Pakistan’s economy continues to grapple with deep structural challenges, from stagnant productivity and ballooning public debt to inefficient resource allocation that fails to deliver meaningful growth or improved living standards for its citizens.
At the heart of these persistent issues lies an institution that has outlived its usefulness: the Planning Commission, now operating under the Planning Division. Born in the post-independence era of state-led development, it remains frozen in a 1960s mind-set while the global economy has transformed dramatically around it. Reforming or reimagining this body is not merely an administrative tweak; it is essential for unlocking Pakistan’s economic potential in the 21st century.
The origins of central planning in both India and Pakistan trace back to the prevailing intellectual fashions of the 1940s and 1950s. Newly independent nations, influenced by Soviet-style Five-Year Plans and a widespread belief in government orchestration of development, embraced the idea that poverty could be engineered away through centralized control.
India’s Planning Commission, established in 1950, drew from the Bombay Plan and the mathematical models of P.C. Mahalanobis, reflecting Nehru’s vision of state-driven industrialization. Pakistan followed suit, though its version was largely imported through foreign advisers from the Harvard Advisory Group, the World Bank, and other international bodies. This was a cut-and-paste exercise, lacking deep local intellectual roots or ownership.
While many countries that adopted similar models have since abandoned or radically overhauled them, Pakistan has clung to the old machinery. South Korea moved away from rigid planning by the 1980s, Malaysia repurposed its commission into a strategy-focused entity, France dissolved its planning body in 2006, and India replaced its Planning Commission with NITI Aayog in 2014. These shifts recognized that the era of shortages, closed economies, and heavy state control had ended. Yet in Pakistan, the Planning Commission endures, largely unchanged in form even as its substance has eroded.
India’s transition offers a compelling lesson. The old Planning Commission had devolved into what critics called a “permission raj without imagination,” focused on approving projects and guarding bureaucratic turf rather than fostering genuine economic dynamism. NITI Aayog represented a philosophical break: from planning to thinking.
It does not approve individual projects or control budgets. Instead, it develops long-term reform frameworks, maintains performance dashboards for states, supports implementation, promotes competitive federalism, and convenes experts across government and academia. It functions as a coordinating research body, emphasizing ideas and evidence over administrative gatekeeping. This change has helped India adapt to a liberalized economy where markets, incentives, and institutions drive progress.
Pakistan’s experience has been far less successful. Once a hub of intellectual activity, the Planning Commission has been reduced to clerical functions, rubber-stamping thousands of PC-1 forms for projects that flood the Public Sector Development Programme (PSDP). Political interference has compounded the damage.
Under Bhutto, nationalizations bypassed planning mechanisms; under Zia, PSDP allocations became tools for patronage; and in later years, IMF programmes often dictated austerity while prime ministers pushed pet projects. The result is a PSDP bloated with scattered, half-baked schemes lacking coherence, proper evaluation, or asset maintenance. Throw-forwards mount, delays and cost overruns are routine, and there is no comprehensive asset registry. What began as a planning engine has become a paperwork warehouse, with little discernible impact on sustainable economic growth.
This stagnation reflects a deeper intellectual failure. The Haq-HAG model, which was shaped by Mahbub-ul-Haq and the Harvard Advisory Group in the 1960s, suited its time: it emphasized capital accumulation, foreign aid, and large infrastructure pushes through five-year plans and incremental capital-output ratios. But economics has evolved profoundly since then.
Nobel Prize-winning work has shifted focus to markets, incentives, institutional quality, productivity, and governance. Ideas of reform and evidence-based policy have replaced blueprints and big pushes. Pakistan’s planning apparatus, however, never made this transition. It retains the old architecture of state-led investment while losing the intellectual rigour that once animated it.
The consequences are visible across Pakistan’s development landscape. Fragmented budgeting encourages “brick and mortar” projects without robust business plans or considerations of long-term productivity. Political capture influences every stage of the project cycle. Public assets—universities without adequate faculty, stadiums detached from sports ecosystems, convention centers generating no revenue—languish without maintenance or evaluation. Hidden subsidies benefit officials rather than the public.
Bureaucratic control dominates, side-lining technical expertise and research collaboration with universities and think tanks. The development budget incentivizes spending for its own sake, disconnected from outcomes or performance. Most alarmingly, the PSDP has morphed into a political slush fund, littered with failed or excessively costly projects that deliver little economic or social return. These underperforming initiatives drain scarce resources and erode public trust; they should be systematically identified, closed down, and phased out to clear the way for a genuine performance-based system.
A reformed planning function must break from this legacy entirely. Pakistan needs a new ‘Growth Commission’, entirely devoid of politics and staffed exclusively with top-tier experts selected on merit rather than political appointments. This body should serve as a professional, independent institution laser-focused on accelerating sustainable economic growth.
The goal should be a shift to performance-based systems, where resources align with measurable results rather than inputs. Merging the development and recurrent budgets would eliminate the artificial divide that distorts priorities and encourage holistic fiscal management. This Growth Commission could coordinate research across institutions, regularly assess reforms, and report publicly on progress, fostering accountability and evidence-driven decision-making.
Competence must return to the core. Free from political interference, the Commission should focus on managing performance contracts with ministries, conducting rigorous evaluations, and interfacing with the best minds in economics, engineering, and data analysis from both within Pakistan and the global diaspora. An asset registry, potentially managed through a Public Wealth Fund, would track and optimize public sector holdings, treating them as national resources to be stewarded for maximum value rather than political spoils. Regular balance sheet updates and evaluations would bring transparency and discipline to public wealth management.
Such reforms would transform the Planning Division from a bureaucratic graveyard of projects into a living institution dedicated to strategic thinking and progress. It would prioritize productivity enhancements, institutional improvements, and competitive dynamics across provinces, much like NITI Aayog has sought to do. By design, this ‘Growth Commission’ would operate above partisan considerations, ensuring that long-term national interests prevail over short-term electoral gains. Pakistan cannot afford to remain trapped in mid-20th-century structures while competitors advance. The choice is clear: cling to outdated forms that deliver diminishing returns or embrace a modern, agile approach that plans for real outcomes—better governance, higher productivity, and inclusive growth.
The PSDP, long criticized as more political fund than development tool, must evolve accordingly. By shutting down failed and low-return projects and focusing instead on evidence, evaluation, and performance, Pakistan can ensure public investment actually builds lasting assets and capabilities. This requires political will to depoliticize key processes and empower technocrats and researchers. It also demands engagement with academia and civil society to generate fresh ideas tailored to Pakistan’s context.
Pakistan stands at a crossroads. Decades of following the same planning rituals have yielded modest growth punctuated by crises. Reforming the Planning Commission into a truly independent ‘Growth Commission’ offers a pathway to break this cycle. By learning from global experiences, including India’s, and aligning with contemporary economic thought, we can build institutions that serve the future rather than the past. It is time to stop merely planning projects and start planning genuine, sustainable progress for the people of Pakistan. The nation’s youth, entrepreneurs, and aspiring middle class deserve no less. Only through bold institutional renewal can we hope to realize the economic promise that has eluded us for too long.
Copyright Business Recorder, 2026
The writer is former Deputy Chairman of the Planning Commission. X: Nadeemhaque Youtube @Sialytics