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FIVE YEAR PLAN SEVENTH (1988-1993)

One camel does not make fun of another camel’s hump

FIVE YEAR PLAN, SEVENTH (1988-1993) The Seventh Five Year Plan was launched on 1 July 1988 by the caretaker government that took office after the dismissal on 29 May of the administration of Prime Minister Muhammad Khan Junejo Mahbubul Haq, the architect of the Sixth Plan, was back in office as the minister in charge of finance and planning Five months after the launching of the Seventh Plan, there was another change of administration On 2 December 1988, Benazir Bhutto was invited to form a government in Islamabad, returning the Pakistan People’s Party to power for the second time in 20 years Although the PPP government pursued an activist economic policy, it did not formally reformulate the Seventh Plan The Plan’s basic objectives and proposed policies were kept unchanged, and the first annual development plan for the financial year 1989-1990 was cast within the original framework The Sixth Plan had achieved a gross domestic product (GDP) growth rate of 66 percent a year, slightly higher than the target of 65 percent The Seventh Plan went back to the target of the Sixth Plan



About 44 percent of the planned investment was to come from the private sector This implied a rate of increase of 105 percent a year in private investment over that realized in the Sixth Plan This rate of growth was also considerably higher than the 79 percent increase that was envisaged for public-sector investment In other words, the planners were hoping to return to the pattern of investment that prevailed before the 1972 nationalization of private economic assets Nationalization had not only significantly increased the economic role of the public sector, it had also discouraged new capital formation by the private sector As had been attempted repeatedly by the framers of five-year plans, those responsible for preparing the Seventh Plan also promised to provide a large flow of public resources for the development of social sectors Education and health were to receive 10 percent of total public investment The most striking feature of the budgetary performance during the Sixth Plan was the emergence of revenue deficits instead of the revenue surpluses that were anticipated by the planners Budgetary deficit as a proportion of GDP increased from less than 5 percent in 1982-1983 to 8 percent in 1987-1988

The Seventh Plan sought to address this situation and suggested a number of improvements in fiscal management These included the requirement that all provinces must balance their current budgets by curtailing non-development expenditure and raising additional tax revenues

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