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- 5. OBJECTIVES
- 8. PeriodIV:The Revivalist Eighties,1977to 1988 (overview) Zia ul-Haq used religion to provide legitimacy to his takeover and subsequent rule, asserting that Islam should be a unifying force for overcoming ethnic, linguistic and other propensities prevailing in the country. Centralization and personal control over the affairs of the state thus became easy to manage under this paradigm. The overthrow of the Bhutto government by a military coup in July 1977 and the ascendancy of a right wing military leader, General Zia ul-Haq, halted the socialist experiment. Political party activity was soon banned, thereby limiting political participation to the local level only.
- 9. Aftertakingchargeofthegovernment,theZia-ul-Haq’s regimeemphasisedontheneedsoffive-year plans. Inearly1980s,theZiagovernmenttookstepstorevivethePlanningCommissionasaneffectiveand authoritativeeconomicdecision-makingbody. Duringthisperiod,twoFive-YearPlanswereformulated,i.e.,FifthandSixth. In1978,theFifthFive-YearPlantocoverthe periodof1978–1983waspublished. ButtheGovernmentfailedtopursuetheplanmainlybecauseofuncertainpoliticalas wellaseconomicconditionsatthattime. TheSixthFive-YearPlanwasformulatedin1983tocovertheperiod1983–1988. At thattime,Dr.Mahbub-ul-HaqwastheFinanceMinister. Heformulatedtheplanandbecauseofhisgreatefforts,thisplanwas asuccess. Duringhistenure,thePlanning Commissionhasplayedavitalroleineffectivelyformulatingandimplementing the economicplanning. NotonlytheSixthFive-YearPlan,butalsotheannualplanswereformulatedbythePlanning Commission. Madrassahs andtrainingcampsformilitantgroupsproliferatedduringthisperiod.Statelawswere modified,newShariahcourtswereestablishedandtheeducationalcurriculumwasrevisedtoinculcatea morehard-lineorradicalIslamicwayoflife.
- 10. BACKGROUND • MartialLawwasimposedbyGeneralZia-ul-Haqin1977. • •ZiatookoverwiththedeclaredpurposeofresolvingtheriftbetweenBhutto’sPeoplesPartyandthe combinedoppositiontoholdfreeandfareelectionswithin90days. • •DuetoBhutto’spublicpopularity,Ziafearedthathecouldreturntopowerthroughfreeelections, thereforetheelectionswerepostponed. • •InsteadgovernmentpublishedanumberofwhitepapersoutliningBhuttoAdministrationsmissdeeds.• BhuttothenchargedwiththemurderofapoliticalopponentwasfoundguiltyinMarch197andhanged on4thApril1975.
- 12. EconomicPerformanceandPolicies: • Economicgrowthaveraged6.6%perannum. • •EconomicgrowthasmeasuredbyGNPsloweddownduringZia’slastfiveyears. • During1977-83,therapidriseinworkerremittanceshadpushedGNPgrowthratetoanannualrecordof 7.6%perannum. • •Asworkerremittancestendedtodeclinesteadilyafter1982-3andinterestpaymentsonexternaldebt gatheredmomentum,theGNPgrowthratefellsharplyto4.9%perannumduring1983-8. • •Inthefirsthalfofthe1980’s,workerremittanceswerealmostasimportantasourceofforeignexchangeas merchandiseexports.•Unfortunately,theworkersremittancesboomdidnottranslateintoasignificantly higherrateofnationalsavingsandinvestments.
- 14. GrowthRates(percentperannum) 1977to1988 Agriculture 4.2 3.5 3.9 Manufacturing 10.2 8.2 9.2 OTHERS 8.6 7.0 7.9 GDP at factor cost 6.7 6.2 6.6 GNP at factor cost 7.6 4.9 6.4 GNP per capita 4.4 1.9 3.3
- 15. WorkerRemittances US $ Million As % of GDP 1987-8 2,013 5.2
- 16. Agricultural Growthand Policies: The agricultural growth increased to 4% in 1977-88 from 2% in 1972-77 Wheat production rose from an annual average of 8.5 mill tons in 1975-7 to nearly 13 mill tons in 1986-8 Cotton production increased from 0.5 mill tons average in 1974-6 to 13 mill tons in 1985-7 The government price policies after 1980 improves agricultural incentives, especially for wheat. • The agricultural growth since the early 1980’s also benefited from strong growth in live stock.
- 20. • IndustrialgrowthunderZiawasimpressiveasManufacturingsectorgrowthover1977-88averagedover 9%ascomparedto3.7%in1972-77.Largescalemanufacturinggrewevenfasterthanthesmallscale • Themainreasonsbehindthisrapidgrowthinindustrywere • 1.LargepublicsectorinvestmentswhichstartedinBhutto’sresultedinmajorincreasesinsteel,cement, fertilizerandvehicleproduction. • 2.Incentivesformanufacturedexportswerestrengthenedbytheintroductionofaflexibleexchangerate policyafter1982,byincreasingthestandardratesofrebateofcustomdutyandsalestaxforexports.The exportsubsidiesrangingfrom7.5%to12.5%wereextendedtoallimportantmanufacturedexports. • 3.Theinvestmentclimatefortheprivatesectorwasimprovedbyprovidingguaranteesagainstfuture nationalization,clearerdemarcationsofactivitiesbetweenthepublicandtheprivatesectorand additionaltaxconcessions
- 22. ExchangeRateand TradePolicy: The industrial zone was established in the late 1970’s to attract foreign investment, speed up flow of modern technology, provide more job opportunities, raise skill and management standards and provide exporters a base for production in an environment free from import duties but the results were however disappointing as exports from the zone were relatively small. TherupeewasdevaluedfromRs.9.90perUSdollartoRs.11.84in1982andthengradually depreciatedtoRs.18perUSdollarbytheend1988. Pakistanin1982begantoregularlyadjustthevalueofthe rupee..
- 23. IndustrialPolicyFramework: While there were significant improvement during the Zia period in the industrial policy framework in terms of emphasis on the role of the private sector, greater import liberalization of industrial raw materials, and relatively strengthening of incentives for manufactured exports, not much was done to signal fundamental change in industrial policies which had hampered the structural change in manufacturing during the 1960’s and 1970’s. By the early 1980s, Easy Asian countries like China, Thailand, Malaysia, the Philippines and Indonesia were successfully following the lead of Korea, Taiwan, Hong Kong and Singapore to develop manufactured goods export aggressively Pakistan’s manufactured exports increased fourfold from US $ 1.3 bill 1980 to US $5.6 bill in 1983.
- 25. • Theinelasticityofthesystemwitnessedduringthe1960’sand1970’spersistedinthe1980’s. • Substantialadditionaltaxationundertakenin1979-80and1986-7yieldedonlymarginal improvementintaxasGNPtotaxincreasedfromnearly12%IN1978-9TO1987-8. • Directtaxescontinuedtoaccountfrofractionoftotalrevenueand,thedependenceon foreigntradetaxesbecamegreater. • • Thelevelofincomeandcorporationtaxrevenueat1.6%ofGDPin1987-8wasnotonly low,butalsohadnotincreasedoverthepreviousdecade • Keepingdomesticwheat,riceandcottonpriceslow,thegovernmentwasabletobenefitthe urbanconsumerandtheindustrialistsatthecostoftheagriculturalproducer.
- 26. NonDevelopmentSpending: Government revenues grew steadily as a proportion of GDP, though this steady progress invariably required new tax effort. The government expenditures had grown by from 10-11% to 27% of GDP. • In nominal terms, defence expenditures increased from 5.5 to 7% of GDP over the period. The army was Zia’s main constituency and he made sure that he continued to enjoy its support.
- 27. RisingDebtBurden: • Interestpaymentshadbecomethefastestgrowingelementingovernmentexpenditures during1977-88,risingfrom1.9%ofGDPin1976-7to4.9%ofGDPin1987-8. • Themainelementintherisingoffiscaldebtburdenhasbeentheinterestpaymentson domesticdebtreflectingboththeenormousgrowthininternaldebtandthehighinterest ratesatwhichtheborrowingwasdone. • Domesticdebtincreasedfrom20.8%ofGDPinmid1981to4.2%ofGDPinmid1988.
- 28. SOCIAL PROGRESS
- 29. Substantial economic growth and relatively low inflation during the Zia period did translate into broad based income growth for most income group. Average per capita GNP grew at an annual average of 3.3% per annum or by 4.3% during 1977-88 though the growth was much higher in the earlier period. Real wages which had increased during the Bhutto period, showed further increase during Zia’s rule.
- 30. • LikeAyub’speriod,inZia’sregimeemploymentcreatinggrowthdidnotreceivespecial policysupportandagriculturalprogrammedidnotfavourfarmers. • •Primaryschoolenrollmentduring1977-88expandedatanannualrateofonly4%only moderatelyfasterthanthegrowthrateofthepopulation. • Progressinincreasingaccessofthepopulationtobasichealthserviceswasslow.•Only modestgainsweremadeinreducinginfantmortalityandincreasinglifeexpectancy. • •Theincreaseddemandforservicesinruralareasfollowingrisingincomesgenerated pressuresforrapidruralelectrificationandruralroads,
- 32. :
- 33. •AsapartofgeneralemphasisonIslamicvaluesandcodesofconduct,ZiaannouncedaplanfortheimplementationofanIslamic economicsysteminFebruary1980. •TheinstitutionalizationofzakatandintroductionofinterestfreebankingwerethetwomostimportantmeasuresofIslamizing economy. •Theaimwastofreetheeconomicorderfromexploitationandprovideequalsocioeconomicopportunitiesfortheneedy. •UndertheZakatOrdinance,mostfinancial assetsinthebankingsystemandsavinginstrumentsweremadesubjectto2.5% deductionannuallyonaccountofzakat. Islamizationalsoaffectedtheinterestratepolicy.Technicallyalllendinganddepositrateswereby1988setonprofitand losssharing. •Themovetoprofitandlosssharingassuchdidnotmakebigdifferencetotheprocessoffinancialdeepeningthatisincreaseinshare ofmonetaryassetstoGDP. •TheratioofthetotalmonetaryassetstoGNP,whichissufferedasharpdeclineinBhutto’speriodduetohigherinflation and uncertaintyaboutthefutureofprivateenterprise,hadrecoveredto36.5%to1980. •Underthecircumstanceszakatdeductionof2.5%perannum,fromwhichforeigncurrencydepositsareexempt,providesastrong disincentivetoholdrupeeassets.
- 34. CONCLUSION:
- 35. • Zia’sruleisthelongestruleeverbyasingleindividualin Pakistan. • •Heneverletgoofthereignsofthepoweruntilhewaskilledin aplanecrash. • •Althoughhisdeathboughtabouttheendofhisrule,muchof hislegacystillhadastrongimpactonthepoliticaland economicdevelopmentsinPakistanforsomeyears.