Cautioning govt: PSDP vital for improving living standards, says ICCI

Says cut in funds will affect country’s development, growth

ISLAMABAD: Voicing concern over the cut in funds of the Public Sector Development Programme (PSDP), the Islamabad Chamber of Commerce and Industry (ICCI) has said that such a step would adversely affect work on development projects and hit economic growth of the country.

ICCI President Muzzamil Hussain Sabri said that enhanced PSDP spending was vital to achieve sustainable economic development and improve living standards.

“However, the ad hoc approach of our successive governments to make PSDP the first casualty whenever a revenue shortfall occurs has held the country back from realising its development potential.”

He said the government has released only 41% funds (Rs216.2 billion) for PSDP during the first seven months (July to January) of the current fiscal year while under its disbursement policy, it should have released at least 50% funds during this period.

He said that the country’s PSDP for 2014-15 has already been slashed from the original allocation of Rs525 billion to Rs477 billion. The reduction of Rs48 billion comes in order to meet the IMF criteria to restrict the budget deficit, said Sabri.

“However, this is not a wise approach as it would affect the pace of development work and increase poverty in the country.”

According to Sabri, there is a dire need of increasing spending on infrastructure development to facilitate the growth of business activities. But there were reports that the government might make a further cut of 22% in the PSDP. This would cause added problems to the economy as lower development spending would negatively impact the growth of trade and industry.

Sabri said that on the one hand the government is favouring a cut in PSDP and on the other hand it was raising general sales tax on petroleum products.

Both decisions would increase difficulties for the common man who is expecting a relief in the wake of a massive reduction in international oil prices.

He was of the view that the economic development could be improved if the government adopted a more prudent approach to reform the entire taxation system. 

Published in The Express Tribune, February 8^th, 2015.

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