PSDP size may be reduced to Rs 437 billion

Horrifying financial constraints and unbridled inflationary pressures have forced economic managers to cut budgeted Public Sector Development Programme (PSDP) for the next fiscal as they plan to reduce its size to Rs 437 billion as compared to Rs 485 billion this fiscal.
The major cut has been proposed in the allocation for development programmes to be executed by Federal ministries, sources told Business Recorder on Thursday. The Federal ministries are likely to get Rs 188 billion in 2008-09 fiscal against fiscal allocation of Rs 229.8 billion.
The overall gross domestic product (GDP) growth has been estimated at 6.5 to seven percent in the next fiscal against this fiscal estimated growth 5.7 percent. These issues will be discussed at the meeting of Annual Plan Coordination Committee in its two-day meeting beginning here on Friday.
Statistics Division Secretary will inform the meeting about the growth projections prepared by National Accounts Committee (NAC) that has completed its exercise in its meeting held here early this week.
According to the sources, the proposed allocation for special areas' development is Rs 23.2 billion for the next fiscal as compared to Rs 21.2 billion in the current fiscal. The government allocates this amount for development projects in Northern Areas, Fata and Azad Jammu and Kashmir.
The allocations proposed for special programmes have been estimated at Rs 26.5 billion for 2008-09 fiscal against this fiscal allocation of Rs 34.4 billion. The corporations like Wapda, OGDC and others are expected to spend Rs 48.4 billion in the next fiscal against this year's allocation of Rs 49.6 billion.
It is interesting to note that no cut has been placed at the allocation for provincial development programmes. The proposed allocation has been estimated at Rs 150 billion. The sources said that there could some changes in the proposed allocation for all the heads as the APCC would discuss these issues in further details after the Priorities Committee of the Finance Ministry has given the proposals.
The APCC would recommend the proposed PSDP allocation to the National Economic Council (NEC) for final approval. The NEC, which usually meet a few days before the budget announcement, will take the final decision. In the last few years, when the government had fiscal space, the NEC always increased the PSDP size proposed by the APCC.
However, according to the sources, the government will find it difficult to do so this fiscal due to serious nature of financial constraints. The sources said that in 2007-09, the government estimated Rs 35 billion as operational shortfall, out of the total Rs 485 billion PSDP. Apart from this, the government had imposed a cut on the development budget this fiscal. Like this fiscal, if operation shortfall is included into the proposed allocation, the PSDP size could further be slashed to almost Rs 400 billion.