Punjab seems to be prospering by what some officials may say leaps and bounds despite an inordinate delay in the finalization of the sixth National Finance Commission (NFC) Award. The marked improvement is quite evident from the record revenue outlay of Rs224.409 billion for fiscal year 2005-2006 — some 24 per cent higher than Rs180 billion estimated for the outgoing year.

Massive funds are pouring in for different sectors, especially the social sector, from all sides. Multilateral donors are more than willing to provide financial assistance to the province.

Better fiscal discipline and debt management strategy has also resulted in an improved financial position for the largest province. Some foreign investors, especially those from the Middle East, are also keen to invest in various sectors agriculture, real estate development, industry, etc in the province.

Money appears to be no problem for the provincial finance managers. The question facing the government is how to utilize it?

With the revenue expenditure pitched at Rs157.5 28 billion for the next fiscal year, the budget carries a net revenue account surplus of Rs66.881 billion, which will be used to cover the capital account deficit of Rs4.486 billion and the public account deficit of Rs19. 267 billion.

The remaining net current budget surplus of Rs43.127 billion, along with a foreign financial assistance (read loan) of Rs9.827 billion and foreign grants of Rs45 million is proposed to be used to finance the provinces record annual development programme (ADP) of Rs53 billion.

The provinces annual development outlay for 2005-06 is about 22 per cent more than Rs43.538 billion estimated for the outgoing year. In all the provincial government proposes to invest upwards of Rs71 billion, including its ADP, on development projects during the next year.

The remaining projects will be financed through Rs10 billion district development programme and Rs8 billion allocated to autonomous institutions of the provincial government. The total development spending envisaged in the budget for the next financial year shows a marked growth over Rs20.500 billion spent on development during the financial year 2003-04.

The budget documents claim that the government spent upwards of Rs62 billion, including an ADP of Rs43.538 billion and a district development programme of Rs9 billion, on development projects in the province during the current year. Some 68 per cent funds are estimated to have been utilized during the first three quarters of the year.

Senior provincial planning & development (P&D) officials hope that 90-95 per cent funds will be utilized by the close of the year on June 30. At the end of the fiscal year 2003-04, the department had claimed to have achieved utilized 90 per cent funds.

Some 35 per cent of the provincial development programme for the next fiscal has been allocated for social sector and 43 per cent for infrastructure development. And 62 per cent of 1,727 schemes with an average per scheme allocation of Rs22 million included in ADP are expected to be completed by the end of the fiscal on June 30, 2006.

The spending on ongoing schemes has been increased by 86 per cent to Rs32.540 billion while on new schemes by 20 per cent to Rs20.460 billion. This compares with the ADP allocations for the outgoing fiscal year.

The development outlay is said to have been enhanced to accelerate the economic growth by improving the existing and building new socio-economic physical infrastructure in the province for reducing (income and public services) poverty through the creation of new productive, sustainable employment opportunities in the province.

The unemployment rate in the Punjab was estimated at the beginning of this decade by the Asian Development Bank (ADB) to be about 8.3 per cent or 0.8 per cent higher than the national average of 7.5 per cent. The labour force in the Punjab is projected by the provincial government to grow by about 3.4 per cent per annum. It means that the province will have a labour force of about 36 million by 2012. Higher rate of unemployment means greater the incidence of poverty.

Hence, just before the presentation of the budget for the outgoing fiscal year in June 2004 we were told by Chief Minister Pervaiz Elahi that the provincial government had devised a programme for creating one million new productive and sustainable jobs during the fiscal year 2004-05, and the following years to achieve full employment in the province in the next 10 years.

Some 25,000-30,000 jobs were to be created in the public sector on the basis of need each year. Another 120,000-125,000 employment opportunities were to be generated through the provincial public sector development plan. The remaining 850,000 jobs were to be created by the so-called engine of growth or the private sector.

The provincial governments role was envisaged as a facilitator, responsible for ensuring the removal of all the fiscal and legal irritants in the way of fresh investment in industry and other sectors of the economy.

The employment creation plan was unveiled by Mr Elahi himself at a pre-budget press briefing where he unfolded his socio-economic vision of the province in 2020. Though many were skeptic of what he had said, others still thought at that time that he may cross the bridge.

Senior finance and P&D officials disdainfully brushed aside any cynicism about the chief ministers claim. But they always attached one proviso if we are to create one million jobs every year, the provincial GDP will have to grow at 7-8 per cent per annum to their optimism.

One year down the road both the chief minister at his pre-budget briefing and his finance minister Hasnain Dareshek in his budget speech for 2005-06 claimed to have achieved the target. “We have successfully managed to create one million new jobs in the province during this fiscal year (2004-05) as promised,” contended Mr. Elahi at his pre-budget briefing this year. His finance minister echoed the claim in his budget speech in the Punjab Assembly.

“Where are the jobs, which the government claims to have created?” asked opposition leader in the provincial assembly Qasim Zia. “Creation of one million jobs in the province simply means that an average 30,000 persons have got some kind of job in each of the 34 districts during the current fiscal year. Do you think it is the actual situation?”

Billions of rupees have though been pumped in the rural economy as a result of record cotton crop and improved wheat yield this year, but it is incorrect to assume that the deprived segments of the rural society, the landless people who live below the poverty line, have benefited from it.”

The government also insists that its record public sector investment of over Rs62 billion on development projects during the outgoing year had generated 85,000-90,000 jobs. But officials admit privately that the increased spending does not mean generation of more jobs. It can simply mean that some people are making more money than before.

“Like GDP growth does not necessarily mean reduction in poverty, the public sector development spending also does not ensure creation of more employment opportunities,” said a former senior finance department official.

Whileinfrastructure construction under its development programme by the government may create a few thousand low-paid jobs, say many economists, it cannot bridge the huge job deficit in the province. Achieving full employment requires huge investments in industry, especially small and medium enterprises (SMEs), and services sector by the private sector. This kind of investment is still not coming. The government, they say, need to focus more attention towards it. If it doesnt, they add, it should forget about its target of one million jobs.

At his press briefing, even Mr Elahi himself appeared incredulous about his own claim perhaps he knew that his claim did not match the ground realities despite the fact that the provincial GDP has grown by well over eight per cent this year, a pre-requisite for the creation of one million jobs. “Ive ordered to carry out a labour force survey”, he added.

One hopes that the survey findings are not tampered with for short-term political gains of the rulers of the province.