The Punjab government has revised upwards its estimated annual provincial development programme (ADP) by 2.61 per cent or Rs2.3 billion to Rs90.3 billion in spite of the fact that during July-March 2007 it has managed to utilise merely 45.93 per cent of the original budgeted amount, raising doubts about its ability to actually spend the entire development funds before the fiscal year is out.
The provincial government had announced a record Rs88 billion ADP. This included a core development programme of Rs65 billion and a special infrastructure development programme of Rs23 billion for building a motorway between Lahore and Sialkot (to facilitate export business) and the Lahore Ring Road. In additional to the provincial
ADP, the government had also announced a district development programme of Rs12 billion.
Surprisingly, the districts, which are often lamented to have little or no capacity to undertake development projects on their own, have consumed the entire development funds of Rs9 billion released during the first three quarters of the year.
As far as its core development programme is concerned, the finance department is reported to have increased its allocation by 8.9 per cent to Rs70.771 billion and released Rs58.08 billion for the projects and schemes relating primarily to social and economic sectors. The implementing departments have been able to utilise only Rs38.958 billion or 59.93 per cent of the original and 55 per cent of the revised allocations during the first nine months.
Compared to the approximately 60 per cent utilisation of funds for the core programme, the government could manage to utilise during the first three quarters merely 6.35 per cent or Rs1.459 billion of the funds set aside for the special infrastructure projects. The allocations for the special infrastructure development have since been revised down by 15 per cent to Rs19.528 billion. The revised share for the two roads in the development programme is likely to be slashed further in view of the little likelihood of any substantial utilisation.
Punjab's finance minister Hasnain Dareshak has no explanation for the exceedingly slow progress on the Lahore-Sialkot motorway and the Lahore Ring Road projects. "I do not know what prevented the C&W Department from utilising only a negligibly small part of the funds allocated for the two important projects. There may be some unavoidable reasons for the delay," he says. "The finance department cannot be blamed for the extremely slow movement on the two projects as it has timely released funds (of Rs4.5billion) for these two mega projects," he explains.
Dareshak is not worried about the unutilised funds. "These will be diverted to other projects," he says, expressing the hope that the utilisation of development programme will substantially increase by the end of the fiscal year. "The utilisation of funds has remained historically very high in the last quarter of the financial year.
So we can expect maximum utilisation of the development funds in the last quarter," he says.
A senior Planning & Development Department official who asked not to be identified says, there were different factors responsible for the slow utilisation of development funds. Among others, these factors include allocations for unapproved schemes, delays in finalisation of the approved schemes and award of contracts. "The first three months of a financial year pass in the approval and finalisation of the schemes and award of contracts for execution, and the actual work on a scheme begins only in the second quarter," he says.
The official says, the department is trying hard that maximum number of approved schemes is included in the development programme. But you see, it is not an easy thing to do. You have to include numerous unapproved schemes at the eleventh hour because of political pressures. Politicians want their schemes, whether approved and unapproved, to be included in the programme for obvious reasons, and it is not a good idea to say no to a public representative," he says.
Both finance and planning and development departments officials say the development programme for the next fiscal year, 2007-08, will be fatter. "The size of the development programme is definitely going to be bigger than the one announced for the outgoing financial year," a finance department official says.
He says the size of the current budget will also rise proportionately to finance maintenance cost of the infrastructure in the province. He rejects the notion that the growth in the expenditure means increase in non-development expenditure. "The money spent on the maintenance of the infrastructure is actually part of the development," he says.
The budgetary allocations for Punjab's provincial programme have seen a dramatic rise in the recent years primarily because of hefty improvement in the resources available in the federal divisible pool for distribution among the provinces under the National Finance Commission (NFC) and partly because of strict financial management and premature retirement of a part (Rs18 billion) of the expensive cash development loans (CDL)obtained in the 1980s and 1990s from the federal government to finance development of the province.
Slight improvement in the provincial own tax and non-tax collection in the recent years and stringent financial discipline has created some fiscal space for the provincial government to commit greater funds from its own resources for development in the province.
Together, the size of provincial and district development programmes for the outgoing year is approximately 10 times bigger than what used to be in the 1990s. Yet, its spending has created little or no impact on the (poor) quality of life of an overwhelming majority of the citizens of the province.
An overwhelming majority of the people, particularly in the rural areas, continue to lack access to proper health cover, clean drinking water, sanitation, public transport, and clean air. Roads in most cities remain choked for a better part of the day as is the case with sewerage. Tap water provided to the people is said by doctors to be a major cause of disease as incidence of hepatitis is rising in the urban areas due to mixing of drinking and sewage water.
The government insists that three or four years are not enough to judge the impact of increased development spending. The impact comes after years of continuous, maximum spending on development, it says. But the fact of the matter is that the provincial government has in the last few years focused on projects that can be used by it to draw political capital. That is why the districts get a negligibly small share – for instance, the district development programme for the outgoing year is only 13.6 per cent of the original provincial programme and 13.2 per cent of revised programme, for their own development schemes.
Some officials admit that the real and immediate impact of development spending can be achieved only by increasing the role of districts in the development effort. But with 2007 expected to be an election year, there is little likelihood of the provincial government increasing the size of the district programme meaningfully.