ISLAMABAD, May 27: The National Economic Council (NEC) on Friday approved a five-point development-and-growth strategy for 2005-06 which envisages water security, energy security, infrastructure development, human and social sector development and second generation reforms.

On the basis of this strategy, the NEC approved Rs272billion public sector development programme (PSDP) and fixed GDP growth target of seven per cent for 2005-06.

The NEC meeting held with Prime Minister Shaukat Aziz in the chair, was attended by chief ministers, AJK prime minister, governor NWFP, federal and provincial ministers for finance and planning and chief secretaries of the four provinces.

According to the strategy two public sector corporations — Wapda and National Highway Authority — would raise another Rs34 billion outside the PSDP through government guarantees from commercial banks, leading the next year’s total development outlay to Rs306 billion. The APCC had originally proposed Rs319 billion for development budget but no decision could be made about Rs8 billion bonds for Mangla dam up gradation.

The figure is, however, about 41 per cent higher than last year’s total development budget of Rs217 billion. The Rs272 billion PSDP for 2005-06 is about 34.6 per cent higher than Rs202 billion of the last year. The usual development budgets of other corporations like PTCL, OGDCL, gas companies etc would remain independent from this figure, deputy chairman planning commission Dr Akram Sheikh told newsmen after the meeting.

The Rs272bn PSDP will have a foreign exchange component of Rs65.3bn and provincial development programmes of about Rs68 billion, while federal share in the PSDP is Rs204bn.

The NEC also approved institution of three funds worth Rs11 billion. These include Rs5 billion PSDP-funded Khushal Pakistan Fund, a government guaranteed Rs1 billion Infrastructure Fund (IF) and Rs5 billion Road Development Fund (RDF). The IF and RDF would be based on government guarantees and securitization of highway and motorway toll.

Allocations for water sector have been increased by 63 per cent to Rs41.7bn. Transport and communication sector has been allocated Rs35.6bn, energy Rs21bn, Khushal Pakistan Programme Rs16.9bn, education and vocational training Rs16.9bn, information technology and science and technology Rs8bn and Health and nutrition Rs10.5bn. Rs99.3bn have been allocated for the infrastructure sector and Rs78.9bn for the social sector. Other sectors would get Rs25.8 billion.

Major enhancements in next year’s PSDP over the current year allocation include 72 per cent for health, 57 per cent for IT, 52 per cent for science and technology, 50 per cent for education and vocational training, 28 per cent for higher education and 21 per cent for special areas like AJK, FATA and Northern Areas.

A new initiative for provision of clean drinking water to entire population in three years would be launched at a cost of Rs6.5 billion. Similarly, Rs2.5 billion have been provided for a five-year plan for prevention and control of blindness and Rs2.6 billion for prevention of Hepatitis.

The NEC also approved macroeconomic framework for next year that envisages seven per cent growth rate and increase in total GDP from current year’s $109 billion to $123 billion next year, chief economist planning commission Dr Pervez Tahir said. He said next year’s inflation had been projected at 8 per cent compared with the current years estimated rate of 9.7 per cent.

Next year’s total consumption has been estimated at Rs6.5 trillion against the current year’s Rs5.68 trillion. Similarly, total investment has been projected at Rs1.369 trillion against the current year’s Rs1.1 trillion. This would include a fixed investment of Rs1.25 trillion, public investment of Rs393 billion and private investment of Rs855 billion.

In terms of percentage of the GDP, total investment would increase to 18.1 per cent from this year’s 16.8 per cent, fixed investment to 16.5 per cent from 15.3 per cent, public investment to 5.2 per cent from 4.4 per cent, PSDP from 3.1 per cent to 3.6 per cent and private investment from 10.9 per cent to 11.3 per cent.

Next year’s national savings have been estimated at Rs1.2 trillion or 15.9 per cent against current year’s Rs988 billion or 15.1 per cent of the GDP. The GNP per capita has been estimated to increase to $803.7 from current year’s $683.5.

The agriculture sector is projected to grow by 4.8 per cent next year, including major crops by 6.6 per cent, minor crops by four per cent, livestock by 3.5 per cent and forestry by 5.1 per cent.

The industrial sector would grow by 9.5 per cent, including manufacturing sector 11 per cent, LSM by 13 per cent, small and household manufacturing by 7.4 per cent and construction by 7.5 per cent. The services sector would grow by 6.8 per cent. The NEC also approved a five year Medium Term Development Framework (2005-10) to sustain high rate of economic growth with macroeconomic stability.

The MTDF projected an average growth rate of 7.6 per cent of the GDP for five years and envisaged that growth rate would rise from seven per cent this year to 8.2 per cent in the terminal year 2009-10.

Overall growth would be ensured through an annual average growth in agriculture sector at 5.2 per cent, in manufacturing at 11.6 per cent and in services by 7.3 per cent. Total investment over the five year period is estimated at Rs7.952 trillion, including a fixed income of Rs7.298 trillion. This would include a public investment of Rs2.537 trillion, PSDP of Rs2.04 trillion and private investment of Rs4.762 trillion.