CSS Economics Economics Paper II: Economics of Pakistan Syllabus

What institution and survey are the primary sources of poverty data in Pakistan?

The Pakistan Bureau of Statistics (PBS) conducts the Household Integrated Economic Survey (HIES) and the Pakistan Social and Living Standards Measurement (PSLM) survey, which provide the consumption and income data used to estimate poverty.

What is the Multidimensional Poverty Index (MPI) used in Pakistan, and which dimensions does it cover?

The MPI (launched officially in 2016, developed with OPHI/UNDP) measures poverty across three dimensions—education, health, and living standards—using ten indicators. It captures non-income deprivations; Pakistan's national MPI was about 38.8% of the population in 2014–15.

Define sustainable development (Brundtland Commission, 1987).

Development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. It integrates economic growth, social equity (intra- and inter-generational), and environmental protection.

What are the three pillars (dimensions) of sustainable development?

The economic pillar (sustained, efficient growth), the social pillar (equity, poverty reduction, inclusion), and the environmental pillar (conservation of natural resources and ecological balance)—often summarised as 'people, planet, profit.'

What replaced the Millennium Development Goals, and how many goals does the new framework have?

The Sustainable Development Goals (SDGs) replaced the MDGs in 2015. The 2030 Agenda for Sustainable Development comprises 17 SDGs and 169 targets. Pakistan adopted the SDGs as part of its national development agenda in 2016.

What is economic planning, and what defines its strategy in a developing country?

Economic planning is the deliberate, coordinated allocation of resources by the state to achieve specified economic and social objectives over a defined period. The strategy involves setting priorities (growth vs equity), targeting sectors, mobilising savings/investment, and choosing between market- and state-led approaches.

Distinguish between indicative planning and imperative (directive) planning.

Indicative planning sets broad targets and uses incentives to guide a largely private/market economy (e.g., Pakistan's approach). Imperative/directive planning involves binding state directives and central control over resources and production (as in command economies).

List the broad chronological sequence of Pakistan's Five Year Plans.

First (1955–60), Second (1960–65), Third (1965–70), Fourth (1970–75, disrupted by 1971 separation of East Pakistan), Fifth (1978–83), Sixth (1983–88), Seventh (1988–93), Eighth (1993–98). The 1970s saw non-plan annual plans; later medium-term frameworks and Vision 2025/2030 succeeded the traditional plans.

Which Five Year Plan is generally regarded as Pakistan's most successful, and why?

The Second Five Year Plan (1960–65), during the Ayub era, is considered most successful: GDP grew strongly (around 6–7% annually), large-scale manufacturing and agriculture (Green Revolution onset) expanded rapidly, and most physical targets were met. However, it deepened regional and personal inequalities.

Why did the Third Five Year Plan (1965–70) largely fail to meet its targets?

It was derailed by the 1965 Indo-Pak war (which diverted resources and reduced foreign aid), falling foreign assistance, and rising regional disparities and political unrest between East and West Pakistan.

Give a standard critical evaluation of Pakistan's Five Year Plans overall.

Strengths: built infrastructure and industrial base, achieved respectable growth in some periods. Weaknesses: over-reliance on foreign aid, neglect of social sectors and human development, growth concentrated in few hands (the '22 families'), worsened regional (East–West) and income inequality, weak implementation, and political instability undermining continuity.

What is the 'functional inequality' doctrine associated with Pakistan's early planning (Mahbub ul Haq's critique)?

Early planners deliberately tolerated inequality on the assumption that concentrating income in the hands of industrialists would raise savings and investment ('the social utility of greed'). Mahbub ul Haq later criticised this, noting that growth was captured by a small elite (the '22 families') and failed to trickle down.

What is the role of governance and institutions in the success of economic planning?

Effective planning requires sound institutions: rule of law, low corruption, accountable bureaucracy, secure property rights, policy continuity, and coordination between federal and provincial governments. Weak governance—rent-seeking, political interference, poor implementation capacity—is a primary reason plans underperform in Pakistan.

What is the Planning Commission of Pakistan and its main functions?

The Planning Commission is the apex federal body for development planning. It formulates Five Year and Annual Plans, prepares the Public Sector Development Programme (PSDP), appraises and approves development projects, advises on economic policy, and monitors implementation. It is headed by the Prime Minister (Chairman) with a Deputy Chairman.

Name the bodies that approve development projects in Pakistan based on cost thresholds.

CDWP (Central Development Working Party) approves projects up to a set ceiling; ECNEC (Executive Committee of the National Economic Council) approves larger/high-cost projects above the CDWP limit. DDWP (Departmental Development Working Party) handles smaller projects.

What are the principal implementation issues that undermine Pakistan's plans?

Chronic resource (savings/foreign-exchange) shortfalls, cost overruns and project delays, 'thin spreading' of PSDP funds over too many projects, weak monitoring and evaluation, political interference in project selection, frequent policy changes, capacity gaps in line agencies, and corruption/leakages.

How did agricultural policy priorities change across Pakistan's early vs later plan periods?

The First Plan and 1950s neglected agriculture, taxing it implicitly via terms-of-trade biased toward industry. From the Second Plan (1960s) onward, agriculture gained priority through Green Revolution inputs, price support, subsidies, tubewell and tractor investment, and institutional credit—shifting from squeezing agriculture to actively promoting it.

What monetary/credit measures has Pakistan used to support agriculture?

Institutional agricultural credit through the Agricultural Development Bank of Pakistan (now ZTBL), commercial banks' mandatory agri-credit targets, subsidised/concessional interest rates, and credit for tubewells, tractors, seeds and fertiliser to finance Green Revolution technology.

What fiscal measures has Pakistan applied to the agricultural sector?

Input subsidies (on fertiliser, water/irrigation, electricity for tubewells, improved seeds), support/procurement prices for key crops (wheat, cotton, sugarcane) via bodies like PASSCO, and a historically low/exempt agricultural income-tax regime (agriculture is largely outside the federal income-tax net, taxed provincially).

What was the Green Revolution, and when did it reach Pakistan?

The Green Revolution was the introduction of High-Yielding Variety (HYV) seeds—especially dwarf wheat (e.g., Mexi-Pak) and IRRI rice—together with chemical fertilisers, pesticides, controlled irrigation (tubewells), and mechanisation. It arrived in Pakistan in the mid-to-late 1960s, sharply raising wheat and rice yields.

What is the 'seed-fertiliser-water' technology package central to the Green Revolution?

A complementary biochemical package: HYV seeds that respond strongly to inputs, heavy application of chemical fertiliser, and assured controlled water supply (tubewell/canal irrigation), often combined with pesticides and mechanisation. The inputs are complementary—yields rise only when used together.

What were the growth implications of the Green Revolution in Pakistan?

It dramatically increased food-grain output (Pakistan approached wheat self-sufficiency), raised agricultural growth rates and productivity, expanded the marketable surplus, stimulated agro-based industry and rural demand, and increased rural incomes—turning a food-deficit sector into a higher-output one.

What were the redistributive (equity) implications and criticisms of the Green Revolution in Pakistan?

It was scale- and capital-biased: large/medium landowners with access to credit, tubewells and tractors gained most, while small/tenant farmers were often bypassed or displaced. It widened income and regional inequality (favouring irrigated Punjab/Sindh), encouraged eviction of tenants, increased landlessness, and raised environmental concerns (waterlogging, salinity, pesticide use).

Why is the Green Revolution sometimes said to have been 'scale-neutral but not resource-neutral'?

The HYV seeds themselves are technically divisible and usable on any farm size (scale-neutral), but realising their benefit requires capital, credit, water, and inputs that only resource-rich (larger) farmers could readily access—so in practice the gains accrued unequally.

What were the three major land reforms in Pakistan between 1950 and 1980, and who introduced them?

(1) 1959 reforms under Ayub Khan; (2) 1972 reforms under Z.A. Bhutto; (3) 1977 reforms under Bhutto. (The 1950s also saw provincial reforms abolishing certain intermediaries.) Each lowered land-holding ceilings and aimed to redistribute land to tenants and small farmers.

What were the key provisions of the 1959 land reforms under Ayub Khan?

Ceilings of 500 acres irrigated and 1,000 acres unirrigated per individual (with exemptions for orchards/livestock and via intra-family transfers). Resumed land was sold to tenants with compensation paid to landlords. Jagirs were abolished, but generous exemptions meant limited actual redistribution.

What were the key provisions of the 1972 land reforms under Z.A. Bhutto?

Lowered ceilings to 150 acres irrigated and 300 acres unirrigated (measured in Produce Index Units). Resumed land was given to tenants without compensation to landlords and without payment by tenants. It also gave tenants greater security of tenure and shifted some input costs to landlords.

What did the 1977 land reforms under Bhutto provide?

They further reduced ceilings to 100 acres irrigated and 200 acres unirrigated and proposed taxing agricultural incomes. However, the reforms were largely unimplemented because the Bhutto government was overthrown in July 1977, and later legal challenges (the Qazalbash Waqf case, 1990) declared land reforms repugnant to Islam.

Why are Pakistan's land reforms generally judged to have failed?

High ceilings and numerous exemptions, transfers of land within families (benami/'fictitious' transfers), weak political will and elite (feudal) resistance, poor administration and record manipulation, compensation favouring landlords, and judicial reversal (Shariat Court ruling) meant only a small fraction of land was actually redistributed and the tenancy/feudal structure largely survived.

Describe the traditional land tenure/tenancy system in Pakistan that reforms targeted.

A system dominated by large feudal landowners with land cultivated by tenants under sharecropping (batai/'haari'), typically splitting output (often 50:50), giving tenants insecure tenure, indebtedness to landlords, and little incentive or capacity to invest—reinforcing rural inequality and low productivity.

What is cooperative farming, and what are its main forms?

Cooperative farming is the voluntary pooling of land, labour, and resources by farmers to gain economies of scale and shared services. Main forms: cooperative better-farming (members keep ownership and farm individually but cooperate on inputs/marketing), cooperative joint farming (land pooled and farmed jointly, with members paid wages plus dividend on land), tenant farming cooperatives, and collective farming.

What is the rationale for, and the experience of, cooperative farming and rural development in Pakistan?

Rationale: overcome small/fragmented holdings, achieve scale economies, pool credit and inputs, and raise small-farmer productivity and bargaining power. In Pakistan cooperatives (and integrated programmes like the 1970s Integrated Rural Development Programme and later RSPs such as AKRSP/NRSP) had limited success—hampered by elite capture, weak management, corruption in cooperative credit societies, and lack of genuine participation.