LAHORE: The Punjab Planning & Development Board (P&DB) is revisiting the development scenario in the province to align public investments with broader goal of stimulating economic activity by reforming development policy, as well as recalibrating its systems and strategies to readjust future interventions to maximise impact on growth.

The focus of the effort is to restructure the entire development policy paradigm to make a shift from too much preoccupation with approval of schemes to a more ‘holistic and integrated approach’ that ranges from need assessment to policy formulation to project preparation to monitoring for reevaluation of the policies and projects, provincial P&DB chairman Hamed Yaqoob Sheikh, who took over the job less than four months back, told Dawn in an interview.

Strategy aims at stimulating economic activity

“Approval of development schemes is an important function of the board but that is not all. Therefore, we have reactivated the hitherto dysfunctional board to readjust development policies as well as create new models: where to use government departments, how to increase their capacity, and how, when and where to involve the private sector,” he asserted.

“Reform of public development expenditure systems and processes is critical to generate economic activity, and provide more and better services for citizens. The idea is to spur economic growth, enhance monitoring of projects to control leakages and prevent delays in their implementation, and strengthen the key departments by changing their mandate and thrust to improve public service delivery and optimise the use of the limited resources at the disposal of the board,” the P&DB chairman emphasised.

He listed a number of areas where the board is reforming the existing policies, procedures and systems or devising new ones for a better allocation and utilisation of development funds. These areas range from acquisition of land for projects to enhancement of social and environmental safety protocols to readjustment of allocations and policies for health and education sectors to improvement in regulatory environment for private sector to remove barriers to entry and growth, and so on.

“We are looking at the government role in every sector (of the provincial economy). Public investments are crucial (for developing social and economic infrastructure), but the P&DB interventions have a bigger role to play by removing procedural and regulatory burden and obstacles hampering private-sector led growth,” Sheikh underlined. “For instance, we are now focusing on building East-West corridors to open up the closed regions and connect them with the rest of the province through an improved road network. This intervention will open these regions/cities to private sector investments and unleash economic potential that until now remains untapped.”

Public investment has historically played a major catalytic part in provincial economic growth. However, the development choices made in the past have attracted a lot of flak from the economic commentators. The new P&DB strategy now focuses on using public capital investments for generating economic growth. “In our opinion the ‘drivers of growth’ exist in the provinces. You cannot curtail provincial expenditure without actually hurting growth. So the focus of public development spending should be on spurring economic growth (rather than on launching schemes that offer little or no economic dividend or return),” the chairman said.

A review of the provincial development programme for the present financial year shows that the board has successfully increased utilisation of the funds (as a per cent of the total development budget) to 44pc or significantly higher than the historic annual average of 38.5pc for the last four fiscal years from 2016 to 2019 during the first eight months to February.

One possible reason for the increased pace of utilisation could be the much smaller size of the core development allocations of Rs308bn than the previous years, except last fiscal’s Rs238bn. Total budgeted development allocation of Rs350bn for the current year includes projects worth Rs42bn in the public-private partnership model. The finance department has released 71pc or Rs134bn out of the core allocation for the year.

“We could have spiked development expenditure utilisation rate through single-line transfer of bulk of the funds to the departments (as had been the practice in the past). Yet we chose a different route. The challenge was to ensure a fairly balanced utilisation of the funds – available with the board after single-line transfers where such transfers couldn’t be avoided – in every sector of the economy in line with our larger objective: revival of economic activity. Evidence shows that our investments have spurred industrial and economic activities in the province and growth is picking up in every sector.”

While making allocations for individual schemes this year, the board took care that more than a third of the ongoing schemes were fully funded. “The purpose was to reduce development throw-forward of Rs800bn in the province. It is important to focus on completion of ongoing, approved schemes for public convenience as well as prevention of cost overruns instead commencing work on new projects,” Sheikh said. “The needs of people are far greater than funds the government can muster for public development programme. This calls for effective planning and efficient allocation of resources. We are trying here to make the entire development framework transparent, need-based and inclusive with greater focus on effective spending and better output.”

The board has already ring-fenced development allocations of 35pc for south Punjab and is now actively engaged with donors to generate more funds for its annual programme next year. “We are looking at $150mn in foreign assistance for our development budget next year,” Sheikh said.

Published in Dawn, March 22nd, 2020