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Economic Survey, 1956

The following economic survey was written by H.A. Alavi, former Secretary, State Bank of Pakistan, and appeared in The British Commonwealth 1956 published by Europa Publications Limited, London (1956).

See the Synopsis of Subjects on the left for other items on Pakistan from The British Commonwealth 1956.

Economic Survey

The Economic Background

At the time of the partition of India, in 1947, the outstanding feature of the territories which came to comprise Pakistan was an almost complete absence of modern industry. The Muslim communities, which constituted the predominant element in Pakistan's population, were backward and played little part in trade and industry. Many opponents of the idea of Pakistan were reconciled to it only because it was widely believed that the new state would not be economically viable. Pakistan has always been conscious of the need to proceed with economic development at the highest possible rate and also to demonstrate economic strength. Its record is at once impressive and punctuated by crises, caused by the strains to which the economy is being subjected, in the course of the drive to build up military strength as well as to bring about a balanced development of industries and agriculture in the quickest possible time.

The first census, taken in 1951, showed that of its total population of 76 million the civilian labor force numbered only 22 million: 17 million were engaged in agriculture and of the remaining 5 million not more than 950,000 workers were employed in factories, plantations, transport and mining. The bulk of these were, in fact, employed on railways and port establishments. These figures indicate the low level of industrial development and the very high proportion of the dependent population, the latter being partly explained by the non-employment of women in many communities. The number engaged in agriculture is excessive in relation to the amount of land available for cultivation, so that, for example, in East Pakistan 9-5 million cultivators have on an average only 2.18 acres of crop land whereas it is estimated that, for the type of cultivation that is carried on, a minimum of 4 acres is required per cultivator to provide him with reasonably full employment. The result of such disguised unemployment on land, the low level of industrial growth and the high proportion of dependent population is reflected in the extremely low average life expectancy of 27 years and the estimated per capita national income of Rs.230.

The first two years of Pakistan's existence were characterized by a complete disruption of her economic life and a desperate struggle to pull herself together. Following on widespread communal rioting in India and Pakistan, several million people left their homes and sought refuge across the border. Statistics of the number of refugees vary considerably but the magnitude of the numbers involved may be judged by Pakistan official figures of 6 million evacuees from West Pakistan to India, and 8 million refugees from India to West Pakistan. All normal economic activity was disrupted in West Pakistan, and the disruption was greatest in the fields of communications and commerce and what little there was of industry. The social and occupational pattern of the population involved was far from being complementary. The Hindu and Sikh evacuees from Pakistan were largely urbanized communities engaged in trade, finance and banking. The Muslim refugees from India were, on the other hand, predominantly agriculturists and artisans. For the new government there was not only the task of an unprecedented magnitude of reorganizing normal economic activity,