KARACHI, May 21: The Annual Planning Coordination Committee (APCC) is meeting coming Saturday in Islamabad to discuss Rs152 billion development budget for next fiscal year.

A document of the planning division considers this allocation of development funds insufficient for the 10 years Perspective Development Plan. The year 2003-04 is the third year for the implementation of long-term perspective plan.

The Rs152 billion PSDP includes Rs105 billion federal government development outlay including a foreign exchange component of Rs30 billion. The federal ministries and agencies demanded total development funds of Rs279 billion. The planning Division pruned it down to Rs 145 billion but the Finance ministry bureaucrats have indicated a sum of Rs105 billion only for the next fiscal year.

Well placed sources in Karachi expect APCC meeting to be a noisy affair where ministers from Sindh, Balochistan and NWFP are likely to protest on retaining the resources allocation formula of 1997 National Finance Commission (NFC) which stood expired in June 2002.

Well placed sources in Karachi, however, expect a soft protest on the NFC award issue in APCC meeting next Saturday to be chaired by Finance Minister Shaukat Aziz. But a loud protest will be made in the National Economic Council meeting to be held either late this month or early next month with Prime Minister Zafarullah Jamali in the chair.

Provinces have been compelled to draw up their respective budgets for the second consecutive year of 2003-04 on the basis of resources allocation formula which has expired its constitutional term in 2001-02.

Sindh and NWFP assemblies have unanimously passed very harsh statements on the NFC issue a few weeks ago. Balochistan Chief Minister and other ministers have also spoken on difficulties they face in formulation of budget because of what they allege an unjust and unfair NFC formula.

Ministers in Karachi, Quetta and Peshawar are under the pressure of their assembly members to demand greater resources for the key projects of their respective provinces. There is a lot of heart burning that many of the key projects have not been given due priority by a committee of bureaucrats who remain indifferent and callous to needs of the people.

According to the sources in Sindh, only a sum of Rs200 million has been indicated for water supply scheme in Karachi with a total outlay of over Rs6 billion. The demand to set the ball rolling was for Rs500 million. Delay in implementation of a previous water supply schemes pushed up the original estimates and hence ancillary components of their scheme remained unimplemented. Islamabad now wants Sindh to take up completion of those ancillary components of the scheme from its own resources.

Islamabad also wants Sindh to finance 37 per cent of Rs 2.87 billion Lyari Expressway Settlement project which planners in Karachi feel is virtually impossible because of the meagre resources.

Officials say that Islamabad has made it clear to the provinces to finance their respective development programmes from their own resources in view of what is being maintained “increasing trend of transfers to the provinces from 2.5 per cent of the GST.” A Committee of bureaucrats has made no provision for Education Sector Reforms (ESR), villages electrification and devolution programme. In the current development budget of Rs 134 billion. A mid term review in January this year forced the decision makers to provide Rs1 billion for ESR and Rs500 million for village electrification.

The public sector development plan for 2003-04 stipulates Rs 105 billion for the federal government and Rs 47 billion for the provinces. Provincial programmes reflect estimates of the provincial annual development programmes. In addition, the PSDP stipulates Rs4.5 billion Tameer-e-Pakistan and Rs2.5 billion for federal priority programmes to supplement development efforts of the provincial governments.

But the budget documents distributed among the provinces are silent on provincial shares in Tameer-e-Sindh and federal priority programmes. The sources in Karachi expect that this issue would also generate a lot of heat.

The federal development programme of Rs105 billion for 03- 04 is 16.7 per cent higher than Rs90 billion programme under implementation in the current fiscal year. The next fiscal year’s PSDP includes a foreign exchange component of Rs30 billion.

Out of Rs105 billion, the federal ministries will get Rs54.4 billion, special areas FATA, AJK and Northern areas Rs8.1 billion, special programmes of Rs9 billion include Rs4.5 billion Tameer-e-Pakistan, Rs2.5 billion priority programmes and Rs2 billion drought emergency relief programme. The public sector corporations will get Rs33.5 billion.

According to the budget document major thrust of the 2003-04 development programme is on social sectors and poverty related expenditure with an allocation of Rs35 billion which is 33 per cent of the development outlay. Transport and communications claim 26 per cent, water resources development 12 per cent and physical planning and housing 10 per cent.

For the current fiscal year expiring end June the total development outlay is Rs134 billion that include Rs90 billion federal government and Rs44 billion provincial governments.

Utilization of development funds remain slow till first half of the current fiscal year because of the hangover effects of Presidential referendum held on April 30 and later the general elections in October. Official agencies reported utilization of Rs51 billion out of Rs134 billion by end December 2002. Out of Rs90 billion federal programme only a sum of Rs31 billion could be utilized while provinces could spend only Rs20 billion.

Utilization of development funds is reported to have picked up in the third quarter of the current fiscal year after the installation of elected governments. An optimistic assessment now suggests utilization of Rs 132 billion by end June. This include Rs88 billion out of Rs90 billion federal development outlay and 100 per cent of Rs44 billion provincial government programmes.