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Escalating development spending in Punjab

January 13, 2013

With the new elections just round the corner, the pace of development spending in Punjab is escalating. The Shahbaz Sharif government has given approval to development schemes worth Rs151.50 billion in the first half of the current financial year to December.

Officials of the Punjab Planning and Development Department (P&D) tell the Dawn that most funds for the approved development schemes have already been released. Though actual utilisation of the funds will not be known for another few days, it is projected to already have far surpassed the previous record.

"By the end of the third quarter of the current fiscal to March, we hope to consume almost the entire development budget for the current financial year," a senior official of the P&D department said on condition of anonymity.

The cost of development schemes approved so far constitutes just below 92 per cent of the total development spending of Rs165 billion during the last financial year 2011/12, and is almost 69 per cent of the provincial annual development programme (ADP) of Rs220 billion, including a foreign loan component of over Rs11 billion. The total size of the ADP estimated in the budget stands at Rs250 billion and includes a financing shortfall of Rs30 billion.

A glance at the development schemes undertaken by the government indicates a city-focused development strategy being pursued by the government. "It is natural for the Pakistan Muslim League-Nawaz (PML-N) in an election year to focus on areas where it feels challenged by its political opponents," a political economist said, refusing to give his name.

"Since Imran Khan's Pakistan Tehrik-i-Insaf (PTI) has emerged as a popular political force in the urban centres in the central and upper parts of the province, the PML-N is trying to counter this threat in the next elections by focusing its attention on major cities like Lahore, Faisalabad and Rawalpindi."

Officials refuse to acknowledge the ‘political, aspect of the development priorities of the Punjab government. "We (the country) are in the election mode for the last five years. If we had political certainty, Punjab would have done much better in terms of implementing development projects," the P&D official said.

He blamed political volatility in the country for slowing economy and reduced tax revenue collection during the last four years, which had forced the province to drastically cut its development budget in the past. "Last year, for example, we had to curtail our development sending by Rs55 billion from the original estimates due to funds shortage," he argued.

A development economist teaching at a private university agreed. "It is difficult to say if the development projects being implemented in Lahore or elsewhere have anything to do with the new polls or politics of the ruling party. The government (of Shahbaz Sharif) has played a big gamble by starting mega projects like multi-billion-rupee Metro Bus System in Lahore. It may harm the government in the elections unless finished well in time."

Another economist, who also attributes the quicker pace of development works in the province to the forthcoming elections, considers the entire provincial development strategy to be focused on a few urban centres due to the ruling PML-N's political needs. "The Punjab government should have spent more funds on the development schemes in agriculture sector, the mainstay of the provincial economy, rather than on projects like the metro bus. Agriculture hasn't performed well in the last few years because of lack of adequate investment," he argues.

Almost 80 per cent of Rs43 billion approved so far for transport/road sector will be spent on metro bus system in Lahore. On the other hand, only Rs2.6 billion have been given for agriculture. Little wonder then that annual average agriculture growth rate in Punjab declined to just one per cent between 2007 and 2011 from 3.3 per cent between 2000 and 2007. In contrast, the average agriculture growth rate rose to three per cent for the rest of Pakistan from 2.5 per cent.

The economist blames the government’s skewed development priorities and its failure to address structural weaknesses and infrastructure gaps for dragging down growth in the province at the cost of jobs and poverty. He advises the government to reset its development priorities to push growth rate to combat rising unemployment and poverty.

He insists that Punjab’s development priorities must focus primarily on removing constraints to economic growth. "The size of development budget has not increased in Punjab as much as in other provinces in spite of rapid increase in its share from the federal divisible pool under the NFC award. And whatever is available for development is spent on politically motivated schemes like free distribution of laptops, subsidising yellow cabs, mega projects like metro bus rather than on creating infrastructure for boosting growth and creating jobs," he argues.