Pakistangot its independence from the British occupation on 14thAugust 1947.
Since emergence of the state on the politicalbackground of the world, economically, it has experienced a bumpy ride alltogether. Pakistani economy grew at a fairly impressive rate of 6 percentper year through the first four decades of the nation’sexistence. A feat achieved by a very few nations.
In spite of rapid population growth during this period, per capita incomes doubled,inflation remained low and poverty declined from46% down to 18% by late 1980s. This healthy economic performance was maintainedthrough several wars and successive civilian and military governments in 1950s, 60s,70s and 80s until the decade of 1990s, now appropriately remembered as the lost decade. VariousEast Asian countries that were behind Pakistan in the 1960s have surged farahead in most economic and social indicators. Pakistan has thus beenunable to realize its potential.
South Korea is a primeexample of this case. In 1960’s both countieswere almost at the same economic stage but owing to the inability to implement the economic plansappropriately, the gap between the two states widened with the passage oftime in South Korea’s favor. Despitesharing a common historical, cultural and social milieu, Pakistan and Indiahave pursued different paths since independence in 1947.Both countries have done reasonably well in improving their economies and reducing absolute povertylevels.
India has, however, emerged as a stable and vibrant democracywhile Pakistan has spent half of its post-independence years under military dictatorships. Pakistan’seconomic and political history can be divided into six distinctperiods: Period I: The Flat Fifties, 1947 to 1958: At the time of partition, the physicalseparation between eastern and western Pakistan, with Indian territory inbetween, put Pakistan at a serious disadvantage. This era marked the governmentof Liaquat Ali Khan and initiation of First Fiver Yearly Plan. The planwas based on the theory of Cost of Production value, and also covered the areasof economic system. State Bank of Pakistan was established to kick startthe economic engine of the nation and major economic infrastructuralexpansions took place in the process.
Currency war between Pakistan and Indiawas also a highlight of this era which started with the refusal ofexchange in PKR by Indian authorities in 1949. In the mid 1950, theserelations were restored and trade resumed between the two nations. This eraalso marked the start of the Korean War which led to economic bloomof the local economy but the growth was reduced by the assassination ofLiaqat Ali Khan in October 1951.
In 1953 the plan collapsed due to need offunds. Also the shortage of consumer goods like food, clothes, medicinesand sharp fall in production due the monsoon floods of 1951-52 and 1952-53 werethe reasons to slow down the progress of the nation. Thus, in the end, Prime Minister Khawaja Nazimuddinwas forced to end the program after sending his request to provideeconomic assistance from the United States and other friendly countries. In1955, Prime minister Muhammad Ali Bogra again revived the plan and published in1956.
The program was again launched with priority on agriculturaldevelopment, and focused on rapidly increasing the developmental effort inEast-Pakistan and in the less-developed areas of West Pakistan. Prime ministerHuseyn Suhrawardy of Awami League gave much priority to food development, agricultureand social development in both states. The concept of Collective farmingwas introduced by Suhrawardy as part of his agricultural policiesand around 27 M rupees were spent in order to improve the agricultureof the country.
However, this plan was notimplemented because of its enormous size that lacked the physical andpersonnel assistance. The shortage of technical knowledge also devastated