Eighth Plan - an Appraisal

By Asad, S. Hasan | Economic Review, July 1994 | Go to article overview

Eighth Plan - an Appraisal


Asad, S. Hasan, Economic Review


Soon after the Second World War, policy makers in the developing countries scrambled for planning as a means to attain rapid economic growth. The reason was the effective fine-year plans of Soviet Union since 1928 at a time when the whole world was in the abyss of the Great Depression. The governments in developing countries such as China, India, Ghana, Egypt, Nepal and Sri Lanka having realised the significance of planned economic growth, formulated five-year plans. Pakistan did not lag behind. In the early 1950's, First Five-Year Plan (1955-60) was prepared by Planning Commission followed by subsequent plans. In this regard, foreign educated economists like Dr. Moeen Qureshi and Dr. Mahbubul Haq were the pioneers.

In Pakistan, plans were more of an academic exercise by foreign trained economists armed with the techniques of econometric models of Harrod, Domar, Rostow and the like which had little application in a country characterised by 70 per cent rural population and illiteracy. Albeit, the planners were successful in obtaining foreign assistance from multilateral agencies like World Bank, IDA, IMF and donor countries particularly the United States. Pakistan was cited as a model of economic development during the 1960's. What happened later testifies that over-fulfilment of certain plan targets had little relevance with the improvement in the quality of life of the populace. The upshot was uneasiness among the people leading to mass scale nationalisation in the early 1970's which resulted in substantial flight of capital overseas. East Pakistan separated. Fourth Plan (1970-75) was abandoned in favour of annual plans. It was in 1978 when Fifth Plan was launched followed by Sixth in 1983 when the new regime came into power.

In a socialist, totalitarian regime, the head of planning agency assigns targets to be achieved by the public officials. In China, it was reported that planning officials were once shot to death because of the failure to accomplish certain targets. In socialist economy, under "planning by direction" called by Arthur Lewis, the whole government machinery is geared towards the achievement of targets set for each sector and sub-sector of the economy. On the other hand, in a free market economy characterised by "planning by inducement", while investment and other economic decisions are taken by individuals or firms in the private sector, the public sector plays the role of a catalyst like building steel mills, highways and railroad. As a result, the success or failure of plan depends on the efforts of the private sector and not upon what is stated in the plan or desired by the public sector.

It is in the above backdrop that the evaluation of Seventh Plan (1988-93) and appraisal of recently announced Eighth Plan (1993-98) should be viewed. The maiden paragraph of Seventh Plan summarises the situation as follows:-

Growth Targets

(% Per Annum)

                            Seventh Plan                Eighth Plan
                          Target     Actual    Shortfall(%)      Target

GDP                        6.5        5.0            23            7.0
Agriculture                4.7        3.7            21            4.9
Manufacturing              8.1        5.9            27            9.9
Construction               8.0        4.6            43             --
Trade and Transport        6.7        4.9            27            6.7
Others                     6.3        5.7            10             --

Sources: Seventh Five-Year Plan, Landmarks of Eight Five-Year Plan, June, 1994
and Economic Survey 1993-94.

"There has been an essential continuity in the process of economic planning since, the inauguration of the First Five-Year Plan in the late 1950's. The continuity has been maintained despite a seven-year interregnum during the 1970's when medium-term planning was abandoned in favour of annual budgeting. Medium-term planning was revived once again with the Fifth Five-Year Plan in 1978. …

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