Javeria Kanwal

Born on May 14, 1907 in Rehana village, near Haripur, Hazara, Pakistan.
Studied at Aligarh Muslim University.
Joined the army of the British Colonial powers in 1926.
Fought in World War II as Commissioned Officer.
Attained the rank of Brigadier General in 1947
In 1950, became first Pakistani to lead army as its Commander-In-Chief.
Army took control of the country in 1958 & appointed General Ayub Khan

as Chief Martial Law Administrator.

Soon after, Ayub Khan declared himself as President.

 The commitment to rapid industrialization.

The benefits of economic growth would drop

down to the poorer segments of the society.

Key priority
Achieve rapid rates of economic growth & price
stability.
Develop Pakistans industrial & agricultural
capacity.

The countrys economic performance in terms of growth rates

of the important sectors includes: 1.

Agriculture

2.

Manufacturing

3.

Balance of payments situation

4. Price index

 One of the salient feature of the Ayub Khans decade was The reversal

of the neglect in agricultural sector that had been there in the early
1960's.
A series of reforms strengthened the Pakistani agriculture sector.
Rural infrastructure investment was increased to improve the overall
availability of irrigation water and the amount of cultivated land.
The two factors that contributed to the revival of agriculture were:
The green revolution, characterized by the introduction of high

yielding varieties of rice and wheat.

The mechanization and diffusion of technology among agriculture
producers.

Green revolution
Green revolution is a concept used for food production of new
and improved varieties of seeds, fertilizers, irrigation and
machinery.
As a result, between 1960-1965, agriculture production grew by

3.8% per annum.

This phenomenal increase in growth can be broken into two
phases.
Between 1960 and 1964-65, irrigation was the main cause of
development
Between 1965-66 and 1968-69 the use of high yielding

varieties seeds and chemical fertilizers became widely

common in West Pakistan which was the main cause of
development then

 Improved Seeds
Agricultural Machinery
Tube well Irrigation
Between 1959 and 1964 agriculture grew at an over

all rate of 3.7% and by 6.3% between 1965 & 1970's

POLICIES IN THE INDUSTRIAL SECTOR

Focus on reconstruction and development of agriculture

based industries

Priority of Ayubs administration was to achieve the rapid rate

of economic growth and develop Pakistans industrial

capacity.

Emphasized on private sector.

Removal of administrative controls and price stability to

provide a macro economic environment conducive to private

investment.

In February 1959, Government announced a new industrial

policy. The main emphasis was put on the utilization of raw
materials available in the country to benefit small and
medium scale industries.
Among the major steps that were taken in the promotion of
industrialization were:
1.
2.
3.
4.
5.

Establishment of Financial & Development Corporations

Industrial Trading Estates
Price Controls
Investment Promotion Bureau
Encouragement of Private Enterprises

1. Establishment of Financial & Development Corporations

PIDC played an important role
Set up with a capital of 1 billion
PIDC was put incharge to promote the following industries:
Jute
Paper-board and newsprint
Heavy engineering
Fertilizers
Sugar
Cement
Textiles etc
2. Industrial Trading Estates
Four new estates for small industries were established in
Bahawalpur, Gujarat, Larkana, and Peshawar
It helped in the process of industrialization by handling the
initial difficulties faced by new industrialists

3. Price Controls

In October 1958, the government took several measures to check

the rising spiral of prices.

Price controls covering a large number of consumer goods and

industrial raw materials were imposed.

These measures led to a fall in prices and improvement in supply

position of a large number of articles.
4. Investment Promotion Bureau

In order to attract foreign investment the government set up an

investment promotion bureau in April 1959.
The main function of this organization was to sanction proposals
for the establishment of new industries involving foreign
investments.
To provide guidance to industrialists and serve as a clearing house
for problems of foreign investors in the matter of procurement of
land, building materials, water, power, railway etc

5. Encouragement of Private Enterprise

Establishment of investment promotion bureau to give

information and guidance to private investments.

Industrial legislation with a view to facilitating the growth

of industry with minimum government interference.

Giving further incentives for encouragement of exports.

- SUPPLY OF CREDIT
Liberally provided to the industrial sector by both the commercial banks &
the specialized credit institutions
- FOREIGN AIDS AND LOANS
Foreign aid and loans received from friendly countries, played a dominant
role in industrial and economic development of Pakistan. Without such aid
the remarkable growth in that era could not be possible
- FOREIGN INVESTMENTS
Liberal policies in tax concession and other measures taken by government,
the inflow of capital increased
According to state bank of Pakistan foreign private investments increased

1956
1959
1965
1966

13.20 Mn
16.59 Mn
26.11 Mn
26.28 Mn

introduced in 1959

Used both to subsidize exports and to allow a safety valve on imports

Under the Export Bonus Scheme, an exporter received:

The amount of rupees converted at the official exchange rate
Bonus Vouchers equivalent to some percentage of his export earnings (the
percentage varied from time to time and from commodity to commodity)
The scheme allowed a free market in the bonus vouchers for certain
commodities.

The 1960s were the only period in Pakistans fiscal history when significant
public savings i.e. the excess of government revenues receipt over revenue
expenditures materialized

Re-investment of earnings in the private industrial sector

Financial efforts through budget surpluses.

Additional taxation resulted in increase of ratio of taxes from 6.1% of GDP in

1959-60 to 7.6% in 1969-70.

A significant rise in government Income

Needs of additional defence spending were met by additional taxation.

In spite of success in industrial diversification and export performance,

Ayub Khans policies had several shortcomings.
Income disparity was seen as the major drawback.
High rates of effective protection continued to make Pakistani industry

inefficient, and a number of international studies documented Pakistan

as a worst example of industrialization.

Unlike other countries, Pakistani use of tariffs and quotas was not

carefully planned.

The differences between East & West Pakistan worsened the situation.

 The 1960's also marked Pakistans increase reliance on foreign

aid.

While the external economic assistance as a percentage of

GDP was a modest 2.8% in 1960's, it became substantial

within the next five years reaching to 6.6% in 1965.

Another negative feature of Ayub's industrial and trade

policies were the deliberate repression of wages.

It was felt that the low wages for industrial workers and the

restriction of trade union activity would help industry

acquire the critical mass needed for industrial takeoff.

These features of authoritarian

governance built up frustrations over time
that ultimately led to the downfall of
Ayub and the political momentum gained
by Mr. Zulfiqar Ali Bhutto