During colonial India, Hindus and Muslims experienced divergent economic outcomes as socio-economic opportunities were more available for Hindus than for Muslims. Thus, Muslims faced greater inequality, with a smaller middle class than Hindus.

One of the main reasons for the establishment of Pakistan was to address the economic disparity. However, due to inherited colonial structure, marginalised communities have continued to be deprived of fundamental rights, leaving them at a disadvantage, even after seven decades.

The myth of economic growth has allowed income and wealth inequalities to persist by providing tax concessions and subsidies at the expense of the poor segment’s well-being.

During General Ayub Khan’s tenure in 1960, Pakistan aimed to become an “Asian Tiger” by offering subsidies, tax breaks, and other benefits to the private sector. However, this led to 20 families controlling a majority of the country’s 66 per cent industrial, 97pc insurance, and 80pc banking assets, creating a significant economic gap.

Over 360,000 people are currently trapped in bonded labour in Pakistan

Despite strong GDP growth, this resulted in the lower 50pc of households receiving only 25pc of total personal income while the top 5pc received 20pc. The “Decade of Development” mainly favoured urban industrial elites and rural land-owning elites.

The Bhutto regime implemented nationalisation, land reform, and uranium enrichment. Despite this, Pakistan’s GDP volume and per capita income doubled from $10.027 billion and $169.124 in the early 1970s to $19.688bn and $254.3478 in just eight years.

Bhutto’s administration also introduced constitutional reforms and development initiatives, resulting in the achievement of fundamental rights and an impressive 8pc GDP growth by the end of 1978.

Notably, wages did not increase during Bhutto’s rule, but farmers received loans, resulting in a significant rise in tractor numbers from 2,000 in 1959 to 35,714 by 1975. However, the 1972 Agriculture Census revealed that landowners owned 30pc of farmland with over 150 acres but who operated only 9.2pc of the total farm area.

By 1973, 43pc of agricultural labourers were wage labourers, with 794,042 peasants turned into such labourers between 1961 and 1975.

Despite these efforts, Pakistan’s disparities persist. Bhutto’s nationalised enterprises were returned to their previous owners, and investment controls were eased. Consequently, private sector investment in manufacturing grew by 9.5pc annually from 1978-1983 and accelerated during the last five years of Zia’s regime.

By the early 1990s, Pakistan’s per capita income was 25pc higher than India, at $500 versus $390. The industrial sector thrived under Zia, with manufacturing growing over 9pc annually from 1977-1988, a significant improvement from the 3.7pc growth between 1972-1977.

However, it is important to note that during Zia’s regime, the lowest 10pc of the population received only 9pc of the national income, compared to 13pc during Bhutto’s regime, and the highest 10pc increased their share of national income from 38pc to 44pc.

The bottom 10pc of the population’s share of national income decreased to 7pc, compared to 9pc in the 1980-90s. Meanwhile, the top 10pc saw their share increase from 44pc to 49pc. Pakistan’s GDP has increased fourfold from $80bn to $348bn as of 2021, primarily due to the flourishing real estate sector.

However, the country’s industrial production decreased from 10.5pc to 7pc, and unemployment increased from 3.5pc to 7pc. Pakistan’s access to finance ratio is the lowest in South Asia at 21.29pc, while India, Bangladesh, and Sri Lanka have 79.88pc, 50.05pc, and 73.65pc, respectively.

Pakistan’s per capita income remains lower than that of India and Bangladesh, at $1,543 per annum compared to India’s $2,191 and Bangladesh’s $2,554. As a consequence, at the end of 2020, the top 10pc households received 24pc of the total income growth, while the bottom 50pc received 32pc of the income growth.

Government spending on education as a percentage of GDP has remained below 2.5pc since 1947, while current health expenditure as a percentage of GDP has also remained below 3.5pc.

Consequently, Pakistan has the world’s second-highest number of out-of-school children, with 22.8 million children aged 5-16 not attending school, representing 44pc of the total population in this age group. The number of out-of-school children doubles after primary-school age, with 11.4m adolescents between the ages of 10-14 not receiving formal education.

These trends have led to a higher incidence of bonded labour due to reduced basic necessities. Over 360,000 labourers are currently trapped in bonded labour in Pakistan, with a high prevalence of modern slavery, affecting 16.82 out of every 1,000 people, while 74.12 out of 100 individuals are at risk of becoming victims of modern slavery.

Pakistan’s position in the Human Development Index (HDI) has been consistently declining. It was ranked 161 out of 192 countries in the 2021-2022 index. On the flip side, the majority of elected officials, bureaucrats, and army officers come from elite educational institutions such as Aitchison College, cadet colleges, Beaconhouse, and Millennium Education.

This depicts that the state structure has consistently favoured the top 10pc of the population, who were a privileged segment during both the colonial era and after independence. This has resulted in income inequality and social divisions.

The state has also failed to fulfil its unwritten promise of eliminating inequality for its citizens at the time of independence. As a result, poor individuals continue to lack access to basic necessities, increasing the likelihood that the child of a forced and bounded labourer will also become a labourer, which further fuels fraction, frustration and polarisation in Pakistan.

The writer is an assistant professor (PhD Financial Economics) National University of Modern Languages (NUML), Islamabad (abwahid.fms@gmail.com)

Published in Dawn, The Business and Finance Weekly, May 1st, 2023