The Public Sector Development Programme (PSDP) for 2005-6 has been placed at the record level of Rs272 billion, up 34.7 per cent over the year.
But the budgetary provision for any purpose is a necessary condition but not the sufficient one. What really matters is the use of the allocation to achieve the objectives in the most cost-effective manner. A small amount judiciously and effectively used can undoubtedly achieve much more than the large sum simply squandered away.
Pakistan offers an interesting case of development with waste and, as it happens with any disease not properly treated, the proportion of waste is on the increase at an accelerated pace. It has already assumed alarming proportions.
An idea about the magnitude of admitted waste of national resources can be had from the then finance minister’s reply given in the National Assembly some time back. He revealed a colossal loss of Rs662 billion per annum to the economy, as estimated by the Planning Commission.(press reports) This represents no less than 13 per cent of the nominal GDP in 2004-05 or close to total domestic saving. It can be safely said that in many cases the amount of money wasted is far more than the amount genuinely spent. The inevitable is quite obvious.
The waste can be in various forms, both legal and illegal, one of these, is extravagance. This is the hallmark of the public sector in Pakistan, the most striking feature of which is the royal life style of the rulers at the State expense making a mockery of mass poverty. They not only preserve a relic of the British Raj but exceed that when seen in relation to existing national resources. The colonial rulers perhaps thought that great pomp and show was a way to impress, rather overawe, the subjects. They could easily afford it because the natives paid for it. Back home, they dare not even imagine, not to speak of indulging in that, because their compatriot taxpayers, who were to bear the burden, would never allow that luxury.
The federal budget for 2005-06 provides Rs261.6 million for the presidency, representing “staff, household and allowances of the President” as against the revised estimate of Rs227.2 million and budget estimate of Rs212.1 billion in the preceding year.
For the Prime Minister Secretariat, the provision is of Rs234 million as against the revised estimate of Rs266 million and budget estimate of Rs226.5 million in the preceding year. A provision of Rs1.4 billion has been made for Parliament, of which Rs939.6 million is for the National Assembly and this compared with Rs786 million, as per revised estimate and Rs758 million as budget estimates a year earlier. The Parliament Affairs Division will cost Rs109 million as against Rs80.8 million revised estimates and Rs77 million as budget estimates last year.
Some times the individual expenditures just do not make any sense. For instance, in the new PM’s Secretariat a chandelier was installed at the enormous cost of Rs20 million. Does this serve any function except the ego satisfaction of the power that be? Recently, the proposed purchase of an expensive car, adding to the existing large fleet, and a house for the Speaker of National Assembly, was discussed in the House. The initial estimate of per square foot cost of construction of the house is to be many times the average cost of construction of residential buildings in Islamabad.
The budget provisions for the rulers at the federal level add up to Rs2 billion, a tidy sum by any standard, but quite staggering when related to nominal GDP. This is the claim made in the budget. Similar expenses in the four provinces and Tribal Areas will add to a large sum.
Opportunity cost is far higher than for the developed countries, as it amounts to denying the sorely needed health care, basic education facilities, repair and maintenance of crumbling economic and social infrastructure etc.
The entire process of project initiation, official approval, implementation, monitoring and final appraisal of performance leaves much to be desired. Inordinate delays at all stages often result in heavy cost over runs. Moreover, lack of coordination, rather synchronization, of various crucial elements of a project, even after its completion, renders it useless.. This may be manifested in the existence of schools without either teachers or students or both and hospitals without either doctors or medicines or both. The expenditure to create a facility but not used for any reason is an obvious avoidable waste. Such cases are legion in Pakistan.
An important factor as a major, rather overarching, contributor to waste is rampant corruption, which results in a fraction of the allocated funds being actually spent on the project and the rest siphoned off by those who have anything to do with preparation, approval and execution of the project or even payment thereof. The ratio of latter to total expenditure booked has been on the increase and has already assumed disturbing proportions. The result is substandard work, which often demands repair long before they could be normally due.
Mr. Wolfensohn, late President of the World Bank, on a farewell call in Pakistan before retirement, publicly identified corruption as the topmost economic problem, along with poverty and lack of attention to human resource development due to lagging social sectors, and suggested transparency in official transactions, judicial reform, better education and devolution.
Any meaningful reduction in the existing colossal waste in public sector would not be possible without effectively curbing corruption. Corruption cannot be curbed without a two prong approach of (a) scrapping all the unnecessary and often outdated laws, rules and procedures, which make corruption not possible but facilitate it and (b) giving the culprits, regardless of their position and influence, exemplary punishment, while handsomely rewarding the genuinely honest.
The National Accountability Bureau (NAB) is charged with the critical function of going after the wrong doers. However, its impact on the national scene has been quite limited, rather insignificant and is often charged with being selective.
By introducing the system of plea-bargaining, better known as Mukmuka, or settlement, it gives a wrong signal to the corrupt. The tacit message, hoped to be not deliberate, is that corruption should not be petty but on a scale large enough to provide for a share for NAB (read government), if one wants to get away with it. As a matter of fact, any out of court settlement is always suspect.
Development projects with blatant waste are legion but a few may be cited here. The case of Liaquatabad-Karimabad Flyover in Karachi comes to mind as a classic example of performance of the public sector development projects.
The plan was approved in 1991 but construction started in 1994. It was partially completed, to the extent of its main structure, in 2001. The desperate public started using it in that very state, forcing authorities to rush to formally open it. The remaining work relating to the under pass is yet to be completed and this is causing great inconvenience to public. To top it off, within the short span of three years, it caved in necessitating its partial closure.
The official explanation is very interesting, rather amusing. According to press report, EDO Works and Services pointed out that on the bridge portion that caved in, a trailer had got one of its tyres burst. The long vehicle had to stay there for quite a long time before the tyre could be replaced. This speaks volumes of the quality of planning and project implementation.
This was followed by a similar situation developing on Natha Khan overhead bridge. Earlier the Rashid Minhas flyover had also caved in. The ultimate cost of the Liaquatabad-Karimabad project is not known for want of its completion. It may safely be assumed that the cost escalation would not be any percentage of the original estimate but in multiples many times over. Even the current repair of the damage is expected to form part of development expenditure.
Interestingly enough the Liaquatabad flyover has no rain water drainage. One can easily find not hundreds but thousands of such cases of gross waste of public money and interestingly enough, no heads roll on that account.
Motorway from Peshawar to Islamabad involves foreign collaboration but its implementation is a sad commentary on project management and a perfect specimen of avoidable waste.
The experience of Special Action Program, (SAP) funded by a loan from the World Bank for the specific purpose of promoting education in the country must be mentioned. The army had to be used to detect ghost schools and teachers and they found ghost teachers in tens of thousands. (forty thousand to be precise). There are almost daily reports of not only ghost teachers but also school buildings awaiting students and teachers and some of these buildings being used by the local influentials as their guest-houses. This phenomenon was first noticed in Sindh.
Now, Punjab also has the same story. In the Dawn of July 24, 2005 is a story emanating from Dera Ghazi Khan carrying the heading, “schools used as guest houses”. It says that CM’s Monitoring Force for Schools raided schools in Khar, Anari, Basti Mauj Ali, Gorawn, Thal, Pathan, Mol, and Choti and found that, even though the academic session was on, there were neither teachers nor students and the school buildings were used as guest houses by local influential sardars.
Health sector has more or less the same story of ghost institutions. It was reported sometime back that at one stage Pakistan Railways had no less than 23 thousand ghost pensioners.
Waste in development expenditure is not only a national toss but also puts the country in an embarrassing position before international community, particularly international financial institutions which may have provided funds for the project.
Here is the latest case of cancellation of ADB loan for flood protection worth $100 million due to inefficiency of those related to the project. The Bank had asked the government to make certain changes in implementation arrangements based on the consistent performance of the project to consider extension of the loan but government not only did not change implementation arrangements, but also did not care to respond to numerous reminders by Bank in this regard. As a result, the loan was closed at the end of June 2005.
The Asian Development Bank has voiced its fear that Government of Pakistan may not be able to implement its enhanced PSDP because of its proven inability to spend in time and that too productively. Hence the crying need for institution capacity building or good governance.
A lot can be achieved with the existing financial resources by drastically reducing, if not eliminating, waste by toning up the process of project planning and implementation and curbing corruption.
The government would be well advised to link financial expenditure to physical aspects of the project. The number of school buildings planned and actually constructed and completed with the ultimate per square foot cost of construction compared with the initial estimate, the number of schools commissioned or not commissioned with reasons for the latter, the number of teachers employed and those who are habitual absentees, the number of students enrolled and regularly attending classes, etc. This kind of transparency would certainly arouse public interest which can, in turn, help improve the situation.