As the second term of the Shahbaz Sharif government ends later this month, its goal of making Punjab an industrialised, economically vibrant and knowledge-based province has not met expectations in spite of heavy development investment in transport and power infrastructure over the last five years.
In its much-touted Punjab Growth Strategy 2018, the government had targeted an eight per cent economic growth to create one million jobs each year and push private investment to $17.5 billion so as to boost exports by 15pc. Additionally, the strategy also sought to achieve all Millennium Development Goals (MDGs) and the targeted Sustainable Development Goals (SDGs) by the end of the government’s tenure.
However, the government is not even close to attaining any of the targets it set for itself in the growth strategy despite investing heavily in large infrastructure. The provincial economic growth rate is claimed to have shot up to five per cent against an average of 4.4pc between 2005 and 2016 but remains far short of the target.
The industry is in disarray as private investment in the manufacturing — especially in export industry — has declined significantly owing to high energy cost; and creation of jobs to absorb the new entrants to the labour market continues to be a challenge. Heavy public investments in infrastructure schemes have at best created low-paid jobs, mostly for the unskilled and to some extent the semi-skilled labour.
The Punjab government is not even close to attaining any of the targets it set for itself in the growth strategy despite investing heavily in large infrastructure
Agricultural productivity remains lowest in the region despite a large subsidy bill borne by the provincial budget in recent years. The services sector has expanded fast but is generating low quality jobs and contributing insignificantly to the provincial tax income. Last but not least, the progress, if any, made on achieving the SDGs is painfully slow.
Critics say the government’s misplaced development priorities and its extraordinary focus on large projects for political reasons have kept it from meeting its growth goals.
“The annual development spending by the provincial government has gone up massively from Rs160bn in 2009 to Rs635bn during the current financial year, but the provincial economy is still not generating enough quality jobs to take in the young men and women entering the market each year,” argued an economist who did not want to give his name for personal reasons.
“Skilled labour and private investment remain in short supply. Public healthcare and education facilities are scarce. A large population of the province remains deprived of clean drinking water. Industry continues to reel under cost pressures and exports are falling and so on. All this is because of misplaced development priorities of the government rather than resource-constraints,” he continued.
“The government’s focus on central districts (of Punjab) from where the ruling party draws its political power has sharpened the regional divide as the southern districts continue to face shortage of social and economic infrastructure, and house most of the poor and unemployed living in the province.
“The government could have pulled out millions of people from abject poverty by investing in industrial and agriculture infrastructure and skill training in the poorer districts instead of focusing on reinforcement of its political base in central Punjab alone,” he concluded.
The government, nevertheless, vigorously defends its performance.
While tabling the Rs85bn supplementary budget 2017/2018 in the provincial assembly for its approval, Punjab Finance Minister Ayesha Ghaus-Pasha claimed that today’s Punjab is a more developed and better governed province than it was in 2008 when the Pakistan Muslim League-Nawaz returned to power.
“When the chief minister took over power the province was faced with multiple challenges: poor governance, service delivery crisis, etc. But the government has worked hard and invested heavily in the last decade to develop social and economic infrastructure and improve governance,” she had noted.
The Punjab Planning and Development report 2017 claims that the current size of public investment is insufficient to meet the province’s development needs.
“… The public investment programme of around $5bn is not sufficient to meet the needs of the rapidly growing inhabitants of Punjab. At best, it can just be used as a catalyst. The government is fulfilling its responsibility to bring about policy and regulatory reforms that will facilitate private sector and enhance its contribution to the provincial economy.”
It further says the development of trade channels, energy corridors and associated businesses under the China-Pakistan Economic Corridor, revival of historic trade routes for better regional integration, consolidation of business linkages with China and Turkey, and enhanced export competitiveness under the GSP+ are some of the low hanging fruits that the government is trying to materialise by providing well-articulated policies.
“In this regard, the government is clear that it has minimal space in development projects to promote the private sector. Hence, the government’s increasing emphasis on policy ‘space’ and ‘planning’ within its development cycle to facilitate the private sector.”
Published in Dawn, The Business and Finance Weekly, May 21st, 2018