Five-Year Plans for the National Economy of Pakistan:

The development plans were the series of nationwide centralized economic

plans and targets as part of the economic development initiatives. The plan was
conceived by the Ministry of Finance and were studied and developed by
the Economic Coordination Committee (ECC) based on the theory of Cost-of-
production value, and also covered the areas of Trickle-down system. The first
five-year plans were approved by the prime minister Ali Khan in 1950 for the
period of 1950–55; it was accepted in a view to serve in the rapid and
intensified industrialization, expansion of banking and financial services, with a
major focus on heavy industry.

First Five-Year Plans (1956-1961)

At the time of independence Pakistan was a relatively under-developed country as
production, transportation, trade and consumption yielded a very low standard of
living, with little opportunity for education, or economic advancement in the
country. The partition had a major effect on the country's existing economic
infrastructure that disrupted the wholesale transfers of population, trade and
business, channels of communication, industrial and commercial organization, and
the pressing need to establish new provisional governments. Economic
planning began in 1948 when Prime Minister Liaquat Ali Khan presented the first
Five-Year plans at the parliament of Pakistan on 8 July 1948. As part of this
programme, the State Bank of Pakistan was established to give a kick start to
banking services in the country. The major economic infrastructure was quickly
expanded and the hiring gap was filled as government revenue began to
rise. The currency war with India following the devaluation and Indian refusal to
recognize the Pakistani rupee in 1949 led to a deadlock in India-Pakistan trade.
In the middle of 1950, relations were restored when India and Pakistan resumed
trade, and in February 1951, India formally recognized Pakistan's currency after
entering in a new trade agreement. In 1953, the programme collapsed when
shortages of clothes, medicines and other essential consumer goods arose; there
was also a serious food shortage as a result of monsoon floods after 1951.Prime
Minister Khawaja Nazimuddin was forced to end the programme after requesting
economic assistance from the United States and other friendly countries. In
practice, this plan was not implemented because of its enormous size. The shortage
of technical knowledge also devastated the programme. The Awami League's
government also had shortage of foreign exchange to execute the plan, and was
unable to find outside assistance to fulfill its commitment to the first five-year
plans.
Second Five-Year Plans (1960–1965)
Despite the failure of the first five-year plans, the programmes were revived and
restated by the military government of President Ayub Khan. The second five-year
plans gave highest priority to heavy industrial development, and advancement in
literature and science, and had a single underlying purpose: "to advance the
country as far as possible, within the next five years. Further improvements were
made in railways, communications, and transportation. More attention was given
to private sector industrial development and agricultural industries; the second
five-year plans aimed to increase the national income by 20%. The unemployment
was tackled with the industrialisation of the country, and overall major industrial
development was carried out in West Pakistan while few in East. The Second Five-
Year Plan surpassed its major goals when all sectors showed substantial growth
which also encouraged private entrepreneurs to participate in those activities in
which a great deal of profit could be made, while the government acted in those
sectors of the economy where private business was reluctant to operate. This mix
of private enterprise and social responsibility was hailed as a model that other
developing countries could follow. The second five-year plans oversaw the
development of water and power utilities in East and West Pakistan and had energy
sector built with the help from private-sector. The financial services heavily
depended on the foreign investment and aid from the United States that hit the
economy.

Third Five-Year Plans (1965–1970)

After the 1965 Indo-Pakistani War over Kashmir, the level of foreign assistance
declined and economic constraints were imposed on Pakistan. The third five-year
plan was designed along the lines of its immediate predecessor, produced only
modest growth. The country had become urbanised by 1970 and only 10%
population lived in rural areas as compared to 1950. The third five-year plans
promoted the activities of private sector investment and tend to increase the
directly productive investment for the stable Financial sector development. The
third programme focused on Gross national product (GNP) growth which was
increased at 122% and had focused on the enhancing the capabilities of private
sector to operate in the country. The size of the third programme was determined in
the light of a careful evaluation of the recent experience under the second
programme. Although the third programme successfully ran for the first three years
of the Third Five-Year Plan, but at the end, the third programme proved to be even
more of a disappointment in terms of proclaimed production goals.
Fourth Five-Year Plans (1970–1975)

The fourth five-year plans were abandoned after the fall of Dhaka East-Pakistan.
Virtually, all fourth five-year planning was bypassed by the government of Prime
minister Zulfikar Ali Bhutto. Under Bhutto, only annual plans were prepared, and
they were largely ignored.The fourth five-year plan was replaced with
the nationalisation programme which featured an intense level of government-
ownership management on private entities. Only scientific aspects of fourth five-
year plans were adopted in a view to turn Pakistan into a major "scientific
superpower" in the world.

Fifth Five-Year Plans (1978–1983)

The Zia government accorded more importance to planning. The Fifth Five-Year
Plan (1978–83) was an attempt to stabilise the economy and improve the standard
of living of the poorest segment of the population. Increased defense expenditures
and a flood of refugees to Pakistan after the Soviet invasion of Afghanistan in
December 1979, as well as the sharp increase in international oil prices in 1979–
80, drew resources away from planned investments. Nevertheless, some of the
plan's goals were attained. Many of the controls on industry were liberalised or
abolished, the balance of payments deficit was kept under control, and Pakistan
became self-sufficient in all basic foodstuffs with the exception of edible oils. Yet
the plan failed to stimulate substantial private industrial investment and to raise
significantly the expenditure on rural infrastructure development.

Sixth Five-Year Plan (1983–88)

The sixth five-year plans represented a significant shift toward the private sector. It
was designed to tackle some of the major problems of the economy: low
investment and savings ratios; low agricultural productivity; heavy reliance on
imported energy; and low spending on health and education. The economy grew at
the targeted average of 6.5% during the plan period and would have exceeded the
target had it not been for severe droughts in 1986 and 1987.

Seventh Five-Year Plan (1988–93)

The Seven Year Plan will be introduced by Benazir Government. The seventh
plans provided for total public-sector spending of Rs350 billion. Of this total,
36.5% was designated for energy, 18% for transportation and communications, 9%
for water, 8% for physical infrastructure and housing, 7% for education, 5% for
industry and minerals, 4% for health, and 11% for other sectors. The plan gave
much greater emphasis than before to private investment in all sectors of the
economy. Total planned private investment was Rs292 billion, and the private-to-
public ratio of investment was expected to rise from 42:58 in FY 1988 to 48:52 in
FY 1993. It was also intended that public-sector corporations finance most of their
own investment programmes through profits and borrowing. In August 1991, the
government established a working group on private investment for the Eighth Five-
Year Plan (1993–98).

Eighth Five Year Plan (1993–98)

This group, which included leading industrialists, presidents of chambers of

commerce, and senior civil servants, submitted its report in late 1992. However, in
early 1994, the eighth plan had not yet been announced, mainly because the
successive changes of government in 1993 forced ministers to focus on short-term
issues. Instead, economic policy for FY 1994 was being guided by an annual plan.
From June 2004, the Planning Commission gave a new name to the Five Year Plan
– Medium Term Development Framework (MTDF). Thirty two Working Groups
then produced the MTDF 2005–2010.