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Ten-year development plan

It is the most ambitious plan ever presented by any government in the history of Pakistan.


Sep 17 - 23, 2001

The Finance Minister, Shaukat Aziz, on Thursday in Islamabad unveiled a ten year perspective development plan (2001-11) which provides for an investment of Rs11.287 trillion on development activities during the next 10 years. By any standard it is the most ambitious plan ever presented by any government in the history of Pakistan. The 3 years development programme announced by the present government earlier is included as part of proposed 10 year development outlay.

The plan was announced at a press conference which lasted about 90 minutes providing cover to the authorities from a minute and a detailed scrutiny which is normally done at the floor of the National Assembly. Many apparent ambiguities, therefore, remained unclarified both because of lack of expertise and shortage of time. The Finance Minister who was flanked at the press conference by the Deputy Chairman Planning Commission, Secretary Planning Commission, the Chief Economist and many other senior officials claimed that the plan would help Pakistan achieve a sustainable level of economic growth and on its successful completion Pakistan will emerge as a country with a sound economy.

The targets given in the three-year and the ten-year plans are not final and subject to change on yearly basis. A review committee will also meet every three months to check the pace of work. Aziz claimed the programme was home-grown and there was more emphasis on raising local funds for the development projects than dependence on foreign assistance.

The total outlay of the perspective development plan a ten-year development strategy is Rs.11.287 trillion including public sector programme of Rs.2.540 trillion. The new plan strikes a balance between private and public sector, human resources development and income generation, social development and increased productivity and between an import based economy to export orientation, the minister added.

He claimed that the plan would be useful to create a sense of direction for the country's next ten years in terms of reducing poverty, improving literacy, and taking care of other social areas like education, health etc. This strategy, he observed would help institutionalize social capital conducive to sustainable development besides improvement in competitiveness by promoting productivity, efficiency and quality.

He said, it comes in the form of a "Rolling Plan" to cater to flexibility needed to meet the emerging needs of the new century. At the same time it sets the course firmly in moving towards a sustained effort to meet a definitive set of basic objectives. The overall theme is that of human development improving Pakistan's ranking from 133 to 90 in UN system, through a comprehensive poverty reduction and growth strategy, he added.

The plan has been formulated within an overall comprehensive policy framework to promote sustainable economic growth the shortest possible time, reduction in poverty in a comprehensive manner from 30 per cent to 15 per cent (food poverty); generation of employment to convert our population into an advantage resulting in a reduction in composite unemployment rate from 10.4 per cent to 6.1 per cent and an increase in economic growth; governance improvements through reforms and devolution of authority to the district governments, stable and improved law and order and a level playing field through institutional reforms and measures aimed at achieving greater effectiveness and transparency of public spending and a competitive private sector.

The major drivers of growth are improvement in water availability and its better use, increased area and improved technology in agriculture as well as other sectors, a knowledge base that uses technical education and Information technology for higher productivity, a thrust in small and medium enterprises and efficiency that cuts across various sectors to achieve a sizeable increase in exports.

The Finance Minister said, economic growth rate achieved in the last year i.e. 2000-01 was 2.6 per cent largely due to the worst drought in the past half century since independence, adding, by the year 2003-04, the growth rate is expected to stabilize at 5 per cent and increase to 6.3 per cent by 2010-11.

This growth is going to be achieved by a smooth improvement in the agriculture sector, which will become less susceptible to vagaries of droughts and floods, of least 3.5 per cent increasing to 4.2 per cent by 2010-11, and stable manufacturing sector growth of 6.9 per cent by 2003-04 increasing to 7.8 per cent by the end of ten years, he added.

The exports are targeted to increase to over $10.73 billion by 2003-04 and to more than $ 16 billion by the end of the decade, adding, forex reserves with State Bank of Pakistan are expected to rise from $ 2.0 billion in 2000-01 to $ 9.9 billion by 2011, and serve as an instrument of confidence.

Investment envisaged in the ten years plan amounts to R8.11,287 billion at current prices, of which public sector investment programme amounts to Rs. 2,540 billion or 22.5 per cent of the total outlay, while the remaining 77.5 per cent will come out of a mature and competitive private sector nurtured within a strong institutional setting in the coming years, he added.

The Finance Minister while talking about priorities said, the balanced strategy is reflected in the overall public sector development programme, adding, allocation of resources reflects the priorities. The human resource development gets 31 per cent of the total resources uniformly distributed over the decade, water and agriculture get 28 per cent of the resources; energy, fuel, minerals and industry get 20 per cent, while the regaining 21 per cent goes to transport and communications.

Within these sectors, importance has been assigned to completion of on-going priority projects, projects for national integration and productivity enhancement, basic social services, poverty alleviation programmes and essential non-wage O&M porgrammes in the social sectors, as part of the closely integrated public sector programme to meet emerging needs, he added.

Since the 1970's water storage capacity has not been increased, he said, adding, on the other hand, the existing capacity has been depleting. The new plan would have great emphasis on building of new water reservoirs, the small water projects are designed to a) provide more land for intensive agriculture on a sustainable basis through an increase in water availability from 134 MAF to 147 MAF; b) create employment opportunities in the transition; and c) raise income levels in the poorest areas of the country by providing one million acres to alleviate poverty and rise the demand for education and other social services.

Improvements of 75,000 water courses will save about 6 MAF of water while storages will provide the other 6 MAF, he added. The 'Roll-over feature of the plan introduces a performance-based and realistic approach to meet the national objectives and allow the economy to utilize its full potentials as it enters the decade, the Finance Minister added.

It is hardly possible to make an indepth assessment of this ambitious plan because enough information was not available in the document released at the Press conference. The projections made in the document are not explained, and the methodology used was not clear. Has the Planning Commission taken a set of assumptions about growth, inflation, revenues and trade figures, and then simply generated figures for the required investment? Or has it set targets which it feels (or has mathematically tested) to be sustainable, then worked out how much investment is available from the public sector (based on revenue and foreign financing projections), and then added a private-sector figure to make up the difference.? Has it first worked out the availability of public and private sector funding, and then generated the likely economic indicators? Or is it just a wish-list. We do not know, because we have not been told.

The Planning Commission has yet to provide the yearly break-ups essential for any proper examination of the figures. For example, we are told that exports will reach the wonderfully precise figure of $10.73 billion in 2003-4 (three years from now), which indicates a growth rate of 5.2 per cent, and will reach 16 billion in 2010-1, an average growth of 5.8 per cent. However, this is an average, and toward the end of the period, export growth would have to be faster if it is to fit in with the GDP growth projection of 5 per cent by 2003-4, and 6.3 per cent in 2010-1 based on corresponding growth figures for agriculture of 3.5 per cent and 4.2 per cent, and for industry of 6.9 per cent and 7.8 per cent. This does not indicate how the growth figures are to change year-by-year, and what will be the size of the GDP by then.

There is also little information forthcoming about funding. There is no apparent discussion of the likely international environment, which has historically played virtually the determining role in Pakistan's access to foreign capital. The sources of the investment, whether the sums mentioned are constant rupees or inflation-adjusted, is not mentioned. How the money is to be allocated in which year is also not given? These details are surely available, unless the Planning Commission has suddenly lost most of its undoubted professionalism, and it is time that they are presented to the public. Until then, this much-vaunted plan will lack credibility.