Pakistan’s economy presents a story of continuous growth with rare cases of stagnancy. In the whole period of the country’s history since it earned independence in 1947, the major stress has been on capital formation, on the one hand, and on alleviation of the people’s poverty and elimination of socio-economic inequalities, on the other. But never before in the history, such concrete measures were adopted for distribution of wealth equitably as have been done by the political government which came as a result of general elections held in 1985 in the country. Programs chalked out at the political level by the present elected government, when brought within the framework of the Annual Development Programs of the last two years of the country’s Sixth Five-Year Development Plan and within the fiscal policies as embodied in the annual budgets, are definitely leading the country towards a breakthrough both in economic management and public welfare measures. it is a qualitative leap towards the concept of a welfare state which becomes more meaningful at a time when Pakistan has joined the middle income group of the countries of the world with its per capita income going up to Rs. 5,344 at the end of 1985-86. According to World Bank figures, Pakistan’s per capita income of 390 American dollars as early as in 1983, was exceeded only by countries accounting for about 52.2 per cent of the world’s population, while 45.9 per cent of the world’s population had a per capita income lower than Pakistan’s. The growth story begins with the country’s independence. In the first decade of independence, the Government’s attention and resources were taken up by the urgent problems of setting up an administrative machinery and the settlement of refugees. The small surplus of financial and organisational resources over and above the requirements of these tasks were devoted to expanding and maintaining the physical and social infrastructure. The productive sectors were largely left to private enterprise. This was particularly true in the sphere of manufacturing where reliance was placed on the private sector for providing finances and entrepreneurial skills to take the pioneering steps in the industrialisation of the country.

The private sector responded to the policy of a sort of mixed economy with fervor and demonstrated entrepreneurial capability and managerial skill in setting up and managing the consumer goods industry. The endeavors of the private sector were buttressed by the fiscal and monetary policies of the government and its financial agencies. Industrialisation process thus soon got off the ground to a good start.

The public sector had also its positive role. It was instrumental in meeting some of the basic and essential requirements of the private sector like infrastructural facilities and long-term financing in both foreign and local currencies. Direct undertaking of high risk and long-gestation projects in the public sector had also become the need of the hour. The requirements to set up industries for betterment of socioeCOflOmiC conditions in the g~rnnarativelv backward areas of the country as well as acquisition of new technology to further stimulate the process of industrialisation were to be met. This job which involved mobilising massive resources and acquiring modem technology could not be left to the private sector. For this, state intervention was a must.

Consequently, the first public sector enterprise with a commercial bias was set up in 1950. Designated as Pakistan Industrial Development Corporation (PIDC), it was assigned the responsibility of setting up heavy engineering, fertilizer, jute, cement and chemical industries.

During the second decade of independence, the public sector was encouraged for purely pragmatic reasons, with no ideological aversion or prejudice of the policy makers against the private sector. Similarly, the private sector did not view this innovative and pioneering role of the public sector with any sense of hostility. On the other hand, a spirit of healthy rivalry and mutual complimentarily began to develop gradually. Some laudable examples of joint ventures between the two sectors also characterised the decade of the 1960s.

In the first half of the 1970s, the role of the public sector was, however, drastically changed to that of a sector designed to control the “commanding heights” of the economy under a distorted political concept. In the process, the unnatural and too fast expansion of the public sector sorely overstrained the resources of personnel, funds, expertise and organisation. As a result, economic disruption of a very high magnitude was witnessed during the period.

The policies adopted in the post-1977 period have, however, restored the balance to a considerable extent. The new policy aimed at restoring the confidence in the market mechanism and envisaged a more active role for the private sector in industrial investment. The present elected government has infused a further sense of pragmatism. The policy line was given by President Zia-ul-Haq himself who said during his visit to Korea that his Government did not want to run both administration and business. So the public sector industries are being disinvested under a planned and phased program, while only the big and the ‘utility’ industries are being kept in the public sector.

land, while the land was actually being cultivated by tenants without any interest or right on the land and with only a little share in the crops. The tenants being generally poor as were the small farmers, they could use only primitive farming techniques.

The nation could not pay proper attention to agriculture in the early years of independence. This sector did not get due priority in First Plan period and thus its annual growth rate stagnated at 2.1 per cent during the 1955-60 period. However, by the late 1950s, a realisation dawned on the policy makers that without speedy agricultural growth, the country would not be able to march ahead in the struggle for achieving economic self-reliance. So, during the Second Plan, concerted efforts were made to boost agricultural growth. As a result, agriculture achieved a growth rate of 3.8 per cent, at the end of the Plan period, surpassing the population growth rate of 2.6 per cent. The impressive achievement was the result of institutional changes, expanded use of essential inputs such as water, fertilizers, quality seeds and pesticides. Favorable weather conditions also helped the process. The production of food crops recorded an annual increase of 3.7 per cent during the Second Plan as against 3.2 per cent in the First Plan. The rise in cash crops was more pronounced, as it went up by 11 per cent per annum as against 4.5 per cent in the preceding Plan period. Total production of principal crops registered an annual growth of 4.7 per cent.

The Third Five-Year Plan (1965-70) envisaged a growth rate target of 5 per cent for the agriculture sector, but the actual achievement surpassed the 6 per cent mark. The production of food crops recorded an increase of 7.6 per cent while cash crops registered a rise of 7 per cent per annum. The total production of principal crops registered an increase of 9.1 per cent. This was the period of Green Revolution in Pakistan.

But the tempo could not be maintained in the subsequent years and the annual growth rate of agriculture declined to 1.7 per cent during the 1970-78 period. The post-1970 war conditions, unfavorable weather throughout most of this period, heavy floods in 1973, the mishap of Tarbela Dam in 1974-75, untimely and heavy rainfall in 1975~76 and scanty rains during 1976-77 were the main factors responsible for the sluggish growth in agriculture during this period.

The situation, however, improved after 1977, as weather conditions improved and Tarbela Dam began operating efficiently. Meanwhile, the policy of support prices for major agricultural products and subsidies on agricultural inputs started paying dividends. Besides, the new government mounted strenuous efforts to break the stagnation in the agricultural sector. Timely and adequate availability of essential inputs to the farmers was ensured. Procurement and support prices of important crops such as wheat, paddy, sugarcane and cotton were regularly revised upwards. Subsidies on fertilizers, seeds and installations of tubewells were regularly rationalised. The government also provided increased facilities on easy terms to the farmers. Small farmers were given interest-free loans and ceilings of such loans were regularly revised upwards. Water management program was undertaken in irrigated zones to cut down water losses in transition.

All this resulted in the achievement of 4.4 per cent growth rate in agriculture per annum during the 1978-83 period. However, in 1983-84, the first year of the Sixth Five-Year Plan, agriculture sector suffered a major set-back and a negative growth rate of 6 per cent was experienced. In 1984-85, the growth rate, however, surpassed all records. It rose to 12 per cent in that year. In the following year, i.e., 1985-86, the growth rate was 6.5 per cent. Bumper cotton crops were harvested in 1984-85 (5.9 million bales) and in 1985-86 (7.1 million bales). Wheat production also increased by 19 per cent in 1985-86. The high rates of growth reflect both favorable weather conditions and satisfactory availability of key agricultural inputs. In 1985-86, water availability went up to 103.36 million acre feet from 96.45 million acre feet in 1981-82, credit disbursements from Rs. 5,269.11 million in 1981-82 to Rs. 11,174.00 million in 1985-86, tractors imported from 19,293 in 1981-82 to 28,500 in 1985-86 and fertilizer off take from 1,080,000 nutrient tons in 1981-82 to 1,512,000 nutrient tons in 1985-86.

The improvement has also its reflections on the field. The total cultivated area rose from 14.69 million hectares in 1947-48 to 20.34 million hectares (estimates) in 1985-86, while the cropped area increased from 11.63 million hectares to 20.06 million hectares (estimates) during the period. About 77 per cent of the total cropped area is under food crops, while the remaining 23 per cent of the total cropped area was under cash crops in 1985-86. The total area under principal crops which stood at
9.3 million hectares in 1947-48 increased to 16.17 million hectares (estimates) in 1985-86. Production of major crops which stood at 11.4 million tons in 1947-48 rose to 54.37 million tons in 1985-86. Of the total production, wheat alone contributed 25.6 per cent in
1985-86.

Industry

For over three decades, manufacturing has grown at an average annual rate of around 8 per cent, while GDP has grown at 5.2 per cent. As a result, manufacturing output has risen from 7.8 per cent of GDP in 1949-50 to 19.9 per cent of GDP in 1985-86. But this was not a smooth going all the way. At the time of independence, Pakistan had very little industrial capacity. Whatever capacity was there, comprised largely a few agro-based units such as flour and rice mills and cotton ginning factories. There were no credit organisations nor were there any technical institutes or research laboratories.

In the Industrial Policy announced for the first time in 1949, the private sector was assigned the key role and except for the defense and strategic industries, the industrial field was thrown open to this sector. To supplement the efforts of the private sector, the Government set up in 1950 Pakistan Industrial Development Corporation (PIDC) which was assigned the task of establishing such industries which the private sector could not undertake because they were either capital intensive or technologically complex. The meet the credit requirements of the private sector industries, the Pakistan Industrial Credit and Investment Corporation (PICIC) was set up in 1958. The commercial banks also started to extend credit facilities to the industrial sector.

In the subsequent years, an intense industrial activity was mounted and by 1969-70, the number of cotton textile units increased from 72 to 100, sugar plants from 6 to 20, cement plants from 6 to 9, fertilizer units from 1 to 4, vegetable ghee factories from 11 to 19, cigarette plants from 8 to 15, cycle tyre and tube units from 3 to 18.

In January 1972, 32 private sector industries were taken over by the Government under the Economic Reforms Order. The nationalisation bid had its adverse effects on the private sector which resulted in the decline of annual growth rate in the manufacturing sector to the lowest level of 2.8 per cent during the 1970-71 to 1976-77 period.

After 1977, the country’s industrial activity resumed with a new vigor after a categorical assurance from the new Government that there would be no more nationalisation. Under the Industrial Policy statement of

1984, industries are being deregulated, industrial incentives are being rationalised, private investment is being encouraged and a new emphasis is being given to the promotion of small industries. While the small-scale sector accounts for only 28.2 per cent of manufacturing output, its share in employment is 80.9 per cent. The creation of a job in large-scale manufacturing costs about 80 times more than the cost in small-scale manufacturing. However, the improved atmosphere has led to a 22.1 percent average annual growth in private manufacturing investment at constant prices since 1982-83 Investment sanctions are up by 83 per’ cent since then.

By 1985-86, Pakistan has become self-sufficient in a number of essential products — cotton textiles, cement, vegetable ghee, sugar, fertilizers and steel. The production of cotton yarn increased by 9 per cent in 1985-86 over that of the previous year. The total capacity of vegetable ghee and cooking oil installed and under installation comes to 916,400 tones per year. There are 39 sugar mills in the country. The cement industry was de-regulated in 1985, while two new industries in the private sector have started production, raising the total installed capacity in the country to 5.7 million tons. At present, the total installed capacity of fertilizer is 1,117 million nutrient tons which is being fully utilized. Pakistan Steel, set up at a cost of Rs. 24,700 million, is an integrated steel mill with a capacity of 1.1 million tones per year of raw steel. The mill has a built-in potential to expand annual production capacity to 2.2 million tones. After going into production in December, 1984, the mill produced during 1985-86, 612 thousand tones of coke, 875 thousand tones of pig iron, 307 thousand tones of billets and 341 thousand tones of rolled sheets/coils/plates. Thirty-two downstream projects of Pakistan Steel ~have also been proposed for implementation by the private sector. Three projects, including one for production of wire rods and baling hoops and two pipe-manufacturing plants, have already gone into production. Another three projects are in various advanced stages of completion, while the remaining downstream projects are in different stages of planning and implementation.

Energy

At the time of independence, the country had very limited energy supplies. The overall energy mix was largely made up of low quality coal and imported oil. Hydro-electric power generation was available but in a very limited capacity. Net energy supply was of the order of mere 0.6 MTOE. Percentage share of each source was:

Coal 59.1%, Oil 37.8% and the rest 3.1% was hydroelectric power.

In early 1950s natural gas was discovered at Sui and the pattern of energy supply started changing. Thereafter, few more gas fields were found and some oil discoveries were also made. Large hydro-electric power stations were established at Warsak, Mangla and Tarbela Dams. Thereby, production of hydro-electric energy increased many times. In 1973, a 137 MW Nuclear Power Station was also established at Karachi to join the energy supply sources.

In 1985-86, total energy supply in the country was 18.6 MTOE. Percentage share of each of the component source was: Gas 35.6%,Oil 39%, Hydel 17.7%, Coal 6.8%, Nuclear 0.48% and Liquefied Petroleum Gas 0.42%.

Oil

At present, total production of crude oil is approx. 39,300 barrels per day from 13 oil fields which have been so far discovered. Whereas the total estimated oil potential of the country is approximately 53 billion barrels. Domestic crude oil production meets approx. 26 per cent of the total requirement of the country. The sectoral consumption pattern during 1985-86 was:

Domestic 10.8%, Industrial 14.8%, Agriculture 3.7%, Power 14.3%, Transport 47.3% and others 9.1%. It shows that transport sector consumed almost half of oil supplies.

Gas

Production and supply of gas at the end of 1985-86 was 380 billion cubic feet. Gas was supplied from 6 main fields. The total recoverable reserves of natural gas are estimated at 123 trillion cubic feet. The sectoral consumption pattern during 1985-86 was as follows: Domestic 13,2%, Commercial 3.1%, Industrial 56.6% and power 26.9%.

Coal

Estimated production of coal in the country during 1985-86 was 2.82 milllion tons. Two new coal fields are being developed in lower Sindh. One of them is Lakhra.

Electricity

The total installed power generating capacity in the country increased to 6,204 MW at the end of 1985-86. Out of this, 610 MWs were added during 1985-86. Hydel power constituted almost 60 per cent of WAPDA’s total capacity.

The demand of power in the country rose to 4,671 MW during 1985-86. Due to seasonal variation of water in reservoirs of the major dams and due .to the restrictions on the water releases from these dams, the hydel power is considerably reduced in winter, resulting in a shortfall in the supply of power. During 1985-86 too, there was a shortfall in demand-supply position during winter. Hence limited load-shedding was resorted to.

During 1985-86, both WAPDA and KESC genera. ted 26,249 MKWH of energy. The consumption was 19,029 MKWH. The sectoral consumption pattern was:

Domestic 39.8%, Commercial 7.9%, Industrial 38.8%, Agricultural 15.2% and others 7.3%. It shows that each of domestic and industrial sector accounted for almost 40% of the total consumption. 26.4% and 22.6% were the losses for WAPDA and KESC respectively during 1985-86.

Village Electrification

At the end of 1976-77 only 6,011 villages were electrified in the country. At the end of 1985-86 the number of villages, electrified rose to 22,917.

Renewable Energy Resources

Pakistan realised the importance of utilising and developing renewable sources of energy after the energy crises of 1973 and had launched systematic program for tapping these sources. The following sources of energy are being developed.

Biogas

The first biogas unit was installed in 1974 to demonstrate the utility of biogas technology. A national program was launched in 1980-8 1. So far, 2,521 units have been installed free of cost. In the second phase, costs were shared with the beneficiaries and 1,337 units were installed. In the third phase, the cost of the installation of biogas units is to be borne entirely by the users, although government will continue to give subsidy to the deserving people. Solar Energy

Located in the latitudinal range of 470 north and 400 south, Pakistan has a lot of sunshine. Pakistan has developed a practical strategy for heating, cooking, electrifying and water pumping to tap this energy. Both solar thermal and solar photovoltaic systems are being used. Four solar units with a total capacity of about 90 MWP, are already operating. Nine more solar systems, with a total capacity of 225 KWP, are in different stages of completion. Two of these systems are located in Northern Areas, three in Baluchistan, two in the remote desert areas of Sindh and two in Punjab.

Wind Energy

Low velocity windmills are being developed in the country for water pumping to develop dairy farming and to meet limited irrigation requirements. A total of 100 small windmills are at various stages of installation in the country. Two windmills in the windy regions of Baluchistan and lower Sindh are being installed for power generation with the financial assistance of UNDP.

Policy

In order to promote optimal utilisation of available energy resources, a number of steps have been taken. These include creating additional refining capacity and enhancing the energy efficiency of National ftefinery Ltd., reducing losses in the power transmission and distribution network, establishing organisations for strengthening energy planning capability and energy conservation (ENERPLAN and ENERCON). Under the Prime Minister’s Economic and Social Program, 90 percent of the villages will be electrified by 1990. Moreover, a program has been chalked out to eliminate load. shedding upto 1990.

Transport and Communications

In Pakistan, roads dominate inland transport for both Passengers and freight and will continue to be the most important mode of transport in future. Out of 114.0 billion passenger kilometers of total traffic in 1985-86 (excluding air traffic), roads carried 85 per cent and railways 15 per cent. Of an estimated 37.4 billion ton kilometer freight (excluding air freight and bulk transport of coal and oil through pipeline) roads carried 77 per cent and rail 23 per cent.

The existing classified road network (excluding city streets) has a total length of 103,578 kilometers of which 43,646 kilometers are black-topped by width. Special emphasis is being laid on the rehabilitation and improvement of the existing road network and construction of new roads, especially farm to market roads.

The railways have not been able to play a greater role because of persistent problems of old and worn-out assets, outdated machinery and lack of operational efficiency. Freight carried by railways has declined from 13 million tones in 1977-78 to 11 million tones in 1984-85. Annual passenger traffic in the late 1970s was around 145 million. Pakistan Railways is, however, increasing its operational efficiency, reducing arrears of replacements, modernising existing equipment, telecommunication and related signaling systems and streamlining operational techniques.

Pakistan has only one general cargo port at Karachi handling 7.552 million tones of dry, including general, cargo in 1985-86. The second port, Port Qasim which is the first bulk, semi-bulk and industrial port of the country, is situated 53 kilometers south-east of Karachi port and is nearing completion.

The fleet strength of Pakistan National Shipping Corporation (PNSC) is 29 vessels with a deadweight tonnage of 449,983. The ships ply on the following routes from Pakistan: (i) USA/Canada-East Coast (ii) UK! Continent (iii) Far East (iv) People’s Republic of China (v) Mediterranean (vi) Middle East/Gulf (vii) Red Sea (viii) Adriatic/Black Sea and (ix) West Africa.

The air traffic is covered by the country’s national airlines — Pakistan International Airlines (PIA) which handled passenger traffic in revenue passenger-kilometers of 7,166 during 1985-86 as against 6,918 million revenue passenger kilometers in the year 1984-85. Passenger capacity in available seat-kilometers increased by 4.5 percent over the period from 10,480 million to 10,699 million. Regarding weight, 311 revenue freight tones kilometers were handled in 1985-86 as against 293 revenue freight tones kilometers in 1984~85. On March 31, 1986, NA’s fleet of aircraft consisted of 46 planes —six Boeing-747s, two DC-10—30s, eight Airbus A300 B4, eight Boeing 707s, one Boeing 720B, six Boeing 737— 300s, 10 Fokker F—27s, two Twin Otters and four Cessna trainers. PTA is currently flying to 38 international and 30 domestic stations. Communications

In March 1986, Pakistan had a total number of 12,006 post offices which rose to 12,053 by June, 1986. 2,626 post offices were in urban areas, while 9,380 were in rural areas. In March, the number of telegraph offices and telephones was 387 and 6,30,500 respectively, while the number of public call offices 2,428. Pakistan is linked with 35 countries through the Satellite Communication System. The total number of overseas channels via satellite are 749, out of which 715 are speech circuits. The total number of record circuits via satellite is 22. About 210 telephone circuits were added via satellite communication during 1985-86. The total duration of outward telephone traffic was 10,722 thousand paid minutes for the period between July, 1985 to June, 1986.

Mass Media

By March 1986, the number of licensed radio sets increased in the country to 1,017,478 from a mere 45,000 in 1947-48. Regular television services were introduced in Pakistan in early 1960s. The number of licensed T.V. sets rose from 74,344 in 1968-69 to 11,5 7,804 by December 1985, while the number of VCR sets is 1,46,924.

With 16 broadcasting stations and 39 short-wave and medium-wave transmitters and with a total radiating power of 3433 KW, Pakistan Broadcasting Corporation (Radio Pakistan) is providing more than 270 hours’ daily programs in the home services and 30.5 hours of programs in the external and world services.

With its five main program-originating centers, 12 rebroadcast centers, three super high frequency links, five translator centers and one low-power transmitter, Pakistan Television (PTV) is telecasting eight and-a-half hours of programs daily. Besides regular programs, PTV is also telecasting educational programs.

Trade and Commerce

Pakistan inherited a crisis-ridden trade and commerce sector at the time of independence. The share of trade and commerce in the national income was only nine per cent in 1948 compared to corresponding figure of 19 per cent in India. The early commercial policies were aimed at keeping a regular inflow of consumer goods and raw materials for the newly emerging industries. The volume of this inflow was controlled by the country’s foreign exchange earning capacity and the quantum of external assistance. Upto the middle of 1952 the situation was comfortable due to sterling balances and foreign exchange earnings received during the Korean War of 1950-51. However, by the end of 1952, the foreign exchange reserves had fallen steeply and all commodities and goods were brought under import licensing.

It was about this time that Pakistan saw the introduction of trade policies which aimed at boosting exports and encouraging import substitution industries. The Pakistani currency was devalued in 1955 to encourage exports and discourage imports. In 1959, Export Bonus Scheme was introduced which was withdrawn in 1972. It covered ‘all items except major primary commodities. However, changes were made in it from time to time till its withdrawal in May, 1972. The momentum of export efforts was also sustained by taking several institutional steps including the introduction of Export Credit.

With Guarantee Scheme and Export Market Development Fund, establishment of Trading Corporation of Pakistan and opening of trade offices in a number of foreign countries, the exports increased from Rs. 542.4 million in 1948-49 to Rs. 3,371.4 million in 1971-72, while imports increased from Rs. 1,176.8 million to Rs. 3,495.4 million during the same period.

In May 1972, the rupee was devalued to the extent of 131 per cent. This provided windfall profits to exporters and caused losses to importers. The devaluation restricted imports and helped increased exports initially. Thereafter, imports started increasing at a much faster rate than exports and by 1976-77, imports shot up from Rs. 8,398 million in 1972-73 to Rs. 23,012 million, while exports increased from Rs. 8,551 million in 1972-73 to Rs. 11,294 million in 1976-77. The overall balance of payments deficit increased from 131 million dollars in 1972-73 to 1,051 million dollars in 1976-77, the year in which the foreign exchange reserves also declined by 252 million dollars.

The post-77 Government adopted a firm policy of boosting exports and encouraging the establishment and expansion of import substitution industries. The policy has been given a new impetus by the elected government. Consequently, export earnings increased from Rs. 11,294 million in 1976-77 to Rs. 29,280 million in 1980-81 and further rose to Rs. 49,592 million in 1985-
86. The import and export policies of the present elected government are geared towards increasing agricultural and industrial production, expanding employment opportunities and promotion of exports. To back up high growth in the industrial sector, liberal imports of machinery, spare parts, agricultural inputs and industrial raw materials have been allowed. At the same time, the import of merchandise which are considered to be competing with the national industries are being discouraged.

Edible oil, POL, fertilizers, tea, chemicals, drugs and medicines, machinery and transport equipment remain the main items of import. The import bill rose from Rs. 23,012 million in 1976-77 to Rs. 53,544 million in 1980-81 and further to Rs. 89,778 million in 1984-85. Efforts are however, being made to contain imports through enhancement of domestic production in the fields of oil, energy, fertilizers, food grains and engineering goods.

The country gets generous aid from the OPEC countries bilaterally as well as through the international agencies, including the Islamic Development Bank and the OPEC Fund for Development. Besides, Pakistan is a regular recipient of aid from the World Bank and the World Bank sponsored Aid-to-Pakistan Consortium comprising the developed countries. The IMF also provides aid as a balance of payments support under various arrangements.

Pakistan has achieved, in recent years, a good growth rate of over six per cent reaching the highest mark of 7.5 per cent in 1985-86. The unusually high growth rate was accompanied by remarkable price stability. The average inflation rate dropped to 5.2 per cent in 1985-86, the lowest in over a decade. Meanwhile, the country’s economy has undergone radical structural changes. Islamisation of economy is going on at a rapid pace. The interest-free banking, Zakat and Ushr system, introduced in Pakistan in recent years, are not only working satisfactorily in the country but are also being keenly observed in the world. The IMF has recently conducted a survey of the interest-free banking system and it has come to the conclusion that the system gives most viable basis of banking. Similarly, Zakat and Ushr systems are being considered at various international forums. Regulatory reforms of the economy are also in progress. A number of industries, including edible oil and fertilizers, were deregulated by May, 1986.

Economic Outlook

To sum up, after 39 years of turbulent existence, material prosperity has brought Pakistan to the threshold of becoming a “middle-income country”. With a per capita income of Rs. 5,340 in 1985-86, the distribution of income in Pakistan is now better than in many countries, rich and poor, of the world. According to World Bank figures, Pakistan’s per capita income of US dollars 390 in 1983 was exceeded only by countries accounting for about 52.2 per cent of the world’s population.

Over the last eight years, Pakistan’s economy has exhibited strength. In difficult international circumstances, and under both adverse and favorable natural conditions, a sustained increase in per capita income and living standards has been maintained, without unduly straining the country’s domestic and external finances.

The major task of economic management in 1985-86 was to provide a stable economic environment during an year of significant political transition. At the same time, the Prime Minister has announced his Five. Point program (1986-90) which provides for both continuity and change in the policy directions outlined in the Sixth Five-Year Plan (1983-88). The program consists of a comprehensive rural development strategy, an anti-water logging and salinity control program, improvement of katchi abadis, provision of low-income housing and integrated manpower plan for providing employment to educated youth.