Economic consequences of partion

Pakistan movement was run in various contextual parameters and one prominent milieu was economic injury to the interests of the Muslim educated, business, trading classes as well as to the common Muslim masses at the hands of Hindus supported by the British rulers. Muslims ruled over sub-continent for almost a millennium but with the manipulation of power by British whole scenario changed. The economic conditions of Muslims started to worsen. This was revealed by various reports published by Foreign as well as local experts. After 1857, British government adopted a premeditated strategy to weaken economy of Muslims in sub-continent. The reason behind it was that British have grabbed the rule by the Muslims and they don’t want see them emerge on paneled basis. The Hindus were main beneficiary of this British policy and they successfully adjusted themselves with the new rules. The Hindu landlords and money lenders were exploiting poor Muslims masses in rural areas. The education made Hindus to secure major share in Bureaucracy and government services as compare to Muslims. Trade of India was also controlled by British and Hindu traders. British introduced modern commercial institutions in India and once again, it was the Muslims who could not fiddle with them.

This economic exploitation added fuel to the fire and made irreversible impact on the Muslim mind set. The Muslims leaders were very well conscious of this factor. Quaid-e-Azam Muhammad Ali Jinnah was induced to take up the leadership of Muslims of Indo-Pak sub-continent. It was during the late 1930s that Allama Dr. Muhammad Iqbal written to Muhammad Ali Jinnah about growing economic inequalities between Muslims and the other communities of the sub-continent. He explained the Muslims plight to M. A. Jinnah in these words;

“The problem of bread is becoming more and more acute. The Muslim has begun to feel that he has been going down and down during the last 200 years. Ordinarily he believes that his poverty is due to Hindus money-lending or capitalism. The perception that it is equally due to foreign rule has not yet fully come to him. But it is bound to come. The atheistic socialism of Jawaharlal is not likely to receive much response from the Muslims. The question therefore is that; how is it possible to solve the problem of Muslim poverty? And, the whole future of the League depends on the League’s activity to solve this question. If the League can give no such promises, I am sure, the Muslim masses will remain indifferent to it as before. Happily there is a solution in the enforcement of the law of Islam and its further development in the light of modern ideas. After a long and careful study of this system of Islamic law is properly understood and applied, at last the right to subsistence is secured to everybody. But the enforcement and development of the shariat of Islam is impossible in this country without a free Muslim state or states. This has been my honest conviction for many yeas and I still believe this to be the only way to solve the problem of bread for Muslims as well as to secure a peaceful India.”

It was very well reflection of Muslim’s thought regarding their economic exploitation in sub-continent. The Whole difference between the Hindus and Muslims was evident. In 1941, the Quaid told to students of the Punjab:

“Can’t you see that a Muslim, when he was converted more than a thousand years ago, according to the Hindu religion and philosophy, he became an outcast and he became Malechaa (untouchable) and the Hindus ceased to have anything to do with him socially, religiously and culturally or in other way? He, therefore, belongs to a different order, not merely religiously but socially and he has lived in that distinctly separate and antagonistic social order, religiously, socially and culturally. Can you possibly compare this with that nonsensical talk that mere change of faith is no ground for a demand for Pakistan? Can’t you see the fundamental difference?”

This led to the economic blockade and backwardness of Muslims in that society. These conditions forced Muslims to live in absolute and perpetual poverty. It raised serious concerns among the Muslims. With the passage of time, Jinnah himself became very much vocal about this economic imbalance. In his presidential address to the all India Muslim League in 1943, he was quite clear on the point when he said:

“Here I should like to give a warning to the landlords and capitalists who have flourished at our expense by a system which is so vicious, which is so wicked and which make them so selfish that it is difficult to reason with them. The exploitation of the masses has gone into their blood. They have forgotten the lessons of Islam. Greed and selfishness have made these people subordinate the interests of others in order to fatten themselves. I have visited villages. There are millions and millions of our people who hardly get one meal a day. Is this civilization? Is this the aim of Pakistan? Is that is the idea of Pakistan, I would not have it. If they are wise thy will have to adjust themselves to the new modern conditions of life. If they don’t, God help them, we shall not help them.”

The All India Muslim League setup an “Economic Planning Committee” in its annual session held at Karachi from 24 to 26th December 1943. The purpose of this body was to analyze the existing economic imbalances in the sub-continent and to suggest remedies. The committee was headed by Nawab Ali Nawaz Jung Bahadur as chairman and Professor A. B. Abdul Haleem as secretary. In its inaugural session at Anglo-Arabic college, Delhi Quaid-e-Azam Muhammad Ali Jinnah said that,

“It is not our purpose to make the rich richer and to accelerate the processes of accumulation of wealth in the hands of few individuals. We should aim at leveling up the general standards of living amongst the masses and I hope the committee will pay due attention to this very important question.”

This committee in its final recommendation showed dissatisfaction from existing economic system and criticized industrialists, moneylenders and British economic institutions which are exploiting the common man.

That is why, During the Pakistan movement economic well-being and prosperity of Muslims masses was one of the dominant issue. Muslims wanted to have a separate homeland where they can develop their economy and flourish independently. But British rulers and Hindu scholars and politicians were doggedly saying that Pakistan would be a failure on economic front because areas which were supposed to constitute Pakistan were economically backward. However, when partition of Hindustan took place, India was far-ahead Pakistan in the size of her economy.

Under British rule the Indian economy had grown as a single unified whole with its concomitant regional specialization and inter-dependence. Its break-up, as a result of partition administered a rude shock to the economics of both India and Pakistan. The former, with a much bigger in size, with a greater factor and resource endowment, found it relatively easy to absorb the initial shock and make rapid adjustment to the new situation. In the case of Pakistan, however, it was altogether a different story. Partition placed it in an advantageous position visa-a-visa India in several aspects in the immediate context. From the long-term point of view also it had one important advantage. It was left with some valuable commercial crops like cotton and jute, and a secure domestic market for industrial product that, before partition, had been largely supplied from Indian factories. This offered a favorable opportunity for the country to start various processing and consumer goods industries to cater to the national domestic market vacated by industrial products from India. From an underdeveloped country that Pakistan was at that time, this was an advantage of inestimable value. But in terms of long-term perspective for large-scale industrialization, partition left Pakistan in an unenviable position. The reserve base in basic mineral was so scare that the country could never aspire to develop into a modern industrial state. This was known before partition and Jinnah, when told that Pakistan, if created would have to live in perpetual poverty, had replied, “Afghanistan is a poor country but it goes along, so does Iraq and that has only a small fraction of seventy million inhabitants that we would have. If we are willing to live sensibly and poorly so long as we have freedom, why should the Hindus object? ……… The economy will take care of it self.

The partition left Pakistan stronger agriculturally, while India industrially. Compared to its population Pakistan got a surplus of production in food grains and two important crops-jute and cotton. India on the other hand got 95% of the industrial production of united India. Immediately, both suffered economic losses as a result of the disruption of the complementarily between raw materials and industry, between products and consumer. In the long run Pakistani areas were probably the great loser.

Economic inheritances of Pakistan:

In the following lines, I will present a picture of post-partition economic inheritances of Pakistan in few sectors of economy. It will help us to understand how Pakistan started its career as an independent state and how hard it was for Pakistan to survive in those sturdy conditions.

a) Financial Institutions: The money market consisted of indigenous moneylenders and bankers, the cooperative banks, other joint stock banks, and the Reserve Bank of India. Pakistan did not have the head office of any important bank except the Punjab National Bank. Even this bank shifted its head office to the Indian domain after partition. The Pakistan areas were served by the branches of banks which had their head offices in Indian Union. According to 1947-48 statistics, the total number of joint stock companies registered in India was 22,674 with paid up capital of 56.950 million. In Pakistan there were 1889 joint stock companies in all with a paid up capital of Rs 1596 million or 2.7 per cent that of Indian companies. The limited commercial and industrial activity in Pakistan was confined to the two provinces of East Bengal and West Punjab.

b) Human Resources: Muslims generally did not make up to the higher positions in the central and provincial services, therefore Pakistan was faced with a dearth of technically trained manpower and civil servants with sufficient status and experience to direct the new ministries. Development of technological institutions and research laboratories had also been neglected in the areas making up Pakistan.”

c) Agricultural Inheritance: As a result of the partition, Pakistan got nearly one- fifth of the total population and one-fourth of the land area of united India. As against a population density in India 261 persons per square mile on the basis of 1914 census, Pakistan had a density of 194 persons square mile (roughly 2.58 square km). However, the growth rate of population, as revealed by census trends in decennial census since 1901, was higher in the areas now comprising Pakistan, than in the areas falling within Indian Territory. Considering the long-term population trend in the two countries, before, the initial advantage enjoyed by Pakistan was liable to be lost soon by a more rapid growth of population in it.

Of the total cultivated area of 218.1 million acres in undivided India, Pakistan share was 47.3 million acres or 21.6% of the total. The total irrigated area in undivided India was 70 million acres. Of this Pakistan got 22 million acres or 32% of the total. This doesn’t reflect fully the extent of advantage enjoyed by Pakistan over India in this respect. Most of the irrigation works falling to the Indian share were of a protective nature whereas the magnificent canal works of Punjab and Sindh that fell to Pakistan’s share was highly productive and profitable. Not only that, East Bengal, because of plentiful annual rain, did not need irrigation for the most part, at least for rising one crop just per year on the land. That was not the case so far as India was concerned. The largest part of the drought prone area of undivided India fell to the share of Indian Union.

The total production of food grains in India and Pakistan in 1948-49 was estimated at 41.2 and 14.4 million tones respectively. Thus with a population of about 20%, but over 26% of the food grains production of undivided India, Pakistan enjoyed a surplus of food grains production; its annual exportable surplus at the time being 5,00,000 to 7,00,000 tones. On the other hand, India went in a deficit of 2.5 to 3 million tones annually. Pakistan had thus a distinct advantage over India at the start in the crucial field of food supply for purpose of economic development. In the two principal commercial crops, jute and cotton, Pakistan’s advantage was even greater. Its share of cotton production in the total of united India was 40% and raw jute 80%.

d) Industrial inheritances: The most striking feature of Pakistan’s economy at the time of independence was the vast contrast between its natural resources and its extreme industrial backwardness. The country produced 75% of the world’s production of jute, annually produced over 15, 00,000 bales of good quality cotton but very few textile mills to utilize it. There was in 1947 an abundant production of hides and skins, wool, sugarcane and tobacco to name a few of the important product; Pakistan’s considerable resources in minerals, petroleum and power remained untapped. These were the main deficiencies and handicaps with which Pakistan started its industrial development policy. The first industrial policy, which was framed in 1949, pointed out that Pakistan at that time, depended on outside sources even for consumer goods.

India received 95% of the overall industrial units in 1945, while Pakistan received less than 9% of the total. The region that came to constitute Pakistan was industrially among the most backward parts of the country. At the time of independence, there were only 34 factories in Pakistan with a total daily employment of 26,400 persons. Although Pakistan inherited 20% of the sub-continent’s population, her share in industry was less than 7% and even these consisted of small scale and minor industrial units.

In 1947, Pakistan had almost no known natural resources, except agriculture land. The country had no significant industrial sectors, developed power resources, and established financial institutions. In developed educational institutions and in trained manpower, Pakistan started off with a very weak position.

Out of the 14,569 industrial establishments in British India in 1947, about 1406 were located in the area then constituting Pakistan (i.e. present Pakistan and Bangladesh). Even these establishments were of much smaller size than established in India. Out of the total number of 3.14 million industrial workers in undivided India, Pakistan’s share was almost 200,000 or 6.3% of the total for India as a whole.

Thus Pakistan inherited one fourth of the total production, less then one tenth of the number of industrial establishment and about one sixteenth of total number of workers in undivided India. Even these were mostly of a seasonal nature, small agro based units consisting mainly of relatively less important units such as flour and rice mills and cotton ginning factories. Hindus owned even the small-scale industries and workshop and the role of the Muslims were merely of workers and employees. There was no sizeable factory worth the name. For example, there was no even a single jute mill in Pakistan, though the bulk of the Bengal jute was grown in Pakistan. All the jute mills were located in the Indian province of west Bengal, concentrated mainly around Calcutta. It was only after the establishment of Pakistan that jute mills were setup in the region now constituting Bangladesh. These included the “world’s biggest jute mills at Narayanganj, set up by the house of Adamjee, a top industrial house of Pakistan.

Industries established in India were totally absent in Pakistan were jute manufacturing, iron and steel works, tobacco manufacturing, dyeing and bleaching factories and paper mills. Of her annual production of 15, 00,000 her own cotton mills consumed bales of cotton only 160,000bales. The few industrial plants and factories that developed in the Pakistani areas were, as mentioned earlier, these engaged in processing of locally available agricultural raw materials i.e. cotton in West Pakistan and jute and tea in East Bengal. West Punjab had a few cotton gaining presses. There were also some sugar factories, flourmills, breweries and general engineering works. East Bengal had jute process; tea factories and paper mills. Since it did not hear a single jute mill, about 80% of its jute went as raw material to the jute mills of Bengal situated in Hoogly near Calcutta. The same was the case with production of raw cotton and location of cotton textile industry.

There were 394 cotton textile units in united India, 380 were in Hindu India and only 14 in Pakistan. With less than 5% of cotton mills, Pakistan produced of 40% raw cotton. Pakistan areas industrial backwardness sprang from the fact that these areas were given the role to supply raw material to the blossoming industrial establishments in Hindu India.

She was totally dependent upon imports for armaments, since it had no ordinance factory. Pakistan, while free from India’s handicap of a heavy food deficit, was faced with the issue of building a viable industrial sector, which was all the urgent due to its embittered relationship with India. To make the situation worse Pakistan lacked industrial credit facilities, technical institution and research laboratories.

At independence, in north-west zone only Punjab had any industry to speak of; the rest of the provinces were extremely backward, except for some cottage industries which existed there from times immemorial Punjab was known as large producer of cotton, competed favorably in the sphere of handloom weaving with other provinces of the country.

These were very bleak and sarcastic statistics which encouraged the Hindu intellectuals to question about the economic viability of Pakistan. The Hindu economic financers and industrialists began to put forward various kinds of studies supporting their view. G.D. Birla, an industrialist, pointed out that Pakistan would not inherit any jute, iron, steel and paper mills. In business, income, agriculture and food resources, mineral production, communication and finance, Pakistan would be much weaker and hence economically not viable. The Hindu Sabha stated: financially it is workable, economically it is disastrous. It was projected that Pakistan would be an addition to the collection of poor states, a menace to themselves and to the rest of India.

Dr. Naureen Talha has explained this issue in her book, “Economic Factors in the Making of Pakistan”. She writes, “The debate on the economic viability of Pakistan had twofold results. First, it was a confession by the Hindu intelligentsia that Muslims majority areas had remained backward. Second, it brought the Muslims close to the ideas of Pakistan. They foresaw that a united India would mean the continued backwardness of Muslim areas. The Hindu intelligentsia argued strongly against the partition of India, on the basis of the fundamental unity of India, terming communal antagonism not good enough a reason for the creation of Pakistan. The Muslim fear of Hindu Raj was called baseless in the face of the safeguard in the constitution.”

She continued “The critics of Pakistan’s economic viability ignored the fact that it was essentially because of these features of economic backwardness in Muslim majority areas that the Pakistan movement had gained momentum. Their criticism, instead of dissuading people from support for Pakistan, had the opposite effect of evoking more support for its cause. The elections of 1946 proved beyond any doubt that the Muslims had understood the message of the Pakistan resolution; that unless political freedom was given to Muslims to shape their own destinies independently, no constitutional formula, no pledges of fair play, and certainly no weight ages or guarantee of equal partnership in Indian affairs would alleviate their economic miseries.”

But sardonically, it was on the basis of these very reasons that the Muslim intelligentsia supported Pakistan. They stated that in undivided India they would continue to be bankrupt province. It would only be under a Muslim majority government that their full economic potential could be realized. They also highlighted the economic assets of the Pakistan area.

Ispahani written a pamphlet in November 1946 and titled it as, “the case of Muslim India” stated that; “Pakistan, which includes India’s granary, produces one third of the world supply of tea, has a monopoly of jute, produces large quantities of cotton and other raw produce, and has vast virgin, untapped mineral resources. Muslim has no fear about the economic future of Pakistan areas, and their reply to objections on that ground is that Muslims are content to develop in their own way without molesting their neighbors.

In reply to Birla’s statement of 6 June 1947, from Delhi, A.R. Khan proved through statistics dealing with the agriculture, economic and mineral resources of the Muslim majority areas that Pakistan would be self-supporting.

Another study conducted by the British and entitled, “will Pakistan work?” also supported the thesis that agriculturally, industrially, budget-wise and in balance of payments, Pakistan both east and west, could work expectedly, Jinnah too countered in strong terms the propaganda about the alleged economic unsounded ness of Pakistan. He opined that the Hindu leaders had been persistently saying that Pakistan would not be a practical proposition. “Because Punjab, Sindh and NWFP are bankrupt province, while Balochistan is zero. Therefore economically it is not a practical scheme. Why not? Can’t you see that at present the main sources of revenue, the bulk of the revenue of this continent is in hands of the center? If there is a partition, if there are independent zones, as we are defining, then those zones will get for themselves the revenue direct and it will not go to the center, because there will be no center for India. Why do you bother about this? If the worse come to the worst like a sensible man we will cut our coat according to our cloth.” It was the reply of Muslims to the objection of their rivals.

There was a clear perception among the Muslim educated class, of the economic assets and disadvantages with which Pakistan was to begin its career as an independent state. But there was clear resolve to built Pakistan as a modern, developed, prosperous and self-supporting state. As is revealed by the numerous publications and the ideas expressed in the Muslim press, it was a decision by the Muslim intelligentsia, businessmen and commitment by the Muslim masses to take up the challenge of an economically backward region and contribute towards its economic development. It was with the conviction that Muslim economic interests would be ignored by Hindu dominated government and an anticipation of a better economic and political status in a Muslim homeland that Pakistan was created. Though above mentioned figures are posing very bleak picture about the economic foundation of Pakistan, but there was great scope of progress. We should not forget that real economic strength of a nation depends upon the size, strength and quality of its population, the fertility of its soil and availability of natural resources including mineral resources and Muslim leadership was very well aware of it. In a public meeting, on March, 26, 1948, Quaid-e-Azam told the people:

“Funds are, no doubt, necessary for development, but at the same time national growth and regeneration do not depend on funds alone. It is human toil that makes for prosperity of a people and I have no doubt, we have in Pakistan a nation of industrious and determined people whose past traditions have already distinguished them in the field of human achievements.”

But, unfortunately, the hope expressed by the Quaid-e-Azam was not destined to some to fruition soon. After his demise and after another three years, with the assassination of the first Prime Minister of Pakistan, Liaquat Ali Khan, and illegal removal of the second Prime Minister, Khwaja Nazimuddin, Pakistan went into the hands of those very forces which the father of the Nation had condemned. They refused to carry out the experiment envisaged by the founder, but are carrying out an economic system which is alien and which is leading, even Europe and the West where it was born, to disaster; a disaster which is no longer in the immigration of any prophets, but it upon us, which makes its appearance in the shape of terrible inflation and other serious economic ills that are eating into the vitals of the nation.

Pakistan was fulfilling all indispensable conditions of progress and development. Only right kind of policies and commitment of its leadership with the purpose was the key to her destination. She has not made presumed economic development but still we are far-better and dignified state in the comity of nations. And the policies which present government has adopted and the commitment which leadership is showing towards the economic wellbeing of the people is a welcome change. However, there is need to take some radical steps and policy measures which can help common man to feel at ease.

One may comment at

DAWN, 14th August,2004


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