Punjab government is taking various kinds of initiatives with a view to winning the favour of electorate in the upcoming general election. Its "holistic" approach touted as a serious effort aimed at developing rural and urban areas in tandem is reported to have received an impetus. The World Bank on 11th September, 2012 approved two credits totalling $220 million for the Punjab government to help support large cities in the province to strengthen systems for improved planning, resource management, accountability and land record management.
While the $150 million "Punjab Cities Governance Improvement" project is said to be aimed at realising the growth potential of five largest cities of the province through improved planning, resource management and accountability, financing of $70 million has been meant for strengthening and expanding better service delivery of land record management throughout the province. According to Country Director of the World Bank, Rachid Benmessaoud, Punjab has been leading the way in fusing together the rural-urban development agenda. Improved management of land records would bolster the confidence of existing and potential landholders, especially small holders or the most vulnerable, while strengthening planning, resource management and accountability in large cities of the province will turn them into a true engine of growth.
It is true that there is an increasing shift of population from rural to urban areas in Punjab province and a lot of resources are needed to facilitate such a shift in an orderly and productive manner. Provincial capital Lahore is currently home to about 8 million people. Other cities with population in excess of one million include Faisalabad (3 million), Gujranwala and Rawalpindi (2 million each) and Multan (1.7 million). About one half of the urban population in Punjab is concentrated in these five cities. In addition, three other large cities - Sialkot, Bahawalpur and Sargodha - are set to cross the one-million mark. There is, therefore, certainly a need to cater adequately to this burgeoning urban population growth but the way in which the government of Punjab has sought to raise resources and utilise them is not very justifiable.
At a time when outstanding level of foreign debt of the country is already very high and also increasing at a rapid pace, further resort to foreign borrowings for low priority projects would certainly put more pressure on current account of the country and mortgage the prospects of future generations of the country. Also, it needs to be remembered that multilateral institutions have the first claim on country's foreign exchange resources whenever it is faced with a crisis in its external sector accounts. As such, it is very important for the provinces to be very frugal and simple in their approach towards foreign loans and only request for aid and grants to the maximum extent possible. However, the best option would be to improve their own fiscal position. They are expected to find enough fiscal space to undertake various projects by themselves. It is, however, unfortunate that Punjab province which used to enjoy a comfortable fiscal position in the past is now faced with a crunch-like situation. Like other provinces, it is also not mobilising enough resources of its own and squandering money on sub-optimal but popular projects like free distribution of Sasti Roti and laptops. Such a negative behaviour increases overall budget deficit of the country which adds to inflationary pressures in economy. It is, therefore, very important for the provinces to raise more resources themselves and spend every paisa of public exchequer prudently. Also, it is very crucial to select projects, especially those financed through foreign borrowings, by analysing their cost and benefits thoroughly and depend largely on indigenous resources for their execution to the maximum extent possible. For instance, we would have fully understood and appreciated the rationale of borrowings from the World Bank if these funds were meant for energy projects or population planning. Projects like resource management, accountability and strengthening of land records should have been taken in hand by the present provincial bureaucracy and implemented with extra selfless efforts and lesser cost to the government exchequer, without resorting to huge borrowings from abroad.