PSDP: big on the highway

Striking is a trillion rupees earmarked for PSDP projects next fiscal. Perhaps more arresting is the fact that highways, roads and bridges have been allocated almost a third of that budget (see illustration). The whopping Rs320 National Highway Authority (NHA) PSDP allocation is more than six times what the PPP’s last federal government allocated for NHA in their election year (2012-13). This budgetary allocation is similar in quantum to what the PPP government spent on entire federal PSDP in its last year.

Some critics disagree, but the PML-N think-tank views highways and roads as the markers of ‘development’. That’s why NHA has been receiving top billing throughout the ruling party’s term so far. Still, the 70 percent swell in NHA’s FY18 allocation (compared to original FY17 budget estimates) and its highly-dominant share in federal PSDP is noteworthy. Yet, it is understandable, at least on two counts.

One, a bunch of transport-connectivity projects under CPEC will receive some Rs180 billion in funding from federal PSDP. The government needs to keep spending, and spend fast, on the highways and motorways from the northern areas all the way down South. In addition, if FY18 is indeed an election year, now would be time to start doubling down on transportation schemes both current and on-paper.

Knowing well the PPP was decimated in Punjab last elections mainly due to power crisis, the water and power sectors, under Wapda, have also consistently ranked among top PSDP recipients in the party’s term. However, after taking Wapda’s power sector budget to Rs130 billion in FY17, the same has been brought down to Rs61 billion in FY18.There is also a rising allocation trend for ‘special areas’ – Azad Jammu & Kashmir, Federally-administered tribal areas, and Gilgit-Baltistan. The trio has Rs71 billion worth of allocations under FY18 PSDP. This is 48 percent more than FY17 (original) budgetary estimates. These are block allocations, so the nature of schemes funded is not available.

For the resettlement of displaced people and enhancing the security in the war’s aftermath, the federal government had allocated Rs100 billion each in FY16 and FY17. Now in FY18, too, a large allocation of Rs90 billion (Rs45 bn each for rehabilitation and security enhancement) has been made in the federal PSDP.

The above-mentioned projects – and many more in the PSDP roster – have a lot of brick and mortar stuff in them. It is suspected that other supposedly ‘soft’ projects – such as the Rs40 billion ‘special federal development programme’, Rs30 billon PM’s ‘global SDGs achievement programme’, Rs20 billion ‘prime minister’s initiative, Rs12.5 billion ‘energy for all’ scheme and Rs12.5 billion ‘clean drinking water for all’ scheme – are also high on brick and mortar stuff, besides being a tool for political patronage.

Leaving the quality of spending aside, which is of course an important issue, even in terms of scale, a challenging and ambitiously-high PSDP target has been set for FY18. If history is any guide, reality may come in the way.

One, the original budget will likely be revised downwards. The PML-N has already done that in FY14, FY16, and now in FY17 as well. And two, it will be difficult to achieve near-full budget utilization on account of both fiscal and managerial limitations. Average PSDP utilization rate (spending over original budget) stood at 88 percent between FY14 and FY16. Let’s see how things pan out for PML-N’s development narrative in the coming fiscal.