Cut in development spending: Punjab and Sindh the most affected provinces

A massive cut of Rs100b in federal development budget will largely affect projects in Punjab and Sindh.

ISLAMABAD: A massive cut of Rs100 billion in the federal development budget, in the wake of the financial crisis, will largely affect projects in Punjab and Sindh, except in the home towns of the president and the prime minister, official documents show.

The federal government has slashed the development budget for Punjab projects by Rs26 billion, bringing it down to Rs19 billion. Punjab has 317 projects with a total cost of Rs587 billion. The federal government had originally earmarked Rs45 billion for these projects.

Planning Commission documents show that Sindh, the second most populated province, equally shared the reduction. Its allocation was slashed to Rs15 billion, a cut of Rs21 billion against the original allocation. Sindh has 265 projects being financed by the federal government, costing a total of Rs588 billion.

Besides, there are 728 projects all over the country costing Rs950 billion. These projects cannot be confined to provincial boundaries. The government had allocated Rs82 billion for these projects, which has now been reduced to Rs47 billion. In this category too, Sindh and Punjab will be affected the most.

The federal government had allocated Rs280 billion to finance the Public Sector Development Programme, which has now been reduced to Rs180 billion to minimise the gap between federal income and expenditure. Out of that, Rs30 billion spending is dependent on foreign countries. In seven months of the current fiscal year, donors have provided Rs15 billion for development projects, the documents show.

Interestingly, the government did not cut the allocations for the Larkana and Multan packages. “We are trying to cut budget allocations for the Larkana package and the Multan package but so far we have not,” said Planning Commission Deputy Chairman Dr Nadeemul Haq, the other day, while talking to The Express Tribune.

In spite of the scarcity of resources, the government approved 307 new projects this fiscal year with a cost of Rs1.42 trillion, according to the documents. With that, the number of development projects rose to 1,822 costing Rs4.01 trillion, which is even higher than the national budget.

“With the given resources, it will take 20 years to complete these projects; yet, the Planning Commission is under pressure from political parties to approve new schemes,” said Haq.

“The projects do not boost growth, as private investment drives the country’s growth,” he said.

Haq said the present aid-driven growth model of the country cannot secure jobs for the young population. Pakistan will have to introduce market reforms and improve governance and management to have a constant growth rate of eight per cent for at least 20 years, said Haq, who is working on a new growth strategy.

“Each of these steps requires strong support from the government and parliamentarians,” he added.

The federal government has also cut the Khyber-Pakhtunkhwa development budget by Rs10 billion and brought it down to Rs8 billion. There are 196 federally-financed development schemes with a total cost of Rs399 billion.

However, it kept the Balochistan development budget unchanged at Rs28 billion, the highest among all provinces. Balochistan has 205 projects funded by the federal government with a total cost of Rs370 billion.

The government also did not cut the Federally Administrated Tribal Areas development budget and kept it at Rs9 billion.

Published in The Express Tribune, February 24^th, 2011.