PAKISTAN’S politicians and policymakers must evaluate economic models that yield better results than the old five-year plans. Instead, just like its predecessor, the Shehbaz Sharif government is drafting a five-year roadmap outlining the way to economic resurgence and stability. The ultimate aim is to curb inflation, alleviate poverty and create jobs. A committee has been formed to consult the relevant ministries to set targets for the next five years in different sectors. Once the required information is gathered, the economics planners intend to roll out a “consolidated document” that includes five-year targets for a number of sectors such as energy, agriculture, SMEs, exports, taxation, IT, investment and privatisation.

A key component of economic strategy in the 1960s and 1970s in many countries, five-year plans lost their utility in the free market system that consolidated its global hold following the fall of the Soviet Union.

Countries are drifting away from such planning models. In recent years, for example, this model has made way for a three-year action plan as part of India’s 15-year vision document. Other economies have also replaced this document with similar rolling, strategic economic models, which are flexible and in sync with today’s realities. Five-year plans are a legacy of highly centralised economic systems where governments used to shape their growth by controlling economic activities through permits, licences, voucher schemes, nationalisation, credit allocations, etc.

In the modern world, where the private sector is considered the engine of economic growth and development, such government intervention in the economy creates distortions and impedes growth. Pakistan is a major example of why a government should not be involved in economic activities.

In the light of past experience, it is advisable that the government evolve a well thought-out strategy to reduce its footprint on the economy, encourage market forces, and help the private sector realise its full potential. The sole objective of the government’s development vision should be to evolve sound policies for private investors for a period of, say, 20 years, decentralise the power structure for quick decision-making, and regulate the markets justly to protect consumers. This paradigm shift in planning is not only needed to fix the economy but is also in keeping with the sociopolitical changes in Pakistan.

Centralised planning hasn’t worked here beyond a certain point. It is hard to recall if any five-year plan has achieved its goals. Even the much-touted early plans implemented under the Ayub regime in the 1960s produced only business monopolies, and an oligarchy that thrived on the state’s largesse.

It would be much better for the new government to focus on real reforms and formulation of policies needed to pull the country out of poverty rather than waste its energy and resources on antiquated ideas.

Published in Dawn, March 16th, 2024