Budget: Punjab budget focuses on economic competitiveness

Published: June 10, 2012
Huge increases in infrastructure, agriculture spending.

Huge increases in infrastructure, agriculture spending.


The Rs783 billion Punjab budget for fiscal year 2013 had Chief Minister Shahbaz Sharif’s vision for the province written all over it: the largest province in the country will dramatically be expanding its spending on agriculture and improving its infrastructure to maintain its economic competitiveness.

The budget speech itself was delivered on Saturday by Punjab Excise and Taxation Minister Mujtaba Shujaur Rehman, who has been given the additional portfolio of finance. The province has not had a full-time finance minister since Tanveer Ashraf Kaira was kicked out of the job in February 2011. And unlike the ruckus in the National Assembly during the  presentation of the federal budget, the opposition in the Punjab Assembly – on instructions from their leadership – was respectfully quiet during Rehman’s speech.

Somewhat unsurprisingly, however, the speech itself included few references to Punjab’s economic competitiveness and focused primarily on highlighting the populist initiatives that the government has undertaken to boost its popularity through the final budget before the next election.

Yet the numbers unmistakably pointed in one direction: the leadership in Punjab, led by the chief minister himself, has decided that the provincial government is vigorously seeking to enhance Punjab’s economic competitiveness by ensuring a high quality of infrastructure, with a special focus on agriculture, seen as the province’s key advantage.

The largest increase in spending comes in agriculture, where the Punjab government will expand its budget by a whopping 67% to Rs78 billion, or about one-tenth of the total budget. The next highest increase came in infrastructure, where Punjab will invest Rs77 billion, a 34% increase over the fiscal year ending June 30, 2012. The overall development budget, at Rs250 billion, is about 51% higher than last year’s development budget.

Lahore will be spending about Rs28 billion on building new canals and improving its existing network, including a Rs12 billion World Bank-financed project to restore the Jinnah Barrage, one of the largest in the country.

And in order to enhance its own capacity to generate power, the provincial government will be spending about Rs10 billion in developing hydroelectric power generation capacity. The amount on energy is relatively small, but it signals the Punjab government’s increasing belief that they cannot rely on the federal government for an equitable treatment with respect to the nationwide power outages, which appear to disproportionately affect the province.

About Rs32 billion will be spent on building highways and bridges across the province. The district governments will spend a further Rs33 billion on road projects, taking up the total amount of spending on infrastructure in the province to Rs110 billion, which is about 14% of the total budget.

The provincial government’s own expenditure on education comes to about Rs64 billion, but the bulk of education spending actually takes place at the district level. The provincial and local governments will spend a combined Rs195 billion on education, which comes to about 25% of the total budget.

About Rs84 billion will be spent on healthcare in Punjab in fiscal 2013, of which Rs64 billion is the provincial government’s share, with the remainder being spent by local governments.

The local government system in Punjab has been allocated Rs247 billion, well over 90% of which will be spent on education, health and infrastructure, with the remainder largely covering bureaucrats salaries and utility bills for government offices.

A little electioneering

In the run-up to the next election, the budget does contain several populist measures. For instance, Lahore will spend Rs2 billion on the ‘Aashiyana’ programme, which seeks to provide low-cost housing to poorer citizens. A further Rs27.5 billion will be spent on subsidising flour.

Sensing political vulnerability in the southern part of the province, the ruling Pakistan Muslim League Nawaz was keen to highlight the fact that it will be spending about one-third of the development budget – Rs80 billion – on South Punjab. The provincial government’s much-vaunted Daanish Schools initiative will be set up eight schools, all of which will be in the South Punjab. The highway construction budget includes money for 10 major projects connecting cities in the region and the government will also set up a separate South Punjab Development Programme worth Rs10.5 billion.

Investing in the youth

In what appears to be a response to the rival Pakistan Tehreek-e-Insaf’s popularity among the youth, the PML-N-led Punjab government was keen to highlight its spending on projects to benefit younger citizens.

Punjab will spend Rs4 billion to provide 125,000 laptops to students across the province. In addition, the provincial government has set up a Rs3 billion venture capital fund to provide Rs50,000 in seed-capital loans to young entrepreneurs looking to start small businesses. The Punjab government also spend Rs2 billion subsidising 20,000 tractors for young farmers in the province.

Around 80,000 young people will be provided provincial government jobs, claimed the minister, and an additional 16,000 will be recruited as science teachers for public schools in the province. In addition, 50,000 college graduates will be provided four-month internships in the provincial government, with a monthly stipend of Rs10,000.

Published in The Express Tribune, June 10th, 2012.

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Reader Comments (1)

  • Saad
    Jun 10, 2012 - 2:36PM

    A good budget. Opposition finding it difficult to criticize and after KPK copying Laptop scheme I think this issue will die too.


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