Throwforward

Media reports indicate that the federal component of the Public Sector Development Programme (PSDP) has piled up a mammoth ‘throwforward’ of Rs2.8 trillion, a term planners use for the total amount of resources required to complete all projects included in the PSDP on a certain date. It reflects three things: a shrinking size of the PSDP due to a narrowing fiscal space; inclusion of projects without regard for resource availability; and approval of projects without the framework of an overall socio-economic plan with a consistent macroeconomic framework. The usual short word to describe the forces underlying these three things is politicisation. In practice, military governments, politicians and bureaucracy have all contributed to this mess. Spring cleaning, one would have thought, should be an ongoing feature of planning and development. Projects and programmes that are not seen to be doing well should be dropped and better projects accelerated in the annual or mid-year reviews.

Throwforward becomes a serious issue during caretaker setups following the dismissal of elected governments and at times of donor denomination. Caretakers are motivated by the desire to paint politicians as fiscally irresponsible and financially corrupt. Donor-propelled exercises are motivated by the self-belief that the aided projects are better than the unaided ones. The first comprehensive exercise to determine the size of the throwforward was undertaken during the caretaker setup of Farooq Leghari. A number of projects were terminated and many had to live with smaller allocations. The results of the throwforward exercise were accepted to the extent that this enabled a PPP-free PSDP.

The PPP has opened its account, but the bulk of the throwforward can be attributed to the ambitions of “the fiscally prudent” military predecessor. This time round, though, the exercise has a far more serious dimension. It is neither political, nor purely economic; it is constitutional. With the end of the Concurrent List after the 18th amendment, a large number of subjects have now fallen to provincial jurisdiction. Initial attempts by the federal government to off-load the related projects to the provinces have met with stiff resistance. The fact that federal ministers presently in charge of these subjects got their PSDP allocations as if the 18th amendment never happened has not helped.

The provinces maintain that there should be a standstill arrangement until the actual transfer of the subjects takes place. This is fair. The provinces expect that the projects should be transferred along with the resources required. This is problematic. The argument made sense in the past when an intrusive federal government formulated projects in the subjects related to provinces and funded them. Occasional attempts then to transfer these projects without funding met with failure because the federal government claimed the lion’s share of resources under the sixth NFC award. These shares have been reversed under the seventh NFC. There is no way that the federal government can continue to fund these projects. Most of which relate to the social sector, the historical neglect of which need not be overemphasised. With the smart hand played by the bureaucracy to mop up more than half of the additional resource flow to the provinces under the seventh NFC as a pay hike, the provincial capacity to fund these projects has been undermined. The 18th Amendment allows the provinces to borrow, but three of them are already in the red. Any further borrowing will play havoc with the provincial finances.

Senator Raza Rabbani and MNA Shahnaz Wazir Ali need to put their heads together and confer with the chief ministers to protect the spirit of the 18th amendment and whatever is left of the social sector.

Published in The Express Tribune, July 30^th, 2010.