LAHORE: Punjab missed almost every major target set in the three-year provincial growth strategy 2015-2018 developed by the previous administration of former chief minister Shahbaz Sharif at the expense of economic growth, manufactured exports from the province, poverty and jobs.
Further, the implementation of the strategy increased regional disparity as public investment was focused more on large schemes in major cities in the northern parts of the province, mainly in Lahore, at the cost of the rest of Punjab, including the most impoverished southern districts. Besides, the focus on large transport and infrastructure projects also led to deficit financing, increasing debt burden on the province.
A critique of the growth strategy of the last Shahbaz Sharif government by the new draft five-year Punjab Growth Strategy 2018-2023 says the authors of the previous document didn’t base their growth projection on historical evidence, which ultimately added abstractness to the targets set in it.
According to the new strategy, the provincial economy grew by 4.9 per cent, slightly slower than the national annual average of 5.1pc, as regional disparities increased owing to lopsided public investment priorities and manufactured exports from the province shrank in the last tenure of Shahbaz Sharif between 2013 and 2018.
‘Lopsided’ public investment priorities widened regional disparities
The province fell far short of meeting its gross regional product (GRP) growth target of 8pc in the terminal year of the previous government as set in its three-year provincial growth strategy (2015-2018) despite heavy public investment that was estimated to have risen from 1.4pc in 2013 to 3.2pc of GDP in 2017 in large infrastructure and transport projects and massive machinery and other imports for energy projects implemented under or around the multi-billion-dollar China Pakistan Economic Corridor (CPEC) initiative.
The pace of Punjab’s economic growth rate picked up from 2016 on improved availability of energy and security conditions in the province to an annual average of 5.3pc. This compared with the national GDP growth rate average of 5.4pc in 2016-2018. However, the decreased competitiveness of exporting industry from the province meant the 15pc annual growth in foreign shipments from Punjab, a target set without providing the baseline value of Punjab’s exports, would not be met.
“The previous strategy development process did not generate the provincial GRP estimates and this limited the evidence base and added abstractness in the way a target was set. The sectoral growth trajectories and expected contributions were also not available due to the same reason. This restricted the understanding of the departments as to what contributions, and thus investments, were required on their part to attain the growth target,” the new government’s critique of the previous growth strategy says.
The Shahbaz Sharif administration also missed private investment target as it dropped to $15.3 billion last fiscal after peaking to $16.8bn a year before and also fell short of the targeted $17.5bn. “Major part of this growth (in private investment) came in energy projects, which now present a recurrent expenditure challenge for the government,” according to the draft new strategy.
On public investment side, it says, the split of allocation of annual development programmes was not optimised to achieve growth and investments were made in inefficient infrastructure resulting in surge in the current expenditure.
Although Punjab reached close to generating a million jobs a year in the last fiscal as targeted in the previous growth strategy, majority of new employment opportunities were created in the services sector as a large chunk of textile industry closed down and new investment in industrial projects dried up.
Published in Dawn, March 26th, 2019