OINT
CHIEFECONOMIST

Agri- W Publicity dminis Coordi_ Develop General Perspec- a Inter- Economic Indus- Transport alth S
Hduca- Osing
ui
|tration nation met Economics an
atidne nonal Research tries andCon- tin Welfar ean
Autoi Pain oetrcnmcsand mun.cations
FEB Y 2zab Commerce I

FEBRUARY
1963
 THE SECOND FIVE YEAR PLAN 81

The Government now understood that planning could not be

divorced from the review and evaluation of the Plan's implementa-
tion. The Planning Commission was accordingly authorized (a)
to strengthen its sectoral sections to enable them to undertake ap-
praisal and evaluation work and (b) to establish an Evaluation
Section to coordinate the evaluation of projects in the various
sectors and determine the results obtained under the total Plan.
The Evaluation Section has been established and has prepared a
review of the progress made during the first two years of the Second
Plan period." Like the other sections, the Evaluation Section needs
additional personnel before it can carry out its functions. When a
sufficient number of qualified persons has been acquired, the stage
will be set for frequent, up-to-date, review and evaluation of the
Plan's progress. Meanwhile, regular follow up on the Plan is
lagging.
The Economic Council and The NationalEconomic Council
In 1959, the military Government established an Economic
Council as the country's supreme economic advisory body. The
Council had 12 members, including the President of Pakistan, who
was Chairman, the Governors of East and West Pakistan and the
five Ministers of the Central Government in charge of the principal
development ministries, 7 9 the Deputy Chairman of the Planning
Commission and the Chairmen of the PIDC and the two provincial
Water and Power Development Authorities. The Council was made.
responsible for reviewing and formulating economic policies, ap-
proving five-year plans, annual development programs and develop-
ment projects, and reviewing the progress of plans and programs to
insure the achievement of balanced economic development of all
parts of the country. In keeping with the Government's policy of
giving the Planning Commission greater authority, its Deputy Chair-
man was made Secretary of the Economic Council and memoranda
for the Council's consideration had to be prepared by, or in con-
sultation with, the Planning Commission.
78 Planning Commission. Mid-Plan Review of Progress in 1960/61-1961/62
Under the Second Five Year Plan.
79 Finance; Industries and Works, Irrigation and Power; Railways and Com-
munications; Commerce; Food and Agriculture.
82 PLANNING IN PAKISTAN

To conform to the provisions of the Constitution of 1962, the

name of the Economic Council was changed to the National Eco-
nomic Council (NEC) and the Provincial Finance Ministers were
added as members. The NEC is to be responsible for reviewing the
country's economic position, the formulation of development plans
and the submission of annual reports to the National Assembly on
the progress made each year in developing the economy. The Plan-
ning Commission provides the NEC's Secretariat.
The Economic Committee of the Cabinet and Its Successors
When the Economic Council was formed in 1959, there had also
been created an Economic Committee of the Cabinet (ECC). The
ECC had seven members, including the Minister of Finance, as
Chairman, and the Ministers of Food and Agriculture; Industries
and Works, Irrigation and Power; Commerce; Information and
Broadcasting; the Deputy Chairman of the Planning Commission;
and the Chairman of the PIDC. It was given responsibility for
making day-to-day decisions on economic problems, supervising the
implementation of economic policies approved by the Cabinet and
the Economic Council and approving development projects prior to
their submission to the Economic Council.
While ultimate authority for deciding economic policy rested
with the Economic Council, it seldom met and, as a Practical
matter, policies were approved and coordination provided through
the ECC. Since, unlike the Economic Council, the ECC had no
formal representation from the Provinces, this gave rise to some dis-
satisfaction although provincial representatives often attended ECC
meetings, but without a vote.
When the Economic Council was reconstituted as the National
Economic Council, the ECC was abolished. Its functions were as-
sumed by two new committees operating under the NEC; one is the
Executive Committee of the NEC, whose main duty is to approve
development projects; the other, the Economic Policy Coordination
Committee, was to be concerned with the coordination of economic
policies. The members of the Executive Committee of the NEC
include the Minister of Finance, who is Chairman, the two Pro-
vincial Governors or ministers they may nominate, the Deputy
 THE SECOND FIVE YEAR PLAN 83

Chairman of the Planning Commission and the two Provincial

Finance Ministers. In addition to providing for adequate repre-
sentation from the Provinces, the Committee is required to meet at
least once every three months in both Lahore and Dacca, to insure
that provincial interests are taken into account when it considers
projects.
The members of the Economic Policy Coordination Committee
(EPCC) were the Deputy Chairman of the Planning Commission,
who was Chairman, the Secretary of the Economic Affairs Division
of the President's Secretariat, and the Secretaries of the Central
Ministries of Finance, Commerce, Industries and Natural Resources,
and Food and Agriculture. The EPCC was charged with keeping
the current economic situation under review, overseeing the imple-
mentation of economic policies laid down by the Cabinet and the
NEC and dealing with day-to-day economic problems. After con-
sultation with the Minister of Finance, whose Ministry continued
to be responsible for financial and monetary policy as distinguished
from the EPCC's responsibility for economic policy, the Chairman
of the EPCC was to transmit the Committee's recommendations to
the President.
EPCC had been constituted with the Deputy Chairman of the
Planning Commission as its head because there had been a growing
understanding in Pakistan that planning and economic policy were
inseparable and that the effectiveness with which development plans
were carried out often depended on the Government's economic,
financial and fiscal policies. However, the EPCC, with its civil
service membership, was soon seen to have been constituted at too
low a level to deal with matters of basic policy. The Ministry of
Finance tended to view most economic matters which came before
the EPCC as having important financial and monetary aspects for
which it had responsibility. When the Ministry refused to accept
the EPCC's decisions and recommendations, the EPCC was abol-
ished, about six months after its creation, and the task of coordi-
nating economic policy was taken over by the Cabinet. Despite the
discontinuance of the EPCC, more general acceptance within the
Government of the integrality of planning and policy, as well as
greater recognition of the Planning Commission's technical compe-
84 PLANNING IN PAKISTAN

tence, has made it possible for the Commission to play an increas-

ingly important part in the formation of policy. The greatest prob-
lem thus far has been the frequent failure of the Commission itself
to make periodic reviews of policy recommendations in the Plan
and recommend appropriate action by Government to insure con-
formity between policy and Plan objectives. In an attempt to meet
the need for such work, a policy section has been established within
the Planning Commission and staffed with able economists obtained
from the Institute of Development Economics.
The Governors' Conference
Chart II shows the present organization for planning and imple-
mentation in Pakistan. Included in this organization is the Gov-
ernors' Conference, which has functioned since the early days of the
military Government as the highest policy-making body in the
country. The President of Pakistan is Chairman and the two Pro-
vincial Governors constitute its other members. But meetings,
which may take place every month or two, often in conjunction with
meetings of the National Economic Council, are attended by-min-
isters and other officials of the Central and Provincial Governments
as required. On the basis of papers circulated in advance, the Gov-
ernors' Conference makes administrative and other policy decisions.
Discussions frequently include questions affecting the implementa-
tion of the Second Plan.
Ministerialand DepartmentalProgramingUnits
The necessity for establishing programing units in the central
ministries and departments in order to broaden the planning process
in Government had been broached in the First Plan. It had also
been the subject of occasional discussion in the Economic Council
and the Economic Committee of the Cabinet. However, the first
formal move by the Government to get operating departments to
create programing units did not take place before July 1959, when
new procedures were published for the Development Working
Party. These directed central and provincial departments, particu-
larly those with large development programs, to establish suitably
staffed programing units qualified to design and formulate projects.
 Chart II
ORGANIZATION FOR PLANNING AND IMPLEMENTATION
IN PAKISTAN: 1962

Governors' Conference - -- PRESIDENT -Cabinet

I National Econ mic Counclil

| Economic Polimcy | xcuse Committee of|
CoordinationnCommittee|

PRESIDENT'S SE CR ET AR IA T

States & Frontier Establishment Planning Division Economic Affairs Cabinet

Regions Division Division (Planning Commission) Division Division

Central Development Working

Party I

- --- -- Finance Ministry …-- -…--

4- ------ Central StatitclOfc-

Central Ministries- - -- Central Departments

Planning Cells Planning Cells

Provincial Planning and

Development Departments I
Provincial Development Working
Parties

Other Provincial Departments

Planning Cells

Note: Broken lines show advisory or indirect relationship; solid lines show direct supervisory
relationship.
86 PLANNING IN PAKISTAN

Subsequent Government orders directed that the staff of each pro-

graming unit was to consist of one economist and two or more
technical officers. Programs for training personnel of new program-
ing units to carry out their duties were to be organized and con-
ducted by the Planning Commission and by Provincial Planning and
Development Departments.
The Planning Commission laid down an ambitious work program
for the proposed programing units. In general, their functions were
envisaged as being similar in many ways to those of the Planning
Commission for the whole economy. For their fields, they were to
formulate and evaluate projects on the basis of cost-benefit analysis.
Projects were to be combined into integrated and internally con-
sistent annual and five-year sector programs with targets based on
an assessment of resources available to carry them out. The pro-
graming units were also to make periodic progress reports and
undertake ad hoc or special assignments, such as the drafting of
loan applications, the preparation of reports for foreign aid mis-
sions, the formulation of regional development projects and pro-
grams or the assessment of the impact of a specific program on
transport facilities, labor supply or administrative capacity. In
order to prepare the required studies and reports, programing units
were to collect, record, process and analyze relevant statistical data.
The Planning Commission was to be entitled to request information
from, and to suggest investigations and studies to, the units. Copies
of all studies and papers prepared by programing units were to be
forwarded to the Planning Commission; in return, the Planning
Commission was to send copies of its studies to them.
For almost two years after the issue of the first directive on the
subject, the Government repeatedly directed central and provincial
departments and agencies to form programing units and to staff
them adequately, but only a few took the necessary measures. By
the beginning of 1961, most central and provincial departments and
agencies had set up part or full-time programing units, but only
three or four were reasonably effective. The rest were understaffed
or headed by junior officials and, in most cases, their functions had
not been defined precisely. Although foreign technicians had been
promised to supplement Pakistani staff where necessary, and there
 THE SECOND FIVE YEAR PLAN 87

was widespread need for such assistance, few programing units

received outside aid. Without foreign technical assistance, few de-
partments had the experienced staff required to get programing
units started.
Government pressure on central ministries to establish effective
programing units has now ceased as a result of the decentralization
of control over the execution of projects and programs which fol-
lowed adoption of the Constitution of 1962. The Government has
decided that there is no further need for programing units in most
central ministries and divisions since central ministries are hereafter
to exercise only broad supervision over projects and programs for
which Provincial Governments have prime responsibility. Such
projects and programs are to be prepared in programing units in the
provincial operating departments. This change in policy shifted
most of the problem of creating effective programing units to
technical departments at the Center and in the Provinces. Although
programing units have been set up in the most important depart-
ments, staffing has been slow. There is even less likelihood that
effective programing units can be set up in provincial departments
than in the Center without more personnel and foreign technical
assistance.
Provincial Planning Organizations
While the Second Plan was being prepared, inadequacies of or-
ganization and staff kept provincial planning bodies from making
appreciable contributions to the Plan. Improvement was slow in
starting, but from the end of 1960 in East Pakistan and from the
beginning of 1961 in West Pakistan, augmented Pakistani staffs, the
upgrading of provincial planning organizations and the enhanced
position of their heads increased the capacity and status of provin-
cial planning. As a consequence of these developments, provincial
planning organizations are playing increasingly effective roles in
initiating and coordinating both planning and implementation.
Nevertheless, since the Central Government controls most of the
country's tax revenues, sets monetary, credit, fiscal and other finan-
cial policies, and controls the distribution of foreign exchange and
proceeds from foreign loans and grants, it remains the dominant
88 PLANNING IN PAKISTAN

force determining the size and composition of each Province's in-

vestment outlays.

East Pakistan
Soon after the military Government came into power, the East
Pakistan Planning Board was abolished. In 1960, the status of the
Planning and Development Department was raised by giving its
head the rank of Additional Chief Secretary, which made him the
third highest civil servant in the Provincial Government. 8 " Two
interdepartmental committees, which with the Planning and Devel-
opment Department constitute East Pakistan's planning organiza-
tion, were set up to assist in the preparation and implementation of
provincial plans:

1. A Planning Authority, composed of the Chief Secretary, the Addi-

tional Chief Secretary for Planning and Development (i.e., the official
head of the Planning and Development Department) and the Finance
Secretary, and
2. A Development Working Party, composed of one representative,
respectively, from the Planning and Development Department, the
Finance Department and the department sponsoring the project under
consideration.

The Planning Authority, which functions as a Sub-Committee of

the Secretaries' Meeting, which is a meeting of permanent secre-
taries of all provincial departments, is empowered to make final
decisions on matters connected with economic development. It
may act on its own initiative, but it generally makes decisions on
the basis of reports submitted to it by the Planning and Develop-
ment Department or the provincial Development Working Party.
The Authority has final responsibility for approving nonrecurring
development projects likely to cost less than Rs. 5 million and
recurring projects of less than Rs. 2 million. The provincial Devel-
opment Working Party is responsible for scrutinizing projects sub-
mitted by the provincial operating departments and for making
recommendations thereon to the Planning Authority.

8O Another Additional Chief Secretary, for Administration, ranks second.

 THE SECOND FIVE YEAR PLAN 89

As the Secretariat of both the Planning Authority and the provin-

cial Development Working Party, the Planning and Development
Department is the first to review projects submitted by the provin-
cial operating departments and agencies. After examining the
projects, the Department is supposed to transmit them to the pro-
vincial Development Working Party for review, from where they go
to the Planning Authority for approval. In practice, the Depart-
ment has done little more than transmit projects from the sponsor-
ing agency to the provincial Development Working Party. The
Working Party has frequently found it necessary to return projects
to the sponsoring department for additional preparatory work.
Because it has taken too long for a project to clear through the
Provincial planning organization, there has been a tendency to
merge the provincial Development Working Party, the Planning
Authority and the Secretaries' Meeting into a single review commit-
tee, composed of most of the permanent secretaries. While this has
had the salutary effect of reducing the number of steps of review
and approval, it has enlarged the membership of the reviewing body
to unwieldy proportions.
In February 1963, a new Planning Board was constituted with
three members. The Additional Chief Secretary for Planning and
Development heads the Board as ex officio Chairman. The Board,
which is visualized as the counterpart on the provincial level of the
Central Planning Commission, was given wide powers to assess de-
velopment resources and requirements, prepare long-term plans and
annual programs, evaluate progress and implementation of plans
and programs, devise and adopt measures for implementing plans,
promote research, surveys and investigations, and maintain liaison
with the Central Planning Commission. The Planning and Devel-
opment Department will act as the Planning Board's Secretariat.
Since there is no line of authority from the Planning Commission
to the provincial planning organizations, machinery has been
needed to improve communications between them. Because of the
distance, East Pakistan's planning organization in Dacca has found
it particularly difficult to maintain contacts with the Planning Com-
mission in Karachi. To provide a more formal and broader basis
for consultation between the two agencies, the Government directed
90 PLANNING IN PAKISTAN

the Planning Commission to hold quarterly meetings with the heads

of the Provincial Planning and Development Departments to con-
sider planning and implementation problems. The Planning Com-
mission moves as a body to Dacca once each quarter for a two to
three week stay and the Chiefs of the Planning Commission's Eco-
nomic and Projects Divisions also visit Dacca at prescribed intervals.
In addition, provincial officers concerned with planning are to be
attached to the Planning Commission for a period of training in
concepts and techniques of planning.
There was formerly a Provincial Projects Department which was
charged with progressing provincial development plans and pro-
grams. Following the lead of the Central Government, the Provin-
cial Projects Department was abolished and its functions were taken
over by a Progressing Division in the Planning and Development
Department. Difficulties experienced by provincial progressing
units have been similar to those encountered at the Center. Since the
Development and Planning Departments are much closer to pro-
vincial executing agencies than central progressing units were, they
are believed to be in a better position to help expedite the execution
of projects and programs. It is therefore expected that current
efforts to improve reporting procedures of the provincial depart-
mental planning cells will be more productive than those of the
former central progressing units.
East Pakistan's Planning and Development Department has made
a good start toward better organization and staffing. There are two
Divisions: Planning and Projects. As in the case of the Central
Planning Commission, recruitment of a good staff has been impeded
by the low salaries offered. For over two years it was impossible to
find an acceptable candidate for the post of Chief Economist to
head the Planning Division. Although the two capable Additional
Secretaries enabled the Department to take on increased responsi-
bilities, the absence of a Chief Economist weakened the Depart-
ment's performance. The positions of the four assistant chief econ-
omists and four research officers for the four Sections of the Division
(Agriculture, Water and Power, Industry and Transport and Social)
were filled only after long delays and with individuals who were
 THE SECOND FIVE YEAR PLAN 91

substantially less trained and experienced than required to carry out

their sectional responsibilities.
Recently, the Provincial Government approved a reorganization
of the Planning and Development Department. The number of sec-
tions in the Planning Division was increased to five and their heads
were raised in status from assistant chief economists to deputy chief
economists. The level of other positions was also raised. At these
higher levels, it was found possible to engage a total of about twelve
well-trained economists from Dacca University and the Institute of
Development Economics in Karachi. A competent Chief Econ-
omist, who formerly held a high post in the Central Planning Com-
mission, has also been engaged. The provincial Statistical Bureau is
being integrated into the Planning Department for the first time,
and Economic Research and Statistics Institutes are being estab-
lished at Dacca University to assist the Department with research
and personnel training activities. These additions to staff and or-
ganizational developments have greatly improved the outlook for
planning in East Pakistan. On the other hand, the Projects Division
of the Department, which is responsible for inspecting, reporting
and evaluating the implementation of provincial projects and pro-
grams, is still inadequately staffed and administered.
West Pakistan
West Pakistan's planning organization is generally similar in form
and operation to that of East Pakistan. In 1961, West Pakistan
finally separated the planning function from operations by creating
a Planning and Development Department headed by a Development
Commissioner who, unlike his predecessors, was able to devote his
full time to planning activities. A staff of about nine professionals
was assembled to assist him. Following the precedent set in the
East Wing, West Pakistan also raised the rank of its Development
Commissioner to that of Additional Chief Secretary. He reports
directly to the Governor or the Chief Secretary, depending on the
business involved. His higher status has made it easier for him to
deal effectively with provincial departments and agencies, with the
result that relationships between the Planning and Development
Department and other provincial departments and agencies are now
92 PLANNING IN PAKISTAN

satisfactory. Chart III shows the organization and staffing pattern

for West Pakistan's Planning and Development Department.
The Planning and Development Department helps in the prepara-
tion of provincial plans and their implementation. In collaboration
with the Provincial Finance Department and other bodies, it draws
up the provincial annual development program, largely on the
basis of the financial resources made available by the Central Gov-
ernment. The Department also evaluates and reports progress in
executing provincial projects and programs (unlike East Pakistan,
West Pakistan never had a Projects Department), engages in eco-
nomic research, and acts as liaison between provincial departments
and central ministries and agencies on development matters.
Provincial departments and agencies send their proposals for
projects to be included in provincial plans and programs for review
and comment to thexPlanning and Development Department and to
the Finance Department. There is a provincial Development Work-
ing Party, chaired by the Additional Chief Secretary, on which the
Finance Department and the department or agency sponsoring the
project under consideration are represented by their permanent
secretaries. The decisions taken by the provincial Development
Working Party are in the form of recommendations to the Governor
of West Pakistan, who generally approves the Development Work-
ing Party's recommendations.
Until the end of 1962, failure to staff adequately the Planning
and Development Department, the lack of training and experience
of its personnel and the absence of a sufficiently strong group of
foreign advisers to assist the local staff, seriously reduced the ability
of the Department to guide, innovate and expedite development
planning in the Province. Recently, the personnel situation im-
proved markedly as a result of the provincial Secretary of Finance's
willingness to allow higher salaries and status to planning personnel,
a reflection of his interest in planning, which is in turn a reflection
of the greater provincial concern with planning. New positions
were established and a group of able economists were obtained from
the Institute of Development Economics in Karachi. The Bureau
of Statistics is being strengthened with the assistance of U.S. AID
statisticians and the services of a highly qualified economist have
 THE SECOND FIVE YEAR PLAN 93

been obtained as Chief Economist. The Progressing Wing of the

Planning and Development Department has begun to turn out effec-
tive reports on the status of project implementation. An Imple-
mentation Committee headed by an Additional Secretary of Finance
has been established to improve project and program execution and
the Secretary of Finance is using the Committee to obtain informa-
tion for budgetary purposes.
Local Planning
Decentralization of the planning process was advocated in the
First Five Year Plan, which recognized that "instead of being pre-
pared and imposed from above, programs particularly in the sphere
of rural development should originate in the villages and proceed
upward.""8 Provincial Governments had a greater share in pre-
paring the Second than in preparing the First Plan. Nevertheless,
because of the Provincial Governments' inability to frame adequate
plans and programs, the Second Plan, like the First, was "dispro-
portionately the work of the Central Government."'" While the

Chart III
WEST PAKISTAN PLANNING AND DEVELOPMENT DEPARTMENT
ORGANIZATION AND STAFFING PATTERN: 1962

ADDITIONAL CHIEF SECRETARY-TWO ADVISERS 1 GENERAL ECONOMIST

DEPUTY SECRETARY DEPUTY SECRETARY

I= ~ I. I I
COORDINATION AND BUREAU OF STATISTICS
ADMINISTRATION SECTION ECONOMICS AND PROGRESSING CELL (1 Director)
(5-6 Section Officers) (6-8 Staff)

1 General Economist 1 Agricultural Economist

2 Research Officers (General) 1 Research Officer (Agriculture)
1 Progress Officer (General) 1 Progress Officer (Agriculture)
1 Research Investigator (General) 1 Research Investigator (Agriculture)

81 Planning Commission. The Second Five Year Plan, p. 111.

94 PLANNING IN PAKISTAN

extent of Provincial participation in the planning process increased

somewhat between the First to the Second Plan periods, divisional,
district and communal bodies played almost no part in the formula-
tion of either Plan. Nor have these local groups participated much
thus far in preparing and carrying out projects and programs under
the Second Plan.
The central authorities believe this situation will change because
a "new dimension has been added to planning by the institutions of
Basic Democracies." 8 2 These institutions represent the Govern-
ment's attempt to give the people of Pakistan an opportunity to
participate in the political and developmental process by means
which differ from the usual forms of democratic representation.
While effective power remains largely in the hands of the President
of Pakistan and the two Provincial Governors he appoints, a
measure of "democratic decentralization" is being sought at various
levels.
Under the Basic Democracies system, union councils are to be
created throughout the country to be responsible at the local level
for agricultural, industrial and community development. Voters
grouped in units of 1,000 to 1,500 elect ten to twelve members to
each council. Originally, these were to be supplemented by five or
six nominated members with special technical qualifications or
representing specified interests, like organized labor. However, the
Government has announced that no nominations will be made to
the union councils, which will therefore have only elected members.
The union councils (town committees in the towns and union
committees in cities) constitute the base of a pyramid consisting in
all of five ascending levels of councils each representing larger geo-
graphic units. At the level immediately above the union councils
are the tehsil (in West Pakistan) or thana (in East Pakistan) coun-
cils. At the third level are the district councils headed by deputy
commissioners or district magistrates, who are civil servants and at
the fourth, the divisional councils under the chairmanship of divi-
sional commissioners, who are also civil servants. At the top of the
pyramid are the two Provincial Development Advisory Councils,
82 Ibid.
 THE SECOND FIVE YEAR PLAN 95

each headed by the Governor of the Province. Councils at each

level send delegates to the councils on the next higher level, e.g., all
the chairmen of the union councils, town committees and union
committees are members of the tehsil or thana council in their area,
but the higher the level of the council, the greater the proportion of
appointed or official members.
The institutions of Basic Democracies have been assigned both
political and economic functions. Their members constitute the
Electoral College of Pakistan, which elects the President and the
central and provincial legislatures. They are also considered to be
organs of local self-government. As such, they have been assigned
economic functions which emphasize their responsibility for agricul-
tural, industrial and community development. The Government
hopes that they can become the means for decentralizing the prep-
aration and, especially, implementation of plans and for local co-
ordination of development. They believe that out of the discussion
within the councils of local needs and problems, with officials ex-
plaining the extent to which funds, equipment and materials are
available, development plans will emerge which reflect the require-
ments and aspirations of each area, as well as the means for exe-
cuting the plans. While the district councils are viewed as the key
units for development administration, where "disparities between
parochial issues and broad provincial and national interests can be
resolved,"8 3 it is considered desirable to delegate powers, as far as
possible to lower levels, where elected chairmen of the union coun-
cils will be in strong positions to represent the views and interests
of the people.
The tehsil councils in the West and the thana councils in the East
are considered crucial points for coordinating the union councils'
development plans before they are combined into district plans by
the district councils. District plans are to be processed and consoli-
dated further at the divisional level into divisional plans which are
to include priorities for projects and programs. At the Provincial
level, the Planning and Development Departments, in consultation
with provincial departments and agencies, are to consolidate the
83
Ibid., p. 4.
96 PLANNING IN PAKISTAN

divisional plans by sectors into provincial plans. For the imple-

mentation of these plans, the process is to be reversed. When na-
tional plans have been approved at the Center, national targets are
to be broken down, to the greatest extent, into provincial, divisional,
district, tehsil and thana, and village targets. Although this is to be
done particularly for agricultural targets, it is also to be done, in
some degree, for all targets.
The system of Basic Democracies, which went into effect in
1959, has been operating for too short a time to determine the
effectiveness of this experiment to mobilize the support and enthusi-
asm of the people. It has begun to show results in some places, but
it has also demonstrated grave shortcomings in others. Since most
of the people are illiterate and live in isolated villages, it is no easy
matter to create initiative among members of the councils on lower
levels. While shortages of funds also have hindered activities in
many localities, the lack of technical assistance has been the biggest
obstacle to local action. There is little prospect that this weakness
can be remedied soon since the demand for qualified specialists to
work with union councils is far greater than the supply. Until re-
cently, union councils had confined themselves to small local devel-
opment works. What planning and execution of development
projects there were, generally took place at district and divisional
levels where some technical assistance was available. Even on these
levels, however, little was done since district, divisional and depart-
mental officials in the field, who were supposed to help the councils,
were already overburdened with their regular responsibilities. In
provincial capitals, moreover, there has been a tendency for officials
to take decisions without consulting local bodies or departmental
field representatives. This development was not unforeseen. As the
Second Plan presciently observed:
The easy course would be simply to continue to do all planning at or
near the top of the hierarchy, and to use the machinery of Basic
Democracies essentially as an instrument for obtaining consent for
decisions taken at the Centre and in the Provincial capitals . . . Basic
Democracies will become meaningful only if a measure of programme
planning and policy formulation rises upward to the points at which
governmental decisions are taken ... Getting participation in planning
 THE SECOND FIVE YEAR PLAN 97

at local levels will be much more complicated [than planning at the

top] ... 84

How effective Basic Democracies will be in involving the people

at lower levels in planning and implementation, therefore, still re-
mains to be seen. The results will ultimately depend on the extent
to which the Center and the Provinces will prove willing to give the
local councils authority and assistance to prepare and execute plans
and projects. Until now, Government policy has shown contradic-
tory movements. 8 5 Most important of all, there is need to provide
councils with technical aid without which they cannot be expected
to produce or carry out useful projects, programs or plans. To
enable local councils to function as effective instruments of develop-
ment, even in the field of community development programs where
they could have an important influence, requires fundamental re-
organization of provincial departments and a considerable extension
of their field organizations. Even if the Government takes these
steps, much time will be needed to solve the attendant organiza-
tional and staffing problems.
The Government has, however, indicated that it proposes to
make Basic Democracies work. In 1962, a public works program
was started in East Pakistan financed by funds from the sale of
United States surplus commodities. A sum of Rs. 100 million was
provided for the use of the units of Basic Democracies, for a series
of several public works projects which employed many workers
during the agricultural slack season. The success of the program in
mobilizing union, thana and district councils has encouraged the
Government to double the amount of funds for the program in
1963 and to start a similar program in West Pakistan.
84
1bid., p. 112.
86 Thus, under the Basic Democracies Order, local councils were given full re-
sponsibility for primary education, hospitals and dispensaries, but the Government
later reduced the councils' role in these fields to an advisory one. In agriculture,
similar tendencies toward centralization are evident in the creation of autonomous
provincial and agricultural corporations, leaving the councils in a supporting
position.
98 PLANNING IN PAKISTAN

THE ADVISERS

In contrast to the primary role played by the Harvard Advisory

Group in drafting the First Plan, a smaller portion of the Second
Plan was actually drafted by the advisers themselves. Moreover, the
Chairman of the Planning Commission edited the entire Plan by
himself. Nevertheless, the character of the final product and its
timing were materially influenced by the Harvard Group by advice,
background papers, comments on staff papers and by actual draft-
ing or redrafting of sections of the Plan. Although the foreign
advisers made a smaller direct contribution to the Second Plan than
to the First, their participation in the drafting of the Second Plan
was indispensable. Even after the Plan was published, revisions
had to be made and other work done which could not have been
carried out by the Planning Commission's staff alone. The need for
the advisers was even greater in the Provinces where, before the
beginning of 1961, they were virtually the only ones available to
conduct provincial planning activities and thereafter were required
to advise the newly formed staffs of the provincial Planning and
Development Departments.
When the contract with the Advisory Group expired in August
1960, there was no reasonable alternative to renewing the contract,
although it had been hoped that by then, both the Planning Com-
mission and the provincial planning organizations would have estab-
lished themselves as self-sustaining bodies. While the Second Plan
was being drafted, it had even proved impossible to follow the
original plan to terminate the contract, although the number of
advisers was reduced. The contract with the Harvard Group was at
first extended for six months and then for an additional two-year
period until the spring of 1963. It is now expected that foreign
advisers will be needed until 1965 and arrangements have been
made to obtain them from Harvard University through the joint
financial aid of the Ford Foundation and the United States Govern-
ment.
At the expiration of the current Harvard contract, almost a
decade will have elapsed since the Harvard Advisory Group came
to help Pakistan prepare a five-year plan and establish an effective
 THE SECOND FIVE YEAR PLAN 99

planning body. The Planning Commission is now accepted as an

integral part of Government. It enjoys a higher position than ever
before and the prospect that it will continue is good. Nevertheless,
after having benefited from the help of some 35 foreign advisers
and 20 consultants, the Commission has yet to reach a point where
it can adequately perform its functions.
The establishment of viable planning machinery in Pakistan is
taking much longer than was expected. Faster progress might have
been attained with a different technique or approach, but even at
best it probably would have taken a long time to create an indige-
nous and smoothly functioning planning organization. Pakistan's
experience strongly suggests that other countries also will require
technical assistance over many years if successful institutions for
planning and implementing development are to be created.

FORMULATING THE SECOND PLAN

A principal reason for the shortfalls in implementing the First

Plan was the Government's failure to accept the Plan until about
half the Plan period had elapsed. In an attempt to avoid a repeti-
tion of this experience in the Second Plan, drafting was started two
years before the end of the First Plan period.
In preparing the First Plan, the Planning Board had begun work
by inviting the central ministries and agencies and the Provincial
Governments to submit proposals and projects which were later
integrated and developed into the First Plan. Since this approach
had not produced satisfactory results, the Planning Board sought
to facilitate the preparation of the Second Plan by first producing a
tentative framework of the Plan which, after approval by the Cen-
tral and Provincial Governments, could become the basis for draft-
ing the Second Plan. As a first step, the Planning Board prepared a
Working Paper on the Second Plan which took account of sugges-
tions made by Central and Provincial Government officials at the
Planning Board's invitation. The Working Paper was submitted to
the National Economic Council, but before the Council could act,
the military Government took power.
100 PLANNING IN PAKISTAN

The change in Government, as well as the attendant changes in

the central planning agency and its leadership, delayed action on
the Plan. A statement of the objectives and size of the Second Plan
which had been prepared by the newly renamed Planning Commis-
sion was discussed in the Economic Council, and after approval
by the Cabinet, was published in July 1959 with a message from the
President. 8 6 The published document gave only a brief resume
of the Plan's objectives. On the basis of the approved objectives, of
a framework of the Second Plan which the Commission had pre-
pared, as well as of the major projects which it was expected would
be included in the Plan, a more extensive Outline of the Second
Five Year Plan was drafted. After the Economic Council had given
it general approval, the Outline was released for general informa-
tion and comments in January 1960.
The President issued a special directive to the central ministries
and the Provincial Governments requiring them to study the Plan
Outline. The President also asked the entire country to comment
freely upon it. The people were promised that their suggestions, if
forwarded to either the President's Secretariat or the Planning Com-
mission, would be considered. Besides making the Plan Outline
available to central and provincial governmental and quasi-
governmental agencies, the Planning Commission sent copies with
requests for comments to chambers of commerce and industry and
other trade and labor associations, universities and other private
organizations. In response, a large number of organizations and
people, both official and nonofficial, submitted comments which
were considered in preparing the detailed Plan.
The drafting of the Plan, which had begun soon after the Gov-
ernment had approved the Plan's objectives, had proceeded along-
side the drafting of the Plan Outline. The detailed Plan was com-
pleted and printed in June 1960 and submitted to the Economic
Council. In contrast to the long delay in obtaining approval for the
Draft First Plan, the principles, objectives and programs of the
Second Plan were approved by the Economic Council in June 1960,

86 Planning Commission. Objectives of the Second Five Year Plan.

 THE SECOND FIVE YEAR PLAN 101

the month before the Plan was scheduled to go into effect. 8" The
speed with which the Plan was approved was possible only because
the Council's members had already familiarized themselves with its
main features when the Council had considered and approved the
Plan's Objectives and the Plan Outline. Moreover, since the share
of investment resources allocated to East Pakistan was almost four
times greater than its expenditures during the First Plan period,
there was less need than formerly to placate East Pakistan. In ap-
proving the Plan, the Economic Council had directed that major
departures from the Plan could be made only with the consent of
the Economic Committee of the Cabinet and, in matters of basic
importance, only with the approval of the Council itself.
Like the First Plan, the planners had begun preparing the Second
Plan by estimating over the five-year Plan period domestic public
and private financial resources and external resources from foreign
exchange earnings, foreign aid and foreign private investment.
Rough estimates were also made to determine the likely manpower
resources by categories and the basic raw materials, like steel and
cement, which might be available and required to carry out the
Plan.
In most fields a dependable basis existed for the preparation of
public sector programs. The provincial planning organizations were
responsible for drawing up the initial programs. In some fields, like
water, power and inland transport, semi-autonomous authorities
had been established which were equipped to plan and execute de-
velopment programs. At the Center, there were also some reason-
ably competent organizations for preparing and carrying out sector
programs. While there was still great scope for improving the quan-
tity and quality of the statistical data, there had been some improve-
ment which facilitated the preparation of the programs. 8 8 In larger
S7 Planning Commission. The Second Five Year Plan. Since the beginning of
the fiscal year of the Government of Pakistan had been changed from April I to
July 1, the starting date of the Second Plan was also postponed to July 1, 1960 to
conform with the change in the fiscal year. . For the same reason, the period of the
First Plan, which had been scheduled to end on March 31, 1960, was extended to
June 30, 1960.
88 One reason for the continued deficiency in statistical data was the absence of
an attractive statistical career service. Statistical offices are located in various
ministries and departments where they are usually regarded as unimportant
appendages.
102 PLANNING IN PAKISTAN

measure than in the case of the First Plan, the public sector pro-
grams which were eventually included in the Plan were based on the
proposals received from the central and provincial operating units,
although the Planning Commission still found it necessary to do a
substantial amount of work on the programs as submitted.
In contrast to the public sector programs, those for the private
sector were far less satisfactory. The central ministries and Provin-
cial Governments had been requested to provide proposals for the
private and public sectors, but they submitted little information for
the private sector. The Planning Commission tried to fill the gap,
often by working out the programs itself. Since the data available,
especially for industry in East Pakistan, were inadequate, the pro-
gram for industry reflected this. Because of the almost complete
lack of information, no reliable basis existed for estimating the
likely amount of private investment in other fields as well, especially
in housing and health services. Advisory panels of officials and
representatives from the private sector, constituted by the Planning
Commission, operated effectively only in a few sectors.
In setting sectoral priorities for the allocation of resources, the
planners were primarily guided by five objectives. Four of these
were similar to those in the First Plan: (1) achievement of a 20
percent increase in the national income, equal in importance to the
other five objectives in the Draft First Plan, but considered the
"crucial" objective in the Second Plan, (2) improvement in the
balance of payments, (3) acceleration of the rate of development in
the country's less developed regions and (4) achievement of an
increase in employment opportunities. For increased social welfare
services, which constituted the fifth objective of the First Plan, the
Second Plan substituted (5) self-sufficiency in food. 89
These objectives, like those in the First Plan, could be conflicting.
Thus, accelerated development of less-developed areas required that
production facilities be located in these areas as far as possible
without seriously affecting national income targets. The objective
89 It was not the planners' intention to ignore the importance of improving
current living standards. The Plan itself proposed only a modest increase in
domestic savings from 6 percent of gross national product in the First Plan period
to 7.8 percent in the Second. This implied that only one-fourth of the estimated
increase in per capita income was expected to be saved.
 THE SECOND FIVE YEAR PLAN 103

of increasing employment opportunities required that projects utiliz-

ing labor-intensive techniques be favored over those utilizing
capital-intensive techniques without unduly depressing the volume
of output.
In practice, the planners approached the problem pragmatically.
They started by directing much of the available resources to agri-
culture and industry, where high yields were attainable. Targets for
developing water and power resources were then set by estimating
the amount of irrigation, drainage, flood control and power facilities
required for achieving the targets in agriculture and industry.
Targets for developing transport facilities were similarly determined
on the basis of railways, highways, and other transport required to
support the agricultural and industrial programs. Training pro-
grams for technicians were worked out by estimating the kind and
number of technical personnel required to implement the various
sector programs. Some attempt was made to balance sector require-
ments for raw materials, manpower, transport and foreign exchange
with estimated supply in order to insure the Plan's internal
consistency.
While the formulation of the public sector programs had pro-
ceeded with reasonable dispatch, the preparation of projects to be
included in the Plan lagged badly. In July 1958, soon after the
Planning Board had begun work on the Second Plan, it had re-
quested the Provincial Governments, central ministries and quasi-
governmental agencies to start preparing projects which they wished
included in the Second Plan. The last date for submission of
projects was to be November 30, 1958. When only a few projects
had been submitted by this date, the time for submission was ex-
tended, first to May 15, 1959, then to August 1959 and finally to
April 1960. However, when the Plan was finally approved by the
Economic Council in June 1960, proposals for many projects which
were to be carried out during the Second Plan period had not been
received by the Commission. Those which had been submitted
were often imprecise, showing only rough and tentative cost figures
without supporting details. Only in few cases had the preliminary
surveys, needed to frame realistic estimates, been completed.
When the Planning Board had originally invited proposals and
104 PLANNING IN PAKISTAN

projects from sponsoring agencies, it had requested them to indicate

the priority of each proposal or project. In most instances, this was
not done. Where priorities were given they frequently revealed that
the sponsors did not have a clear notion of the Plan's objectives.
The central planrners themselves therefore felt it necessary to de-
velop and apply criteria for assigning priorities. Since the Second
Plan was mainly intended to carry forward the development started
under the First Plan, the planners gave high priority to projects
started during the First Plan period, whose execution was well ad-
vanced, and to those projects which were being financed with
foreign aid. They also gave priority to projects which promised to
obtain quick results through better use of existing resources and
productive capacity. Development funds allocated to the capital-
intensive sectors of water, power, transport and communications
accounted for over half of the total public outlays under the Plan,
but wherever a choice was possible, the planners favored projects
which would make use of labor-intensive techniques.
In drafting the Second Five Year Plan, the planners made an
effort to profit from the experience of the First Plan by improving
the precision and quality of their product. A new classification,
designated the "semi-public sector" was introduced to segregate
quasi-government bodies from Government or private sectors. The
concept of development expenditures was also redefined to exclude
most recurring costs for projects in the public sector, which had
been included in the First Plan, and to include development outlays
by local bodies, which had been excluded in the First Plan. 9 0 Al-
though the lack of information about projects to be included in the
Plan made it necessary to make lump sum allocations for some
sectors, the planners chose not to resort to a percentage reduction
for shortfalls in public sector outlays, in order to bring proposed
outlays down to the level of estimated resources, as had been done
in the First Plan.
These changes represented improvements over the methods used
to prepare the First Plan. Significant statistical advances had also
90 The huge expenditures for the Indus Basin replacement works were not in-
cluded in the Plan on the grounds that these works were not primarily develop-
mental or a part of normal replacement of capital.
 THE SECOND FIVE YEAR PLAN 105

been made in the First Plan period. Nevertheless, with few excep-
tions, the Second Plan had been prepared in the face of much the
same deficiencies of data as the First. Provincial planning organiza-
tions, central operating ministries and the private sector made
greater contributions to the Second Plan than they had to the First,
but the Second Plan emerged in its essentials as a product of the
central planners in Karachi instead of as a composite document
which reflected the aspirations or proposals of the national and
regional interests most concerned.

THE SECOND PLAN'S PROVISIONS

In formulating the Second Five Year Plan, the planners had

made a preliminary attempt at perspective planning for a period of
30 years from 1955, the year the First Plan started. The Second
Plan was envisaged as the second in a series of six five-year plans
which would "endeavor to speed up the pace of development, to
overcome the inadequacies of achievement during the First Plan
period.""9 The Second Plan estimated a rate of increase in popula-
tion of about 1.6 percent in 1960, rising to possibly 1.8 percent in
1965, to reach about 9 percent in the five-year period, 1960-65.
On the basis of these assumptions, and of a 20 percent rise in
national income, the increase in per capita income would average
about 2 percent annually and total about 11 percent for the five
years.
To achieve these targets, the Second Plan proposed gross invest-
ments of Rs. 19 billion, 65 percent higher than in the First Plan,
and estimated to average 13.4 percent of annual gross national
product over the Plan period compared with 9.5 percent during the
First Plan period. Of the total investment in the Second Plan
period, Rs. 9.75 billion were to be in the public sector, Rs. 3.25
billion in the semi-public sector and Rs. 6 billion in the private
sector. The Central Government's share of public resources would
account for 35 percent of the total and West Pakistan's for 31 per-
cent. In contrast to the First Plan, when East Pakistan's expendi-
01 Planning Commission. The Second Five Year Plan, p. 4.
106 PLANNING IN PAKISTAN

tures amounted to only 17 percent of total public expenditures, its

share under the Second Plan was to be 34 percent. Foreign ex-
change requirements were estimated at Rs. 6.5 billion, in addition
to Rs. 1.5 billion for an expected balance of payments gap for non-
development expenditures (called maintenance support) during the
Plan period. Like the First Plan, the Second Plan did not include
annual phasing of resources and expenditures, except for external
aid requirements.
It soon became apparent that the Second Plan was inadequate
for a number of reasons. Because the Indus Basin Agreement had
not yet been concluded when the Plan was being prepared, it in-
cluded no provision.for the additional physical requirements which
the execution of the proposed Works would place on the transporta-
tion and other sectors of the economy. In addition, it had become
apparent that the cost of achieving the physical targets in the Plan
had been underestimated. When the Plan was being formulated,
detailed engineering and financial studies had not been available
for some projects and programs. As such studies were completed,
they revealed that original estimates were too low. Finally, the
census of February 1961 had revealed that population had been
expanding in the previous decade at an average of 2.1 percent per
annum, and, accordingly, the rates of population growth of 1.6 to
1.8 percent assumed in the Plan were too low. If per capita incomes
were to increase at the rate of 2 percent per annum proposed in the
Plan, physical targets would have to be raised.
After several piecemeal changes proved unsatisfactory as a
means of coping with the Plan's inadequacy, the cost of the Second
Five Year Plan was totally revised in May 1961. The investment
target was increased by Rs. 4 billion to a new total of Rs. 23 billion
and the estimate of maintenance support required during the Plan
period was changed by Rs. 1 billion to Rs. 2.5 billion. The foreign
exchange component of the Plan was also increased from Rs. 6.5
billion to Rs. 8.45 billion, raising the proportion of foreign aid
required from 42 percent of total investment outlays in the original
Plan to 48 percent for the revised version."
92 The Plan is being financed with the help of large amounts of external assist-
ance. A Consortium, organized by the World Bank in October 1960, has pledged
 THE SECOND FIVE YEAR PLAN 107

As a result of the Second Plan's revision and the added income

envisaged from the Indus Basin Works and other programs not
included in the Second Five-Year Plan, it was now expected that
gross national product would rise by 24 percent, instead of 20 per-
cent, over the five-year period of the Plan. However, since popula-
tion was expected to increase more rapidly than originally esti-
mated, per capita real income was expected to remain virtually un-
changed from the amount estimated in the original version of the
Plan.
In June 1961, the Economic Council approved the revised Plan.
Subsequently, however, in August 1961 the Plan underwent a
second revision. Except for a transfer of Rs. 1 billion from housing
to agriculture, this revision did not modify the May 1961 estimates
for total or sectoral investment. But, it embodied many changes
within sectors, the general effect of which was to reduce allocations
for some projects of low priority or of long construction duration
and to increase those for projects which promised to produce quick
results.
The Second Five Year Plan, as revised, gave increased agricul-
tural output the highest priority and, both relatively and absolutely,
made much larger allocations to agriculture than did the First Plan.
The Plan target called for a rise of 21 percent in foodgrain produc-
tion to achieve self-sufficiency by 1965. It also emphasized con-
tinued industrialization, water resource and power development,
transport and communications, and education. Allocations for
housing and health were kept low in order to release more resources
for investments with higher productivity in the short run. Because
"So far the fruits of economic development have been almost com-
pletely absorbed in maintaining an increasing population," the Plan
also recommended "measures for arresting the menacing growth of
population"93 through a program of family planning.

assistance to the extent of $1,599 million to meet foreign exchange requirements

for the first four years of the Plan period. In addition, the United States is to
supply surplus agricultural commodities valued at about $707 million. Some
foreign aid is in the form of conventional banking loans, but most of the aid is to
be in the form of grants, "soft" loans or loans with long maturity periods.
Da Planning Commission. Objectives of the Second Five Year Plan, p. 6.
108 PLANNING IN PAKISTAN

When the Economic Council approved the revised Plan, it decided

that:
the revised figure of Rs. 2,300 crore ($4,830 million) will be re-
garded as firm and final. If any new schemes or projects, which are
not in the Plan, are proposed at any time to be included in it on
account of their importance and urgency, their inclusion will be
permissible only by substitution of existing projects and not by addi-
tions to the Plan.9 4
A similar decision was made for foreign exchange requirements.
While this determination gives assurance that the size of the re-
vised Plan and the amount of foreign aid required under it are now
fixed, Pakistan's requirements for development resources will be
greater than in the Second Plan. Besides the Plan, the Government
is simultaneously undertaking, or proposing to undertake, a series
of other investment programs. A Public Works Program, financed
by U.S. P.L. 480 commodity aid counterpart funds, was started in
1962 and expanded in 1963. Further expenditures will have to be
made for the Indus Basin Works, the revised cost of which is esti-
mated at $1,743.9 million. 9 5 An enlarged Waterlogging and
Salinity "Master Plan" has also been prepared which is expected to
cost Rs. 5.9 billion. However, expenditures during the Second Plan
period are expected to be modest and most of the impact of this
program is expected to be felt in the Third Plan period. Even if
additional funds to finance these programs are found, these addi-
tional programs will add to the strain on the supply of technical,
9i4 Quoted in Planning Commission. The Second Five Year Plan, Including
Revised Estimates, p. 7.
95 The Indus Basin Works in Pakistan are included in a ten-year program for
the construction of a system of works designed to convey waters from the three
Western rivers of the Indus Basin to the irrigated areas in the southeast part of
West Pakistan. They will replace waters from the Eastern rivers being diverted
for use in India. Simultaneously, a construction program is to go forward in India
to allow that country to make full use of the water from the Eastern rivers of the
Indus Basin. The program is the largest of its kind ever to be undertaken any-
where in the world. It was devised during negotiations between the two countries
over an extended period held through the good offices of the World Bank. The
program is being financed by a group of six Governments, in addition to India,
Pakistan and the World Bank. The World Bank administers an Indus Basin De-
velopment Fund, set up to finance the program. The responsibility for carrying
out the Works in Pakistan rests with West Pakistan's Water and Power Develop-
ment Authority.
 THE SECOND FIVE YEAR PLAN 109

administrative and managerial talent available to carry out the pro-

grams in the Second Plan.

IMPLEMENTING THE SECOND PLAN

In the First Plan period, the Government scarcely made any at-
tempt to adopt measures which the planners considered essential to
the execution of the Plan. In sharp contrast, in the implementation
of the Second Plan the Government has shown notable interest
which has led to many administrative and organizational reforms.
The Government has also sponsored a series of conferences and
meetings for officials at which problems of plan execution and tech-
niques for improving current implementation procedures have been
discussed.
When the Economic Council approved the original version of the
Second Plan, it appointed a Study Group, headed by the Chairman
of the Planning Commission, to consider the desirability of creating
s-ecial machinery for implementing the Plan. The Study Group
concluded that no new machinery was required and that effective
utilization of existing organizations would best assure the Plan's
implementation. The Study Group felt that the annual development
program was the most practical and effective instrument available
for carrying out the Plan and proposed that the timetable for its
preparation be improved. It also proposed that central ministries,
and central and provincial departments and agencies take steps to
improve their methods of initiating and executing projects and
programs. The Study Group's proposals were approved by the
Cabinet.
The Plan's Relation to the Budget
A decision of the Cabinet required that the execution of the
Second Plan be carried out through annual development programs
which conformed generally to the, Plan's objectives, principles and
priorities. The timetable for preparing the central Budget was
modified to permit the Budget to include the annual development
program. Only projects in the annual development program were
110 PLANNING IN PAKISTAN

to be included in the Budget. Nevertheless, in the first year of the

Second Plan, the Budget deviated substantially from the annual
development program, but, in each subsequent year, budgets have
come closer to the allocations and priorities proposed in the annual
development programs.
When the Cabinet approved the annual development program as
the basis for budgetary developmental allocations, it provided that
the annual development program would thereafter include, besides
information about projects and their domestic and external cost esti-
mates, the economic and physical targets to be achieved each year.
In practice, the Planning Commission has not yet produced annual
development programs which represent adequately phased state-
ments of the Second Plan and they continue to be little more than
listings of projects with allocations of funds.
While the relationship which was established between the annual
development program and the Budget provides the most practical
means for implementing the Plan, it may also not be sufficiently
flexible to allow the Plan to adjust to changing conditions. Often
budgetary commitments to projects under way are already so great
that only limited resources remain in the annual development pro-
gram to be allocated to new projects or programs. Operating
agencies tend to claim that all their expenditures are for on-going
programs and therefore irreducible. The Ministry of Finance has
insisted on a more rigorous definition of on-going programs to ex-
clude projects of low priority on which only a small part of the total
cost has been spent. In June 1960, the Economic Council ap-
pointed a special Committee on the Review of On-Going Schemes,
headed by the Deputy Chairman of the Planning Commission to
deal with the problem. The Committee's report indicated an urgent
need for closer scrutiny of on-going projects, but did little to solve
the problem.
Experience had demonstrated the desirability of coordinating the
allocation of foreign exchange with the budgetary provision of
rupees for approved projects. Under the revised procedures ap-
proved by the Cabinet, the annual development program was to
indicate the foreign exchange, as well as the rupee, requirements
for each project. When the Government approved the annual
 THE SECOND FIVE YEAR PLAN 111

development program, its approval was to apply to both the rupee

and foreign exchange requirements of the program. To make it
possible for the annual development program to include both
foreign exchange and rupee requirements, the preparation of the
annual foreign exchange and domestic budgets was to be synchro-
nized and both of these were to be submitted together for Govern-
ment consideration. The foreign exchange budget was to match
total estimated foreign exchange resources against the requirements
of the private sector, as well as for public investment and non-
development expenditures.
While these measures laid the groundwork for a closer relation-
ship between critically short, foreign exchange resources, on the one
hand, and the Plan and budgets, on the other, they could be made
effective only if an adequate foreign exchange allocation policy were
developed. However, the problem of allocating foreign exchange is
complicated by the fact that Pakistan is heavily dependent on aid-
giving countries. In principle, foreign aid may be pledged, but in
practice funds are frequently forthcoming only after protracted
negotiations and delays. Actually, therefore, foreign exchange
allocations are often made with no certainty that funds will become
available to specific projects or programs in time for them to move
forward on schedule. There is also need for the Planning Commis-
sion to strengthen its staff work to furnish the Foreign Exchange
Control Board with information required to improve the basis on
which allocations are made. To a considerable extent foreign ex-
change allocations have not adequately reflected Plan objectives.
As a result, many projects included in annual development pro-
grams and budgets cannot be carried out because of foreign ex-
change shortages.
The Government has also made changes in budgeting and finan-
cial control procedures. The most important of these was the aboli-
tion of the dilatory system by which the Ministry of Finance cleared
expenditures against funds already allocated in the Budget. The
new procedure involves a substantial delegation of powers formerly
exercised by the Ministry of Finance to the operating agencies.
When a project has been approved and funds for it have been allo-
cated in the regular budget, the responsible executing agency may,
112 PLANNING IN PAKISTAN

with some minor exceptions, make expenditures within budgetary

limits without further reference to the Ministry of Finance. It is
hoped that the new system will permit operating agencies to accel-
erate the implementation of projects and programs.
The CentralDevelopment Working Party
In July 1959, the Economic Council had approved a new set of
procedures for the central Development Working Party. These re-
affirmed the basic principle laid down when the Development Work-
ing Party was created that all projects presented for the Central
Government's approval had to be examined by central ministries
jointly and simultaneously instead of in succession. This require-
ment had been largely vitiated by the Ministry of Finance's insist-
ence on a separate review of projects after their approval by the
Working Party. The new procedures provided that the Ministry of
Finance would no longer have the right of separate review except
where a project involved the services of a consultant or a foreign
technician. Even in these cases, the Ministry, and other central
bodies considering projects, were given a maximum period of two
weeks to complete studies of a project. Where a Ministry or agency
unduly delayed action, the Working Party was authorized to submit
the project to the Economic Council without the approval of the
ministry or agency responsible for the delay.
The Planning Commission was made responsible for arranging
the Development Working Party's meetings and the Deputy Chair-
man of the Commission became its presiding officer. More recently,
the Secretary of the Commission was made Chairman. The mem-
bership of the Working Party was increased to include representa-
tives of the Projects Division, until it was abolished, the Ministry of
Finance, the Economic Affairs Division of the Presidential Secre-
tariat, for projects requiring foreign aid, and the department or
agency sponsoring the project under consideration. In order that
members of the Working Party might be in position to speak for
their ministries, departments or agencies, representatives were re-
quired to have the rank of secretary or joint secretary.
Although ministries, departments and agencies are now repre-
sented by high level civil servants, many do not have enough knowl-
 THE SECOND FIVE YEAR PLAN 113

edge of economics to grasp all the important issues which are dis-
cussed. Nevertheless, the Development Working Party, which now
virtually operates as an arm of the Planning Commission, is evolv-
ing into a reasonably effective agency for reviewing projects to be
included in the Second Plan and the annual development programs.
The Working Party's emphasis on adequate technical and other
preparation before a project is approved for inclusion in the annual
development program and the Budget has had a salutary influence
on the preparation of projects by sponsoring bodies. It has also had
an exemplary effect on the activities of the provincial Development
Working Parties. One factor still limiting the effectiveness of the
Working Parties is the lack of soundly devised investment criteria
which can be applied generally to projects and programs. Present
criteria, some of which are obsolete or otherwise inapplicable, are
taken from a variety of sources, such as railway and Water and
Power Authority manuals. Because the central Development Work-
ing Party is one of two points for central control over implementa-
tion of the Plan, it has become a bargaining center where provincial
interests are most effectively represented. 9 " This aspect of the cen-
tral Development Working Party is likely to become even more
significant since Provincial Governments are now authorized to sub-
mit most development projects and programs directly to the central
Development Working Party without prior detailed scrutiny by
central ministries. 9 7
ProjectPreparationand Execution
The failure of sponsoring departments and agencies to come
forward with enough projects by the time the Second Plan was ap-
proved has delayed the Plan's implementation. Under pressure
from the Planning Commission and the Development Working
90 The Foreign Exchange Control Committee, which allocates foreign exchange,
is the second point of control. Representatives of the Planning Commission and
the Provincial Finance and Planning and Development Departments attend meet-
ings of the Foreign Exchange Control Committee, to give them an opportunity to
present their points of view when the Committee makes decisions on foreign ex-
change allocations.
97 Under the new Constitution adopted in March 1962, Provincial Governments
are now primarily responsible for programs in industry, fuel, power, food, agricul-
ture, health, labor, social welfare and education.
114 PLANNING IN PAKISTAN

Parties, operating departments belatedly prepared proposals. For

about a year after the Plan was issued, the central Development
Working Party assembled and scrutinized estimates which had been
received too late for inclusion in the Plan. The projects had gen-
erally been prepared hurriedly and information which the Working
Party needed to judge their technical and economic soundness often
was not supplied. Some proposals and projects were overly am-
bitious. Since many had to be returned for additional information
or modification their approval was delayed. Almost every depart-
ment sought approval for projects which had not been envisaged in
the Plan. This brought further delays while sectoral programs were
adjusted to make room for the new projects. 9 8
Projects were usually presented for approval on the basis of their
financial implications without much information about the physical
or management problems which were likely to be encountered.
Preliminary investigations and surveys essential to the formulation
of well-conceived projects were rarely carried out. After their ap-
proval, many projects ran into difficulties which greatly delayed
their execution. In agriculture, especially, projects have frequently
been retarded unduly because of problems encountered in acquiring
land which the sponsoring agency had assumed would be available
as soon as funds were obtained. In some cases, no specific site for
the project had been selected. After the projects were approved, it
was found that land was either unobtainable or much more expen-
sive than expected; or because of shortages of water, inadequacies
of soil, lack of communications or necessary technical personnel,
execution of the projects was impossible or involved much higher
costs or basic revision. Inadequate procurement machinery also
caused execution of many projects to lag. Delays tended to increase
costs, which in turn made it necessary for various governmental
bodies to re-examine and reapprove the projects. Such revisions

98 Some agencies have continued to make substantial modifications in their

projects and programs which have required further revisions in the sector programs
of the Plan. Although the Planning Commission recognizes that the Plan must be
flexible enough to accommodate revisions required by changing circumstances,
some changes requested by operating agencies appear to be due more to uncer-
tainty about the right approach toward Plan objectives than to a desire to adjust to
new situations.
 THE SECOND FIVE YEAR PLAN 115

sometimes delayed the project's progress as much as the physical

limitations themselves.
In submitting proposals, some departments and agencies had pro-
vided only rough cost estimates based on untested assumptions or
on price schedules which were already or would soon be outdated.
Often only guesses were included for the cost of land, materials,
machinery or construction. For many projects, costs were under-
estimated and benefits likely to accrue were overestimated with the
result that cost-benefit ratios proved to be unrealistic. Sometimes
the eventual costs were so large compared to the original estimates
that the project became uneconomic, but by the time this was real-
ized the execution of some projects had gone too far to stop them.
The Planning Commission has taken a leading role in getting
executing departments and agencies to improve their costing prac-
tices, but it is no easy task. In a frank statement of the problem, the
Deputy Chairman of the Commission conceded that there is still
great waste of resources and that estimates were almost always
exceeded."9
As a result of the efforts of the Planning Commission, criticism
of ill-prepared projects and programs from the central and provin-
cial Development Working Parties and difficulties encountered with
aid-giving agencies, there has recently been discernible a growing
emphasis on adequate project preparation in operating departments
and agencies. There has also been a shortage of adequately engi-
neered projects needed to achieve Plan targets. Because of the
great shortage of Pakistani technicians, Government agencies are
engaging many well-known foreign engineering firms and con-
sultants to supervise the preparation and execution of projects.
Foreign firms have also made a series of pre-investment surveys,
including transportation studies in both Provinces, a forest inven-
tory in East Pakistan and water, salinity and power studies in West
DD Said Hasan: Inaugural Address, to the Training Course in "Planning for
Development." Held under the auspices of the Planning Commission and the
Institute of Development Economics. Karachi. July 9, 1962. More careful costing
procedures could greatly reduce the discrepancies between estimated and actual
costs of projects. But if a project is to be financed with "tied" foreign aid, it may
be difficult to estimate the cost since it depends ultimately on which country
finances the project. Prices charged by aid-giving countries may vary by as much
as 40 or 50%.
116 PLANNING IN PAKISTAN

Pakistan. It is hoped that the Third Five Year Plan, on which work
has already started, will thus be based, to a much greater extent
than the Second Plan, on a series of pre-investment studies, sectoral
plans and improved research and statistics. However, there is con-
siderable room for further improvement. The greatest need is for
foreign advisers and specialists to train Pakistanis who will be able
ultimately to prepare, carry out and operate projects.
Besides inordinate delays in the preparation of projects and ex-
cessive increases in costs, accounting practices followed by exe-
cuting bodies often preclude the possibility of obtaining useful
progress reports. There are three systems of accounting in use in
Pakistan. The government system is used on government projects,
while the commercial system of cost accounting is generally em-
ployed by autonomous agencies like the Pakistan Industrial Devel-
opment Corporation and the provincial Water and Power Author-
ities. For some projects, accounts are based on a third system which
is partly government and partly commercial. While all have defects,
the government accounting system is generally less appropriate for
development projects than one based on commercial concepts. Ac-
counts often are not maintained to keep pace with the execution of
the project. Because expenditures frequently are not entered as they
occur, huge sums amounting to crores of rupees, remain in suspense
accounts which have become convenient depositories for disburse-
ments of unidentified purpose. In many cases, accounts remain un-
closed for long periods after completion of the project. Conse-
quently, it is often impossible to determine its capital cost or its
recurrent costs. If the project is a plant which is to produce and
sell commodities or services, it is difficult to estimate costs of pro-
duction and to fix selling prices for the output which will bring an
appropriate return on investment.
Administrative Reforms
As a result of investigations carried out by several official com-
mittees, the ministerial and departmental structure of the Central
Government has undergone changes which should help expedite the
Second Plan's implementation. Many functions have been trans-
ferred to Provincial Governments. Some ministries, like the Min-
 THE SECOND FIVE YEAR PLAN 117

istry of Food and Agriculture, have been reconstituted; some func-

tions have been separated and embodied in self-contained units, as
in the Ministry of Works; others have been combined into a single
ministry, like those of the Ministry of Health, Labor and Social
Welfare; several ministries, like the Ministry of Fuel, Power and
Natural Resources, have been created to deal specifically with
urgent problems. Departments and divisions have been rearranged
and reorganized to conform with the changes at the ministry level.
Procedures and administration within the ministries have also
undergone considerable reorganization. One sweeping reform re-
duced the much criticized overstaffing of secretariats by eliminating
several layers of junior secretariat staff."' 0 To counteract the over-
centralization of authority which has hampered effective operations,
the Government has adopted and is enforcing the principle that
central ministries shall concern themselves exclusively with ques-
tions of policy and shall delegate their executive functions. It is
therefore emphasizing the importance of administrative decentral-
ization from secretariats to departments and from departments to
divisional and district representatives. A good deal has been done
to decentralize executive responsibility, but it is necessarily a slow
process:
Exercise of power is habit forming; and the administrative tradition of
the Indo-Pakistan sub-continent has been that of centralization of
authority. But long-established attitudes apart, there are some real
difficulties to be overcome. The distinction between policy formula-
tion (the staff function) and executive determination (the line func-
tion) is not always clear in practice; . . . centralized co-ordination of
development projects and programmes, inescapable in a planned
economy, has led to a further concentration of authority in the central
government.1 0 '
Apart from eliminating unnecessary layers of personnel in the
secretariats, a shift is also taking place from the generalist to the
"00 G. Ahmed, in "Changes in the Administrative Organization of the Govern-
ment of Pakistan since 1953" (Public Administration, (London), Winter 1961,
p. 357) lists six layers (the lower divisional clerk, the upper division clerk, the
assistant, the superintendent, the assistant secretary and the under secretary) which
were replaced by a section officer with the rank of under secretary.
"'1 Ibid., p. 358.
118 PLANNING IN PAKISTAN

specialist. But much needs to be done before a proper balance has

been struck and the necessary replacement of generalists by tech-
nicians is likely to take time. It will first be necessary to define more
clearly the proper role and authority of generalists and technicians.
Civil service regulations and procedures will have to be reconsidered
and legislation amended. The great shortage of technicians in all
sectors adds to the difficulty, especially in the agricultural services.
While new technical, agricultural and engineering schools are being
established and existing facilities are being expanded, it will take
years to meet the growing demand for qualified technicians in the
country. Even when more technicians become available, the Gov-
ernment will have to take steps to raise the status of technicians in
relation to generalists, by increasing technicians' salaries and pro-
motional opportunities, in order to. attract the number and quality
of technicians required to carry out development programs.
The Government's program for decentralizing planning and im-
plementation also entails a considerable reorganization of the
Provincial Governments. Some changes have already taken place,
but the task of decentralization from Provincial levels down to
divisional and district levels still remains to be accomplished. Fre-
quent and haphazard changes in organization, often superficial in
nature, have led to delays in implementing plans. There have been
cases where projects have been transferred from one department to
a second and then to a third within short periods of time. When
new departments have been created, they sometimes did not have
enough staff to carry out projects entrusted to them. Because of
frequent shifts or lack of staff, it has not been unusual to find
projects languishing or even abandoned.
Perhaps the most striking change in development administration
has been the shift from slow-moving operating departments to
"government by corporations.""' In April 1958, the Water and
Power Development Authority (WAPDA) of West Pakistan was
established as a semi-autonomous agency and in 1959 a similar
Authority was established in East Pakistan. These Authorities have
been given responsibility for building and operating water regula-
102 Ibid., p. 355.
 THE SECOND FIVE YEAR PLAN 119

tion and power facilities in their respective Provinces. They func-

tion on a commercial basis, setting rates at levels which cover
operating costs, interest charges, depreciation and taxes, and pro-
vide for a reasonable return on investment. Although they have
been in existence for only a short time, both Authorities have al-
ready demonstrated their superiority over regular government
departments in carrying out irrigation, drainage and flood control
projects. With the aid of consultants, the West Pakistan WAPDA
has prepared and is implementing a comprehensive plan for unified
and multipurpose development and use of the water and power
resources in its Province. The East Pakistan WAPDA is preparing
a similar plan for its own Province.
An Inland Water Transport Authority has been created in East
Pakistan and the railways have been placed under the authority of
Provincial Railway Corporations. A Food and Agriculture Com-
mission, set up by the Government in July 1959, concluded that the
past rate of growth of agricultural production had been unsatis-
factory and that existing departments and agencies were not able to
accelerate agricultural development sufficiently to meet the country's
needs. On the basis of the Commission's recommendation, an
autonomous Agricultural Development Corporation, patterned on
the Water and Power Authorities, was set up in each Province. The
Agricultural Development Corporations are responsible for provid-
ing adequate and timely supplies of agricultural requisites like seed
and fertilizers to farmers, and for conducting intensive integrated
development programs in selected project areas. As semi-
autonomous agencies, the Corporations are expected to operate
more flexibly and effectively than regular government departments
and to attract the qualified technicians and administrators needed
for successful implementation of the agricultural development pro-
gram. One year after their establishment, however, their organiza-
tion and precise functions had not been clearly defined. The
resultant uncertainty has slowed down implementation of agricul-
tural programs. In spite of reforms, therefore, organizational and
administrative limitations continue as serious bottlenecks in the
execution of the agricultural program.
Organizational, administrative and technical problems are par-
120 PLANNING IN PAKISTAN

ticularly pressing in East Pakistan, since its development program

under the Second Plan is four times larger than under the First
Plan. The Provincial Reorganisation Committee, which the Central
Government appointed to recommend changes in Provincial admin-
istration, reported in April 1962 that East Pakistan's governmental
organization:
suffers from over-centralisation, absence of co-ordination at vital
points of contact with the public, outmoded methods and procedures
of work, delays and duplication, and a general inadequacy to deal
with its new and enlarged responsibilities."0 8
The Committee made a number of recommendations for strengthen-
ing the major departments to equip them for their enlarged respon-
sibilities under the new Constitution. These included proposals for
simplifying procedures, removing administrative and financial
bottlenecks in the execution of developmental programs, and de-
centralizing many departmental activities to divisional, district and
local levels. The Cabinet approved all the recommendations and
constituted a special "implementation cell" in the East Pakistan
Government under an Additional Chief Secretary to carry out the
Committee's recommendations by September 1962. The President
also directed that a progress report on the implementation of the
recommendations be sent to him every fortnight.
The Government's increased interest and effort gives reason for
hope that central and provincial administrative and organizational
problems will be solved. Pakistan has now had several years of
experience in development administration. It has built up an ex-
perienced cadre of senior administrators and managers around
whom newly trained technicians can be grouped. More than ever
before, there is an awareness of the need to improve administrative
procedures and organization, evidenced by the recent establishment
of an Administrative Staff College, of schools of public administra-
tion and of a variety of other intensive training programs for senior
officers in the public service, the armed forces, semi-autonomous
agencies and private industry. But much needs to be done to fill
the need for trained personnel at all levels and in all sectors.
10s Government press communique as quoted in Dawn (newspaper), April 25,
1962.
 THE SECOND FIVE YEAR PLAN 121

The Private Sector

These programs should eventually make available a substantial
supply of qualified administrators. But the action which promises
to make more administrators available at an early date is the Gov-
ernment decision to rely in the future primarily on the market and
on fiscal and monetary measures instead of on direct price, profit
and physical controls, a decision which logically followed the "basic
assumption of the [Second] Plan that for the implementation of the
industrial development programme reliance will be placed primarily
on private enterprise."' 0 4
Official acceptance of the fact that private enterprise had a key
role to play in the economic development of the country was based
on' industry's manifest record of achievement during the First Plan
period rather than on a desire to reduce public investment expendi-
tures. Although Government fiscal and other incentives had helped
speed private industrial development, the Government now recog-
nized that industrial development had, on the whole, been unneces-
sarily slowed down by the multiplicity of official restrictions on its
activities.
In the First Plan period, the principal limitation on the develop-
ment of the private sector had been the shortage of foreign ex-
change, for which public projects and programs had been given
priority:
There has been a tendency in the past to let private industry bear the
brunt of cuts in foreign exchange allocations. As a result, the oper-
ating efficiency of many private concerns was seriously hampered.
Controls over privately operated industries remained cumbersome;
. . . But for these disabilities and particularly the shortage of foreign
exchange, private industry would have developed still more rapidly."0 5

In order to insure that the private sector obtains a reasonable share

of the available foreign exchange resources under the Second Plan,
the Ministry of Industry functions as the private sector's representa-
tive on the Foreign Exchange Control Committee.

104 Planning Commission. The Second Five Year Plan, p. 225.

10 Ibid.
122 PLANNING IN PAKISTAN

Experience during the First Plan period had made it clear that
Pakistan could ill afford to devote its scarce administrative talent to
the task of supervising an extensive and complicated system of con-
trols on capital issues, prices, profits, imports, exports and the move-
ment and distribution of many kinds of goods and services. In a
striking official change of policy, the Second Plan therefore pro-
posed "to free the economy as much as possible from controls in the
industrial, commercial and agricultural sectors, and to rely increas-
ingly upon private initiative and judgment."'1 6 Because of extremely
scarce resources in some fields, some controls, e.g., on imports,
would have to be continued. But where this was necessary, they
would be simplified, and as much as possible changed to indirect
controls to guide private activity without regulating it in detail.
With the help of taxes, subsidies, and fiscal and monetary policies,
the greatest reliance would be placed on the price mechanism to
equate sutply and demand.
The Government has begun to eliminate controls. Price and
distribution controls have been lifted from wheat, cotton textiles,
yarn and many other commodities. Import restrictions have been
relaxed and about one-third of all import items have been placed
on the automatic licensing list. The Export Bonus Scheme, as an
export incentive, gives exporters the right to a proportion of their
foreign exchange proceeds freely to import a large variety of items.
Bonus vouchers, which represent this right to import, are traded at
a substantial premium in the local securities markets. Apart from
its success in stimulating industrial exports, the system has provided
valuable flexibility in procuring urgently needed imports.
Sixty percent of proposed industrial investment under the Second
Plan is to be made in the private sector. Although public industrial
investment, to be carried out mainly by PIDC, will still be impor-
tant, no industry has been wholly reserved for the public sector.
The public investment program is intended to establish and expand
only those branches of industry which are essential for the country's
security or national development and for which private capital is
not forthcoming.
108 Ibid.
 THE SECOND FIVE YEAR PLAN 123

The Plan envisaged that private capital would not be available in

the required amounts to insure East Pakistan's industrial growth
and for the establishment of some important industrial ventures in
West Pakistan. In such cases, PIDC would take the initiative. It
would endeavor to associate itself in these undertakings with private
investors. As in the past, the Corporation would be guided by the
requirement in its Charter that it dispose of its enterprises when
private entrepreneurs are capable and ready to take them over.' 07
Steps were also taken to expedite the expansion of private ca-
pacity in branches of industry which the Government wished to see
develop. The Second Plan provides for preference to be given for
the establishment or expansion of industrial enterprises which will
bring about the modernization, balancing or optimum utilization
of existing capacity. The establishment of new capacity is approved
where sponsors can demonstrate that it will make a large net con-
tribution to national income, will increase net foreign exchange
earnings, will be based mainly on the use of indigenous raw mate-
rials, will produce certain types of capital goods, which must now
be imported, or produce essential consumer goods. For the purpose
of applying these criteria, the Government established, in July 1960,
an Industrial Investment Schedule which set ceilings for 107
branches of industry which were eligible for private investment. If
a private project came within the scope of the Schedule, the granting
of permission for establishing or expanding an enterprise was made
semi-automatic and independent of special applications.
Applications from private investors far exceeded the limits pre-
scribed in the Schedule, and the Government, under pressure from
private investors, approved projects in an amount well above the
total ceiling in the Schedule. A revised Industrial Investment
Schedule covering 114 items was issued in February 1963. Never-
theless, only 30 percent of the amount of investments approved
under the Schedule had actually been committed to projects at the
end of the first two years of the Plan period. Experience with the
Schedule thus far indicates that it is far from an ideal way to pro-
107 As part of the current decentralization movement, PIDC has been divided
into two provincial industrial development corporations, each of which attempts to
do for its own territory what PIDC had done on a national scale.
124 PLANNING IN PAKISTAN

mote private industrial investment. Originally intended as a general

guide to branches of industry to which private industrial investment
might be directed, the Schedule has become a bureaucratic instru-
ment of control which tends to restrict industrial expansion instead
of assuring its development along socially and economically desir-
able lines.
In order to improve further the climate for domestic and foreign
private investment, a variety of incentives have been provided. The
tax on dividends of industrial enterprises has been reduced; under-
takings established during the Second Plan period are generally
exempt from taxation for four, six or eight years depending on the
areas in which they are located; losses may be carried forward for
six years and liberal depreciation allowances, in addition to the
regular rates, are allowed on plants and machinery not previously
used in Pakistan. In order to attract foreign capital, various con-
cessions and safeguards are given to foreign private industrial in-
vestors. There are no restrictions on the remittance of profits and
the repatriation of capital in approved industries established after
September 1, 1954. There are double taxation agreements with
several countries. There is to be no restriction on the degree of
participation of Pakistani capital in any industry where foreign in-
vestment is approved by the Government. Foreign technicians
employed by approved industrial undertakings, under contracts of
service approved by the Central Government, have been exempted
from tax on their salary in Pakistan for a period of two years.
The Government has also sought to stimulate private industry by
making an interest-free loan of Rs. 30 million, and by sponsoring
external loans from the World Bank and other Consortium mem-
bers to the Pakistan Industrial Credit and Investment Corporation
(PICIC), the most important institution in the country financing
the capital needs, especially for foreign exchange, of private large
and medium-sized industrial enterprises. PICIC, which has made a
substantial contribution to the development of Pakistan's industry,
has expanded its operations greatly during the Second Plan
period.' 0 8 The Pakistan Industrial Finance Corporation (PIFCO)
108 PICIC was incoporated in 1957 with initial paid-up capital of Rs. 20 million.
Private Pakistani investors contributed 60 percent of the capital and industrial and
 THE SECOND FIVE YEAR PLAN 125

was established to play a part similar to that of PICIC in the field

of small and medium-scale industry. It also acts as financial agent
for certain loans directly sponsored by Government to large and
medium-scale industry. In 1961, it was reorganized into a new
Industrial Development Bank.
As a result of the Government's new attitude toward private en-
terprise and the measures it is taking to promote private investment,
the outlook for fulfillment of the private industrial program is
promising. The industries which the Plan wishes to encourage in
the private sector, i.e., cotton and jute textiles, light consumer goods
using local materials, cement, etc., are those which Pakistani entre-
preneurs favor. The record of the first two years of the Plan period
has already demonstrated that the Government's policy is producing
results.
The Government and the Plan
Although the shift in the official attitude toward businessmen has
been a significant factor in improving the outlook for the Plan, the
decisive element has been the Government's unfailing conumitment
to the Plan. Stimulated in part by a desire to obtain increased
amounts of aid from foreign donors and lending agencies which
put a high premium on planned development and, in part, by the
example of Indian planning, the present Government has from the
start demonstrated an interest in the problems of planning and im-
plementation of development which is in encouraging contrast to
the past. The Planning Commission's elevation in status began al-
most immediately after the change of Government in October 1958.
It has continued until the Commission has become one of the most
effective organs of Government. When the Second Plan was drafted,
it was adopted by the Economic Council without delay prior to the
start of the planning period. This, again, contrasted strikingly with
-the experience of the First Plan, which was not accepted by the then
financial interests from the United States, the United Kingdom, Canada and Japan
contributed the remaining 40 percent. The Pakistan Government, the World Bank
and several foreign countries have all made loans to the Corporation. PICIC
primarily serves privately owned, large and medium-scale industries with loans
above Rs. 100,000.
126 PLANNING IN PAKISTAN

National Economic Council until two years of the Plan period had
passed.
The President of the Republic has given his full support to the
Plan. When the Plan's Objectives and, later, the Plan Outline were
published, he made strongly worded appeals commending the docu-
ments to officials and the people for study and comment. Again, a
few hours after the Plan was approved by the Economic Council,
he made a nation wide broadcast exhorting his countrymen to make
a "most determined effort" and the sacrifices needed to carry out
the Plan. These steps were then followed up with concrete measures
to insure the Plan's execution.
The Economic Council made it clear when it approved the Plan
that ministries, departments and agencies were expected to adhere
to it. The Council decision provided that no major change could be
made in the Plan without the approval of the Economic Committee
of the Cabinet and, in. fundamental matters, without the Council's
approval. In order to bring home to everyone the importance which
the Council gave to the Plan, its decision was reproduced on a
separate page at the beginning of the Plan document."'
During the First Plan period, civil servants had often found it
impossible to get political leaders to make fundamental decisions.
The evasion of decisions and the lack of vigorous action, as well as
weak and sporadic political control, bred indifference, skepticism,
and inefficiency in the civil service. Many civil servants were un-
committed to the country's development and their lack of interest
in the objectives of the First Plan had its effects on results.
Under the firmer direction of a stable Government, a spirit more
appropriate to development needs is beginning to take hold within
the civil service. With clear-cut policies and a judicious use of the
"carrot and the stick," the political leadership is providing the civil
service with both direction and incentives for improving develop-

109 Planning Commission. The Second Five Year Plan. Frontispiece. The full
statement is as follows: "On 21 June 1960, the Economic Council of the Govern-
ment of Pakistan accorded its general approval to the objectives, principles, and
programmes of development contained in the Second Five Year Plan. The Council
further decided that no major departure from the Plan should be made without
the approval of the Economic Committee of the Cabinet and, in matters of funda-
mental importance, without the approval of the Economic Council."
 THE SECOND FIVE YEAR PLAN 127

ment administration. Everyone knows that the President has made

the Plan his own. This commitment on the part of the country's
leader tends to be contagious. Formerly intractable problems are
somehow beginning to be resolved because the will to do so is
present.
The Government's interest in economic development has made it
possible to make a start toward reorganizing and rationalizing ad-
ministration and toward adjusting to changing conditions. It pro-
vides private businessmen with the assurance they require to in-
crease investment and makes it possible to obtain foreign financial
and technical assistance. Thus, while the prospects for the First
Plan were bad from the start, prospects for the Second Five Year
Plan are better. This much is apparent from the Plan's achieve-
ments thus far.

RESULTS AFTER TWO YEARS

At the end of the first two years of the Second Plan period, the
national income had risen by 11 percent and per capita income by
almost 7 percent.110 If incomes continue to increase at the same
rates, the five-year targets, which call for increases of 24 percent in
national income and 12 percent in per capita income, will be ex-
ceeded. Despite bottlenecks caused by scarcities of skilled person-
nel, especially foremen and experienced maintenance men, large-
scale industrial production increased by about 23 percent. On the
basis of the expected rate of growth during the next three years,
there should be little difficulty in achieving the planned increase of
60 percent in 1964/65, the last year of the Plan period. Indeed, for
some manufactures, e.g., vegetable ghee and ammonium sulphate,
the five-year targets have already been exceeded; for others, e.g.,
paper, paper board and cigarettes, output was well above the targets
110 The data in this section come largely from the Planning Commission's Mid-
Plan Review of Progress in 1960/61-1961/62 under the Second Five Year Plan.
A less optimistic, but still favorable evaluation of the results obtained may be
found in Power, John H., "Two Years of Pakistan's Second Plan," The Pakistan
Development Review (Karachi), Vol. III, Spring 1963, No. 1.
128 PLANNING IN PAKISTAN

for the first two years."1 ' The high rate of industrial progress has
been officially attributed in large measure to Government incentives
to investors, policies which permit private enterprise to operate
under market conditions freed from many restraints, increased im-
ports of essential materials and fuller utilization of existing
capacity."'
Progress has also been satisfactory in mining, transport and com-
munications. Some power and water projects started before the
Second Plan period were completed in the first two years of the
Second Plan period. As a result, installed power generating ca-
pacity increased by 30 percent in the first two years of the Second
Plan. The volume of electricity generated was 54 percent greater.
In East Pakistan, 1.4 million acres were safeguarded against sea
water and floods and in West Pakistan, 255,000 acres were brought
under cultivation. An area of 465,000 acres in both Provinces was
provided with irrigation facilities.
Of even greater significance than the growth in other sectors was
the 13 percent increase in agricultural production. The improve-
ment was particularly great in foodgrains, the output of which rose
by 20 percent. This increase was close to the target of 21 percent
set for the five years of the Plan period. Agricultural production
suffered a setback in 1962/63 because of drought in West Pakistan
and floods in East Pakistan, but output was still higher than in
1960/61. While the growth of agricultural output in the first two
years of the Plan period was mostly due to favorable weather, past
investments in flood control, drainage and irrigation, as well as im-
proved extension services, also contributed to the results.
Government investment during the two years was equal to over
90 percent of budgetary provisions, and private investment was
somewhat higher. Investments in water and power development,
transport and communications and social services proceeded at a

11I The threat of mal-investment and over-investment, which was especially

serious in the First Plan period, remains. Thus, in 1962, installed capacity in the
vegetable ghee industry was already five times the target fixed for 1964/65.
112 Speech delivered by S. A. Hasnie, Governor, State Bank of Pakistan, at the
14th Annual General Meeting, Ist September, 1962, Lahore, Pakistan, as reported
in IMF International Financial News Survey, Vol. 14, no. 40, October 12, 1962,
p. 1.
 THE SECOND FIVE YEAR PLAN 129

generally satisfactory pace. However, development outlays for agri-

culture amounted to only one-fifth of the amount allocated for that
sector. Progress in investment has been slowed by the absence of
effective machinery for promoting agricultural development. To
some extent shortfalls in public development expenditures were
offset by an increase in agricultural bank credit. Despite lower
than expected outlays, public expenditures for agricultural develop-
ment have been about three times greater than similar expenditures
at the outset of the First Five Year Plan.
Public outlays for mining and manufacturing also lagged behind
Plan investment targets, due to lower than expected expenditures on
oil and gas exploration. The lag in public industrial investment is
considered temporary, the main delay appearing to be due to the
bifurcation of the Pakistan Industrial Development Corporation
into provincial development agencies. Lower outlays than expected
were also made in education and welfare services.
Pakistan still faces many vexing questions. Foremost is the prob-
lem of a rapid rate of population growth, especially in East Paki-
stan. Despite favorable agricultural yields in the first two years of
the Plan period, underemployment and low productivity still handi-
cap agricultural output. The level of domestic savings also remains
below desirable levels.
On the whole, however, at the end of two years, Pakistan can
claim encouraging results from the implementation of the Second
Five Year Plan. The main shortcomings have been caused by in-
adequacies of technical skills and inadequate organization. Since
strenuous efforts are being made to train more technicians and to
rationalize organization and administration there is hope that these
difficulties can be mitigated in the remaining three years of the Plan
period.
VI.

The Third Five Year Plan

THE GESTATION of Pakistan's Third Five Year Plan has begun and
the broad outlines of the Planning Commission's initial thinking
were presented to the National Economic Council on May 25,
1963. In his annual budget speech for 1963/64, the Minister of
Finance stated:
The targets will be much more ambitious than those of the Second
Plan, as they ought to be. There should be substantial progress
toward closing the gap in income between the two wings and in reduc-
ing our dependence on foreign aid. Industrial development, particu-
larly of heavy industries and those oriented to exports, will be stressed.
According to press accounts,"1 3 the Third Plan, to be imple-
mented during 1965/70, will provide for total expenditures of
Rs. 43.5 billion (US $9,135 million). Gross investment in the
public sector is estimated at Rs. 32 billion, and after allowing for a
shortfall of 10 percent, to Rs. 28.5 billion. Outlays in the private
sector will amount to Rs. 15 billion. Of gross public expenditures,
Rs. 3.5 billion will be for the Central Government's development
program, Rs. 15 billion for East Pakistan's and Rs. 13.5 billion for
West Pakistan's.
Among the targets listed for the Third Plan are (1) an increase
in national income of 30 percent compared with a target of 24 per-
cent in the Second Plan, (2) a reduction in the foreign exchange
component of the Third Plan to 40 percent of total outlays from
about 48 percent in the Second Plan, (3) an increase in the rate of
domestic savings from a level of about 8 percent of gross national
11 Dawn, Karachi, Pakistan, May 25, 1963.

130
 THE THIRD FIVE YEAR PLAN 131

product to about 14 percent by the end of the Third Plan, (4) an

increase of investment from about 13 percent of gross national
product to over 20 percent, and (5) a reduction of 25 percent by
1970 in the regional disparity in per capita incomes.
At the same meeting of the National Economic Council which
approved the outlines of the Third Plan, the Planning Commission
also presented a Twenty-Year Perspective Plan for 1965/85. Dur-
ing the Perspective Plan Period, per capita income is to treble from
the 1962 level of Rs. 335 and the country is expected to reach full
employment.
VII.

Evaluation and Conclusions

THE RESULTS of economic planning in Pakistan have been described
as "brilliant, uneven and inadequate.""' 4 Impressive gains have
been made in power generation, construction of housing and gov-
ernment buildings, and port development. But progress has been
more spotty in irrigation, land reclamation, and in the development
of roads, inland waterways and small-scale industry. Finally, the
results of planning have been inadequate in agriculture, which has
lagged badly. Despite some recent improvement, this sector remains
the weak point in Pakistan's economic development. Moreover,
while the foundations of an industrial complex have been laid,
"revealing a degree of managerial and entrepreneurial ability which
was wholly unsuspected,"'1 5 planning can claim little credit for this
development.
Several uncontrollable factors, like unfavorable weather and the
deterioration in the terms of trade, have hampered economic
growth, but political instability and the consequent absence of
sustained governmental support for economic development were the
prime impediments to progress. The lack of strong Government
commitment to economic development as well as a lack of official
awareness of what needed to be done during most of the First Plan
period, made it impossible to deal effectively with administrative
and organizational deficiencies or to counteract the acute shortage
of managers, technicians and skilled workers at all levels and in all
sectors by making efficient use of the available supply, supplement-

114 "Planning in Pakistan," Planning (London), Vol. 25, no. 433, 20 April 1959,
p. 106.
115 Planning Commission. The Second Five Year Plan, p. 220.

132
 EVALUATION AND CONCLUSIONS 133

ing it with an adequate number of foreign technicians in the short

run, and training additional Pakistani personnel for the longer run.
Nevertheless, much was accomplished in the aftermath of the
catastrophic circumstances in which Pakistan obtained its independ-
ence. Essential services were re-created and expanded. Trade,
commerce, banking, transport, public services and the government
itself were re-established and developed. Investments made during
the first twelve years of the country's existence transformed a falter-
ing economy into one which is making solid progress.
The Government gives every indication that it is seeking and
applying measures required to reach this goal, although it recognizes
that "the path . . . will be long and hard.""'1 Organizational
machinery and administrative procedures are being refashioned and
reinforced; official obstacles to private initiative are giving way to
investment incentives for both domestic and foreign industrial
entrepreneurs; the climate for planning is being made more favor-
able both at the Center and in the Provinces.
The Planning Commission has become one of the most effective
agencies in Government. Since October 1958, when it was moved
from the jurisdiction of the Minister of Economic Affairs to the
President's Secretariat, its status has greatly improved. Pakistan's
experience clearly indicates the importance of locating the central
planning agency at the highest level of government. It is true that
the central planning body was better off at the beginning under a
Minister of Economic Affairs who was interested in planning than it
was later under a Prime Minister who was not, but only because the
Minister of Economic Affairs was then the most powerful Minister
in the Government. When he left, the effectiveness of the planning
body under the Ministers of Economic Affairs who followed, de-
clined sharply.
Pakistan's experience also demonstrates the importance of polit-
ical stability and the necessity of having the strong support of the
country's political leadership for the planning body. Without that
support, the planning body was ineffectual even though the Prime
Minister headed it; with that support, the Planning Commission has
116 Ibid., p. 3.
134 PLANNING IN PAKISTAN

made good progress in performing its functions. After many fail-

ures, it has now succeeded in acquiring two prerogatives essential
to effective planning: the right to prepare annual development plans
which form the basis for budgetary allocations and the right to
review and evaluate the implementation of plans.
One of the key lessons revealed by Pakistan's experience is the
importance of relating plans to basic, economic, financial and fiscal
policies. Until recently various Government bodies adopted policies
without any consistent attempt to relate them to the objectives of the
plans prepared by the Central planning agency. Consequently, eco-
nomic policy has often conflicted with plan objectives. Thus, agri-
cultural price policy has hampered the achievement of targets, agri-
cultural programs and controls have often impeded the development
of industry along lines laid down in development plans. Only within
the last two years or so has the Government come to understand the
integrality of planning for the public and private sectors with eco-
nomic and financial policy. As a result, the Commission now
participates in all important Government bodies dealing with eco-
nomic matters. The Deputy Chairman of the Commission, besides
being the Commission's operating head, also is in charge of the
important Economic Affairs Division of the President's Secretariat.
He attends Cabinet meetings and is a member of the National
Economic Council and its Executive Committee. The Secretary of
the Planning Division heads the Central Development Working
Party, is a member of the Foreign Exchange Control Committee,
and acts as Secretary (with the Planning Commission as Secre-
tariat) of the National Economic Council. Through its participa-
tion on these bodies, the Commission now has a powerful voice at
high levels of Government in the formation of economic policy, in
the coordination of economic policy with planning objectives, and
in the implementation of development plans.
The acceptance of planning and of the central planning agency
in Pakistan has been the result of a gradual process characterized by
ups and downs. The planners were not always without influence in
the First Plan period, nor were they always on the ascendancy after
the new Government took over in October 1958. Although progress
was slow in the First Plan period, considerable advances were made
 EVALUATION AND CONCLUSIONS 135

by the planners in introducing rational criteria in Government con-

siderations involving the distribution of resources among alternative
projects and sector programs, the size and composition of plans and
capital budgets. In the preparation of the budget for 1957/58,
before the change in Government, and on other occasions, the cen-
tral planning agency was able to exercise considerable influence.
Thereafter, in 1959, the influence of the Commission declined for a
time because it was believed that the budget deficit was due to the
high level of public investment which the Commission had advo-
cated."17 Since then, the Government has come to a better under-
standing of the contribution which a group of disinterested tech-
nicians in the Planning Commission can make in improving the
quality of public investment decisions.
The current preference of donor countries and international lend-
ing agencies for comprehensive development plans as a basis for
their aid or lending operations to developing countries has also
greatly helped strengthen the Planning Commission's position. The
Government now looks to the Commission to prepare its presenta-
tions for foreign aid consortia and for other aid and loan negotia-
tions. This has greatly enhanced the Commission's standing with
central and provincial operating agencies which need foreign as-
sistance for their projects and programs.
The Planning Commission is now an accepted part of Govern-
ment. Its position is no longer questioned, but it still has serious
organizational problems. Almost a decade after its creation, the
central planning agency is still without an adequate staff. The
Commission's increased powers and responsibilities have imposed a
heavy, probably impossible, burden on a few of its key officials.
Without additional qualified personnel, it is difficult to see how the
Commission can effectively perform all the functions assigned to it.
Pakistan's experience indicates that the creation of workable plan-
ning machinery is likely to take a long time. It also raises questions
about the best use of foreign technical assistance in establishing
such machinery.
117 The Commission contended that the deficit was the result, not of over-
spending on development, but of bad harvests, high public expenditures on current
account and delays in the transmission of U.S. P.L.480 aid.
136 PLANNING IN PAKISTAN

Since 1954, Pakistan has received the continuous services of a

group of advisers provided by Harvard University with the aid of a
Ford Foundation grant. Few countries have received high caliber
foreign planning assistance on as large a scale as Pakistan. By
working closely with Pakistani counterparts, the advisers were fre-
quently able to impart by precept, example and discussion, knowl-
edge which often improved the competence of staff members in the
Central planning body. But the advisers in Pakistan confronted a
dilemma which arises in other countries as well. Faced with a
choice between producing acceptable five-year and annual develop-
ment plans in reasonably short periods and concentrating on train-
ing over a longer period a local staff which could eventually prepare
its own plans, the foreign advisers found it impossible to resist
Government pressure to produce plans and postpone training activ-
ities. As conscious as anyone of the desirability of in-service train-
ing, and even more concerned with the need for training the plan-
ning staff than the Government itself, the advisers were nonetheless
unable to operate and conduct an in-service training program
simultaneously.
Although the staff of the central planning agency has been
strengthened recently, it has proved impossible in almost a decade
to equip it with a qualified Pakistani staff. Although inadequate
personnel policies are partly responsible, it is probable that the
quality of the staff could have been improved if the advisers had
from the start concentrated on training activities. It is likely,
moreover, that in the case of Pakistan, with its two widely separated
and distinctive Provinces, it would have been best to decentralize
the planning function, as was eventually done in 1962, and station
more foreign advisers in the Provinces. It is also clear that if a
coordinated program of technical assistance had been provided to
establish programing units in executing agencies and to improve
budgetary procedures of the Ministry of Finance, even if this had
involved some reduction in the refinements employed in the prepara-
tion of the First and Second Five Year Plans, the ultimate results
would have been better. Finally, it can be said that the establish-
ment of such a correlated program of technical assistance for imple-
menting the Plan might have been easier to realize if the Planning
 EVALUATION AND CONCLUSIONS 137

Office had from the beginning been given the function of coordi-
nating all governmental foreign aid and technical assistance require-
ments.
Pakistan has inherited a strong tradition of political and eco-
nomic centralization, which has been reinforced since independence
by the channeling of domestic funds and large amounts of foreign
aid and foreign exchange resources through the Central Govern-
ment to East and West Pakistan. Central control over domestic and
foreign funds, as well as financial policy, greatly limits the Prov-
inces' freedom of action in development activities. The preparation
and execution of the First Plan reflected the inherent centralism in
Pakistan's administration. The Planning Commission's attempts to
get Provincial planning agencies to contribute to the formulation of
the Second Plan were only moderately successful and the Second
Plan, like the First, was essentially a product of the Central
Government.
The failure of the Provinces to make significant contributions to
the country's planning activities was directly due to the inadequacies
of the Provincial planning and programing agencies; but these in-
adequacies were in turn the result of the Provinces' failure to recog-
nize the importance to them of effective planning and, in East
Pakistan, the frustration induced by a belief that the Province was
not getting its fair share of development resources. The Constitu-
tion of 1962 gave effect to the growing realization that in Pakistan,
with its separated and diverse Provinces, decentralized planning
was likely to produce better results than centralized planning. As a
consequence of the devolution of developmental functions from the
Central to Provincial Governments following adoption of the new
Constitution, the importance of good planning is becoming more
manifest to the Provinces. The staff and status of the provincial
planning bodies have now reached levels which permit them to
participate actively, if not always effectually, in both the formula-
tion and execution of development plans and programs.
In the evolution of its planning machinery, both at the Center
and in the Provinces, Pakistan has furnished many valuable lessons
in addition to those already mentioned. Pakistan's experience points
up the unsurmountable obstacles which face a temporary planning
138 PLANNING IN PAKISTAN

agency, or one (in East Pakistan) established outside the govern-

mental line of command. It reveals the deficiencies of a commission
type planning agency with full-time political members when the
members attempt to act independently, the undesirability of com-
bining planning with expediting and operational functions, the
necessity for combining progress reporting and evaluation of plan
results with the planning function, and the tendency for imple-
mentation, because of administrative, organizational or personnel
limitations, to lag seriously behind the plan targets.
A serious shortcoming of planning in Pakistan thus far has been
the limited extent of public knowledge and support of development
plans. Attempts are being made to break through administrative
barriers to bring a general understanding of the Plan to the people
and to encourage them to articulate their needs and aspirations
through a hierarchial system of elected and appointed local and
other councils constituting the institutions of Basic Democracies.
The public works program initiated in East Pakistan in 1962 and
in West Pakistan in 1963, was an important step toward making
development meaningful to the people. If, so far, these attempts to
"plan from below" have not yet borne great fruit, at least a start has
been made toward drawing the mass of the people into the national
effort for planned economic development.
Pakistan's planning history to date has been characterized by a
movement away from a project-by-project approach limited to the
public sector toward more comprehensive and aggregative planning
encompassing the entire economy. Three distinct periods are dis-
cernible in that history: the period between independence in 1947
and 1955, when the Six Year Development Programme was termi-
nated; the period of the First Five Year Plan, 1955/60; and the
present period of the Second Five Year Plan beginning in 1960.
In the first stage, the re-establishment of government machinery,
communications, trade and commerce and the resettlement of mil-
lions of refugees constituted urgent priorities for the new state.
There was no attempt to plan on a broad scale and available re-
sources were distributed among projects whose high priority
appeared obvious to the new Government. Even the Six Year De-
velopment Programme of 1951, prepared for the purposes of the
 EVALUATION AND CONCLUSIONS 139

Colombo Plan, as well as the Two Year Priority Programme which

followed it, were little more than a package of uncoordinated public
investment projects collected on an ad hoc basis without reference
to available resources and the economy's requirements.
The First Five Year Plan was a much more sophisticated ap-
proach to planning. The Plan necessarily included many projects
carried over from the previous period. The paucity of statistical and
other data greatly limited the value of the calculations which were
used to allocate resources. Nevertheless, in establishing an in-
ternally consistent theoretical framework on the basis of which an
attempt was made whenever possible to allocate resources rationally,
a great step forward was taken. The First Plan also brought into
focus the problems which the country would have to resolve in
order to develop. Although it was never adopted by the various
Governments of the period and it failed to achieve its main objec-
tives, the Plan became a guide for future action. Its greatest virtue
was that it increased the country's awareness of the need for plan-
ning by giving form and direction to formerly inchoate and dis-
persed efforts to develop the country's resources.
The Second Five Year Plan lacks the pioneering character of the
First. It merely extends the course of development along lines laid
out in the First Plan. Like the First Plan, it includes many projects
started in the preceding period and, technically, it suffers from the
same lack of dependable data which made the First Plan defective.
There is, however, a crucial difference between the First and Second
Plan periods. The essential and novel fact which distinguishes the
present stage from the previous one is the attitude of the Govern-
ment toward economic development. During the period of the First
Plan, no Government made the execution of the Plan a central ob-
jective of policy. In marked contrast, the present political leaders
are firmly committed to the principle of economic development and
to the Second Plan as the means for giving effect to that principle.
As a result, the outlook for fulfilling the Second Plan is brighter
than it ever was for the First. The Central Development Working
Party is proving an effective medium for improving the preparation
and review of projects. Central and Provincial Government reforms
are reducing administrative and organizational weaknesses. There
140 PLANNING IN PAKISTAN

is evidence of a gradual transition from civil service attitudes formed

in the imperial administration, with its heavy emphasis on the main-
tenance of law and order and the collection of taxes, to the more
dynamic outlook required in an era when development is a para-
mount objective. The need for upgrading the status, pay and pro-
motional opportunities of technicians in Government is gaining
official acceptance and some improvements have already been made.
Technical and administrative training is being accelerated and,
meanwhile, many foreign engineers and other technicians are being
engaged to prepare pre-investment surveys, projects and programs
required to achieve Second Plan targets and lay a sound basis for
the Third Five Year Plan. Although the existing official structure
still gives preferred treatment to the generalist, there is wider recog-
nition in Government that lower ranking of experienced technicians
in relation to generalists seriously impairs efficiency and morale in
development activities.
The Government's attitude toward private industry has been in-
creasingly sympathetic. The removal of irritating controls which
formerly inhibited business activity, as well as more vigorous use of
incentives and aids to private enterprise, give promise of stimulating
domestic and foreign investment. Apart from its beneficial effects
on the private sector, the reduction of direct controls on the econ-
omy should also free many officials engaged in supervising controls
for more productive work.
Achievements in the first two years of the Plan period have been
encouraging. Despite lagging investment in some sectors, especially
in agriculture, production targets are generally being fulfilled, and
in some cases, exceeded. These results are to some extent due to
measures taken in the period of the First Plan. The Second Plan
period is undoubtedly benefiting from commitments for foreign aid,
administrative reforms and important investments in social over-
head facilities made before the start of the Second Plan. Skills ac-
quired by the civil service, and managerial and entrepreneurial skills
developed during the First Plan period are being put to work in the
Second. Thus, many conditions which now favor development are
attributable to actions taken during the First Plan period.
Nevertheless, it is the political leadership's strong support for
 EVALUATION AND CONCLUSIONS 141

economic development which must be given the greatest credit for

the improved outlook and for the results obtained in the last few
years. During the First Plan period, gross national product in-
creased annually by less than 3 percent and per capita output by
about 0.5 percent; from 1959, gross national product has increased
each year by 5 or 6 percent and per capita output by about 3 per-
cent. In the absence of political support, it is doubtful if proper
advantage could be taken of the possibilities which now present
themselves. As a consequence of strong political leadership, there
is a new alertness both among the civil service and private entre-
preneurs to the need for breaking bottlenecks in the public and pri-
vate sectors. Within the Government there is a realization of the
need for better preparation and execution of projects and of the
desirability of tying the Five Year Plan to the budget by means of
the annual development program. Pakistan still has a way to go
before it develops adequate programing and implementation ma-
chinery. However, no amount of improvement in these fields will
yield significant results unless the planners can obtain governmental
and private support for the innovations in development policy re-
quired to deal effectively with such problems as Pakistan's alarm-
ingly accelerating population growth, stagnation, underemployment
and low productivity in agriculture and the low level of domestic
savings. But progress is being made and many problems which
formerly appeared insoluble are being resolved. The achievement
of developmental goals in Pakistan is far from certain, but the pros-
pects for success are better than ever before.
Appendix
PAKISTAN'S CENTRAL PLANNING AGENCIES
IN ORDER OF ESTABLISHMENT

No. Period Agency Purpose

Early 1 1948-50 Development The first planning body.
Planning Board
'Period 2 1948-58 Ministry of Coordinated planning
Economic activities and acted as
Affairs planning secretariat to
various planning bodies.
3 1948-50 Planning Advisory and public re-
Advisory lations body during
Board Pakistan's early plan-
ning period.
4 1951-57 Planning Reviewed projects be-
Commission fore submission to
higher authority.
5 1951-56 Economic Aneconomiccommittee
Council of the Cabinet respon-
sible for implementing
the Six Year Develop-
ment Programme.
First 6 1953-58 Planning Established to prepare
Plan Board the First Five Year
Period Plan.
142
 APPENDIX 143

No. Period Agency Purpose

7 1956-58 Economic The name given to the
Committee of Economic Council (No.
the Cabinet 5) when the National
Economic Council (No.
8) was established.
8 1956-58 National Created after adoption
Economic of Constitution of 1956
Council as the highest economic
body in Pakistan. Ap-
proved the First Plan.
9 1957- Development The Central body which
Working Party reviews projects and
programs.
10 1958- Governors' Highest policy making
Conference body in the country.
11 1958-59 National The name given to the
Planning Planning Board to dis-
Board tinguish it from the
East Pakistan Planning
Board established in
1957.
Second 12 1958- Planning Replaced the National
Plan Commission Planning Board (No.
Period 1 1).
13 1959-62 Economic Successor to a develop-
Committee of ment committee previ-
the Cabinet ously established by the
Martial Law Govern-
ment.
14 1959-62 Economic Established by the Mar-
Council tial Law Government as
the country's supreme
economic body.
144 APPENDIX

No. Period Agency Purpose

15 1959-61 Projects Progressing agency.
Division
16 1961- Planning The alternate name for
Division the Planning Commis-
sion (No. 12) after it
was made a part of the
President's Secretariat.
"Commission" and "Di-
vision" are now used
interchangeably.
17 1962 Economic One of two Committees
Policy which succeeded the
Coordination 1959-62 Economic
Committee Committee of the Cabi-
net (No. 13). Reviewed
economic policies and
oversaw their imple-
mentation. Abolished
soon after it was cre-
ated.
18 1962- Executive The second of the two
Committee of Committees which suc-
the National ceeded the 1959-62
Economic Economic Committee
Council of the Cabinet (No. 13).
Approves projects.
19 1962- National The successor of the
Economic 1959-62 Economic
Council Council (No. 14).
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PLANNING IN PAKISTAN
Organization and Implementation

Albert Waterston, assisted by

C. J. Martin and Fritz A. Steuber

designer: Edward D. King

typesetter: Monotype Composition Co.
typefaces: Linotype Times Roman
printer: Universal Lithographers, Inc.
paper: Perkins and Squier R