ISLAMABAD, June 2: The National Economic Council on Monday approved a Public Sector Development Programme of Rs541 billion, 11.2 per cent higher than the outgoing year’s PSDP, and projected 5.5 per cent GDP growth rate for 2008-09.

The NEC meeting, presided over by Prime Minister Yousuf Raza Gilani, focussed on ‘insufficient resources’ for funding the new budget, while the provinces complained about insufficient budgetary allocations.

Insiders told Dawn that Finance Minister Syed Naveed Qamar insisted that the allocations could not be increased significantly because of the ‘weak’ financial position.

Governor State Bank Dr Shamshad Akhtar stressed the need for keeping the nation informed about the exact economic situation.

Terming the widening fiscal shortfall, burgeoning trade and current account deficits and rising inflation ‘serious challenges’, she advised utmost care in framing new economic policies.

Sources said that some participants were of the view that former finance minister Ishaq Dar had created a feeling of despondency among the people by painting an alarming picture of the national economy.

Others, led by Naveed Qamar, said the nation needed to be given hope that things would improve soon. However, he said that the ministries and the provinces could not get more funds and said that everybody should realise that 2008-09 “will be tough in terms of finances”.

“The prime minister was visibly disturbed and kept asking the economic managers to provide sufficient funds for giving adequate subsidy to the poor,” one of the participants said.

He said that the Planning Commission had proposed an allocation of Rs60 billion to Rs70 billion for providing a safety net for the poor but the ministry of finance could disburse only Rs34 billion.

Sources said that Punjab Chief Minister Dost Mohammad Khosa cautioned against keeping economic indicators on the higher side, especially at a time when the economy was in deep trouble.

Criticising the planners for proposing a higher GDP growth rate, he said that under the present circumstances it would be impossible to achieve.

The sources said that Sindh Chief Minister Syed Qaim Ali Shah demanded extra development resources, especially for the Lyari Expressway project.

Similarly, Chief Ministers of the NWFP and Balochistan Amir Hiader Khan Hoti and Nawab Aslam Khan Raisani also sought more funds. The chief minister of Balochistan said that important projects like the proposed cadet colleges needed sufficient funds.

Some of the participants accused the planners of having failed to propose viable budgetary measures.

They also criticised the Economic Advisory Council which mainly comprised bankers and private sector businessmen. They said that members of the council had their personal business interests.

Deputy Chairman of the Planning Commission Salman Farooqui said the size of the federal PSDP would be Rs371 billion and that of the provincial development programmes Rs170 billion. The allocation for ERRA is Rs27 billion which is in addition to the PSDP allocation.

Social sector allocation stood at Rs188 billion, 12 per cent than last year’s.

Funding for infrastructure development has been increased to Rs166 billion, and for power sector Rs14 billion, which is in addition to Rs51 billion to be spent by Wapda from its own resources, water sector Rs75 billion; food, agriculture and livestock Rs20 billion; transport and communication sector Rs61 billion, higher education Rs18 billion. Special areas like Azad Kashmir, Northern Areas and Fata will get Rs23.3 billion.

Mr Farooqui said the new PSDP was aimed at providing “a comprehensive safety net against severe hardships faced by the poor” and overcoming energy and water crises.

It was also aimed at giving “highest priority to development in Balochistan, the NWFP and special areas, reviving growth in agriculture and manufacturing and building up human resources”.About Rs2 billion has been earmarked for the Hunarmand Pakistan Programme, Rs10 million for the establishment of Placement Bureaus, Rs500 million each for ‘white revolution’ and village product specialisation, Rs10 million for cold chains, Rs3.5 billion a year for doubling the number of lady health workers and Rs500 million for upgrading basic health units.

A Rs10 billion revolving fund will be set up for a ‘Housing for All Programme’ and a Real Estate Investment Trust will be set up at a cost of Rs300 million.

Mr Farooqui said the government was planning to set up an integrated Thar Coal Development Board headed by the chief minister of Sindh.

The prime minister, he said, had directed to provide Rs54 billion for the National Programme of Small Dams for building 314 such units.

An allocation of Rs2 billion has been provided for vocational training and skill development.

Phase-II of the Gwadar Port will be implemented involving construction of 10 more berths and linking it to other parts of the country by road and rail. About Rs10 million has been set aside for a feasibility study for the development of the Keti Bunder port.

Mr Farooqui said preparatory work on Bhasha and Munda dams was almost complete and an international donors’ conference would be convened soon to arrange funding for the projects.

He said he was confident that with the Thar coal project and planned power projects not only loadshedding would end but the country would also be in a position to export power.

He said agricultural sector’s growth target for the next year had been fixed at 4.4 per cent. The target for large-scale manufacturing sector had been fixed at 6.6 per cent.