Size of development budget to be cut

ISLAMABAD: The federal government has decided to reduce the size of Public Sector Development Programme (PSDP) to Rs300b for the next fiscal year 2010-11.

It will also slash the allocation for subsidies, provided for the relief of common people, from Rs185b to Rs100b. According to documents available with the Express, the federal government has decided to fix the development budget (PSDP) in 2010-11 at Rs300b.

It will be increased to Rs375b in fiscal year 2011-12 and Rs470b in 2012-13. According to the documents, the federal budget for development for the current fiscal year was Rs406b, around 2.7 per cent of gross domestic product.

However, this was revised downward to Rs300b, 2 per cent of GDP, due to financial difficulties. The documents reveal that the PSDP for the next fiscal year will be cut to 1.8 per cent of GDP at Rs300b. This will be increased gradually to 2 per cent of GDP in 2011-12 and 2.3 per cent of GDP in 2012-13.

The funds allocated for provision of subsidies will be reduced to Rs100b, 0.6 per cent of GDP. According to the documents, funds for subsidies will be reduced to Rs81b, equal to 0.4 per cent of GDP, in 2011-12. They will be further reduced in 2012- 13 to Rs68b, 0.3 per cent of GDP.

In the current fiscal year, Rs120b was allocated for subsidies, which was 0.8 per cent of GDP. This was later revised and increased to Rs185b, 1.2 per cent of GDP.