ISLAMABAD, May 18: The federal government has decided to increase the size of next year’s development programme to Rs295 billion, including a Rs23 billion co-financed investments through public sector corporations. A senior government official told Dawn on Wednesday that under the revised PSDP, allocations for provincial programmes had been increased to Rs70 billion from the original Rs65 billion while the federal PSDP would stand at Rs202 billion.

He said the decision to this effect was taken at the conclusion of the meeting of the Annual Plan Coordination Committee (APCC) on Tuesday night. The official said the meeting had decided that the federal government would make small investments in a large number of projects and provide guarantees to public corporations to raise funds from the banking sector on self-financing basis.

For example, he said, the federal government would invest about Rs60 million in the Karachi Mass Transit Project (KMTP) and provide guarantee to the National Highway Authority (NHA) to raise Rs500 million for the project. Overall, the NHA would be investing about Rs30 billion while distribution companies of Wapda would invest about Rs34 billion. Half of this funding would be raised through this new concept of co-financing on government guarantees and small government funding.

He said the objective of this new initiative was to generate a lot of economic activity through a large number of small projects in all areas. The official said the NEC had been requested to approve a Rs272 billion public sector development programme — Rs202 billion and Rs70 billion for federal and provincial projects — besides Rs23 billion co-financed investments.

In such a situation, the overall public sector development programme would go up to Rs295 billion, showing about 46 per cent increase in development spending when compared with current year’s allocation of Rs202 billion.

Dr Ashfaque Hassan Khan, economic adviser to the government, said that a working paper had been circulated among the APCC participants which showed that seven per cent growth rate for the current fiscal year had been prepared two days before the meeting.

He said the 8.35 per cent growth rate announced by the prime minister was based on data finalised by the National Accounts Committee, which had met a day before the APCC meeting.

Another official said that the National Economic Council, scheduled to meet on May 27, would approve the budget schedule along with revised development programme.

The official said the federal and provincial authorities had made demands for Rs331 billion, including a foreign aid of Rs62 billion. The planning commission had originally recommended Rs222 billion, including foreign aid of Rs50 billion. He said the total Rs295 billion development budget was Rs3 billion higher than envisaged in the medium-term development framework (five-year plan) and would amount to slightly over four per cent of the GDP.

A major emphasis in the proposed 2005-06 development programme is on social sectors and poverty related expenditure with an allocation of 37 per cent, followed by transport and communications, 19 per cent, water resources development 20 per cent and power sector eight per cent.

The highest share of Rs86.7 billion has been allocated for infrastructure development against current year’s allocation of Rs72.7 billion. This included Rs48.4 billion for water and power sector which was given Rs35.6 billion in the current year PSDP.

The water and power sector has got the largest allocation. However, no allocation has been made for any mega water reservoir like Kalabagh or Bhasha dam as commonly expected, but three new projects of Rs500 each in Sindh, Punjab and the NWFP have been included in the PSDP for the lining of irrigation channels, distributaries and minors.

About Rs10 billion has been allocated for 17 new projects in the small hydel power generation and transmission system. Another Rs5.5 billion has been allocated for the Neelum-Jhelum hydropower project.

However, no funding was envisaged for new initiatives in 29 federal divisions. These include health, education, population welfare, women development, social welfare, law and justice, Fata, Kashmir and Northern Areas, environment and labour and workforce.

The AJK finance minister is reported to have protested in the meeting that while total PSDP had been increased by 16-30 per cent for federal and provincial programmes, the AJK had been given just three per cent increase.

He demanded that allocations for the AJK be increased to enable them to start rehabilitation activities along the Line of Control. The highest number of 196 projects, worth Rs11 billion, of the Higher Education Commission have been included in the PSDP, but without any new initiative. There is also no new initiative for high yielding sectors like oil and gas, information technology and telecommunication, information and broadcasting, communications, commerce, ports and shipping, works and science and technology.