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Detailed Annual Plan, 1990-91.

Detailed Annual Plan 1990-91

The Planning Commission of the Government of Pakistan issues regularly three documents about the Annual Plan. One is a sketchy and issued in haste with incomplete plan expenditure along with the Federal Budget in May or June of the preceding year. It gives an outline of the Plan expenditure in private and public sectors during the outgoing year and the projection for the new fiscal year. Simultaneously, the Programming Section of the Planning Commission issues Federal Government Public Sector Development Programme in detail.

Later, during the year when better statistical data about the economy are available a detailed Annual Plan for the current year is made public. It covers Annual Plan expenditure targets and physical goals to be achieved during the year by public and private sectors. The detailed Annual Plan 1990-91 was issued in January 1991. This over 360 pages document pertains to the third year of the Seventh Five Year Plan 1988-93, which from the very beginning has been passing through turbulent developments. The rapidly changing developments in Pakistan and the world over call for serious national vigilance and hard work to move quickly toward the goal of self-reliance which is becoming more and more difficult year after year.

In the Detailed Annual Plan, a brief review of the economy for 1989-90 is given which is confirmed by the State Bank of Pakistan in its Annual Report for that year. Although actual growth rate of 5.2 per cent of the GDP was below the Plan target of 5.8 per cent, yet it was quite impressive. The overall fiscal deficit was 6.4 per cent of GDP and the rate of inflation measured by the changes in the consumer price index was below 8 per cent. The rate of monetary expansion was held below the rate of nominal increase in GDP with an adequate provision for credit to the private sector. However, the balance of payments position was under pressure.

In sectoral performance, overall growth rate of agriculture was estimated at 4.1 per cent against the plan target of 5.2 per cent. The growth rate of mining and quarrying at 9.7 per cent exhibited an impressive improvement over the Plan target of 7.3 per cent for 1989-90 and actual achievement of 2.1 per cent in 1988-89. This impressive achievement was mainly due to high growth rate of 14.3 per cent in extraction of oil and 9.2 per cent in gas. Daily output of oil was 53,481 barrels and of gas 1,363 MMCF. Similarly the output of large scale manufacturing was estimated at 7.7 per cent against the Plan target of 7 per cent. Small scale industries exhibited a growth rate of 8.4 per cent. Thus the growth rate of all manufacturing was estimated at 7.9 per cent against the target of 7.4 per cent and 4 per cent in 1988-89.

Construction industry received a setback in 1989-90 and growth rate was 3.1 per cent against target of 5.5 per cent and actual rate of 2.3 per cent in 1988-89. Electricity and gas distribution exhibited growth rate of 8.3 per cent against the target of 5.8 per cent and actual growth rate of 13.2 per cent in the preceding year. The growth rate of commodity sector as a whole was 5.5 per cent in 1989-90 against the target of 6 per cent and actual growth rate of 5.9 per cent in 1988-89. The growth rate of services sector was estimated at 4.8 per cent against the target of 5.6 per cent and actual rate of 3.7 per cent in 1988-89.

Fixed investment in 1989-90 were estimated at Rs. 143.7 billion against the target of Rs. 141.8 billion. Private sector investment was Rs. 73.6 billion and public sector Rs. 70.1 billion. Total increase in fixed investment over the preceding year was 16.3 per cent, 19.9 per cent in the private sector and 12.7 per cent in the public sector. In relation to GDP fixed investments' share increased from 16.3 per cent in 1988-89 to 16.4 per cent in 1989-90. Savings were 14 per cent GDP in 1989-90 as compared to 13 per cent in 1988-89.

The overall balance of payments position was under pressure in 1989-90 due to sharp increase in trade deficit and decline in the invisible balance surplus. The current account deficit decreased from $1,934 million or 4.8 per cent of GNP in 1988-89 to $1,652 million or 4 per cent of GNP in 1989-90. However, the net inflow of long-term capital declined from $1,911 million to $1,491 million. The overall balance of payments deficit was $126 million in 1989-90 against $ 297 million in 1988-89.

Proposed Plan 1990-91

The proposed Annual Plan for 1990-91 aims at GDP's growth rate of 5.5 per cent comprising 4.8 per cent in agriculture, 7.7 per cent in manufacturing and 5.2 per cent in other sectors of the economy. The growth projections are based on some presumptions including normalization of law and order situation, favourable weather conditions, continuing improvements in agricultural input supplies, completion of new industrial and energy projects on schedule and prevalence of fiscal and monetary stability. The key objectives of the Annual Plan include GDP growth rate of 5.5 per cent, inflation rate (GDP deflator) of 7 per cent, maintenance of external competitiveness, reduction of current account deficit from 4 per cent of GNP in 1989-90 to 3 per cent in 1990-91, and investment level of 18.9 per cent of GDP. The proposed savings and investment scenarios for 1990-91 as compared to the preceding two years are given in the Table-I.

Table : Table- I Investment and Savings Projections 1990-91 As Compared to 1988-89 and 1989-90
 (Rs. in billion)
 1988-89 1989-90 1990-91
Particulars (Actual) (Revised) (Projected)
Fixed Investment 123.6 143.7 171.1
 Private 61.4 73.6 88.5
 Public 62.2 70.1 82.6
Changes in Stock 12.4 14.0 15.8
Total Investment 136.0 157.7 186.9
Financing 136.0 157.7 186.9
 Net Foreign Savings 37.2 35.4 29.9
 Net National Savings 98.8 122.3 157.0


As Percentage of GDP
 Investment 18 18 18.9
 Fixed Investment 16.3 16.4 17.3
 Net Foreign Savings GNP 4.8 4.0 3.0
 Domestic Savings 10.5 11.5 13.8


Table : Table II Private Investment Projections by Economic Sectors
 (Rs. in billion)
Sector 1988-89 189-90 1990-91
Agriculture 11.7 13.6 15.7
Manufacturing 20.5 26.8 31.3
Large Scale 17.2 23.1 26.9
Small Scale 3.3 3.7 4.4
Energy - - 3.8
Transport and Communications 6.4 7.2 8.0
Ownership of dwellings 15.7 17.8 20.5
Services and Others 7.1 8.2 9.2
 TOTAL: - 61.4 73.6 88.5


[Tabular Data Omitted]

Details of project private investment for 1990.-91 as compared to estimated investment in 1988-89 and 1989-90 are given in the Table-II

Financing of private sector is projected to come from three major sources. The Banking system and the Development Financial Institutions are likely to provide loans and credits to the tune of Rs. 29.8 billion (33.7 per cent of the total investment). About Rs. 15.2 billion (17.2 per cent) are to come from foreign sources. Rest of Rs. 43.5 billion (49.1 per cent) will be the sponsors equity. These projections are in line with the methodology of the State Bank of Pakistan, so far as agriculture, manufacturing and housing finances are concerned. For rest of the sectors, the Planning Commission has evolved its own methodology. Sector-wise financial plan is given in the Table-III.

CONCLUSION

Detailed Annual Plan of the Planning Commission and the Annual Report of the State Bank of Pakistan are unique documents in one respect. These two publications provide the most reliable economic appraisal of the country. In this respect, the Annual Plan of the Planning Commission has an additional advantage over the Annual Report of the SBP that it concentrates on development efforts, in detail, of the private and public sector. There are investment targets and savings and financing approach and physical targets for each economic sector. Investment agencies of public and private sectors have clear implementation proposals.

The Detailed Annual Plan exhibits two aspects of opposite nature. First and the disappointing one is that the implementation of the Seventh Plan is not going on according to Schedule. Total investment of Seventh Plan was projected at Rs. 710.7 billion (in 1987-88 prices). During the first three years investment in current prices is estimated at Rs. 480.6 billion. In 1987-88 prices the amount should be much less. Second aspect and of some promising trend is that there is a desire toward self reliance because of the changing global scenario. This will require in the nation to work much harder than before. In conclusion, this is a very important document for all from students to teachers, investors and administrators.
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Author:Khan, Abdul Majid
Publication:Economic Review
Article Type:Book Review
Date:Jul 1, 1991
Words:1538
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