KARACHI, March 5: The Social Policy and Development Centre (SPDC) in its annual review (2009-10) has blamed high cost of war-on-terror for having crippling impact on social and economic development of the country.

The report has particularly mentioned the whooping cost of war from Rs380 billion in 2007-08 to Rs840 billion 2009-10, which had fiscal implications in terms of budgetary priorities of both federal and provincial governments.

It has been strongly highlighted in the report titled 'Social Impact of Security Crises' that costs of the war are over three times greater than the bilateral assistance forthcoming, especially from the United States.

The SPDC report was presented by Dr Khalida Ghous on Saturday at a ceremony held under the chair of Javed Jabbar.

Exploring various facets of the existing security crisis the report pointed out that there had been systemic failure both of institutions and social development policies initiated by respective governments and their role in breeding violence and extremism.

Whereas cost of participation in the war-on-terror has risen exponentially resulting in dislocation of economic activity, high losses of life and property and impact on the investment climate was even much higher.

It was pointed out that in 2009-10 cost to the economy due to fall in investment and stock market capitalisation was Rs367 billion.

While analysing trends in federal and provincial government expenditures the report stated that an extraordinary growth in expenditures on public safety was recorded.

The security related expenditures increased from Rs177 billion in 2009-10 to Rs800 billion in 2010-11.

The sector-wise analysis of government expenditures show that resources have been shifted away from economic activity to security and war-on-terror leaving such areas of development like water, power, health and education with paucity of funds.

The analysis presented in the report shows that the pace of social development during last ten yeas slowed down resulting in higher incidence of poverty from 30 per cent in 2004-05 to 38 per cent in 2007-08.

The report analyses the impact of security crisis on the economy of Khyber Pakhtunkhwa where escalation of armed conflicts has had repercussions on the lives and livelihood of the masses.

The SPDC states that agricultural sector in KP which suffered because of 2005 earthquake shows major decline which can be partially attributed to the increase in militancy and the military operations carried out in the province.

Similarly, manufacturing activity in the KP has either declined or slowed down. As a result, the growth and pattern of employment have also been adversely affected. In 2008-09 youth unemployment rate in KP was estimated to be 11.6 per cent as compared to the national average of 7.5 per cent.

The report also laid down some solutions and suggested that there is a greater need for a consensus based national strategy that aims both at preventing terrorism and minimising its effects on socio-economic development.

It has recommended that the national goal of poverty reduction should be considered an essential element of the anti-terror strategy and use of force alone could not bring peace in the country.