Economy in ZAB era

Most of the literature generated so far discussing the state of the economy during Prime Minister Zulfikhar Ali Bhutto's rule (1972-77) were authored either by economists with socialist orientation or by the champions of free market economy. The set of literature authored by the former group does not fault Bhutto's economic policies and claims that these policies had actually put the country on the road to prosperity with equity. As opposed to this claim, the literature produced by the latter group not only drills umpteen holes in ZAB's economic policies, it actually blames these very policies for the never-ending economic crises that the country has been undergoing since the decade of 1970s. And for obvious reasons all through the last 40 years it is this second set of literature on the subject that has been taken to be more authoritative and authentic than the first one.
It was in the backdrop of the above that one found rather highly provocative the chapter on economy in a book (Bhutto: The Psychodynamics of his Rise and Fall) published this month. The book's fresh narrative on the subject demolishes, using published official data, the conventional view of the economy during the Bhutto era.
The author, Shamim Ahmad, former chairman, Central Bureau of Revenue (CBR), a civil servant with an unblemished service record and a person with no apparent political axe to grind comes up with a seemingly politically objective assessment of the economy during the Bhutto period and in the process ends up substantiating the thesis of the socialist-oriented narrative on the subject.
Shamimh as a Master's degree in Psychology from Karachi University, a Master's degree in Defence and Strategic Studies from Quaid-i-Azam University and he has also done a number of courses in Public Finance from Syracuse University, the US. He also has abiding interest in literature. His earlier book titled Torment and Creativity is a psychoanalytical study of literature and literati.
Conceding in the very first sentence of the relevant chapter of the book that economy under Bhutto is usually viewed adversely the author hastens immediately to refer to three factors that in his opinion formed the basis for this view: 1. The big business, which was antagonistic to Bhutto even before he came to power, became more so after he acquired power and embarked on nationalization spree; 2. The negative propaganda of the Zia regime and; 3. The expectations of the masses were raised to such an extent that any achievement in the realm of possibility could not satisfy them.
He follows up with a brief account of conditions prevailing when Bhutto assumed power in the residual Pakistan in the wake of the break-up of the country. It was East Pakistan, the seceding wing of Pakistan that was earning most of the foreign exchange; the eastern wing was also a captive market of West Pakistan; OPEC increased the price of crude oil by a hefty margin; a world-wide recession followed that badly affected the already war-torn economy of Pakistan; massive floods of 1974 and 1976 had severely disrupted the country socio-economically. Amongst the natural calamities was also the earthquake of 1973.
The author records that despite adverse circumstances listed above, one important indicator of economic performance viz. GDP in percentage terms grew substantially (4.8%) in the Bhutto years compared to its growth before and after his advent. Doing a comparative study of the performance during the 11 decades (1950s-2000s), he records, quoting official government statistics, that the GDP growth during the six years that Bhutto ruled was higher in six cases and lower in five. It was as low as 2.2% in 2000-01, when Musharraf ruled with an iron hand.
"It was not fortuitous that high growth rate was recorded during the times when dictators were in power (1960s, 1980s and 2002-03). Not only the US authorities had soft corner for dictators in Pakistan, but they also extended humongous largesse to them for helping America in its indefensible and self-seeking agendas for fighting its war against USSR in the 1980s and our unequivocal acceptance of its dictates after 9/11."
The author claims that while the large nationalized units taken over by Bhutto were the most inefficient in the industrial sector, still "this sector experienced a reasonable growth rate."
He uses official government statistics to substantiate the assessment of Bhutto era's economy by Akber S. Zaidi, an economist of international repute, and Dr. Mubashir Hassan, ZAB's Finance Minister.
Zaidi observes "Bhutto's government also laid the foundations for future growth and development which his successor benefited from. Basic industries were set up and a base for capital goods industry was established which resulted in subsequent growth. The Middle East boom which Bhutto initiated, yet another irony in Pakistan's history, helped keep Zia in power for some years. The illiberal economic policies of Zulfikhar Ali Bhutto were responsible for growth not only in his tenure but also for the period after 1977."
Zaidi has also noted that the massive 120% devaluation of Pak Rupee in May 1972 "brought about significant dividends regarding export growth - in one year (1972-73) despite the loss of East Pakistan's exportable produce, West Pakistan doubled its foreign exchange earnings."
Dr. Mubashir Hasan claims that against the rise of the price of wheat of 4.50 rupees per maund over a period of thirteen years by the military rulers, "the PPP government raised the price by 20 rupees in a five-year period. The prices of rice and sugarcane were similarly raised. The price of cotton rose dramatically on account of government policy and also due to rise of cotton price in the international market. Besides raising prices, Bhutto took several other measures to increase the production of wheat and other essential commodities. More than 400,000 new tube-wells were installed, the amount of agricultural credit was raised fourteen fold, and the use of chemical fertilisers was nearly doubled during the five year period of PPP government... . The yield per acre rose from 12.9 maunds in 1970-71 to 15.4 maunds per acre 1976-77 and total production of wheat increased from 6.7 million tons in 1971-72to 9.1 million tons in 1976-77."
During the Q&A session following the launch of the book on Thursday, the 24th January, 2019 a short and sharp debate ensued on whether or not Bhutto's proposed imposition of agricultural income tax at the federal level from the following fiscal year had played any role in his ouster. A section of the audience thought it was the last straw on the camel's back as the apprehensive landed aristocracy joined hands with the disgruntled big business and financed massive street agitations against ZAB which created the political space for the military dictator to step in and take over. And the very first act of the military junta after take-over was to do away with the proposed measure!