1. Economic Decision Making

2.  Our aim in this chapter is three fold:
 1-To see different kinds of economic decisions and to analyze
their characteristics and their objectives ,their time frame ,Possible
resources to achieve them.
 2-Identify different forces that influence the decision making
process.
 3-The evolution of planning machinery, its administrative
structure, and its powers.

3.  The decisions which are taken by state authorities are mainly based on
the duration or time period of the problem or choice with which the
problem is concerned.

4. Type of Decision Level Objectives Means available/
Measures taken
1-Very short run Local Administration
Central Government
Provincial Government
-Provision of essential goods
-Ensuring immediate relief
in physical calamities i-e
floods ,rains
-Movement of goods from
surplus areas
Strong action against black
marketing and hoarding
2-Short run Central Government
Provincial Government
Planning commission
-Raising revenues for the
functioning of state
machinery.
-Price stability
-Foreign trade balance
Direct/indirect taxes
Foreign/domestic borrowing
Price Incentives
Controlling money supply
and interest rates
3-Medium term Central Government
Planning commission
-Formulation of 5 year plan
with strategies/ objectives
-Overall goals of sustained
growth in per capita income
and self reliance
Fiscal policy
Monetary policy
Commercial policy
Foreign borrowing
4-Structural changes Central Government Equitable distribution of
economic assets
Restrictions on monopoly
practices
Strengthening the economic
and bargaining conditions
-Land reforms and tenancy
regulation
-Nationalization
-Trade union activity and
minimum wages

5. Sector Classes/Groups Sources of Power
Agricultural sector Large landlords/medium size
farmers/Tenants/landless laborers
Land holdings < 150 acres
Significant portion of rural population
Manufacturing sector -Big industrialists
-Medium industrialists/Small sized
industrialists/Industrial labour
Ownership of industrial assets
Trading sector/services -Big trading firms
-Small trading firms
Numbers/Trade unions
Control trade and influence prices
Foreign sector -Western aid giving countries i-e
USA,UK
-Loan giving agencies i-e IMF, world
bank
Play a major role in financing
development plans and giving balance
of payments support
Other important groups Bureaucracy
Urban groups/ students
Central state power create
disturbances.

6.  The Period of economic coordination (1947-53):-
The first phase dates back to 1947-53 when some attempts were made at
economic co-ordination and planning in the immediate post independence
period. The effort began in 1950 with the Colombo plan when the
development board compiled ,within a period of three months ,a six year
development plan 1951-7,this plan was a plan more in name than in content
and represented merely a loose aggregation of a number of individual
projects in various fields.
During this period, despite a multiplicity of planning committees and other
organizational units ,the planning machinery was hardly equipped to do its
job effectively.

7.  The period of planning board (1953-8) :-
The creation of planning board in 1953 marked the beginning of second
phase of economic planning which lasted till 1958.The planning board
had serious problems of shortage of staff ,absence of statistical data,
uncertain status in the Government, resentment from other strongly
well-established Ministries and Departments i-e Ministry of Finance and
State bank which regarded it as a rival institution. The institutional
liaison between the planning board and other ministries remained fairly
weak and the annual development programmes were never seriously
followed.

8.  The period of powerful planning commission (1958-68):-
The third phase in the evolution of economic planning process begun in 1958
with the assumption of power by the military Government of Ayub khan. The
new regime choose to make Economic development through a market
Economy and reliance on the private sector as its primary objective. The status
of planning commission was raised to a Division in the president’s secretariat.
The President himself assumed the chairmanship of planning commission and
a Deputy chairman was made the operational head of the commission.
 The important developments during 1958-64 were institutionalization of
planning process.
 Provincial planning Departments were organized .planning cells were created
and Decision making committees were organized.

9.  The period of Decline of Planning commission (1968-77):-
The decline of planning commission declined with the fall of Ayub Khan’s
Government. The planning commission had become very closely identified
with Ayub Khan’s Government during 60’s and the rejection of growth strategy
followed was also taken to reflect adversely on the planning commission. The
first major blow to power and authority of planning commission came during
the Government of Yahya khan when serious planning was almost completely
given up by the Government. One reason for this was that the Government
decided to run the economy through annual plans rather than through a
comprehensive five year plan.

10.  Recent Attempts in the revival of Planning commission (1980-
present):-
 More recently, however the Government has taken steps to revive the planning
commissions as an effective and authoritative economic decision making body.
 A deputy chairman of the planning commission has been appointed and given
the authority of formulating plans.
 Similarly the Government has appointed members to the planning commission
to ensure both more technical competence as well as better regional
representation.

11.  Chronology of Planning
Machinery
 Development Board
established in 1948 in
the EAD
 Planning Board set up in
1953. First 5 year plan
prepared for 1955-60
 National Planning
Board established in
1957
 Planning Commission
setup under the
Chairmanship of
President in 1959
 Functions
 Consultation with:
 Federal Ministries / Provincial
Governments
 Donors
 Civil Society
 Formulation of National
Plan
 Annual Plan
 Five Year Plan
 Rolling Plan
 Perspective Plan (15-25
Years)
 Project Management
 Approval of Development
Projects
 Monitoring of Major Projects
 Evaluation of on-going and
completed projects
 Association with EAD in
matters of Foreign Assistance