Economic development used to be a passion with the people. This passion manifested itself in an average annual growth rate moving up from 3.5 per cent in 1950s to 6.8 in 1960s, 4.8 in 1970s, 6.5 in 1980s and 4.6 per cent in 1990s.

After recording nine per cent in 2004/05, the growth rate continued to plummet to stand at 2.4 per cent in 2010/11.What to speak of the downslide, the national assets built over time in infrastructure, production and social sectors are decaying and turning into debris.

The analysts ascribe this downturn to a number of factors. These include low investment and low saving rates, dependence on foreign savings for development, exponential growth in non-development expenditure, reluctance of the elite in establishing an equitable taxation base, concentration of assets in few hands, low expenditure on human development, flight of capital, political instability and our participation in war-on-terror.

Undoubtedly, all these causes of downturn in growth rate are valid. But what is more important to consider is that how much deceleration in growth has been caused by decay in our national assets such as Pakistan Steel Mills, Railways, Water and Power Development Authority, National Highways Authority and other state-run institutions. A decline in production and service delivery are largely responsible for an overall dismal growth rate.

High growth rates became synonymous with success of the government. This fixation led successive governments to lay emphasis on annual allocation of resources for public sector development programmes without due regard to resource availability. This led to an inevitable overstretching PSDP and a mid year exercise for pruning of project allocations.

Motivated by a desire to go on expanding the portfolio of the projects, the governments went all out on a borrowing spree from bilateral donors and multilateral agencies with scant regard to availability of matching rupee resources. As a result, the projects were invariably delayed.

This delay imposed extra costs on two counts. First, it pushed project costs, generally called cost overrun. Second, the commitment charges continued to be paid to the lenders for the undisbursed portion of the loan. Then there were approvals on political grounds. The technical, financial and economic viability of the projects carried out by the specialists in the Planning Commission was conveniently overruled for accommodating unviable projects.

Another adverse trend was witnessed Successive governments that came to power relegated the ongoing projects of outgoing governments to lower priority and insisted on liberal allocations to new projects initiated by it. This proliferated the number of projects and schemes which were abandoned without being completed. Another method employed was to short-circuit the competent fora by issuing directives from the prime minister for including projects in the PSDP and according them priority in the allocations of the funds.

The politicisation of the PSDP apart, the assets were not provided adequate funding from non-development budget for efficiently running the executing departments and agencies. This is reflected in the allocations being heavily tilted in favour of salary component at the expense of non-salary component comprising equipments, plant and machinery, transport, function related inputs and what is more important provisioning for repairs and maintenance, generally called operation and maintenance expenditure.

A financial analysis of these allocations reveals that the salary component in most departments and organisations claimed two-third of the allocations while non-salary share was only one-third. With these endemic output trends, the quality suffered.

This loss of output from the existing stocks of assets contributes a substantial portion to slow down of growth in the economy.

The crux of the matter is that given the present resource crunch, the new asset creation should give way to rehabilitation and operationalisation of existing assets by allocating larger funds to these entities and their resuscitation with merit-based management.

The writer is a retired Joint Chief Economist of the Planning Commission.

e-mail: <masood_kizilbash@hotmail.com>