The Planning Commission has failed to provide final estimates regarding utilisation of PSDP allocations for FY 2006-07, though a review meeting was held almost a month ago and the ministries and other government departments have already submitted details of their spending in the last fiscal year.
According to informed sources, no details of sector-wise spending are, therefore, available as to what amount has been spent on infrastructure, social or other sectors. It was important to furnish details in most cases. For instance, the infrastructure sector was provided the largest allocation out of Rs 270 billion, but the Planning Commission was of the view that there was an operational shortfall of Rs 20 billion. Total size of PSDP was more than Rs 385 billion in the last fiscal year, inclusive of Rs 115 billion for the provincial development programme.
There was an additional allocation of Rs 50 billion for the Earthquake Rehabilitation and Reconstruction Authority (Erra) projects in the last fiscal year. However, the Planning Commission or the Planning and Development Division were not responsible for overseeing the spending of these allocations. According to the sources quoted in our report, an amount of Rs 135 billion stands unaccounted for.
Timely release of funds for uplift projects is as important for their scheduled completion as the quantum of funds allocated. There is a perception among some analysts that perhaps the unspent funds from 2006-07 will be made a part of the Rs 100 billion increase the authorities plan to make in the PSDP allocation for FY 2007-08, thereby raising the total allocation to Rs 535 billion. The Planning Commission's mid-year review last year had identified some of the procedural snags that routinely impacted the execution of SPDP projects.
The compilers of the review had claimed that in most cases the "savings" had been re-allocated to the same sector in the fast-track projects either for their expeditious completion or for meeting the contractual obligations within the approved cash plan. Such midway re-scheduling appears at times to have been influenced by personal likes and dislikes. The PSDP 2006-07 projects, for which funds amounting to Rs 62 billion were reportedly withheld by the Finance Ministry, mainly related to infrastructure, which remains the weakest sector of our economy.
Moreover, the allocations were meant for some of the least developed regions of the country, which made it all the more important for the authorities to ensure their timely release. The trouble, therefore, lies with the midway re-setting of PSDP priorities. Secondly, the problem is compounded by the discrepancy that exists between the government's ambitious uplift goals and its comparatively restricted delivery capacity. The third factor is the credibility deficit that characterises our implementation strategy. According to experts, the government spending used to be traditionally categorised into revenue expenditure and capital expenditure.
But with the adoption of the policy of planned economic development, the budget became an instrument for carrying out the objectives of the Plan, and hence it became necessary to distinguish between expenditure for economic development, and the non-development expenditure. Unfortunately, there has been a tendency in our country to put greater emphasis on the latter category. Yet another factor has been the cost overruns that have become the bane of our economy.
It seems that two basic causes of the malaise are a lax monitoring mechanism, and the paucity of political will. Good governance implies a capacity to turn public income into human development outcomes. It is also an essential pre-condition for pro-poor growth as it establishes an enabling regulatory and legal framework. Incidentally, most of the projects in our country are often executed at a breakneck speed at the fag end of the financial year, which has contributed to the lowering of project execution standards.