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Nationalization of Steel

In: Business and Management

Submitted By adeel716
Words 401
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M. Adeel Sohail
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Assignment # 3
Analysis of Pakistani Industries
Miss Sadia Mansoor
Nationalization of Steel and Wheat Industry in Pakistan
Nationalization
In 1972, nationalization program was implemented by Mr. Zulfikar Ali Bhutto for the very first time in Pakistan. The aim of this process was to promote economic democracy, liberalization, and to put the country in state of progressivism. Ended in 1977, this program was again put forward in 1996 by Benazir Bhutto. Despite its success in the initial years, these programs left disastrous effects on Pakistan’s national economy.
Impact on Wheat Industry
In the third phase of nationalization (year 1976), around 2,000 cotton, ginning, and rice husking units came under the program. This caused huge chaos among the workers of the country, especially the farmers as the agricultural hub was being affected by the policy. The program eliminated the crucial role of middlemen. The first and second phase had already created resentment among investors and trading agents across the country. There were various implications that nationalization gave to Pakistan: hyper inflation, drastic fall in production & GDP growth which consequently led to low savings & tax collections, resulting in unemployment, loss of confidence in the investor sentiment, public sector overweighed, sick industries, fall in production and most importantly increase in corruption. Government socialist policies against the business elite was believed to be a measure to narrow the gap between the rich and poor .But rather turned out to be an dictatorial move to save government own skin from a rising industrial class focused on educating the masses and developing their skills. Nationalization brought Pakistan's economy to its knees and sank the Pakistani public deeper into poverty.
Impact on Steel Industry
In the first round of nationalization, numerous steel manufacturing firms were nationalized. This policy greatly affected the 22 royal families of the country, including Mr. Nawaz Sharif. The first phase was a relative success when Bhutto's government nationalized the commanding heights of economy — insurance, banking and commerce sectors as well as heavy industry. The mistake that establishment made was handing over of these entities to the bureaucracy instead of professional corporate management. Our bureaucracy was the steel frame of the British Empire but has always been incapable of running businesses. By not bringing in professional people to run the nationalized sector, the first round of nationalization failed due to the corrupt bureaucracy and pressure of trade unions.…...

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