NEC approves guidelines for PSDP allocations

Says special attention needed for underdeveloped districts

ISLAMABAD:

The National Economic Council (NEC) has approved the policy guidelines to include highly underdeveloped areas in the Khyber Pakhtunkhwa (K-P) and Balochistan provinces in the priority list for fund allocation under the Public Sector Development Program (PSDP) in the upcoming budget 2024-25.

In a recent meeting, the NEC also directed that funds allocation should be made for water projects in line with the true spirit of the National Water Policy.

The council observed that funds allocation is primarily made on a geographic basis. However, since population is also considered an important factor for fund allocation, it should be considered one of the criteria for selecting areas for PSDP projects.

Earlier, the NEC was informed that the selection of underdeveloped areas/districts in the country was based on criteria determined by the Pakistan Bureau of Statistics (PBS).

It was observed that the highly underdeveloped districts of Balochistan and K-P, including the newly merged areas of the erstwhile Federally Administered Tribal Areas (FATA), had not been included in the list of twenty least developed districts, while some relatively less underdeveloped districts had been included.

The most deprived districts of Balochistan as well as the newly merged areas of K-P needed special attention, particularly in education, health, and infrastructure.

It was suggested to revisit the criteria for selecting the least developed districts for PSDP-funded projects. Furthermore, it was noted that provinces are also responsible for uplifting their underdeveloped districts.

Therefore, there was a proposal to share information regarding provincial annual development program (ADP) allocations and expenditures for these districts with the NEC.

The NEC was informed that many areas of Sindh were greatly affected by the 2022 floods, which needed special attention for rehabilitation.

It was suggested to explore financing options from the International Fund for Climate Change for development projects, for which feasibility studies were required.

The federal government had allocated funds in the PSDP for water-related development projects in light of the National Water Policy, but such allocations were missing in the ADPs of provinces.

There was a dire need for provinces to adhere to the National Water Policy and allocate sufficient funds in their ADPs for this purpose.

The formulation process of the PSDP began with the issuance of the PSDP Call Circular (PCC) to ministries/divisions/provinces in January each year, subsequent to the issuance of the Finance Division's Budget Call Circular.

The PSDP Call Circular contained necessary guidelines, criteria, and formulas for inviting project-wise budgetary proposals for inclusion in the next financial year's PSDP.

It was noted that the funds demanded by Ministries/Divisions were consistently higher than the Indicative Budget Ceiling (IBC) conveyed by the Ministry of Planning. Therefore, certain guidelines needed to be followed, and priorities needed to be set for effective allocation of development funds."