PML-N’s dash for development

Here comes another big bang development budget. For FY15, the federal government has budgeted Rs525 billion for its public sector development programme (PSDP) and another Rs162 billion for ‘other development expenditures’. The PSDP allocations are 23.5 percent more than the revised budgetary estimate of Rs425 billion for the ongoing fiscal. And the priorities are visible (see the illustration).
Transportation infrastructure projects will get the bulk of PSDP funding next fiscal. About 74 projects for highways, motorways, bridges, and regional arteries have been allocated Rs112 billion. Projects include land acquisition of the 959 Km Karachi-Lahore motorway, civil works on motorways between Gwadar-Ratodero, Gwadar-Turbat-Hoshab, Raikot-Havelian-Islamabad, and expansion of the Karakoram Highway. Allocations have been made to allay congestion in metropolis like Karachi and Peshawar.
The energy sector then follows with healthy allocations for water and power sector projects. Power sector projects, including in coal and wind power, will receive Rs64 billion. Water sector projects will get Rs43 billion for storage and irrigation projects across the country. Nearly Rs40 billion have been allocated for railways, bulk of which will be utilised in procuring locomotives and carriages, track rehabilitation and urban rail projects in Karachi and Lahore.
There are a few new social sector programmes as well, which seem to balance the infrastructure development priorities. For instance, Rs12.5 billion have been allocated for Pakistan MDGs and Community Development Programme. Similarly, Rs36 billion would go to a programme directed at the uplift of provinces and special areas.
Outside of PSDP, ‘other development expenditures’ include Rs97.15 billion for BISP, Rs21 billion for the Prime Minister’s various schemes, besides a surprising inclusion of a Rs25 billion TCP urea import subsidy under this head.
These are all large allocations, and as such merit commendation in the face of development challenges. But in light of recent context, one should take these numbers with a pinch of salt. The original FY14 PSDP allocation of Rs540 billion remains only 59 percent funded as of May 23, with the budgeted rupee component of Rs430.7 billion (budgeted government spending) funded at an even lower, 55 percent.
Finance minister has emphasised in his budget speech that the revised PSDP will be fully funded by June end. But that seems a feat difficult to accomplish.
Pakistan needs large development outlays in a number of infrastructural and social areas, yet the ‘total development expenditure’ by the federal government (federal PSDP, provincial development grants, social safety nets like BISP, special packages, etc.) has not crossed even 3 percent of GDP in recent years. Intriguingly, the PML-N government is faring worse than last government on this count.
The PPP government managed its highest total development expenditure at 2.65 percent of GDP in FY10. But the PML-N government’s total development spending has been only 1.05 percent of GDP (Rs273 billion) in 9MFY14. PPP’s lowest was at 1.53 percent in FY11. It seems that the PML-N’s first year will have this measure lower than the PPP’s lowest once full-year figures are released later.
But development is not just about allocating and spending. It has to do with impact. But the budget speech nowhere had even a slightest mention of development spending reforms. It’s the same old bureaucratic machinery which will be put to work by pumping billions into it. One hopes that “socioeconomic impact” figures in the policymakers’ mind while approving and monitoring the development projects in the coming year.