ISLAMABAD: Fixing the budget announcement date on June 11, the government on Thursday approved a consolidated development portfolio of Rs1.837 trillion, targeting an economic growth rate of four per cent for the next fiscal year.

A meeting of the Annual Planning Coordination Committee (APCC) presided over by Minister for Planning and Development Mukhdum Khusro Bakhtyar was marred by strong protests from the Sindh government for ignoring the province in federal-funded schemes and dropping dozens of its ongoing projects. The planning minister said a coordination committee had been set up to address concerns of the provinces.

Representing the Sindh government, provincial Minister for Mines and Minerals Mir Shabbir Ali Bijrani said his province had been severely discriminated against as 293 new schemes were brought into the Public Sector Development Programme (PSDP), but none was for Sindh. Instead, he added, about 36 ongoing projects of Rs51 billion in Sindh had been deleted.

Mr Bijrani said that about Rs102bn worth of federal-funded projects were part of the PSDP this year which had been brought down to Rs37.7bn for the next year that was only 5.6pc of the total PSDP against last year’s 7pc. He said that some important projects for Sindh had been dropped.

Budget to be announced on June 11; Sindh protests dropping of ongoing schemes under next PSDP

He regretted that special allocations were made for less developed areas of Balochistan, south Punjab, Azad Kashmir and Gilgit-Baltistan, but no such area from Sindh was considered. He said the Planning Commission told the meeting that the Center did not have funds for provincial projects and the PSDP would finance only federal projects.

Macroeconomic indicators

A senior government official told Dawn that the next year’s GDP growth rate target was set at 4pc based on dismal performance of the economy during the current fiscal year with the GDP growth rate of 3.28pc against a target of 6.2pc. He said an attempt had been made to keep the targets realistic given the three-year stabilisation programme under the IMF watch. Therefore, the target for industrial sector output growth rate was set at 2pc against the current year’s 7.6pc and actual output growth of just 1.4pc.

The large scale manufacturing (LSM) growth rate has been targeted at 1.5pc for the next year against the current year’s decline (contraction) of 2.1pc. The LSM had a growth target of 8.1pc for the current year that was missed by a wide margin.

The agriculture sector is targeted to put up 3.5pc growth next year against a nominal 0.85pc growth during the current fiscal year. The target for the current year was 3.8pc. Likewise, the services sector is forecast to improve by 4.8pc, exactly at the current year’s actual performance that missed the 6.5pc growth target.

The next year’s target for investment-to-GDP ratio was set at 15.8pc against current year’s 15.4pc that missed the target of 17.2pc. The saving-to-GDP ratio is expected to remain at 12.8pc against the current year’s 11.1pc. The current year’s target for savings was 13.1pc of GDP.

Development

The planning minister said the next year’s total development outlay would be about Rs1.837tr, including provincial development programmes of Rs912bn, adding that the focus of next year’s PSDP would be on priority areas of climate change, water, transmission, agriculture, health, knowledge economy, regional equalisation development and the China-Pakistan Economic Corridor even though the government would be undertaking measures for stabilisation of economy.

Mr Bakhtyar said the government was optimising economic returns by investing in projects with high socio-economic return. He accused the previous government of mismanaging the PSDP (2018-19) in the last year of its term by adding 393 projects with a throw-forward of Rs2tr which was 33pc of the total throw-forward against a meagre allocation of Rs55bn.

The meeting was informed that Rs371bn would be set aside for the infrastructure sector, including energy (Rs 80bn), transport and communication (Rs200bn), water (Rs70bn) and physical planning and housing (Rs21bn). An amount of Rs94bn will be spent on the social sector, including Rs20bn for health and population, Rs32bn for education, Rs8bn for environment, Rs24bn for achievement of sustainable development goals and Rs10bn for other areas.

Special areas, including AJK and GB, would be provided Rs39bn, while funds for merged districts of Khyber Pakhtunkhwa have been increased to Rs24bn from last year’s Rs10bn. The science and information technology sector will be given Rs12bn, while governance will get Rs3bn.

An amount of Rs14bn has been earmarked for the production sector, including Rs12bn for food and agriculture and Rs2bn for industries. An amount of Rs13bn has been set aside for Knowledge Economy Initiatives and Rs5bn for Earthquake Reconstruction and Rehabilitation Agency. As such, the total allocation for core PSDP was put at Rs575bn.

A block allocation of Rs100bn has been earmarked for programmes to be managed by the finance ministry, while about Rs250bn will be arranged through ‘alternative financing’, taking the total PSDP to Rs925bn.

The next year’s PSDP has been kept unchanged at last year’s Rs675bn level. Even out of this, an amount of Rs100bn will be set aside as block allocations under the prime minister’s programmes to be financially administered by the finance ministry. As such, the core PSDP will come down to Rs575bn — almost unchanged at a level revised by the Pakistan Tehreek-i-Insaf government under its supplementary budget.

The government put the federal development programme at Rs925bn, but this included an unexplained block allocation of Rs250bn as ‘alternative financing’ to be raised through private sector financing and Rs199bn allocations to be financed by two corporations — the National Highway Authority (Rs157bn) and the National Transmission and Dispatch Company/Pakistan Electric Power Company (Rs42.3bn).

Out of Rs100bn block allocations, Rs32.5bn each will be earmarked for security enhancement and settlement of displaced persons, followed by Rs22bn for merged districts of tribal region and Rs10bn for PM’s Youth Skill Development Programme. An amount of Rs2bn has been set aside for Clean Green Pakistan and Rs1bn for gas development projects.

All the federal ministries are being allocated Rs370bn of which the largest share of Rs85bn will go to water sector projects, followed by Rs45bn to the Ministry of Kashmir Affairs and Gilgit-Baltistan and Rs37bn to the Ministry of Finance. About Rs32bn allocation will go to the Higher Education Commission, while the Pakistan Atomic Energy Commission will get Rs25bn.

Separately, a finance ministry statement said the prime minister’s adviser on finance and revenue, while presiding over a meeting on budget framework, “gave directives to the concerned wings of finance ministry to timely complete the budget process which will be presented in the National Assembly on June 11, 2019”.

Published in Dawn, May 24th, 2019