Cut in IT budget

This column has previously raised the issue of low government spending on the IT sector. (Read “IT: build scale,” published November 26, 2018). It is good to see several Senators also raising this issue lately. The recent context is that the IT & Telecom Division’s development allocations have been slashed by over 50 percent to Rs1.5 billion for FY19, as per the revised PSDP announced in September last year.

One hopes that the Senate body will follow up on a more granular level the state of public spending on IT. There are issues concerning both the quantum and quality of the public spending on IT. On the quantitative side, it’s fair to say that spending has grown in recent years. But it’s really a drop in the ocean compared to the broader economy.

IT & Telecom division’s PSDP allocation – a key barometer for government’s fiscal commitment – stood at Rs526 million in FY15 (88% of it was utilized). It jumped to Rs923 million in FY16, but an amount twice that size was spent owing to foreign aid. In FY17, a higher allocation of Rs1.1 billion saw 70 percent utilization. An Rs1.5 billion FY18 allocation was outspent by a billion rupees, thanks to foreign assistance, mostly from China.

But in relative terms, the development allocation for IT projects has consistently languished below one percent of overall PSDP portfolio. In terms of actual spending, the IT & Telecom Division had a share, in overall PSDP spending, of 0.1 percent in FY15, 0.3 percent in FY16, 0.1 percent in FY17 and 0.3 percent in FY18. As for FY19 thus far, the share is standing right there at 0.3 percent, thanks to lower allocations.

This spending is too low, especially when it is seen in the regional context. For instance, the Indian government’s spending on IT is estimated at nearly ten billion dollars. In Pakistan, the government’s digital spending is not even ten billion rupees.

On the qualitative side, the IT & Telecom Division’s dozen-odd projects in recent years have remained focused mainly on three areas. One is the computerization at government secretariats and divisions. Second is the setting up of IT training institutes and Technology Parks in a few areas. And third is funding CPEC-linked connectivity project of Pak-China cross-border optical fiber cable, besides expansion and up-gradation of 3G/4G services alongside Karakoram Highway in Gilgit-Baltistan.

Many of those projects have been years under development. Partly this is due to the abysmally low funding level, as indicated in the headline figures above. And partly, it is explained by absence of continued commitment by top political leadership to build the capacity of the local IT industry and to digitize the government’s fiscal and operational processes.

In that regard, it is good to note the PTI government’s commitment, announced in December 2018 through the Enhanced National Financial Inclusion Strategy, for 100 percent digitization of government receipts and spending by 2023. Though it is unclear how the envisaged Transformation Center at the PM’s office (deadline of March 2019) for this purpose will be different from similar initiatives in the past.

The government’s digitization drive can work better if there is a centralized contracting authority for digital projects, as also promised in PTI’s pre-election Digital Policy (2018). That body can better coordinate government’s several digital initiatives in a coherent and consistent manner. Besides, it can also provide opportunities to local IT SMEs to innovate locally and later breakthrough in the international markets.