Pakistan Economic Survey 1967-68

Abstract

The year 1967-68 has been of great significance on two counts. First, it witnessed the fruitful culmination of a great Decade of Reforms and Development which covers the period of the present regime. During this decade, considerable progress has been achieved in all spheres of our economic and social life. Secondly, the year under review saw Pakistan surmount the economic stresses and strains caused by the Indo-Pakistan conflict, reduction in foreign economic assistance and two successive years of crop failures. Clear signs of our having weathered the storm is provided by the preliminary estimates of national income which indicate a growth rate of 8.3 percent over the previous year. The first two years of the Third Plan had registered growth rates of 4.6 percent and 5 percent respectively. The high rate' of economic growth this year is due to a substantial increase in agricultural production, as agriculture still holds a dominant position in the national economy and accounts for almost half of the national income. This excellent performance of the agriculture sector is largely due to the awakening among the farmers created by the bold and imaginative lead given by the President as well as the vigorous efforts of the Government, both Central and Provincial, which have resulted in the large-scale use of key inputs in agricultural production by farmers, such as improved varieties of seed, fertilizers, pesticides and insecticides and improved agricultural implements and machinery. This was also made possible by the increase in the supply of water resulting from the completion of several irrigation schemes as well as the provision of more credit for farmers. Favourable weather also played an important role in raising agricultural production this year. It is expected that food self-sufficiency will be achieved by 1970, and that the the production of non-food crops will also increase considerably during the next few years. As a result, the rate of GNP growth is expected to rise substantially and the target rate of 6.5 per cent per annum for the entire Plan period may well be achieved. Progress in industrial production has been maintained despite the shortages of certain imported raw materials caused by diversion of a substantial part of our foreign exchange earnings to the import of foodgrains and by delays in the commitment of commodity assistance. This was due to the re-orientation of our industrial policy towards the maximum utilization of existing capacity and the development of industries based on indigenous raw materials. During 1967, the Government had to pursue a cautious monetary policy. This was necessitated by the rapid expansion in the money supply during the previous years which was caused by increased defense expenditure and a steep rise in bank credit. To meet the situation, a number of selective icredit’eontraH!Isasft|es were adopted, as a result of which there was a significant- fall in money supply and some easing of the pressure on prices emanating from monetary expansion