Introduction

General Ayub Khan came to power in October 1958 after President Iskander Mirza abrogated the 1956 Constitution and imposed martial law. After removing Mirza from office, Ayub Khan announced plans to improve the economy and bring changes to agriculture, industry and other sectors. His government aimed to increase production, promote industrial development, create employment opportunities and make Pakistan economically stronger.

A. Agricultural Reforms

Agriculture was a major part of Pakistan’s economy. A large proportion of the population depended on farming, while industries also needed agricultural raw materials such as cotton and sugarcane. Ayub Khan introduced land reforms and encouraged modern farming methods to increase agricultural production.

1. Land Reforms of 1959

Before the reforms, large areas of agricultural land were owned by powerful landlords. Many tenants worked on this land but did not own the farms they cultivated. The government introduced land reforms to place a limit on individual land ownership and make more land available to other farmers.

Under the 1959 reforms, an individual could own up to 500 acres of irrigated land or 1,000 acres of unirrigated land. The government could take surplus land by paying compensation to the owners. The land was intended to be redistributed, particularly to tenants and landless farmers who could purchase it.

The purpose was to reduce the concentration of land ownership, improve the position of tenants and encourage better use of agricultural land.

However, the reforms did not bring major changes to the existing landholding system. Many large landowners found ways to retain much of their land, while poor tenants often lacked the money and resources needed to purchase land.

2. Introduction of Modern Farming Methods

Ayub Khan’s government encouraged farmers to use modern methods instead of depending entirely on traditional farming practices. These methods included improved seeds, chemical fertilisers, pesticides and agricultural machinery.

High-yielding variety (HYV) seeds: These seeds helped farmers obtain greater crop yields when supplied with suitable water and fertilisers. Chemical fertilisers: Fertilisers supplied nutrients to crops and helped improve production. Agricultural machinery: Tractors and other machines made ploughing and other farming activities faster and reduced dependence on manual labour. Agricultural loans: Credit facilities helped some farmers purchase machinery, seeds and other agricultural supplies.

These changes increased the production of important crops, particularly wheat and rice. However, wealthy farmers were generally better able to afford modern equipment and supplies than small farmers.

3. Development of Irrigation

Water was essential for increasing agricultural production, especially in areas where rainfall was insufficient. Ayub Khan’s government supported the construction and improvement of dams, barrages, canals and tube wells.

These projects improved the supply of irrigation water and allowed farmers to cultivate land more effectively. Tube wells also helped farmers obtain underground water where suitable. Better irrigation, combined with improved seeds and fertilisers, contributed to increased crop production.

The development of irrigation was particularly important because agriculture depended heavily on the availability of water.

4. The Green Revolution

The introduction of high-yielding seeds, chemical fertilisers, modern machinery and improved irrigation methods became part of the Green Revolution in Pakistan during the 1960s.

The Green Revolution helped increase the production of wheat and rice and improved the supply of food. Higher agricultural output also provided raw materials for industries, particularly cotton for the textile industry.

However, its benefits were not shared equally. Farmers with larger holdings, better access to water and more money for machinery and fertilisers generally gained more than poorer farmers.

B. Industrial Reforms

Ayub Khan considered industrial development necessary for economic progress. His government encouraged private investment, supported the establishment of industries and introduced measures to increase exports. The main aim was to increase production, create jobs and reduce dependence on imported manufactured goods.

1. Expansion of Industrial Production

The government encouraged the establishment and expansion of manufacturing industries, including textiles, cement, sugar and engineering. Industrial development increased the demand for raw materials, electricity, transport and skilled workers.

The growth of industries also created employment opportunities in factories and related services. Cotton production supported the textile industry, while agricultural development supplied raw materials to other industries.

However, industrial investment and the ownership of major businesses became concentrated among a relatively small number of wealthy families and industrialists.

2. Establishment of an Oil Refinery

An oil refinery was established at Karachi in 1962. Oil refining was important because petroleum products were needed for transport, machinery and industrial activities.

The development of oil refining helped support the country’s energy requirements and industrial growth. It was part of the wider effort to develop Pakistan’s industrial capacity.

3. Pakistan Mineral Development Corporation

The government established the Pakistan Mineral Development Corporation (PMDC) in 1974, after Ayub Khan’s period in office. Therefore, it should not be presented as an industrial reform introduced by Ayub Khan himself.

During Ayub Khan’s rule, the government did encourage industrial development and the use of Pakistan’s natural resources. Mineral exploration was important because local resources could provide raw materials for industries and reduce dependence on imports.

4. Export Bonus Scheme

The government introduced the Export Bonus Scheme in 1959 to encourage exports. Exporters of certain goods received bonus vouchers linked to their export earnings. These vouchers helped them obtain foreign exchange for importing approved machinery and raw materials.

The scheme encouraged industrialists to produce goods for foreign markets. It also supported the expansion of export-oriented industries, particularly manufactured goods.

However, the scheme mainly benefited businesses involved in eligible exports and did not directly improve the financial position of every section of society.

5. Regional Cooperation for Development (RCD)

Pakistan, Iran and Turkey established the Regional Cooperation for Development (RCD) in 1964. Its purpose was to promote economic cooperation among the three countries.

The organisation aimed to increase trade, encourage industrial development and improve economic relations. Cooperation among the member countries was expected to create wider markets for goods and provide opportunities for joint development projects.

Reforms at a Glance

2.1.4 Analyse the Impact of General Ayub Khan’s Reforms on Pakistan’s Economy

Ayub Khan’s reforms contributed to economic growth during the 1960s. Agricultural production increased, industries expanded and exports grew. However, the distribution of wealth remained unequal, and the benefits of development did not reach all regions and social groups equally.

A. Positive Impact on the Economy

1. Increase in Agricultural Production

Modern seeds, fertilisers, machinery and improved irrigation methods increased crop production. Higher agricultural output helped provide food for the growing population and supplied raw materials to industries.

For example, increased cotton production supported textile manufacturing, while higher wheat and rice production helped improve the food supply.

2. Growth of Industrial Production

Industrial policies encouraged the establishment and expansion of factories. Production increased in sectors such as textiles, cement, sugar and other manufactured goods.

The growth of industry helped Pakistan develop its manufacturing sector and reduced some dependence on imported manufactured products. It also created employment opportunities in factories, transport and related services.

3. Increase in Exports

Higher agricultural production increased the availability of export crops, including cotton and rice. Industrial expansion also helped increase the production of goods for foreign markets.

The Export Bonus Scheme encouraged exporters by providing incentives linked to export earnings. Increased exports helped the country earn foreign exchange, which could be used to import machinery, fuel and other necessary goods.

4. Improvement in Infrastructure

The construction and improvement of dams, barrages, canals and other development projects supported agricultural and industrial growth. Better irrigation increased the amount of land that could be cultivated effectively.

Infrastructure development also helped economic activity by improving the supply of water and supporting the needs of farms and industries.

5. Rapid Economic Growth

Pakistan experienced rapid economic growth during much of Ayub Khan’s rule. Growth in agriculture, manufacturing and exports contributed to this progress. The government presented this period as a Decade of Development because of the expansion of economic activity and development projects.

However, overall economic growth did not necessarily mean that every citizen experienced an equal improvement in living standards.

B. Negative Impact on the Economy

1. Limited Success of Land Reforms

The land reforms aimed to reduce the ownership of very large estates, but their results were limited. Many powerful landlords managed to retain much of their land through transfers to family members and other methods.

Furthermore, landless tenants often lacked the money needed to purchase the land offered to them. As a result, the reforms did not bring about a major change in the distribution of agricultural land.

2. Unequal Distribution of Wealth

Although Pakistan’s economy grew, the benefits of industrial development were concentrated among a relatively small group of wealthy industrialists and business families.

Large businesses gained from industrial investment, government policies and access to finance. Many low-income families, however, continued to face poverty and limited economic opportunities. This created a gap between wealthy and poorer sections of society.

3. Difficulties Faced by Small Farmers

Modern agricultural methods required investment in seeds, fertilisers, machinery and irrigation. Wealthy farmers were generally better able to afford these resources, while small farmers often had limited access to credit.

Consequently, large farmers were often in a stronger position to increase production and earn higher profits. This widened the economic difference between many large landowners and small farmers.

4. Regional Economic Differences

Economic development was not equally distributed between East and West Pakistan. Industrial investment and economic opportunities were concentrated in particular areas, while many people in East Pakistan believed that their region was not receiving a fair share of national resources and development.

These differences increased dissatisfaction over the distribution of wealth, employment opportunities and economic power. Economic inequality therefore became one of the factors contributing to political tensions between the two wings of Pakistan.

5. Limited Benefits for Poor People

Industrial growth created employment, but its benefits did not reach every section of society equally. Many rural families continued to depend on low-income agricultural work, and landless tenants remained in a weak economic position.

Therefore, rapid national economic growth did not automatically remove poverty or ensure better living conditions for all citizens.

Impact at a Glance

Overall Evaluation

Ayub Khan’s economic policies helped expand agriculture and industry. Modern farming methods increased crop production, while industrial policies encouraged manufacturing and exports. These developments contributed to rapid economic growth during the 1960s.

However, the reforms had important limitations. Land reforms did not significantly change the position of many powerful landlords, and industrial wealth became concentrated among a small group of business owners. Differences in development between East and West Pakistan also increased economic and political dissatisfaction.

Conclusion

Ayub Khan’s reforms brought major changes to Pakistan’s economy. Agricultural production increased through modern farming methods and improved irrigation, while industrial policies supported manufacturing and exports. These measures contributed to economic growth during the 1960s.

Nevertheless, economic growth was not accompanied by an equal distribution of land, wealth and opportunities. The reforms helped develop agriculture and industry, but their benefits remained uneven among farmers, workers, industrialists and the two wings of Pakistan.