Economic Exploitation: 1948-1971

Charles Smith of the Financial Times, London in an article in 1971 wrote:

…If East Bengal is amongst the 8 poorest countries in the world it has to be partially attributed to the very fact that it is a part of Pakistan.

…in 1937, at partition, East Bengal was actually better off than the west wing in a number of important aspects.

…As for the future East Pakistan’s well watered countryside looked more promising for development than the relatively arid west.

…What East Pakistan did not have, however, and has never possessed until today, was political power – and it was the exercise of power by the leadership in the west that started the rot.

Conflict in East Pakistan

Authors:
[1] Edward S. Mason, Lamont University Professor Emeritus, Harvard University.
[2] Robert Dorfman, Professor of Economics, Harvard University.
[3] Stephen A. Marlin, Professor of Economics Harvard University

Some excerpts:

The basic facts seem to support the East Pakistani charge of economic domination by the West. The economic disparities between East and West Pakistan have been so serious for so long that the Pakistan Government’s highest planning authority has been forced to take official not of them…

East Pakistan blame three instruments of the Central Government for their plight:-

  1. Pakistan’s scant investible resources, plus foreign aid, are directed unduly to the development of West Pakistan – to the comparative neglect of East Pakistan
  2. In particular, East Pakistan’s foreign trade earning are diverted to finance imports for West Pakistan.
  3. Economic policy favors West Pakistan at the expense of East Pakistan. Specifically, tariffs, import controls, and industrial licensing compel East Pakistan to purchase commodities from West Pakistan which, but for the controls could be obtained more cheaply in world markets.

Economic Exploitation: 1948-1971 Part II

PlanWest PakistanEast PakistanNet Spending in terms of percentage of total expenditure

Rupees in crores

1950/51-54/55112952420
1955/56-59/60165552432
1960/61-64/653355140442
1965/66-69/705195214141
Total12834430034

Reports of the Advisory Panels for the Fourth Five Year Plan 1970-75, Vol. I, published by the Planning commission of Pakistan

  • From 1948-60 East Pakistan’s export earnings had been 70%, but its share of import earnings was only 25%.
  • A sizable net transfer of resources had taken place from East to West Pakistan. The report states that, if allowance is made for the undervaluation of foreign exchange in terms of Pakistan’s domestic currency, the total transfer from East to West Pakistan over the period 1948/49-1968/69 was Rs 31,000,000,000 [1971 terms]. Using the then exchange rate of Rs 11.90 to the dollar, this worked out to 2.6 thousand million dollars in 1971 terms.

Some Consequences

  • In 1948 there were 11 textile mills in the East and only 9 in the West.
  • In 1971 there were 26 in the East as opposed to 150 in the West.
  • East Pakistan’s economy transformed from a surplus one to a deficit one.