'Spending higher in big cities'

WB says Quetta getting 475%, Lahore 440% more funds than other districts

ISLAMABAD:

The World Bank has said that disparity in expenditures between a provincial capital and other districts remained far wide with Quetta receiving 475% more per person funds and Lahore 440% compared to other districts of these provinces, underscoring growing inequality in human and infrastructure development.

The Strengthening Fiscal Federalism report also showed that per person spending gap between the provincial capital and the other districts was relatively smaller in Khyber Pakhtunkhwa where Peshawar received 335% per person higher spending. In case of Karachi the disparity was the lowest but still the country's largest metropolitan received 178% more funds than other districts. The report underpins growing inequality in human and infrastructure development in the country despite a surge in shares of the provinces after the 7th National Finance Commission award of 2010. The report stated that despite a narrowing gap in real per capita spending between provincial capitals and other districts since 2009, provincial capitals continue to absorb a disproportionate share of resources.

In Quetta, per person spending was Rs57,000 compared to just Rs12,000 in other districts of the same province. In Peshawar, per capita spending was Rs35,000 against Rs10,000 in other districts.

In Lahore, Pakistan's second most populated city, per person spending was Rs31,000 compared to only Rs7,000 in other districts. In 2009, per capita spending in Lahore was as high as Rs67,000 while in other districts it was Rs5,000, 15 years ago. In Karachi, the most populated city, per capita spending was Rs25,000 compared to Rs14,000 in other districts.

The disparity is most pronounced in insurgency-hit Balochistan, where Quetta captures five times more per capita spending compared to other districts.

The under development and lack of creation of jobs is said to be one of the key reasons for insurgency in Balochistan. The provincial government is cash-rich and runs budget surpluses. The World Bank said that in Punjab, real per capita spending in Lahore remained approximately four times higher than in other districts. But compared to 2009 the gap has significantly narrowed down mainly because the spending in Lahore decreased. In other districts of Punjab, the provincial government spending was almost stagnant, according to the World Bank.

In Khyber-Pakhtunkhwa (K-P), spending in Peshawar was about 375% higher. In Karachi, the per capita spending was 178% higher compared to other districts, according to the World Bank. The report stated that district-level allocations continue to diverge from socioeconomic needs. There is an apparent inverse relationship between lagged poverty levels and current district-level per capita spending allocations, according to the lender.

Wealthier districts consistently receive larger budgets, perpetuating a cycle of low-budget traps in poorer areas. This pattern is evident across all provinces and is particularly pronounced in the capital districts. Similarly, district-level allocations do not appear to be guided by any metric of socioeconomic needs, such as infrastructure, healthcare, or education.

The absence of a clear connection between spending and socioeconomic needs may be undermining the quality and efficiency of provincial spending on key social services, stated the World Bank. This in turn may be contributing to the slow progress in human development indicators observed since at least 2009, it added. Spending at the local level also remained very low. Despite constitutional provisions pertaining to the role of local government, few of the additional resources allocated to provinces were made available to local governments.

The provincial finance commissions have not been established and the ruling parties are also reluctant to hold local elections on party-basis. The ongoing decline in the share of total government spending by local governments continued after the 18th Constitutional Amendment, from around 10% in 2005 to around 4.7% in 2024, stated the World Bank.

The report also raised questions about the quality of spending, particularly in health and education sectors. Despite increased spending, the indicators in certain provinces worsened. In FY23, real per capita provincial spending on education in Khyber Pakhtunkhwa was less than one-third of the level observed in Balochistan. However, K-P's net enrollment was 23% and adult literacy rate was 9% higher than Balochistan, as reported by the 2024-25 Household Integrated Economic Survey.

These gaps reflect a range of factors, including the quality of public services, interprovincial income differences or the scale and quality of private sector provision, according to the lender. According to the 2025 Annual Status of Education Report, 30 to 40% of children aged 6 to 16 years old were enrolled in private schools in Punjab, compared to 20 to 30% in Sindh and KP and less than 10% in Balochistan.

During FY09-23, real per capita provincial spending on education increased between 200 and 650% in Punjab, Sindh, and Balochistan. However, according to the 2008-09 Pakistan Social and Living Standards Measurement Survey (PSLM) and 2024-25 HIES, net school enrollment fell by 4% and 11% in Sindh and Balochistan, respectively, while adult literacy declined by 1% in Sindh. By contrast, KP achieved gains of 2% in net enrollment and 9% in adult literacy during the past 15 years, with virtually no increase in real per capita spending. In health, real per capita provincial spending rose between 200% in Punjab and 440% in Balochistan over a period of 15 years. However, the share of the population living within 15 minutes of a health facility decreased between 3% and 18%.