Failing to plan is planning to fail, they say. Pakistan, however, hasn't been short of planning and policymaking. Whether such planning has been fraught with errors is another matter altogether. It is the long-term inconsistency in following through agreed upon plans and frequent policy reversals which are usually held responsible for inadequacies in coping with chronic economic problems and dismal human development scene in the country.
In Pakistan, economic & social policymaking and developmental planning has stayed with the Planning Commission. The history of planning & development in Pakistan dates back to the time right after independence when a 'Development Board' was set up by the government in early 1948 to focus towards economic development in the country. The Planning Commission of Pakistan (PC) was established in October 1958, through a reconstitution of the National Planning Board which was formed in 1953.
PC's mandate The Commission derives its authority and responsibilities from the Schedule II of the Rules of Business 1973. Role of the Planning Commission is central to any government's goals of economic development and social welfare. The Commission is required to devise policies in consultation with various government tiers, relevant agencies, and non-governmental stakeholders.
One of the key plans prepared by the Commission every year is the Annual Development Plan (ADP) which assesses development needs and sets sectoral priorities of the country. The Public Sector Development Programme (PSDP) is government's flagship developmental program which undertakes investment in areas including infrastructure, energy, communications, health and education.
Post-devolution, federal PSDP outlays are limited to large-scale projects in infrastructure development, as areas like health and education have become provincial subjects.
The Commission determines national priorities, and apportions resources accordingly. It plays an active role in the approval, monitoring, and evaluation of these projects. The Commission also prepares and examines summaries for the cabinet's Economic Co-ordination Committee (ECC) on economic issues. It also advises the federal and provincial governments if any unusual economic event occurs.
Organisational structure
According to publicly available information, the Commission is chaired by the sitting Prime Minister, and comprises of eleven members which include the Deputy Chairman, Planning Commission; Secretary, Planning and Development division; Chief Economist; Director, Pakistan Institute of Development Economics (PIDE); and members of various sections at the Commission.
Various sections
There are two main sections inside the Commission. The technical section deals with sectors, including health, education, food and agriculture, governance, devolution, population and social planning, science and technology, transport and communications, water resources, women development and manpower.
The economic section is concerned with areas like economic appraisal, employment & research, international trade and finance, macro-economy, fiscal policy, plan co-ordination, poverty alleviation, etc.
These sections are responsible for preparation of long-term (perspective) plans; medium-term (five years) plans; rolling (three years) plans and short-term plans. They are required to examine and appraise development schemes submitted by federal and provincial governments through the Central Development Working Party (CDWP), and also assist the Executive Committee of the National Economic Council (ECNEC) with the approved schemes.
Members of these sections are supposed to be the eyes and ears of the government as far as economic and social policymaking is concerned. Being the chief executive of the economy, the Prime Minister is supposed to consult the various policy and research centers housed at the Commission and run through them proposals submitted by line ministers and divisions before further action.
Economic planning and the Five-year plans
Growth curve of Pakistan's economy resembles a sinusoidal curve - signified by patches of stellar growth and prolonged stagflations. While policy reversals and frequent yet irregular regime changes are often held culpable for such growth pattern, it is also a matter of concern whether the policymakers ever got the fundamentals of the economy right. Sixty four years is a long time to figure out what works and what not.
The various five-year plans prepared by the Commission have had disparate effects on the economic and social landscape of Pakistan. Some were followed through in situ, while some were made inoperative; some took advantage of exogenous factors and some fell to regime changes.
The first five-year plan (1955-60) never quite took off due to political whirlwinds during the mid-fifties. The second five-year plan (1960-65) encouraged private sector investment and Pakistan averaged a handsome GDP growth rate of 7.32 percent during the plan period. Inspired by the plan's success, countries like South Korea adopted it and turned their economies around.
1960s is often regarded as Pakistan's 'golden decade' or 'decade of development'. However, the growth was dependent on foreign aid from countries like the United States whom Pakistan had entered into strategic defence treaties with during that time.
The third five-year plan (1965-70) saw the economy cooling off, with GDP growth averaging 5.47 percent, owing to rising defence expenditures in the aftermath of the 1965 war and declining foreign aid inflows. The fourth five-year plan (1970-75) was abandoned after the independence of East Pakistan and Zulfikar Ali Bhutto's government opted for annual plans which were rarely implemented.
The fifth five-year plan (1978-83) was formulated during the Zia regime. Despite rising defence expenditures, higher oil import bill, influx of Afghan refugees' post-Soviet invasion of Afghanistan in 1979, and hangover of Bhutto's nationalisation schemes; the economy grew by an average of 6.4 percent over the plan term as liberalisation policies helped restore investor confidence to some extent.
The sixth five-year plan (1983-88) re-focused on private sector participation, industrial investment, agricultural productivity, and public investment in social sector. Despite severe droughts in 1986 and 1987, the GDP growth averaged 6.5 percent during the time period.
The seventh five-year plan (1988-93) outlined major investments in energy, transport and communications, water, physical infrastructure, health and education. The economy grew by around 4.8 percent during this period. The eighth five-year plan (1993-98) was formulated with extraordinary participation from business community and senior bureaucracy. However, it could not see light of the day due to successive regime changes.
Thereafter, Pakistan's economic policymaking was reduced to annual plans, without a concrete long-term blueprint, for almost a decade. It was only in 2004 that the Planning Commission reverted back to the long term planning, giving a new name, 'Medium Term Development Framework (MTDF)', to the five-year plans. The MTDF 2005-2010 was the latest medium-term plan adopted by the federal government.
The way forward
Recently, the Planning Commission came up with a unique prescription for the economic ills: the 'New Growth Framework'. The Commission contends that previous five-year plans have been a failure; an aid-driven economy is not sustainable in the longer run; and internal lacunas in governance, markets, urban management need to be looked into. Basically they are saying: Look inwards!
The NGF has already been approved by the National Economic Council (NEC) headed by the Prime Minister, and the Commission is currently busy developing consensus on the framework. Implementation of the reforms outlined in the framework is absolutely critical. However, for a government preoccupied with fiscal stabilisation woes, there seems to be little appetite for such a comprehensive reforms agenda.
Post-devolution scenario
The NEC in the post-18th amendment milieu has allowed Planning Commission the functions of co-ordinating national planning system (including provincial Planning and Development departments), introducing results based management across provinces, and monitoring of national reforms agenda. For planning to be consistent with national standards, provinces would be engaged at fora like the annual plan co-ordination committee, NEC and the ECC.
COURTESY: Economics and Finance Department, Institute of Business Administration, Karachi, prepared this analytical report for Business Recorder.
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