A comprehensive report on the state of provincial economies, akin to the National Pakistan Economic Survey, does not appear to be forthcoming.

Currently, development efforts at the provincial level appear to be politically driven rather than aligned with the prioritised needs of the masses. Consequently, the outcomes are modest and have a high opportunity cost.

In economic terms, opportunity cost represents the potential benefits foregone when one alternative is chosen over another. It includes both implicit and explicit costs. This concept is particularly important in public finance, as the government is entrusted with spending public money to best serve the interests of the masses.

To achieve optimal development results, nations worldwide are increasingly shifting to evidence-based planning and interventions, relying on larger sets of relevant real-time data.

Encouraged by the unexpectedly positive outcomes of this strategy, as seen with the Benazir Income Support Programme and pandemic containment efforts, among others, the federal government is gradually adopting more advanced approaches to development planning.

This includes utilising new information technology options for data gathering and compilation and expanding the application of credible information across various sectors and segments to enhance governance efficiency and effectiveness.

Economic surveys of Sindh and Punjab cannot be expected in the near future as provincial bureaus continue to deprioritise statistics

Progress at the provincial level in systematic data collection and its application for improving governance quality appears to be slow. The persistent neglect of provincial bureaus of statistics and the lack of capacity in other relevant departments exacerbate this challenge.

As sub-national governments are busy finalising budgets, with the financial year ending in June, the provinces’ political and administrative leaders are too preoccupied to address issues they already consider peripheral.

Responding to a query in this regard, Sindh Planning and Development Minister Nasir Hussain Shah responded in writing, “Capturing provincial economy is not simple.

“Limited data on inter-provincial trade, defence, household income and expenditure, imports and exports explicitly for the province, huge informal economy especially in the services sector are major impediments.

“The provincial Bureau of Statistics is working on establishing regional accounts in Sindh. The exercise is expected to take two to three years.”

A senior member of the economic team in Punjab confirmed that fairly credible agriculture data has been collected, and partial information on the manufacturing sector has also been gathered, but covering the gigantic cash-based service sector is hard to cover and poses a major challenge.

The chief economists of the two bigger provinces, Sindh and Punjab, along with the other relevant secretaries, were approached for their input on calculating provincial GDP, details of contributing sectors, and key economic indicators.However, their responses were still pending at the time of filing this report.

A senior official in Islamabad, speaking anonymously, provided some insights over the phone. “Top-down estimation has begun in the provinces, but transitioning to a bottom-up approach requires two key developments that are currently in progress.

“First, the provinces need to build minimum capacity to understand the System of National Accounts (SNA) 2008, enabling them to conduct sustainable bottom-up surveys. Second, there needs to be an aggregation of provincial GDP by the Pakistan Bureau of Statistics to ensure that the exercise remains non-political,” he explained.

The SNA 2008 is an internationally approved and supported statistical framework that provides a comprehensive, consistent and flexible set of macroeconomic accounts for policymaking, analysis and research purposes.

Background research revealed that an exercise to project the provincial GDP has been discussed, and data collection efforts have been ongoing in these provinces for several years. However, those involved have identified several issues, including the unavailability of service data due to a lack of documentation.

They expressed concern that, despite its significant value, this issue has not received the priority it deserves. Consequently, economic surveys of Sindh and Punjab cannot be expected in the near future.

“What do you expect when the future of democracy is under threat, overtly or covertly, for much of the elected government’s tenure?” an anonymous politician from Punjab probed.

“The political class in Pakistan is still learning to navigate and accept the complexities of power dynamics. It would be unfair to judge the government’s performance under such peculiar conditions or compare it with other nations. Political stability is essential for long-term planning, evidence-based or otherwise,” he added.

A senior economic commentator in Sindh disagreed, arguing that the shortcomings are intentional.

“The parties ruling Punjab and Sindh primarily use public money for political purposes. They clearly value loyalty over integrity. Development schemes are often designed and implemented not on merit but for political ends, sometimes to buy, but mostly to reward the loyalty of provincial assembly members,” he asserted.

A senior member of the ruling team in Sindh defended the leadership, giving them the benefit of the doubt.

“Who wouldn’t want to improve performance to gain public trust and popularity in a democratic order? However, the provincial hierarchy’s preoccupation with other matters pushes the agenda of improving data quality and its timely compilation down the priority list.

“Additionally, the political interference by the central leadership of the ruling party in affairs of the province, including key appointments, compromises the capacity of relevant departments, making the task more difficult,” he noted.

Published in Dawn, The Business and Finance Weekly, June 3rd, 2024