The cash-starved government has proposed a steep reduction in the development budget allocation for the ministries in the next fiscal year against the original spending plans for the outgoing year but has kept Rs40 billion for the parliamentarians’ schemes despite fiscal constraints.
The Ministry of Planning and Development has issued indicative budget ceilings to dozens of federal government divisions for fiscal year 2022-23 along with instructions not to make any allocation for various ongoing projects due to the limited fiscal space.
The ministries have been directed to prudently distribute the indicated resources to individual projects and submit their recommendations by Monday for approval by the Annual Plan Coordination Committee (APCC), which is going to meet on June 4.
The ceilings have been given against the proposed budget of Rs800 billion for the next fiscal year, which is 11% less than the original budget for the outgoing fiscal year but 60% more than the revised development budget.
For the current fiscal year, the previous government had earmarked Rs900 billion, which has now been cut to Rs500 billion due to the projected budget deficit of Rs5.6 trillion.
The government has proposed Rs40 billion for the parliamentarians’ schemes under the head of Sustainable Development Goals (SDGs) programme. The allocation has been capped at the outgoing fiscal year’s revised budget but is Rs28 billion less than what the last PTI government had initially allocated.
However, the planning ministry has recommended the new government to abolish the SDG programme, as the money is spent on the provincial-nature projects and the federal government should not foot such bills due to the limited fiscal space.
Interestingly, the government instructed the ministries that all provincial-nature schemes should be discouraged from funding from the next year’s Public Sector Development Programme (PSDP) and the provincial governments should be encouraged to take responsibility for such schemes.
There are 326 projects of provincial nature, which still require Rs97 billion more to complete work on them.
Planning Minister Ahsan Iqbal has declared a dozen priority schemes for the development spending in the next year with e-governance and information technology entrepreneur development as the topmost priority.
Other sectors that have been identified are venture capital funds, productivity enhancement, Metro Bus project for Rawat and Baraku, Gwadar Port City and Gwadar Port Dredging.
Women entrepreneurship, national police hospital, water supply for Islamabad and skill development are also declared as priority areas projects.
The government has proposed Rs50 billion for the Power Division, down 28% against the original budget for FY22 but higher than the revised estimate. The Power Division’s revised development budget for the outgoing fiscal year is Rs46.5 billion.
The government has proposed Rs120 billion for the National Highway Authority (NHA), down Rs6 billion against the original allocation for the outgoing year. But the proposed budget is Rs33 billion or 38% more than the revised budget. NHA had demanded Rs500 billion for the next fiscal year.
The Ministry of Industries has been given Rs3 billion ceiling, which is at the level of current year’s original budget.
A major reduction has been proposed for the Ministry of Finance that mostly funds the provincial-nature projects, like the Karachi schemes. Against the original allocation of Rs69 billion, the government has proposed Rs1 billion for carrying out work that too on the ministry’s own projects.
Another Rs40 billion has been proposed for development activities in the merged districts of Khyber-Pakhtunkhwa and other provincial-nature projects, down from Rs54 billion. Cumulatively, the Ministry of Finance’s budget has been reduced from Rs123 billion to Rs41 billion, a reduction of Rs82 billion or two-thirds of the original allocation.
The government has proposed Rs30 billion for the Higher Education Commission (HEC), which is only 44% of this year’s original allocation, which could force the HEC to cut many grant programmes.
The Ministry of Information and Broadcasting will be given Rs2 billion, which is higher than the original allocation for this year.
The share of Ministry of Housing and Works has been slashed by Rs15 billion to Rs10 billion. Many provincial-nature and road schemes are parked under the Ministry of Housing.
The Ministry of Maritime Affairs will get Rs2.3 billion, which is half of this year’s allocation.
The Poverty Alleviation and Social Development Division may get Rs750 million for the development activities – one-fourth less than the original budget for the outgoing fiscal year. The government has also instructed that the new small projects where spending is less than 10% may not be given funding in the next fiscal year.
Eighty-five projects in the PSDP have received less than 10% funding. Their total cost is Rs504 billion, while Rs266 billion has already been spent on them.
Another 371 schemes have an estimated value of Rs1.7 trillion but they have not received any financing.
It has also directed to drop all non-performing projects that have not received any funding in the past three years.
Published in The Express Tribune, May 28th, 2022.
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