When Bhutto began his rule there was nothing in the treasury. The journey that he had embarked upon was quite thorny and perilous, but he knew that the Pakistani businessmen and rich people had over $3,000m in banks abroad. To ensure that the money was returned, the government ordered that the holders should declare their assets by January 15, 1972. It had been hoped that if the money abroad was brought back to Pakistan it would improve the foreign exchange position. The date passed but the response was poor. The government had confiscated the passports of these people to prevent them from travelling abroad but still the government’s demand remained unmet and the remorseful government had to return their passports. This was a setback for the government in the early days.
After attending to some initial work, Bhutto began his economic reforms programme. On January 1, 1972, he announced the Economic Reforms Order under the martial law umbrella. Through this order large industries such as iron, steel, heavy engineering, cement, gas, electricity, oil refineries and basic chemicals were nationalised; it was an act that the nation had not expected. They had a capital equipment worth one billion rupees. Critics claimed that industries of many an opponent of Bhutto which had little turnover were nationalised while the favourites were spared.
Calling upon the people to work hard to enhance productivity, he said: “There is no substitute for hard work… Now we have the people’s government and the people are the ultimate masters.”
Later, on March 18, 1972, he nationalised the life insurance industry, which, till then had been run by 39 domestic and four foreign companies. It had an investment of some Rs40bn, which gave an annual profit of Rs240m. Banks were the next in line. This had an adverse effect on the international credit rating of Pakistan. However, Bhutto hoped to get the rescheduling and seek financial support from friends like Qadhafi of Libya and Shaikh Zayed of United Arab Emirates.
This was followed by the nationalisation of privately-owned schools and colleges on October 1 of the same year. Nationalisation drew much criticism from industrialists, entrepreneurs, educationists and politicians. The main reason was that the country’s private educational institutions had produced highly qualified people. When these institutions were handed over to the bureaucrats, they managed them like government departments and were least bothered about the end result. Thus, with the passage of time their workability deteriorated and many ran aground. Forty years later, in 2010, PPP leader and sitting prime minister, Yousuf Raza Gilani, admitted that the nationalisation of educational institutions was a mistake and should have been avoided.
Bhutto had brought Pakistan People’s Party to the mainstream by his captivating slogan Roti, Kapra aur Makan, with the labour class being his important and dependable constituency. He had not forgotten the pledges he made during the election campaign and now he wanted to fulfil them. On February 10, he announced the labour policy, under which he decreed four per cent share of the profit for the workers. Though it was difficult to make the workers and managements sit together and sort out labour problems, he managed to do so. He also asked the special courts to “adjudicate grievances within twenty days” and promised security for the workers against arbitrary retrenchment. Cheap housing for workers and free education up to matric for at least one child of every worker was promised by the state.
Social security benefits for even domestic servants were pledged. Four years later, in 1976, a full-fledged department known as Employees Old Age Benefit Institute (EOBI) was established to ensure pension for retired and senior citizens. As this department became part of the government administration, it ran into snags. Inefficiency became a characteristic of the organisation defeating the very purpose of the introduction of the labour policy.
Apparently this was a difficult policy to implement and Bhutto knew the limitations of his government which was still in infancy. He also knew that with the faulty mechanism he had inherited he could not achieve the results he intended. While the investors and business tycoons bitterly criticised his policies, the working class welcomed them with caution. He always reminded them of the prevailing situation and told them that the reforms could not change their fate overnight. Bhutto was quite aware of the system he was to work with; therefore, he sent a word of caution to his administrative executives.