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Capital for Regeneration of Agriculture in Pakistan

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Capital for Regeneration of Agriculture in Pakistan CAPITAL FOR REGENERATION OF AGRICULTURE IN PAKISTAN DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By UMAR KHAN NIAZI, B. S., M. S. The Ohio State University 1957 Approved by: / Advi:Adviser Department of Agricultural Economics and Rural Sociology PREFACE A TREATICE CN THE UNDERSTANDING OF THE NEED FOR CAPITAL FOR THE REGENERATION OF AGRICULTURE IN PAKISTAN The Almighty's vicegerant's functions of life on this side of the grave, popularly known as the Triangle of Life, are to make a good living, worship Him and reproduce so as to keep up his race. He loves to live as long as possible but cannot escape from death. Undoubtedly, everyone will agree that life is short in duration, and therefore, the first economic principle for anyone should be, not to waste his time, but to make the most out of it. In fact, his economic program, is to sharpen his common sense to maximize gains in transactions, in order to achieve the noble goal of life called success. There is no dearth of anything, save the state of knowledge and for it, speaking economically, he needs a lot more than ever before the desirable as well as admirable services of his servant termed capital, hardly his "exploiter," a good joke for Marx. Therefore, what is required is to create more capital. The history of mankind tells us that his race as a whole, has trav­ ersed a long distance and nobody knows what is in the nature's store for him, but he is responsible for making his own fate. While Pa­ kistan, that constitutes a part (3%) of his race, today, is facing a great difficulty in the field of his first function i.e., food. She can easily overcome the obstacle and progress equally well if her farmers are able to use inanimate power. ii ACKNOWLEDGMENTS Mo sooner had I begun the dissertation, than I became aware of how tremendously complex this seemingly simple and direct idea of "Capital for Regeneration of Agriculture in Pakistan" was, Cer- tainly, I would never have persisted in the effort had it not been for the help of those to whom I should now like to express my heart­ felt thanks. Needless to.say, none of these, bears responsibility for the short-comings or errors of the analysis. But they are highly responsible for whatever merit it contains. No brief statement of acknowledgments can do justice to the many individuals who have helped in their own right. In addition to the following, acknowled­ gments is due to many American friends who have helped me in one way or.vanother particularly, Guy ¥. Hiller for his encouragement and help in supplying much of the data for the analysis of this problem. The final product, of course, necessarily more than most, owes its existance to Dr. Mervin G. Smith, the Chairman of the Department of Agricultural Economics and Rural Sociology. For this, and for his inestimable help, I am pei*sonally indebted to him beyond all re­ payment. Certainly, I would never have undertaken such a project without his warm encouragement and therefore, it is the tutor of mine, to whom I, once again extend my sincere thanks. I should also recognize with deep appreciation the guidance given me by my Adviser Dr. Virgil R. Wertz, under whose careful supervision, this analysrs was conducted. Every stage in the development of this study shows iii the impact of his suggestions and of his constructive criticism. The author is also indebted to Dr. Elmer F. Baumer and profited greatly from the benefit of his critically thoughtful judgment and invaluable help. Many people in both the Departments of Agricultural Economics and Rural Sociology and Economics have been most generous in supplying needed information. I have the pleasant duty of extending my sincere thanks to all these persons with a special reference to Ralph ¥. Sher­ man, Dr. Clifford L. James and Dr. Robert D. Patton for the unfailing help. Finally, I should like to add a note of thanks to the personnel of the Ohio State University library, who must have wondered how any­ one could possibly want so many books but who however, supplied them almost all with admirable efficiency. Mrs. Sara Smith provided much help in typing it and any acknowledgments would be incomplete with­ out a word of special thanks to her. In fact, she has been unfail­ ingly helpfuL at all times. Most of all, I am grateful, to my friends, collegues and professional acquaintances for their similar help with special mention to Mr.. Abbas Ghezelbash for his controversial dis­ cussions. Last of all, I deeply appreciate my wife for the sacrifice made by her in keeping the family running during the period of my stay here for this study. TABLE OF CONTENTS PREFACE ACKNOWLEDGMENTS TABLE OF CONTENTS LIST OF TABLES CHAPTER PAGE I. INTRODUCTION ................................ 1 The Problem ............... 1 Objectives of the S t u d y ................. 2 Importance of the S t u d y ................. 2 Definition of Terms Used ....... ..... 3 Organization of the Study ......... h PART I AH ANALYTICAL VIEW OF THE PROBLEM ............. 3 II. A REVIEW' OF THE ECONOMY OF P A K I S T A N ........... 6 Emergence of Pakistan ............ 6 Pakistan in Miniature .................. 7 Population ..... ............... 7 Agriculture ....... 9 Obstacles to Rapid Development .... 15> Finance ................... ..... 18 General ........... 21 Philosophy of People ••••. ........... 23 III. THE STATEMENT OF THE PROBLEM .......... 26 v vi CHAPTER PAGE IV. THE METHOD USED IN THE ANALYSIS OF THE PROBLEM . 33 The S c o p e ................................ 33 Economic Methods and Principles Applied in this S t u d y ................. ............. 35 Statistical Methods Used in this Thesis . 35 Economic Considerations ............... 35 Statistical Considerations ....... 37 V. A REVIEW OF THE CURRENT L I T E R A T U R E .............. 38 VI. SOME OBSTACLES TO BE OVERCOME TO PERMIT ECONOMIC ADVANCEMENT IN PAKISTAN ........................ U5 PART II TOWARD A SOLUTION FOR IMPROVING THE PRODUCTIVITY OF AGRICULTURE IN PAKISTAN .................. ...... 52 VII. A STATISTICAL ANALYSIS OF THE ECONOMIC STATUS OF AGRICULTURE IN PAKISTAN . ..................... 53 The Program $k Justification of the Program 58 VIII. THE PROBLEM OF INCREASING PRODUCTION ........... 65 Historical Perspective ................... 65 Agricultural Production ................. 66 Industrial Production ....... ....... 7 k Small Scale and Cottage Industries ...... 77 Water as a Basic Resource ................. 78 IX. THE PROBLEM OF SURPLUS RURAL POPULATION.......... 81 vii CHAPTER PAGE Implications of Land. Scarcity ....... 82 The Extent of Surplus Rural Population in Pakistan . ............. ....... 85 X. THE NEED FOR SUPERIOR TECHNOLOGY .............. 93 PART III WAYS AND MEANS OF INCREASING THE SUPPLY 0? CAPITAL IN PAKISTAN .................................. 105 XI. THE ROLE OF FINANCIAL ORGANIZATION IM INCREASING THE SUPPLY OF CAPITAL ................. .. 106 Governments .......... ....... • 106 Corporations 112 Banks .. ............. lll| I n s u r a n c e .................... ......... 117 XII. OTHER MEANS OF INCREASING CAPITAL .............. 122 Foreign Aid ....... ............... 122 Foreign Trade ............... 127 XIII. TAXES AND THE BUDGET. AS A FACTOR CONTRIBUTING TO CAPITAL FORMATION ................ ............ 135 XIV. EFFECTIVE MOBILIZATION OF PRODUCTIVE SAVING .. llj.3 XV. OTHER METHODS OF PROVIDING CAPITAL ........... 155 Devaluation ......... 157 XVI. THE PLACE OF OTHER MEANS FOR CAPITAL FORMATION IN PAKISTAN .................................... 166 Capital Imports on Deferred Payments Basis . 167 Revolving Funds and Reinvestment Schemes • . 168 Economizing of Capital ............. 168 viii CHAPTER PAGE XVII. IMPORTANT FINDINGS MID SUGGESTIONS ............. 171 Findings . ........................ 171 Suggestions ..... ..................... 17U APPENDICES ............................................... 179 Appendix A .................. 180 Appendix B .................. 207 Appendix C ..... .......................... 210 Appendix D ......................................... 213 Appendix E . ...... .......... ......... 217 Appendix F .................... 219 BIBLIOGRAPHI ............................................. 220 AI7T0BI0GRAPHI 222 LIST OF TABLES TABLE PAGE 1. Land and Population in Pakistan: 1931 ............. 7 2. Land Situation in Pakistan: 1 9 3 1 ................ 11 3. Area, Production and Yield Per Acre of Principal Crops in Pakistan in 1933-36 ................ lU li. Principal Exports of Pakistan in the Selected Years . 13 3. Foreign Aid to Pakistan 1%) to the End of September 1936 19 6. The Direct Contribution of Agriculture in the Total National Products of Pakistan ..................... 33 7. The Cost of Operation in Rupees Per Acre in Two Different Methods of Cultivation in Pains tan ..... 3>6 8* Per Capita Consumption of Mineral Fuels and Waterpower in Selected Countries: 1930 ........... 36 9. Consumption of Electricity Per Capita, Selected Countries: 1930 ........................ 37 10. Yield Per Acre of Wheat, Maize and Rice in Selected Countries ............. 39 11. Disproportion Between Land and Labor Factors of Prodixction in Pakistan: 1931 ...... ..... 61 12. Land Tenure Situation in Pakistan: 1931 • ' 6l 13. Total Area and Area Cultivation in Pakistan: 1931 • . 62 13. Food Grains Situation in Pakistan ................. 67 13. Food Requirements of Pakistan at the Present Level of Consumption ............... 68 169 Land Utilization in Pakistan
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