Punjab: low on social development

The Shahbaz Sharif government presented its tenth-consecutive provincial budget last Saturday. While the outlays are numbing, a closer scrutiny helps identify a few patterns for the younger Sharif’s development ambitions next fiscal.

First up, the scale is immense. At Rs635 billion, the Punjab’s Annual Development Plan (ADP) for next fiscal will be 20 percent more than revised budgetary estimates this year. But that growth doesn’t quite capture the scale. Get this: if the province goes on to spend all of its budgeted ADP – and it might, thanks to an election year – it will be more than what the federal government spent on its PSDP projects in FY16!

So far as numbers are concerned, it is encouraging to see that development expenditures are set to have a slightly higher share (32.2%) in the overall planned expenditures (Rs1.97 trillion) next fiscal (see the illustration). That ratio looks good compared to recent years, but the challenge still remains to spend a greater portion, around 40 percent, of total expenditures on development.

Second, the bigger may not be better after all. The largest province continues to have skewed priorities towards infrastructure. Only 32 percent of the FY18 ADP has been allocated to “strictly” social sectors, whereas roughly 60 percent of the ADP can be categorized under brick and mortar projects. Sure, there are other programs with social components (e.g. special initiatives worth Rs88 bn), but they, too, are mostly being spent on brick and mortar projects.

Within the social sector budget, development outlays for healthcare – at Rs50 billion – are too low for a government that wants universal healthcare for its people. Similarly, amid rising population level, the largest province only allocated Rs1.5 billion to its population planning schemes. This won’t do much to get the hoped-for stabilization in population growth.

This is alarming, because provinces carry the mandate for social sector spending following the 2010 Eighteenth Constitutional Amendment. The federal government has already minimized its role in social sector. Barely 15 percent of federal PSDP has been going to social sector projects in recent years. Being a heavyweight, where Punjab spends on development – its ADP is usually equal to the combined ADPs of the remaining provinces – has implications for human development accumulation in the aggregate.

Third, while social sector allocations are low, recent trend is that of growth see the illustration). For instance, school-education allocations (Rs53 bn) in FY18 are roughly 3.5 times the allocations in FY14; water & sanitation budget (Rs57 bn) is now more than 5 times what it was in FY14; funds for local governments have doubled since FY14 to Rs8 billion; population planning now has a budget ten times of what it was earmarked in FY14 (Rs150 mn), even as healthcare allocations have tripled.

And lastly, at the same time as social sector domains are seeing growth in allocations, Khadim-e-Aala has doubled down on infrastructure spending, as the same illustration depicts. Under mass-transit transport, Rs93.5 billion will be spent on the Lahore Orange Line Metro Train Project, all under Chinese financing. Half of the Rs91 billion ADP for roads will be spent on new schemes next fiscal.

Critics rightly pounce at such a spending approach in a country that is low on human development. But that doesn’t matter to those who matter in the final analysis. For an election has to be won next year. So the playbook remains the same. For the same “concrete strategy” has worked before.