Socio-economic imbalances persist

So far, 12 development plans have failed to remove structural bottlenecks

ISLAMABAD:

Though the country has formulated 12 socio-economic development plans since 1955, still it faces socio-economic imbalances and structural bottlenecks as the centre has failed to take provinces on board in the plan execution process.

The previous caretaker government, before its departure, approved the 13th socio-economic development plan with particular focus on 15 key areas of the economy to be executed by the new government. The 13th development plan, approved by the National Economic Council (NEC), particularly targets reforms in the energy sector by shifting focus from thermal to renewable energy and seeks investment in mineral exploration and processing.

Experts say Pakistan’s development plans have failed due to inconsistency of policies during every government’s tenure and ignoring the national economic agenda.

During discussions in a recent NEC meeting, it was informed that in light of Article 156(2) of the Constitution, the NEC was responsible to review the overall economic condition and advise federal and provincial governments to formulate plans in respect of financial, commercial, social and economic matters. While drawing up such plans, the NEC was required, among other factors, to ensure balanced development and regional equity.

It was observed that despite the above provision, seldom any advice was given by the NEC to provinces, which also never shared their Annual Development Plans (ADPs) with the NEC.

NEC was briefed that over the past few decades, Pakistan had faced several internal and external challenges that hindered its ability to achieve high economic growth on a sustainable basis. “Long-term planning has generally been missing, while emerging challenges were also occasionally not envisioned or addressed. This has led to policy inconsistency.”

It was pointed out that high growth had remained episodic, with each period of high growth generally followed by a swift rise in external imbalances, leading to the adoption of adjustment policies, which then induced growth slowdown. “The challenge of rapidly growing population increases demand for schooling, shelter, healthcare, infrastructure and skills. On the other hand, inadequate resources limit the government’s ability to adequately invest in human capital.”

At the same time, the NEC was told, climate change was posing a serious threat to food security, while the volatile agrarian performance had negative externalities across other sectors, having a significant spillover impact. It was stated that the unsustainable growth pattern prevented the country from progressing adequately in areas of human and social development. Within provinces, many areas continued to feel deprived of gains that should have accrued to them from economic growth.

There is an urgent need to revamp the growth framework in a way that addresses the issues of low productivity and income, as well as regional inequalities, by making growth more balanced, inclusive, sustainable, and more reliant on indigenous resources rather than external inflows. The national imperatives and global developments necessitate a holistic approach to initiate drastic structural reforms for a transformational turnaround in the economy.

Since 1955, five-year plans have been the main tool for planning, strategising, and providing direction and focus to the economy.

The country’s first formal five-year plan was implemented from 1956-60 with agricultural development getting the highest priority.

Since then, the five-year plans up to 1993 prioritised industrial development and advancement (1961-65), private sector investment (1966-70), nationalisation of private business entities (1971-75), improving the standard of living of the poorest segments (1979-83), promoting private sector by tackling issues of low investment and saving ratios, low agricultural productivity, heavy reliance on imported energy, and low spending on health and education (1984-88), and private investment in all sectors of the economy (1989-93).

The tradition of five-year plan was abandoned with the eighth plan (1994-98), which was approved but could not be implemented.

The ninth plan (1999-2003) was also prepared but was not approved, while the 10th plan (2011-15) was prepared in 2010 but was replaced with the Framework for Economic Growth in 2011.

The 11th plan (2014-2018), approved in 2016, was a major step to actualise the Pakistan Vision 2025, a medium-term framework designed to address multiple challenges on economic, security and development fronts.

The 12th plan (2018-23) was approved with a focus on improving the fundamentals of economic growth and ensuring balanced regional development. However, it was not officially released. Now, the 13th Five-year Plan will be implemented from July 2024 to June 2029 and is being prepared in the backdrop of socio-economic imbalances and structural bottlenecks.

Published in The Express Tribune, March 13^th, 2024.

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