ISLAMABAD: The National Economic Council (NEC), under the chairmanship of Prime Minister Nawaz Sharif, approved on Monday a national development budget of Rs1.16 trillion, representing an increase of Rs282 billion over the previous year.
In keeping with the federal focus of the Pakistan Muslim League-Nawaz, Rs540 billion have been approved for the federally managed Public Sector Development Programme (PSDP), resulting in an increase of Rs180 billion from allocations under last year’s budget.
Similarly, another Rs615 billion have been approved for the provincial Annual Development Plans, up by Rs102 billion over the outgoing year.
Setting the tone for his government’s first year in office, Nawaz abolished the controversial prime minister’s discretionary fund and set aside a whopping Rs115 billion for development projects, promised during electioneering.
Projects that are expected to be started by the Rs115 billion include a metro bus system for the country’s largest metropolitan city Karachi, and a similar bus network linking the twin cities of Rawalpindi and Islamabad.
As expected, the NEC approved Rs4.5 billion under the previous Peoples Work Programme, now renamed Tameer Pakistan Programme. Under the programme, Rs10 million will be given to each member of parliament for development projects.
Talking about increased financing for the PSDP amidst a financial crunch, Planning and Development minister Ahsan Iqbal defended the allocation by saying that the increased expenditure would be met by raising revenue through an aggressive taxation policy.
Iqbal added that public sector investment had gone down over the years and the new development budget will provide impetus to economic growth.
During the NEC meeting, the prime minister constituted a committee under the chairmanship of Iqbal, with provincial chief ministers as its members, to review existing PSDP projects and drop projects deemed unnecessary. The committee is expected to complete its list by the end of next month.
“The primary constraint to growth is the energy sector and the government’s highest priority in the next fiscal year will be addressing energy shortages,” said Iqbal while explaining prioritisation of projects under the approved development budget.
In all, Rs107 billion have been allocated for energy sector projects under the next fiscal year’s PSDP. This amount is in addition to Rs118 billion that Wapda and Pepco will spend outside the PSDP.
Around Rs25.2 billion have been allocated for the Diamer-Bhasha Dam, Rs 25 billion for Neelum-Jehlum hydro power project, Rs 14 billion for Tarbela-IV extension, Rs42 billion for Chashma 3 and 4 nuclear power plants, and Rs 10 billion for Karachi Nuclear Power Plant.
Some Rs105 billion have been approved by the NEC for communications, with Rs63 billion for National Highway Authority (NHA) and Rs31 billion for Pakistan Railways. NHA is expected to link Gawadar with the rest of the country through a new road which will bypass restive parts of Balochistan, said Iqbal.
Meanwhile, Rs59 billion were approved for water sector projects, Rs25 billion for education and Rs25 billion for inter-provincial health sector projects.
With the approval of the development budget, fresh economic targets were also approved by the NEC on Monday. With the new government banking on delivering an economic revival, the GDP growth rate for the next fiscal year has been set at 4.4%, up from this year’s 3.6% growth.
Projected growth by sector is expected to be 3.8% in agriculture, 4.5% in manufacturing and 4.6% in services, with inflation expected to be 8% during the next fiscal year.
The target for investments has been set at 15.1% of the total size of the economy, whereas exports are targeted to be $26.6 billion, up by 5.4%.
Published in The Express Tribune, June 11th, 2013.
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