As already mentioned, the Hindus and Congress had not accepted the establishment of Pakistan with sincerity. They always looked for opportunities to undermine and harm Pakistan. They adopted every possible means to strangle Pakistan's economy besides creating other problems like massacre of refugees, accession of princely . States which have already been discussed in the preceding pages. In order to destroy Pakistan's economic conditions, India denied Pakistan equitable share in the financial and military assets. False propaganda was made about Pakistan's viability in the economic sector in. order to create doubts among the people about Pakistan's unstable economic conditions. When Pakistan came into existence, it mostly consisted of those areas which were economically backward and under developed.

These areas were mostly producers of raw material which could not be utilized locally because related processing industries were located elsewhere. The British Government had not paid any attention towards the economic uplift of these areas. The agricultural system was obsolete and outdated which added to the economic backwardness of the areas forming part of Pakistan. The geographical location of Pakistan too, created economic problems for Pakistan. Pakistan was divided into two parts, each located one thousand miles away from each other with India's territory lying in between them. The two wings of the country had no geographical links between them. Before partition, the Hindus, with the blessings of the British Government, had acquired complete monopoly in trade and commerce. The entire capital was in the hands of the Hindus.

The banks and other financial institutions were established in those areas which were located in Indian Territory. The major industries were also located in the areas which are now part of India. Besides these factors, the technical experts and laborers, who operated the industries were all Hindus because the Muslims extremely lagged behind in education and financial capabilities. Pakistan also suffered heavily because of Calcutta being awarded to India by Radclife. All major jute factories were located in Calcutta which was produced and cultivated in East Pakistan and was the most precious crops of the province. The only seaport of East Pakistan, Chittagong , was not capable of handling export of the jute to the other countries as yet. Pakistan, therefore, had no other alternative than to export her jute through Calcutta or sell it to India at a low price offered by her. The inadequate system of transportation and communication also made its adverse affect on economic development of the country. The railway system and river transportation in East Pakistan was in depleted condition. The roads were in shabby and irreparable condition.

The communication and transportation system in West Pakistan, comparatively, was in a better condition. The power resources in the two wings were scarce and negligible which were insufficient to meet the national requirement. In spite of the adverse economic position, the Government of Pakistan took up the task of economic development with determination. The Quaid-i-Azam immediately set himself to the stupendous task of re-building the economic system of the new country. He had correctly realized that Pakistan would not be able to overcome its economic problems by the assistance of Reserve Bank of India alone. He, therefore, ordered that a State Bank -of Pakistan be set up immediately and entrusted the job of setting up of the bank to Mr. Zahid Husain. The State Bank of Pakistan was established on 1st July, 1948 with a capital of three crores of rupees. The Ouaid-i-Azam inaugurated the Bank and said, "The Bank symbolized the sovereignty of our people in the financial sphere. The western economic system has created many problems for Establishment of Pakistan 109 humanity. This system will not help us in setting up a workable economic order. We will have to evolve an economic system based on the Islamic concept of justice and equality". A numb r of other steps were also taken for the economic development of Pakistan. A Development Board was set up in 1948 which was to do planning for industrial development. It was an advisory body which gave expert advice to the Government on economic development. When the Government of India delayed the division of financial assets to Pakistan and denied its equitable share in the capital to create economic crisis for the new country, the Quaid-i-Azam immediately asked for setting up of 'Pakistan Fund'. 

A large number of rich traders and people generously donated to this fund which enabled the Government to overcome its economic problems to a great extent. In 1948 a concrete policy was devised for the industrial development of the country with an emphasis on the use of raw material available in the country. The electrical, telephone, and wireless equipment industries were nationalized. Service conditions and wages schedule for the laborers were drafted. The planning and control of the industry dealing in iron, steel, heavy machinery, cement, mineral oil, sugar and tobacco were taken over. Concession in taxes and lenient policy in credits were announced. Agricultural sector is the backbone of Pakistan's economy. Eighty per cent of Pakistan's population is dependent for their livelihood on the agricultural sector. The agricultural sector provides raw material to a number of industries.

The agricultural system, therefore, had to be developed on stable footings. The Government of Pakistan took various steps for the development of agricultural sector. Lenient credit policy was announced. Effective steps were taken to control the menace of water logging and salinity. Agricultural Corporation was set up with an objective of taking appropriate steps for the agricultural development. The Government of Pakistan gave its first budget in 1948-49. It was a balanced budget which confirmed Pakistan's stable economic conditions.

 
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