Development: KP leads among laggards

Data show Khyber Pakhtunkhwa (KP) has been leading other provinces on development spending. As per federal finance ministry statistics, between FY09 and FY16, the province’s development spend averaged 31 percent of its total annual expenditure. That’s more than what Balochistan (26%), Punjab (26%), and Sindh (25%) have spent on development out of their total spending during this period.

And it seems the KP government would continue to lead the charge among top three provinces. The PTI-led coalition government has budgeted Rs208 billion for its development projects next fiscal. This figure, which shows double-digit growth over current fiscal’s budgetary estimates, equates to 34.5 percent of total budgeted spending of Rs603 billion. That ratio is slightly higher than what would be spent of their total budgets on development projects in Punjab (32%) and in Sindh (33%).

About 61 percent of the Rs208-billion development budget will be funded by the KP government, whereas the rest will be financed by foreign assistance. About 37 percent of the development budget will go to new schemes, and they have a larger ticket size. On average, each new scheme will get Rs105 million in funding, which is 57 percent more than an existing scheme on average.

Given the provincial mandate for social sector development post-Eighteenth Amendment, it is of obvious interest how much the provinces allocate for social sector development. Unfortunately, none of the provinces – or federal government – categorizes their development budgets in terms of social and infrastructure spending.

On that count, none of the provinces comes to a satisfactory mark. Our rough calculations show that the KP government has earmarked around Rs75 billion – or 36 percent of its FY18 development budget – for social sectors. This is higher than Punjab (32%) and Sindh (31%). Given the low levels of human development across the country, at least half of the development budget ought to go to social sectors.

Healthcare and education are two of the most critical components of human development. The KP government has allocated them Rs44 billion in the FY18 development budget, which represents a 21 percent share. This is slightly higher than Punjab’s allocation (20%), and Sindh (15%). But there is clearly a case for all the provinces to spend more on developing healthcare and education sectors.

Apparently the affinity for infrastructure spending has also reached the country’s northwest. Calculations suggest that close to Rs96 billion – or 46 percent of the development budget – have been set aside for areas high on brick and mortar stuff.

These include Rs46 billion for transportation project – mainly a mass transit system for Peshawar financed by ADB; Rs20 billion for roads and bridges in select KP districts; Rs8 billion for irrigation schemes like canal up-gradation and flood protection; Rs6 billion for urban development projects like waste management, parking spaces, ring roads, etc; and Rs1.4 billion for construction and reconstruction of public buildings.

Besides, other projects such the Rs30 billion districts’ ADP – whose schemes are unspecified – is also presumably high on brick-and-mortar content.

But all that will be peanuts compared to what KP is about to embark on, if budget documents are any guide. The development budget allocated a token amount of Rs1 million for 84 new (unfunded) schemes under ‘CPEC/Chinese investment’. Those schemes – unspecified but clubbed into 14 areas – are worth billions of rupees and mostly concentrated in energy, industries, housing, roads, and transport. How fast those projects move from MOU stage with the Chinese firms to implementation remains to be seen.