Opportunities up for grabs in Punjab, but challenges remain

Reform space in the province is limited to only those areas that have been fully devolved.

LAHORE: With changing dynamics of the economic and political landscape, the need for meeting public demand and expectations is increasing manifold.

In this period of continued democracy, new challenges are emerging as old order of the society is being restructured by economic growth, urbanisation and informality. This situation provides solid grounds for formidable reforms.

In our article published on November 13, 2017, we claimed that Punjab was now “taking a more strategic approach in developing home-grown solutions to actual problems and aims to drive the agenda of development partners rather than driven by it.” This new approach to managing donor projects has not happened in isolation, but is in fact part of a much bigger strategic reform agenda that the provincial government has adopted.

The Planning and Development Department is the lead agency responsible for economic management and development in the province. In this role, it has identified that Punjab is at a complex crossroads where certain contingent opportunities are up for grabs, but they are not without certain challenges.

Given Punjab’s economic and population size, it is usually ranked with large national economies of the world, but it is a sub-national economy. This makes Punjab a unique example as it is responsible for a large number of inhabitants, but it is not entirely a master of its own fate.

Even after devolution, key areas such as macroeconomic management, a large part of taxation, foreign affairs, trade and power to a huge extent remain under the federal domain. Thus, Punjab’s reform space is limited to only those areas that have been fully devolved, which makes sub-national reforms more challenging.



Upfront challenges

Whereas Punjab has made significant progress both in economic and social sectors, certain challenges remain. The most notable one is the rapidly growing population that has crossed 110 million.

Based on projections of the Pakistan Bureau of Statistics, by 2025 the population of Punjab will go beyond 125 million. It may give some idea of the size of efforts required if these figures are put in international perspective — in 2025, the projected population of Punjab will be equal to the combined population of the United Kingdom and France.

The scale of planning and economic management required to meet the needs of citizens is phenomenally complex as any amount of generous fiscal space remains diluted. Second key challenge for the economy has been a relatively tougher business environment and investment climate for the private sector.

Investment climate surveys done by the World Bank show that Punjab has been hit more adversely than other provinces in the areas of power outages, cost of managing electricity and losses.

Similarly, other indicators on taxation and cost of doing business have been the deterring factors for businesses in the province.

Third challenge is managing the China-Pakistan Economic Corridor (CPEC). The initial fanfare has raised large expectations, but the policy space under CPEC will have to be meticulously managed with adequate safeguards built for the domestic industry.

Fourth challenge is managing the social sector needs in an equitable manner such that compliance with the Sustainable Development Goals (SDGs) is achieved. Additional challenges such as law and order and security conditions have continued to plague development in the province and nationally at different levels.

Reform hub

The Planning and Development Department’s role became more perplexing in the last three to four years as the size of development budget more than trebled.

With the higher financial size, the complexity and diversity of the projects increased manifold. The department found itself in an arena with more resources, but at the same time with the responsibility to manage a greater number of multifaceted tasks.

However, the department has come out stronger with an effective response to the host of challenges. Instead of taking giant leaps, it wrestled through rough grounds one step at a time.

The department has experimented innovative and novel solutions that have been internally generated while working closely with technical partners such as the Sub-National Governance Programme.

The department has become a hub of reforms over the past two years. It has introduced private sector expertise within the public sector, reformed the planning framework and approach, allowed increased autonomy and decision-making to client departments, improved transparency of development spending, created checks and balances in service delivery, strengthened monitoring and evaluation, and improved business and investment climate.

It has also created a resource pool on CPEC and SDGs, introduced innovation to manage population issues, enhanced focus of sector departments on sustainable development and policy, initiated policy dialogue with donors and development partners to develop a common understanding and increased the visibility and communication drive of the government. These reforms have been achieved in the past two years.



Small changes trigger bigger results

In the reform drive, each line department and the Planning and Development Department are required to produce their annual reports, a move that has been initiated with the technical support provided by the Sub-National Governance Programme.

These reports are an extremely useful tool to increase transparency and share development spending with the public and have also helped departments to take account of activities that worked well and those that did not.

The timing of the reports is strategically designed to come just before the initiation of a new planning cycle. Data in these reports will help the departments to plan better and focus on the delivery gaps that remained in the preceding year.

Thus, a very small intervention is likely to have a much significant impact on the lives of millions in the province.

Muhammad Usman Khan is the adviser and Dr M Amanullah is the chief economist, Planning and Development Department, Punjab

Published in The Express Tribune, December 4^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.